The age of greed

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By BRIAN MCGRORY

By BRIAN MCGRORY

New York Times News Service

At some point in the future, maybe 50 years from now, maybe a century, historians will look back at this era as the time when America basically lost its collective mind.

The latest example is Ted Kelly, the recently retired chief executive officer of Boston’s Liberty Mutual insurance company. Ask any official or business person across the state, and they’ll sing Kelly’s praises: good guy, insanely smart, devoted to the common cause, all of that manifest in the fact that Liberty Mutual grew at breakneck speed under his leadership and gave millions of dollars away.

There’s something else, though, that came out this week. Ted Kelly had an annual compensation package of $50 million for the last four years. Yes, there’s a zero after the 5. That’s just shy of a million dollars a week, $192,000 per working day, $24,000 an hour. To run an insurance company.

It calls to mind an anecdote in an award-winning Washington Post series last year. A newly promoted chief executive of Dean Foods got a pay package in the 1970s equal to $1 million in current dollars, plus a Cadillac. He moved from a three-bedroom house into a four and joined the local country club. He declined future raises because he thought it would be bad for company morale.

It’s not apparent that Kelly had those same reservations. As a result, every Liberty Mutual policyholder, all those regular people making ends meet at kitchen tables, have paid for Kelly to take $200 million out of the company, their company, over the last four years. Every Massachusetts taxpayer is footing part of his salary, given that the state granted Kelly’s company a $46.5 million tax break for a new headquarters in Boston. The whole thing is grotesque.

This is not a screed against the rich. There are precious few people who don’t want to be part of that group. But there should be at least some rhyme or reason to who makes what. You’re an entrepreneur, an inventor, someone who founded a business by taking enormous risk, you deserve whatever the open market will bear. It’s why there’s admiration (and envy) rather than ill-will for that Holliston-bred techie who made $400 million from the sale of Instagram, or all that money made in San Jose and along Route 128.

But $50 million to be an insurance executive, albeit a very good one? Did the board of directors seriously worry he’d flee from an insulting offer of $15 or $20 million a year? Was there no one else on the planet who could do it nearly as well for $10 million?

These boards, of course, are the real problem. Kelly revealed this week that the Liberty Mutual directors are paid $200,000 a year, a figure never previously reported.

Enter NStar chief executive Tom May, a marquee character in the serial of overpaid executives. May sits on the Liberty Mutual board, helping to set Kelly’s salary. Meantime, a key Liberty Mutual official sits on the NStar board, which recently hiked May’s pay from $7.9 million to $9.2 million. Hey, what’s a million-three among friends?

This isn’t fair market value; it’s a rigged game: executives hurling bundles of money at each other, then using the raises as benchmarks. Is there a synonym here for grotesque?

Corporate profits set a post World War II record last year, but worker pay fell 2 percent. Chieftains are swimming in millions while unemployment is historically high. We’re in an era of princes and paupers, mansions and minions, with income inequality here rivaling developing countries like Uganda and Cameroon, and tax policies that favor the uber-rich.

Fifty million a year for an insurance executive? The corporate world thinks this is business as usual, the way things are supposed to be. It’s really nothing short of obscene, more evidence of an unparalleled age of greed.