While the main spotlight may shine on the Bay Area CEOs who bring down the biggest of the big bucks, there's another drama unfolding off behind the curtains.
With little fanfare, a phalanx of compensation consultants is busily soothing Fortune 500-sized egos, putting out fires for the board's compensation committee and crunching stratospheric salary numbers. Their mission: Nail together a pay package that will keep the boss fat and happy but won't make the shareholders come unglued.
"This line of work can be extremely emotional," said Robin Ferracone, chief executive of Farient Advisors and author of "Fair Pay, Fair Play: Aligning Executive Performance and Pay."
"Anger, resentment, I've seen it all," Ferracone said. "I had one CEO who got really aggressive with me because he wanted a very rich compensation program that I thought was inappropriate. He really lit into me over the phone, with profanity and insults, but I just shut up and eventually he calmed down.
"You have to keep your equilibrium, because you're working on behalf of the company's shareholders. So that time I took a hit for the team."
It's not clear precisely how many of these pay-package wranglers are out there taking hits, providing cover for board members who ultimately must approve what can be politically explosive compensation agreements with CEOs and their C-suite lieutenants. There's no national trade group that keeps an exact count, though experts say only 12 or so major firms deal with the bulk of large publicly traded companies, including the Apples and Hewlett-Packards of Silicon Valley. But there also are hundreds of other consultants hired by smaller public and private firms, all of them quietly tackling the thorny question of what somebody's truly worth in dollars and cents.
"And it's not just 'do we give this guy $5 million or do we give him $6 million?'" said Aaron Boyd, director of governance research at Equilar, the Redwood City-based executive compensation data firm that prepares the annual CEO-pay survey for this newspaper. "There's a much more complicated discussion going on."
Boyd said the setting of an executive's pay goes beyond "trying to make them work harder by paying them more money. The main purpose of a pay package is to focus the direction of the CEO, perhaps by having them focus on a top-line number like revenue or on a certain product. That way, compensation ultimately is a reflection of the intended growth path of the company."
Like the boards they work with, the consultants themselves have come under criticism by activist shareholders for being a part of the problem of excessive pay packages for many CEOs, some of whose companies have struggled under their watch. But whether working for large or small companies, consultants face the same challenge: how much to pay a new CEO or a current executive, taking into account peer pay, best practices and increasing demand by shareholders for boardroom transparency. New Jersey-based consultant Paul Dorf said that while "there used to be an old boys' network, with mostly old white men drinking coffee and Perrier, it's now a slightly better mix of women and minorities in the boardroom, and most of these people are trying to do the right thing for shareholders."
But while the compensation committee has the last word on a package, it's their advisers who are up to their elbows in the muck.
"I probably go to 100 compensation committee meetings a year, so this human-interest side of it is where I live," said Tim Sparks, president and co-founder of Compensia, one of the leading advisers to Silicon Valley's tech companies -- which can be, well, high maintenance.
"A lot of companies here in the valley are headed by founder-CEOs, and you can draw your own conclusion about the personality profile. So there's a psychological side to this work, dealing with incredibly successful people, and everyone feels like they're undercompensated."
Sparks said that because of "the mobility of talent these days, there's also a real challenge to get and retain top talent, which can lead to even more stress. And if you're a poorly performing company, there's pressure from all sides that the ship might be sinking."
In the middle of it all are people like Graef "Bud" Crystal, whose more than 50 years on the front lines of executive compensation have made him something of a guru. As an adviser to Coca-Cola, American Express and other large corporations, he's gathered plenty of tales from the front lines, and one dispatch from his consulting days with pharmaceutical giant Squibb captures the color of what Crystal jokingly calls "the world's second-oldest profession."
Concerned about the generosity of the CEO's proposed pay package, Crystal wrote to the head of the human resources department to say the stock-option grant was way off the mark. Six months passed without a response, then Crystal ran into the guy.
"I told him, 'I never heard back from you about that letter,' and he said, 'I gave it to the CEO.'"
And what, Crystal asked, did he do?
"He read it."
"And what did he do next?"
"He tore it into pieces," the fellow replied, "and threw it in the wastebasket."
And that, said Crystal, "was the last business I ever got from Squibb."
Contact Patrick May at 408-920-5689 or follow him at Twitter.com/patmaymerc