COMMENTARY -- Today is National Boss Day and the ones celebrating most might be the biggest bosses, because they're having a richer time of it than ever before.
At least 250 grand stands as the going minimum for a CEO these days, according to compensation experts quoted recently by Reuters reporter Ian Simpson. Apparently, CEO salaries have risen 25 percent over the last six months, especially as "struggling start-ups" and "newly-public dot-coms" try to attract experienced executives. Other high level execs command at least $200,000, Simpson writes.
Pretty good for a gig whose end goal nowadays seems to be "Find a buyer now." Take Convergent Group (Nasdaq: CVGP) as an example.
"Business Transformation" is a mantra of Convergent, which should know all about that topic; the company transformed itself from a IT consulting outfit that did things like install Geographic Information Systems for airports, and now touts itself as an expert in turning utilities and government agencies into Internet operations.
A 15-year-old company, Convergent went public at the beginning of August. Less than three weeks ago the company said its "aggressive recruitment strategy" has produced almost 200 hires this year, including a new executive vice president for global sales and new presidents for the company's European and Asian divisions.
This morning Convergent unveiled an agreement to sell a controlling stake to Schlumberger (NYSE: SLB), one of the world's biggest oilfield services companies and former employer of Michael Capellas, who worked there for 18 years before joining the company he now runs, Compaq Computer (NYSE: CPQ). Schlumberger will own 71.7 percent of outstanding shares at $8 apiece, or a dollar above the IPO's first-day closing price.
If Convergent's new executives received the sort of industry standard pay described in the Reuters piece, they've done well for themselves in just a few months. I don't know what this year's hires are paid, but consider that last year, the then-EVP of sales, Larry Engelken, received a base salary of $200,000 and total annual pay of $256,580. I can't imagine his replacement would settle for anything less.
That doesn't count bonuses and options, which were sizable for Convergent's top tier in 1999, and probably remain large this year. Options grants throughout the Internet-related industry remain at the same level as last year, Simpson says.
It wouldn't be fair to characterize the Schlumberger acquisition as merely a cash-out-and-move-on story, because Convergent will remain a separate operation run by founding partner and current CEO Glenn Montgomery (who also made $256,580 in salary last year, on a base of $225,000). Presumably several executives will stay on for awhile.
Still, today's announcement doesn't mark a turnaround, but simply a way out. That Convergent's board settled for a $1 premium over the initial offering price tells you the company doesn't see great prospects for itself independently.
Maybe directors have a point, considering that Convergent lost money four out of the previous five years and saw more red ink this year, despite growing revenue. Viewed in that light, $250,000+ a year doesn't seem like a lot to pay to executives who managed to polish up the company enough to produce a workable exit strategy. At this point, many dot-coms would be thrilled to get the kind of buyout Convergent garnered. 22GO>