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Critic of 'Overpaid' CEOs Dies at 82

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Graef “Bud” Crystal, who became the foremost critic of excessive compensation after a career advising board directors on how to justify paying their chief executive officers top dollar, has died. He was 82.

He died April 18 at his home in Las Vegas, according to an email from his wife, Sue. The cause was heart disease.

“My switch from henchman to gadfly incensed many CEOs, some of whom called me a Judas and asked where they should deliver the 30 pieces of silver,” Crystal wrote in a 1996 article for “In a sense, though, those CEOs and I were operating on the same wavelength. They were quoting from the Bible, while I was beginning to think seriously about the need to save my immortal soul.”

For more than four decades, Crystal made a good but quiet living advising clients such as American Express Co. and General Electric Co. But once a critic, he found himself in the middle of controversies such as the alleged excesses of the employment contract that he helped Walt Disney Co. negotiate with Hollywood superagent Michael Ovitz.

Ovitz Controvsy

Ovitz was hired to be the No. 2 to Disney CEO Michael Eisner. Crystal had switched from consultant to critic in 1989, but he agreed in 1995 as a personal favor to Eisner to help the Disney board draft Ovitz’s employment contract.

In the Slate article, titled “Michael Ovitz Got Away with Murder — And I Helped Him,” Crystal explained he had warned Eisner he would put his critic hat back on if the contract became an issue — which its $140 million severance provision did in news stories and shareholder litigation that upheld it.

Crystal’s wife found it “incomprehensible” that the Disney board had agreed to pay Ovitz that kind of money for failing as the company’s president.

“I couldn’t have put it better,” Crystal wrote.

Crystal, who was a Bloomberg News columnist on executive-pay for eight years starting in 2000, prepared yearly reports identifying the most overpaid top executives, based on models he developed that compared compensation with a company’s size and performance.

“Bud Crystal was relentless confronting the opacity of executive compensation and he benefited all investors, especially Bloomberg users, by setting the standard for bringing transparency to publicly-traded companies,” said Matthew Winkler, Bloomberg News editor-in-chief emeritus.

Over the decades, he had some favorite targets, such as Stephen Wolf, ex-CEO of United Airlines Inc., whose 1990 pay was more than $18 million while the company’s profit fell 70 percent. Wolf made 1,200 times what a starting United flight attendant did, “60 Minutes” reported in an 1991 interview with Crystal.

Ross, Iacocca

Other targets included Steven Ross of Time Warner Inc. and Lee Iacocca of Chrysler Corp., whose employers paid them enormous sums while their companies were performing poorly, Crystal said.

Crystal had fun with his critiques, issuing in 2004 a list of All-Star Pay Hogs to coincide with Major League Baseball’s All Star game. Leading his list of greed among then-active CEOs was Citigroup Inc.’s Sanford Weill, who he called the runner-up to Ross in the all-time pay-hog-of-the-world contest.

On the basis of stock-option grants, he also included: Larry Ellison of Oracle Corp., who in 2001 exercised options with gains of $706 million; Eisner, who turned options into almost $1 billion of pay; and Barry Diller of IAC/InterActive Corp., who reaped gains of $151 million in 2003, while holding options with paper profits of $1.1 billion.

He also named as the All Star team manager former New York Stock Exchange CEO Richard Grasso, who fought with New York Attorney General Eliot Spitzer over whether his $139.5 million in compensation was excessive. In the late 1970s, Crystal was the NYSE’s compensation consultant.

Underpaid CEOs

Crystal also spotlighted CEOs he considered underpaid. The compensation for Bank of America Corp.’s Brian Moynihan — $13.1 million in 2013 — was 30 percent below the “going rate” for a company of his bank’s size.

“Shareholder return is the best determinant of pay because it’s the only gauge of success that’s external and can’t be manipulated by accounting tricks or shifts in performance targets,’’ Crystal said.

Graef Slater Crystal was born April 30, 1934, in Oakland, California, the son of Louis and Esther Harris Crystal. At age 10, after the death of his parents, an aunt and his maternal grandparents enrolled him at San Rafael Military Academy in San Rafael, California.

He received a bachelor of arts degree in psychology from the University of California at Berkeley in 1956, and a master’s degree in the same subject from Occidental College in Los Angeles in 1962.

Early Career

After college, he worked as a management trainee for Sears, Roebuck & Co. before becoming a wage and salary analyst for RCA Corp. and the director of compensation at General Dynamics Corp. In 1968 he became director of compensation for Pfizer International Inc. and then a senior associate at Booz Allen Hamilton Inc. and a vice president at Towers, Perrin, Forster & Crosby.

Crystal focused on pay packages as an adjunct professor at the Haas School of Business at the University of California at Berkeley. He was the editor of the Crystal Report on Executive Compensation.

He also wrote six books including “In Search of Excess: The Overcompensation of American Executives” (1991), “Questions and Answers on Executive Compensation: How to Get What You’re Worth” (1984) and “Executive Compensation: Money, Motivation and Imagination” (1978).

In addition to his wife, he is survived by a daughter and two sons from a previous marriage: Allison Taliercio, Matthew Crystal and David Crystal. He also had three stepchildren from another marriage: Chad Cunningham, Amy Breninger and Jamie Baker.

Asked why he thought CEOs didn’t like people complaining about their pay packages, Crystal told Charlie Rose in an interview in 1992: “Some of the things I’m saying will result in having their pay slashed, which is roughly the equivalent of trying to take a piece of filet out of the jaws of a Doberman who hasn’t eaten for a week.’’


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