Column: Roger's Soapbox

Antisocial Compensation

By: | July 6, 2017 • 3 min read
Roger Crombie is a United Kingdom-based columnist for Risk & Insurance®. He can be reached at [email protected]

A newspaper I worked for once printed a league table of CEO pay in the Bermuda insurance industry. The table contained only one mistake. The best-paid CEO reportedly earned $5.1 billion that year. Yes, billion. His peers were on an average of $1 or $2 million a year.


The $5.1 billion wasn’t a random figure. It was his company’s gross premiums for the year. Simple enough mistake, sort of.

The CEO told me that he wasn’t thrilled, but admitted that when his peers read the table, they might raise their pay gigantically, and then he’d have to do the same. He was kidding.

Cognitive dissonance is the discomfort that arises from holding two opposed opinions simultaneously. An example might be seeing your mother-in-law drive your new Jaguar over a cliff, as the old joke has it.

I suffer from cognitive dissonance on the subject of executive pay.

Obviously, the most qualified, capable and efficient person in a company should earn top dollar, yet the level at which CEOs are paid in many industries astounds me.

Relax: I don’t count insurance among those industries. Yes, insurance CEOs can make big money, but not at the level of their peers in, say, hedge funds, retail or other pursuits. (And not with a carried interest loophole, either.)

A gigantic paycheck is anti-social. People aren’t on minimum wage because that’s what their work is worth; it’s because that’s all they can get.

Relax further: I’m not overly distressed by the average gap between those at the top of much of the pay scale and those at the other end. We’re capitalists. Belief in meritocracy, and rewards that match responsibility and performance, are articles of faith.

Here’s what I’m talking about: Marc Lore, chief executive and president of U.S. e-commerce at Walmart, made nearly $237 million in 2016. Tim Cook, CEO of Apple, pulled down $150 million, and John Weinberg of investment banking advisory firm Evercore Partners was paid $124 million that year. Those numbers exclude profits from stock options, as I understand it.

See what I mean? Those guys and their peers are top businessmen who deserve rich rewards, but $237 million a year — almost a quarter of a billion — just sits wrong.

These monster pay packages are fair, proponents argue, because (a) the execs might command as much elsewhere; (b) their efforts add more to the bottom line than they cost; and (c) the company’s remuneration committee said it was OK.


Top-level insurance bosses, the guys who take on our risks, typically make between $10 and $25 million a year. Seems reasonable, doesn’t it?

Besides all that, what would you do with the money? Once you’ve bought the homes, the yacht, and gold everything, what would you do with next year’s $237 million?

That’s my lack of ambition speaking. I know it’s not about the money. It’s about the power. That big, swinging pay packet is the most concrete evidence of power in action.


A gigantic paycheck is anti-social. People aren’t on minimum wage because that’s what their work is worth; it’s because that’s all they can get. Reading that a store executive made more in a year than the worst-paid 15,000 full-time workers in his town is hardly a recipe for social cohesion.

Solutions are hard to divine. Legislation, such as pay caps, is always a terrible idea. Ditto penal taxation. A little common decency in the more powerful boardrooms might not go amiss.

Shareholders are the only ones with the power to change corporate remuneration policies. Normally, if everyone’s making money, shareholders don’t care, but lately, British shareholders have been agitating for changes to executive pay.

Sir Martin Sorrell, founder of advertising agency WPP, has survived a series of peasants’ revolts, but his pay last year was cut to £30 million ($39 million). Shareholders would like to reduce it to $17 million this year. That would be in line with what insurance company chiefs take down, and they have real jobs.

Executive pay: enough, already.

More from Risk & Insurance

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The Profession

Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

R&I: How did you come to work in risk management?

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

R&I: What is the risk management community doing right?


I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

R&I: What could the risk management community be doing a better job of?

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

R&I: What was the best location and year for the RIMS conference and why?

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

R&I: What emerging commercial risk most concerns you?

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?


Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

R&I: What have you accomplished that you are proudest of?

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

R&I: What is your favorite book or movie?

Favorite movie is definitely “Good Will Hunting.”

R&I: What’s the best restaurant you’ve ever eaten at?

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

R&I: What is the most unusual/interesting place you have ever visited?

The Grand Canyon. It is just so vast. A close second is Stonehenge.

R&I: What is the riskiest activity you ever engaged in?


A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

R&I: If the world has a modern hero, who is it and why?

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

R&I: What about this work do you find the most fulfilling or rewarding?

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

R&I: What do your friends and family think you do?

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]