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September 09, 2014 02:00 AM

CEO likeability is an unmeasured asset

Gayle S. Putrich
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    Rich Williams

    Would you want to work for Artie T.?

    In June, Market Basket CEO Arthur T. Demoulas was removed as the head of the family-owned grocery store chain, a more than $4 billion enterprise employing 25,000 workers in 71 stores across Massachusetts, New Hampshire and Maine.

    After six weeks of employee protests, customer boycotts and even supplier pickets, Artie T. is back, buying out his ouster and cousin, Arthur S. Demoulas (aka Artie S.), who has been at the center of decades of fighting over the family business in a nearly unbelievable, twisted tale of years of lawsuits, subterfuge, secret tapes and more.

    In a world where CEOs usually make headlines for calling for massive layoffs while drawing exorbitant salaries and workers are more likely to protest “the 1 percent” than try to bring back their boss, Artie T. and Market Basket are a unique case.

    Artie T. is, by all accounts, a stand-up guy who has worked hard to ensure his (not unionized, by the way) workers enjoy profit-sharing, a solid retirement plan, holiday bonuses and the kind of encouragement that has literally taken grocery baggers up through the ranks to corner offices. He remembers names and birthdays and is often compared to George Bailey from “It's a Wonderful Life” for his tendency to put people over profit and his own paycheck.

    He's just a likable guy.

    There are many columns and categories of data involved in the annual Plastics News North American executive pay ranking. But there's one factor to executive pay that no number cruncher can measure: the likeability of a CEO.

    Designing an executive compensation is a complex matter, and the ever-changing rules for publicly traded companies make it even more complicated. And analyzing what a pay package actually says about how executives and their contributions are valued is an even darker and more mysterious art. While metrics and pay-for-performance trends are a big factor, there are some other, less quantitative matters, experts say.

    David M. Barron/oxygengroup

    Gayle S. Putrich

    “For executives, especially a CEO, their job is always on the line, and the company's stock price is only a part of the equation in figuring out if they're doing a ‘good' job,” says Aaron Boyd of Equilar, the company that compiles Plastics News' executive pay data. “But things can go wrong, things outside of a CEO's control.”

    Metrics and goals must be met before bonuses can be doled out and those marks are more transparent than ever, helping shareholders understand why the folks in the C-suite are making so much money. But an executive might not make all the set metrics to get a bonus after a fire or mechanical problems in a plant, but still receive part of the bonus anyway since it was beyond any one person's control. A plastic processor's stock could take a dip if liquid natural gas prices suddenly spike.

    “If the board likes the person and feels like the CEO can do the job, they will keep the job,” Boyd says. “And get at least part of the bonus.”

    So, it's not a popularity contest. Except when it is.

    But “likability” is bigger than a board of directors. As a manager, you want to think your employees like you.

    At how many plastics firms would the departure, forced or otherwise, of the CEO cause an employee revolt?

    Gayle S. Putrich is Plastics News' Washington-based staff reporter.

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