December 01, 2004

Graef Crystal Back Online

In the early days of The Internet, Graef "Bud" Crystal had an excellent website covering executive compensation issues. Then he joined Bloomberg as a columnist and the website disappeared. But Bloomberg now makes his columns available online. If you are interested in executive compensation, you could not ask for a better teacher than Crystal. He does two things most journalists can't or won't do: he does the math (correctly, I might add), and he names names. He doesn't offer you the opinion that CEOs make too much - he tells you who he thinks makes too much, and why he thinks it. I do have methodological quibbles with some of his work, usually over the time horizons and benchmarks he uses. He likes to evaluate the performance of a company's stock vs. the S&P 500 over a one-year period. I'd rather he used a sector index and a longer time period (three years?). Another quibble: In today's column he argues that broad stock option ownership has not been associated with great returns the past three years. Not surprising, since the tech sector was a disappointment during that period. But what about the previous 20 years? Without those broad stock option programs, Silicon Valley (and all the wealth it created) probably would not exist. And the benefits to society - cheap computing, better cancer drugs, free blogging software - would probably still be waiting to be invented... The Economist also had an excellent review of executive pay last year.