Their wealth may look enormous on paper, but Inc 500 CEOs generally don't describe themselves as rich. You may disagree.
Even CEOs worth millions demur when asked if they feel rich. Many say no because most of their assets are tied up in the business. Others insist on qualifying: "Rich? Not Bill Gates rich."
Take Frank Gwynn, president of Freedom Medical (#36), a biomedical-equipment supplier in Exton, Pa. Six years ago Gwynn was living in a $200-a-month rental in seedy south Philadelphia. "I was flat broke," he says. Today he has a 5,000-square-foot house on five acres replete with a pond that is home to two swans. But Freedom Medical is very capital intensive: earnings are reinvested in ventilators and other equipment. So aside from his much-improved quarters and the ability to indulge his taste for nice cars, Gwynn doesn't consider himself unduly affluent.
Richard Stromback, CEO of the Web Group (#189), a technology-staffing business in Troy, Mich., grew up so poor that his family couldn't afford a phone. He started the com- pany with $2,000 -- nearly all his savings. Three years later, with a salary of $750,000, he finally began to feel comfortable. But even today, with a beautiful home and a fleet of pricey cars, Stromback argues that "wealth is relative. Rich to me 15 years ago would be me now. But as you go up the pay scale, you have access to wealthier individuals. I have friends with $20-million private jets. I feel fortunate. But compared to them, I'm poor."
20 % of the Inc 500 CEOs surveyed had an estimated worth of more than $7.5 million.
Not everyone is shy about claiming the "W" word. One exception is Robert Carr, CEO of Heartland Payment Systems (#57), a credit-card- and payroll-processing business in Princeton, N.J. Carr first tasted financial security at age 51, when a group of investors sank $1 million into his then-five-year-old company. "Until then, every month was a struggle," he says. In 2000 he bought out the investors for $15 million (with borrowed money), and a year later he sold that same interest to a different group of investors for $40 million. That's when he began feeling flush. "Wealth hasn't changed my life except that I take several trips a year to places like Alaska and Greece with my family, and I buy my wife more expensive gifts," he says. "I still walk to work and still wear the same old khaki pants, much to the chagrin of my family."
Many on the Inc 500 list aspire to lead large public companies. But that doesn't mean they sympathize with the likes of Kenneth Lay and Bernard Ebbers, whose companies' travails have drawn attention to their own beyond-the-pale payouts. By contrast, Inc 500 CEOs often pay themselves only modest salaries plus profits taken as owner disbursements. Real company growth, not stock-price inflation, should be the measure of a paycheck, they insist -- and who would argue?
Jim Rednor, of Phoenix-based CIW Services (#337), which sells industrial water-purification equipment, pays himself $60,000 a year -- less than what two of his key employees make. "Sure, I'm important, but without motivated employees, I'm nothing," says Rednor, whose company is virtually debt-free. "It would be great if more of my employees made more money than me. The more they make for themselves, the more they make for the company."
Greg James of Topics Entertainment (#419), a software-publishing company based in Renton, Wash., rewards himself only when the company hits important goals. For example, when Topics had its first $1-million-net-sales month, he bought himself a sailboat. When it had its first $1-million-profit month, he sprang for a Ferrari.
Chris Gill of Heritage Microfilm (#304), a newspaper-microfilming company based in Cedar Rapids, Iowa, collects an annual salary of $33,000 plus profit. A refugee from corporate America, Gill knows firsthand that "those places are so big that [the CEOs] lose contact with rest of the world." His solution: pass a law requiring that the 10 largest stockholders in the company be the board members. "It's a put-your-money-where-your-mouth-is approach," he says.