Avoiding The Glare of the Public Spotlight

October 30, 2007

Upon first glance at that headline, it was tough for me to feel much sympathy for a guy whose firm made such bad bets on the mortgage market while collecting an eye-popping salary. According to Forbes.com, O’Neal’s total cash compensation last year was $91 million, while his anticipated severance package has been estimated at $159 million—an amount that exceeds the total value of many mid-market mergers. Now in his mid-fifties, O’Neal could retire quite comfortably on that sum.

But perhaps, if just for a few minutes, it’s worth reflecting on the challenges of running a high-profile public company, where the spotlight can quickly turn from warm to an all-out burn.

In many ways, the ouster of a CEO is like firing a manager in sports. The team (in this case, the investment bank) disappoints with its play, some poor decisions are highlighted, and it’s not long before the fans (in this case, investors) demand that someone get axed. We’ve all heard the phrase ‘statistics don’t lie’ when it comes to athletics. In the world of publicly-traded companies, earnings don’t lie.

When you’re running a high-profile public company, it’s almost impossible to screw up without paying some consequences. Even if your share price remains intact, there’s a good chance your bad decision will spark news stories, analysis and angry blogs questioning your competence. In the viral Web 2.0 world in which we now live, presidents, coaches and CEOs can be crucified in a matter of minutes.

Conversely, if you go to Google and type in the name of a private equity-backed middle market CEO, you’re unlikely to find more than a handful of hits and possibly no blog references whatsoever. Depending on the size of the company and its sector, a private equity-backed CEO can screw up in relative silence. Since PE firms don’t have the pressure of paying quarterly dividends and can hold onto an asset for a long time before having to monetize it, one bad year doesn’t always necessitate a management change.

So for those private company CEOs who are cursing under their breath about the deal that O’Neal is expected to get, or the value of Steven Schwarzman’s stock holdings, just remember that life in the public eye, while more lucrative, can be tougher on the ego.