CFOs: In Defense of Private Equity?
Two thirds of CFOs surveyed by Grant Thornton think CEOs are overpaid. But only 25% think their own CEO is overpaid. Sounds like a case of “no one wants to call the baby ugly.” The board of directors would likely respond with a similar answer. Execs are spoiled, but ours deserves it. And the survey revealed another interesting point: 83% of those surveyed think the CEO and chairman role should be separate. Both of these answers support an argument in favor of private equity that says PE firms bring much-needed discipline to companies. The survey doesn’t ask why CFOs want less power and money for CEOs, but The Lehman Brothers Effect isn’t a bad guess. So I ask, if a failing company like Lehman, for example, were backed by a private equity firm, wouldn’t management have been dismissed many quarters ago?
