As you look over the business landscape today, how would you say CEOs are performing?
    It's an interesting question, and to answer it I ask myself: Where are the business leaders? My mentor George Moore would have described them as "playing mouse." They're hiding. Who are the spokesmen for American business today -- name me one, quick. . . .
     So why aren't there business leaders standing at the barricades today? Because they know that if they do stand up, the media, with justification, will ask, Hey, how come this guy earned $200 million last year and got $1 million in registered stock besides -- and, by the way, the interest rate on his deferred comp is 12 percent, and last I looked the federal funds rate was below inflation. Business leaders haven't got an answer for that; they may feel in their heads that their position on compensation is indefensible.
     When I retired from the local bank here, there was nobody in my industry who made $1 million a year. You could argue we weren't worth any more, and you'd probably be right, but the difference between $950,000 and $200 million is quite a stretch.
     How did executive compensation get so seriously off-track? I hold compensation consultants responsible. They come into your boardroom with their PowerPoint displays and say, We've posted your competitors' salaries on this trend line, and your guy is only in the third quartile -- isn't that terrible? And the board says, We can't have that-put him in the fourth quartile. And then the consultants pack up their little projector and go on to the next corporation, and compensation is ratcheted up again and again and never goes back.
     And CEOs walk away with bigger and bigger pay packages.
     I'm talking out of school, but it's true. I was the longest-serving director of General Electric and chairman of the comp committee that put Jack Welch in the job. When I read the 10-K and saw what he had coming to him from GE upon his retirement, I went over to see him, although I was retired at the time. I said, Jack, this is going to come back and bite you in the tail. His reply to me was, Did I miss something? Well, I said, you can laugh, but if you're retiring with a billion dollars, which most people could live on if they trimmed a bit here or there, you might think why the hell shouldn't you have a plane for life, an apartment, and your laundry done. But at some point it's going to come back and make the business community look like fools. And, of course, that's what happened when it all came out during Jack's divorce. It wasn't about money so much as it was about belonging to a club: Whatever Jack has, Larry Bossidy has to have, and so on. . .
    At the time, did you or any other directors challenge the consultants and say to them, This is a line of bull you're feeding us: You're just ratcheting up compensation. We're going to draw a line in the sand.
 We said that; a lot of boards I was on said that. . . . I was on one board where we needed a new CEO, and when I looked at the compensation package I told the consultant, This guy may be able to walk on water without his wings clipped, but it seems to me that this package is excessive. And the headhunter said, Yeah, but I got two or three other offers for this guy -- do you want him or don't you?
     Like, take it or leave it?
     Almost like that. Finally, I said, OK, let's go ahead. And it turns out this fellow is doing a superb job. All this is to explain how the market was made: It was made by consultants. . . .

The market is also make because of companies that don't pay enough attention to management succession.  This responsbiliity, of course, ultimately rests with the board of directors.  Companies with poor succession planning are much more likely to pursue the "rock star" outsider CEO, whose pay is much more heavily influenced by the consultant cabal Wriston described.