Does Graef Crystal Deserve a Pay Cut?

By listing Richard H. Jenrette, CEO of Equitable Companies under the heading: “Low Performance, High Pay,” it is clear Graef Crystal (“Growing the Pay Gap,” July 23) failed to do his homework.

Dick Jenrette’s base compensation is in line with competitive pay in our industry; most of the current compensation includes part of the settlement arranged for when Equitable purchased Donaldson, Lufkin & Jenrette several years ago. In addition, if that were not the case, Mr. Crystal would find it very difficult to identify informed resentment at the Equitable for any amount paid to Dick Jenrette based on his contribution to the Equitable.

Mr. Crystal should more closely examine Equitable’s recent history. He would find that Dick Jenrette took over when the company was on the ropes. A series of financial debacles, including the well-chronicled GIC pressures, had led Equitable to the brink. Dick engineered and willed the demutualization strategy to a rather rapid and successful end. This was punctuated by the acquisition of $1 billion of investment capital that halted a significant rating decline and set the company on a course of financial accountability.

Dick has more than earned his pay. Prof. Crystal, however, is guilty of surface analysis and has rightfully earned a “low performance, high pay” rating because he failed to gather all the facts and therefore drew an erroneous conclusion in listing Dick Jenrette in his article. There are many underworked and overpaid executives in America; Dick Jenrette is not one of them.

ARTHUR P. CARROLL Jr.

EUGENE W. BLUEMLY Jr.

Equitable

Woodland Hills

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There he goes again--sort of.

Graef Crystal’s diatribe tries to build a case that CEO compensation is high compared to the “average worker.” He makes some interesting points, although his methodology raises questions.

Crystal may have made an apples-to-oranges comparison when he compared growth in CEO salary of his 424 company survey group against growth in compensation of the “average worker.”

First, how is the “average worker” defined? Second, shouldn’t survey group CEO compensation be compared to survey group average worker compensation? It appears that a broader base was used in establishing “average worker” compensation. Have CEOs within the survey group influenced incentive plans that allow the “average worker” in these companies to share in upswings in company performance? To what extent can companies incorporate “pay-for performance” incentive structures into “average worker” compensation plans (do unions support this or stand in the way)?

I wholeheartedly agree with one of Mr. Crystal’s points. The discrepancy between CEO compensation increases of 12.4% and shareholder returns of 2% for the company survey group form 1993 to 1994 is troubling. Before I pass judgment, however, I’d like to see a few more survey years analyzed as a basis for comparison. My statistics teacher told me never to rely upon an “n” of 1.

JIM DODENHOFF

Culver City