Was Ken Lay worth it?

• Author: Schwab, Robert
• Position: On Colorado

KEN LAY DIED IN ASPEN LAST MONTH, AND MANY PEOPLE mourned the lost opportunity to punish him.

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Lay, of course, was the former chairman of Enron, one of the most expensive frauds in the nation's history, and he died, at age 64, while awaiting sentencing for his part in it. His death left in limbo government regulators' ability to recover some of the $45 million in personal assets Lay had accumulated while he cheated his shareholders and employees.

It also brought to mind the issue of how Ken Lay accumulated such wealth as an executive of a bankrupt company, and--as I helped prepare this month's report on "The Best Companies to Work for in Colorado" (page 23)--the thought that any employee must put faith in the executives of his or her employer, trusting that an honest effort is being made to serve the interests of all company stakeholders: principals, shareholders, customers and employees alike.

Management makes a company successful, and the "Best Companies" package suggests how some Colorado managers do that by making employees valuable to the process.

Lay's life story, however, is an epic example of a nation's misplaced trust in a big-company executive. And yet Lay was paid millions of dollars for his work. Which business commentators across the land have seized on as yet another reason to revive an ongoing debate over exorbitant corporate executive pay.

Fortune magazine carried a story June 30, before Lay's death on July 5, titled "The real CEO pay problem," and in it, writer Rik Kirkland quoted Charlie Munger, who is Warren Buffet's partner in Berkshire-Hathaway, saying, "About half of American industry has grossly unfair compensation systems where the top executives are paid too much."

After Lay's death, Ted Rall, an author, wrote on Yahoo! News that Lay should be lumped together with philanthropists Bill Gates of Microsoft, and Buffett, because, according to Rall, both Gates and Buffett made billions, not millions, on the backs of their employees just as Lay made much less. I don't agree with that assertion.

But on the very day that Lay died, Wall Street Journal columnist Alan Murray wrote on page 2 of the Journal that a Business Roundtable study being released that day showed "the pay of CEOs, while still lush compared to that of a Starbucks barista, isn't as outrageous as some press reports suggest."

Murray reported the study found the median pay of CEOs...