CFO magazine (along with the usual sources) reports that at Raytheon's annual meeting yesterday the  company announced that it would freeze CEO William Swanson's salary at its 2005 level and reduce his restricted stock eligibility by 20%.  Not that he's suffering:

"In 2005, Swanson’s salary was $1,120,934, up 15 percent from the prior year. His restricted stock awards were worth nearly $3 million, up more than 25 percent from the prior year. Altogether, Swanson earned more than $7 million last year."

You will recall that The New York Times broke the story last month that Swanson's claim to fame in CEO-dom, "Swanson's Unwritten Rules of Management," was plagiarized nearly wholesale from a 1944 book, "The Unwritten Rules of Engineering," by W.J. King, an engineering professor at UCLA. The similarities were discovered by Carl Durrenberger, a chemical engineer and—surprise—blogger, in San Diego.

Before the plagiarism discovery, Raytheon had distributed 250,000—300,000 free copies (reports differ) of Swanson's booklet, and Swanson had gained more than a bit of fame for his folksy aphorisms, such as "Be extremely careful of the accuracy of your statements."

Raytheon has, to state the obvious, stopped distributing the booklet, and here's what they had to say about the wrist-slap given Swanson:

"The two officials also stressed that the board is taking the matter very seriously. Nevertheless, they insisted, the situation shouldn't overshadow Swanson's "extraordinary vision and performance" in leading the company during the past three years."

As for "extraordinary...performance," I beg to differ.  Here's Raytheon's stock price (blue) vs. the S&P 500 (green) for the past three years. To my eye, it pretty much looks like Raytheon is pacing the index:

However you choose to interpret the chart, "extraordinary" performance it is not.

Now, why are we taking this detour from "the economics of law firms?"

Integrity, character, and trust.

Without them, your CEO, or your managing partner, is quite literally nothing and no one.  Forgive me for stating the obvious, but this is something Raytheon's Board of Directors evidently could afford to be reminded of.

The firm claims to subscribe to these values, among others:

• "Integrity
  • Be honest, forthright and trustworthy.
  • Use straight talk; no hidden agendas.
  • Respect ethics, law and regulation."

Now, don the hypothetical hat of any employee, from factory worker to senior manager, at Raytheon, and tell me whether you buy that value statement.

The "message sent" by the  Board was, we "tak[e] the matter very seriously."   The "message received" by the world was, "Swanson's still CEO."  I am deeply distressed at having to say this, but when will people learn? Integrity is simply non-negotiable. Full stop.