In my First Year as Editor of Treasury & Risk Management, one of my first projects was the annual compilation of CFO salaries. The year was 2002, and one of the CFOs highlighted was Tyco International Ltd.'s Mark Swartz. In 2001–a year before he left the company with the government in hot pursuit–Swartz was paid $21 million. Today, a mere five years later, the number sounds less shocking. (T&RM has two CFOs earning more than that on our 2006 list.) But at the time, Swartz was earning three times more than the next-highest-paid CFO on our list of 25–many of whom were from larger companies. As shocking as that was, the next year his total compensation had jumped to almost $78 million. His successor David Fitzpatrick was to be paid a mere $3.7 million. Swartz was a poster child for excess, but the interesting thing about his pay was that most of it came in the form of restricted stock or long-term incentives. His base never even hit $1 million. What's also worth noting is that during those years, Tyco stock was doing well. So, by the standards the media and others tend to judge most executive pay, was it okay that he was reaping that much from the company's success given that shareholders were sharing in the booty? Of course it wasn't, because $78 million was, and is, unreasonable for anyone to earn for doing their job. Although the SEC proposals for executive compensation do not include a test on whether a salary is reasonable, the SEC obviously believes the market will impose that test once totals are visible. This may be a bit of fantasy, given that shareholders have shown themselves unwilling to question anything as long as they are making out well, too. One need only look at the case of Enron Corp. or, for that matter, Tyco.

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