What risk really means.

Much of your June editorial ("CEOs Should Be Well Paid. Fix the Abuses.") is quite appropriate. But I strongly take issue with two instances in which you infer big "risk-taking" by CEOs.

First, you liken chief executives to entrepreneurs who should be "celebrated" for creating value for others. Traditionally, an entrepreneur has his wallet and skin in the game and takes sizeable personal risk in pursuit of home runs. He takes personal losses when his ventures don't succeed. Today's CEOs often rationalize their entitlement to big earnings as an appropriate reward for their entrepreneurship. Is that really so? Do they get hit badly if their big ideas fail?

Also, it seems to me, you fail to place the issue of risk with large, long-term stock-option grants in a proper context. Options are not clearly and fully aligned with the interests of shareholders, because a CEO (or other very large option holder) does not risk a big personal loss if he aggressively ventures and fails. He merely lets an unexercised option lapse--and he may get a new option at a much lower price. Only the shareholder takes a hit.

I am all for options, and I broadly distributed them to lots of associates when I was CEO of ADP. However, then and now, I balk at assuming that huge senior-level option grants align the executive with shareholder interests in a balanced way.

Josh S. Weston

Honorary Chairman

Automatic Data Processing 

Roseland, N.J.