Section Five
WHAT HE SEES: A very egalitarian company.
There are no perks. Everybody has the same
office, with a chair, a computer, a couple of
bookshelves and some storage space. We spend
most of our time in meetings anyway.^62Compensation also has important status implications in
many organizations. The compensation of top executives can
become a major status differential and thus a potential cause of
decreased organizational performance.^63 Graef Crystal has
analyzed the relationship between the compensation for
20 CEOs and the performance of their companies. As a
measure of company performance, he used an index of total
shareholder return weighted over a three-year period. For
compensation, he included base salary, annual bonus, and the
following forms of long-term incentives: stock options,
restricted stock, and performance plans that generally involve
cash payments for attaining goals. In order to determine the
value of stock options, he used a version of the Black-Scholes
Option Pricing Model. He also derived a market value for the
CEOs reflecting differences in firm size, industry, and company
performance. In another study of 279 CEOs from throughout
the United States, he determined that the average total
compensation was $8.7 million.^64