Coming out on top.

Some of the nation's chief executives discuss the pluses and minuses of being openly gay on the job

Keith Ferrazzi will never forget his years spent shuttered in the corporate closet. First there were the lies: switching pronouns in casual conversation, bringing female dates to industry events, having his partner go out for the evening so he could host dinners at home. Later there was just an avoidance of all things personal. Finally, on his 31st birthday, Ferrazzi, then chief marketing officer for Deloitte Consulting, decided it was time to come clean.

The epiphany came while Ferrazzi was watching Disney's animated musical Mulan with his partner, Roel Hinojosa. Inspired by the heroine's voyage of self-discovery and frustrated by the limits of his own secrecy, the pragmatic executive gave himself a strict deadline. "I said to myself, I'll give you one year to come out at work," recalls Ferrazzi, who is now 35 and CEO of YaYa, a Los Angeles-based company that develops games as vehicles for advertising and education.

True to his word and just making his deadline, Ferrazzi came out during a final interview for chief marketing officer at his soon-to-be new company, Starwood Hotels. He simply asked the head of human resources whether the company had domestic-partner benefits. Though not actually a pronouncement of anything, as a young, unmarried male, Ferrazzi felt it was a pretty good giveaway. "And just like that, it was done," he says.

Coming out to colleagues and supervisors can leave anyone dry-mouthed--and senior executives are no exception. "My biggest fear," says 45-year-old Cynthia Martin, who spent 12 years at Eastman Kodak Co. before coming out, "was that I had worked all my life to be respected for my skills and capabilities, and somehow with three spoken words--`I'm a lesbian'--that would all suddenly vanish."

But as Martin--who went on to become Eastman Kodak's president of global customer service and support before retiring from the company in February--and Ferrazzi both learned, being gay is no longer the barrier to career ascendancy that it once was. The stereotype of the stodgy white male chief executive in his 60s with a penchant for cigars and a staunchly heterosexual sensibility has given way with the rise of openly gay executives such as DreamWorks' David Geffen, Sega GameWorks' Skip Paul, and former E*TRADE president Kathy Levinson--who have in turn cleared the way for other openly gay people to poke their heads through the glass ceiling.

These days, the sluggish economy notwithstanding, companies can ill afford to rule out good candidates who are gay. "They would be denying themselves a huge talent pool. It would be foolish," says Joseph McCormack, managing partner of McCormack and Associates, a Los Angeles-based search firm that specializes in diversity recruiting. "The whole attitude toward gay men and lesbians has changed enormously in the business world. In most cases today, it's a nonissue."

Some research, in fact, suggests that being out actually is a help rather than a hindrance for some professionals. A recent survey of 302 gay alumni of the University of Southern California found that the average salary for out professionals was $91,500-50% higher than the average salary for those closeted at work. "That link between personal self-acceptance in a positive workplace and the positive impact that has on one's career is the most powerful one I found," says study author Kirk Snyder, assistant dean of student affairs and associate executive director of the university's Career Planning and Placement Center.

One of the primary reasons for that, he adds, is that closeted professionals have to spend considerable time and energy covering their tracks--which leaves less to devote to work. And as many once-closeted executives attest, that is no small burden. Walter Schubert, who kept his sexuality from colleagues for 15 years on the New York Stock Exchange trading floor, says the secret-keeping took a heavy toll. "I was looking in the mirror every day, constantly refining my answers to questions about where I was last weekend and constantly worried about people finding out about the real me," recalls the CEO of New York-based Gay Financial Network. "All of that sapped me of a great deal of energy."

The fact that closeted executives have to be cagey with colleagues doesn't help in their quest for camaraderie--or building the interpersonal networks so critical to advancement. "People are very intuitive, and they can tell if someone is being inauthentic," Snyder says. "If someone is afraid to be out in the workplace, that can be interpreted as being standoffish, not being a team player."

Marge Connelly, 39, who is an executive vice president at Capital One Financial Corp., says she'd be at a disadvantage if she were still in hiding. "Not being as open with folks as they are with me--that shows," she says. "It would impede my ability to build deep relationships with my peers."

Not that being out and gay doesn't pose its own challenges. Oftentimes CEOs and other executives are ushered to the top by mentors who take personal interest in their "diamonds in the rough." "A lot of it is someone looking down and saying, `That person reminds me of me, and I want to help them,'" says Ferrazzi, who worried when he came out that potential mentors might not see--or might not want to see--an image of themselves in a gay man. "But that's also the struggle women have had in general: that bonding that occurs [among straight men] in large corporations."

