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Characteristics of the ‘new tycoons’

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You’ve heard the argument that executives’ “obscene salaries send the wrong message through a company.” Those are the words of James Sinegal, chief executive of discount retailer Costco, who took home $349,000 last year—incredibly modest by current standards. In his estimation, that wrong message “is that all brilliance emanates from the top.”

That’s misguided, he says, and he’s joined by Robert Crandall, retired chief of American Airlines, who criticizes “a market system that rewards a few people in extraordinary ways and leaves others behind.”

The nation’s new tycoons see it differently. By and large, they’re proud of America’s second Gilded Age, roughly a century after the first, arguing that their skills and charity justify their compensation.

Lew Frankfort, paid $44.4 million last year as chairman and chief executive of handbag designer Coach, explains it this way:

After World War II, most people’s incomes rose faster than inflation, the United States became the dominant world economy and business leaders only had to be good managers, not leaders. They moved everybody forward at steady rates through the 1950s and 1960s.

With today’s globalization, he argues, leaders have to compete more fiercely. They must be more entrepreneurial, daring and risk-taking, just like the first Gilded Age tycoons. Driven by technology, “you now needed vision, lateral thinking, courage and an ability to see things, not the way they were but how they might be.”

Is that really any different from yesterday’s leaders? You decide.

—Adapted from “The Richest of the Rich, Proud of a New Gilded Age,” Louis Uchitelle, The New York Times.

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