Page 130 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

116 The Complete Guide to Executive Compensation

ring should have been reached or clearly within sight. Late-career crisis typically occurs after
the half-century mark, certainly by age 55, if career expectations appear they will not be
realized. Postcareer crisis is after retirement. Some choose not to accept failure and go on to
do something else. Others decide to take out their frustration on a golf ball or extended cock-
tail hours. Some feel trapped within a particular industry due to their particular skills. This
would seem more likely to occur to those in line rather than staff positions, due to the latter’s
abilities to cross industry lines.
By definition, this trauma is greatest for those who had high expectations but are still a
significant way from top management, with no apparent shortcuts in sight. Those who
identified their strengths and interests earlier in developing career paths, and have made the
necessary adjustments to stay on course, probably have less of a crisis with which to cope.
For those with very significant difficulties, alcohol and emotional concerns may be
sufficient to require counseling. Unfortunately, although the facilities exist in many organi-
zations to handle such situations, executives are often concerned that their problems may not
be treated in complete secrecy. They may fear that discussions with a counselor will be
revealed and used to minimize future promotions. Therefore, they often do not use the
facilities available.
Burnout. A problem similar to career crisis is burnout. Both problems result in significantly
lowered job performance. Whereas career crisis is associated with lack of promotion, burnout
is typified by lack of interest in present position. Individuals have lost their enthusiasm for
continuing their duties. Reasons cited include disillusionment as to job importance and loss
of creativity. The job not only is no longer “fun,” it is a depressive form of punishment.
In many cases, burnout is caused by gruellingly long hours of work and yet still not enough
time to get the work done. The workload has gotten increasingly heavier at all levels of the
organization. In many cases, this occurs when organizations downsize without figuring out
how to reduce the workload. Twelve-hour days at the office coupled with long commutes and
additional work at home have the American executive experiencing a problem common to
Japanese management—very little free time. Multiply stress by long hours and it’s easy to see
why “burnout” is an issue at a much earlier age than it used to be.

Inappropriate Behavior. Surrounded by their praetorian guard of “direct reports” who seek
big bonuses and job security, many CEOs are shielded from the truth. After a while, some
believe that they are not accountable to anyone—not the board of directors, not the share-
holders, and not the law. Some even believe they are the law! This arrogant view is reinforced
when the business press lauds business results and overlooks executive behavior. And when
the business falters, many executives blame everything and everyone but themselves, fully
expecting to still be handsomely compensated.
A culture where there is a lack of candid discussion about appropriate behavior at all
levels of the organization is a climate where inappropriate actions will also occur. Some may
merely be counter to the spirit of the law; others will violate the letter of the law. Topping
the list will be financial fraud, insider trading, and tax evasion.
Greed. The dramatic escalation in executive pay in the last 15 to 20 years has been due
mainly to excessive stock option grants at a time when stock prices were increasing at a
dramatic rate. The use of stock options as the main compensation vehicle was not inappro-
priate; the number of options granted was the problem. Without question the number should
have been scaled back as stock prices continued to escalate.