Some of that, McCormack says, will depend on both the company and the industry. Some industries are more homophobic, traditionally, than others. The entertainment, fashion, advertising, retail sales, and hospitality industries have long been gay-friendly, while financial services, pharmaceuticals, and heavy industry, such as automotive companies, have been less so, although they've improved, McCormack says. "We had a meeting recently with Navistar, formerly the International Truck and Engine Corp.," he says. "You wouldn't think that would be a company where gay and lesbian issues would be top of mind, but in fact they're very committed to diversity. That's encouraging."

There are plenty of ways to figure out just how safe an environment a company provides, McCormack says. Written antidiscrimination policies, domestic-partner benefits, and the presence of active gay and lesbian groups are all good signs. So is the welcoming of same-sex partners at company events. When Martin attended the first Kodak event held after she came out, she was too nervous to bring the woman who was her partner at the time. "That was when the chairman's [George Fisher] wife came up to me, put her arm around me, and asked me where my partner was and asked me to bring her next time," Martin says.

McCormack also advises finding out whether there are openly gay executives at the level you want to achieve--or higher. "If not, you may be a pioneer, and that can be a tough role," he says.

And then there's that other anxiety executives have about post-coming-out life--the prospect of being affixed with the dreaded label "That Gay Executive."

"I came out on the trading floor and Walter Schubert, a.k.a. `Schubie,' the lovable guy everyone had known for 15 years, became the `gay guy.' People stamped a label on me, and I lost part of my identity," Schubert says. One way to deal with that, Connelly says, "is to come clean with folks and say, `This is who I am, but it's just one facet of who I am. I'm not a poster child on this front. That doesn't mean I'm not active in promoting and recruiting diversity. But I don't want to be labeled in any narrow fashion."

That probably won't stop reporters from repeatedly asking about it in press conferences or playing up the angle in stories. When David Bohnett was running the Web site company GeoCities, he summarily dismissed questions about his sexual orientation, though he'd been out for years. "Not that I don't want to talk about it," he says. "It just didn't have anything to do with GeoCities." But one day he relented, disclosing in an interview with The New York Times shortly before the company went public that his own coming-out process had inspired him to found GeoCities because it made him aware of how important it was to build communities of interest. The Times stow made more of it than Bohnett thought fitting. "So I regretted that, because I'd been so careful and appropriately responsive to the media about business issues, and the one time I mentioned being gay, it seemed to be taken out of context," he says.

It's the sort of thing that can have consequences for the company. When Quark cofounder Tim Gill, who had been out since college, was trying to get his desktop publishing product to market in the early 1980s, he found that a major distributor "didn't want to carry a product from a gay company," he says. Fortunately for Quark, the boycott lasted only about a year. "You have to worry about your customers, but that can't change what you do too much," he says.

It definitely worried Allan Gilmour. The former vice chairman of Ford Motor Co. never came out during his 34-year career with the auto company. "I knew if I had, I would have been a controversial figure," he says. "Major organizations don't look for and don't want controversy around the people who work there. They want the emphasis on what the organization does." Dutifully, Gilmour waited until he retired in 1994 to come out, and he now speaks to groups about the challenges that exist for gay people in the workplace. "Each person does what he or she thinks is best," he says. "That doesn't mean we're always right, but it's extremely hard to do history over."

Not that he would change anything if he could; Gilmour is still reasonably convinced that his career would not have gone as far as it did--he was once in line for the CEO crown--had he come out. But the 67-year-old also admits that being closeted may have contributed to his not having had a committed relationship while at Ford. "We all make trade-offs in life, though. That's nothing new," he says.

Gilmour may have had good reason to make the choice he did. In fact, 33% of the respondents to Snyder's study said their sexual orientation or gender identity had some negative impact on their overall career. Though that's less than the 54% who felt it had no negative impact, it's still a sizable percentage. And not surprising either, given that antidiscrimination policies are still noticeably absent at the vast majority of U.S. companies and that being fired because of sexual orientation is still a grim reality in more than three quarters of the states. "And there are companies where gay, lesbian, bisexual, and transgendered people are not welcome," Martin says.

And even in those companies that have demonstrated their commitments to diversity, as Capital One has, executives have to wonder whether being out will keep them from achieving the success they hope for. "I'd be lying if I said I didn't think about it," Connelly says. "But I look at it as, these are the choices I make around my career, my being, how I feel about my life as a whole. And I would never trade a step on the ladder for being able to be a complete person."

Neither would Ferrazzi, who nowadays brings his partner regularly to industry dinners and events; on October 13 the couple celebrate their 10-year anniversary with a commitment ceremony in Los Angeles. "A lot of being a CEO is leaving a legacy. And there's an opportunity here for major changes in the human rights agenda. We can either watch it happen and let others shoulder the burden, or we can dive in fully and be part of this movement," Ferrazzi says. "I've chosen the latter."

Prince is executive editor of CEO Magazine.