Roche took slow but ethical way to wealth


Make no mistake: George A. Roche is a very wealthy man. He and his family own T. Rowe Price Group stock worth $200 million, and there's probably other dough he has accumulated in nearly four decades with the Baltimore mutual fund company.

But Roche, who retired as Price chairman and president last month, stands apart from other plutocrats who decorate the business pages. He made his money, as the Smith Barney ads used to say, the old-fashioned way.

He earned it by staying with one company, helping like-minded executives build that company into a premier, ethical institution and sharing proportionally in the long-term gains of its sharehold- ers.

FOR THE RECORD - Jay Hancock's column in the Business section Sunday incorrectly reported that T. Rowe Price Chairman and President George Roche retired last month. Roche plans to retire in the fourth quarter of this year. The Sun regrets the error.

Highly irregular, of course, but every industry has its rogue elements.

Roche could have picked from a long menu of faster, easier and more exciting enrichment techniques available to the modern executive. But, for some reason, he chose to avoid the quicksilver and leave an enduring legacy to his shareholders and community.

He did not cash his chips early by selling T. Rowe Price to an absentee empire builder, despite numerous opportunities. Big financial houses have been trying to buy Price for years, but the answer has always been: Hell, no.

Price doesn't even have "golden parachutes" to tempt bosses into flipping the company and hitting the lottery. It is corporate policy not to. Apparently, the expectation is that employees will succeed by delivering a great product to customers, not by auctioning the ignition keys to outlanders.

Roche never got a "supplemental executive retirement plan." SERPS are fabulous pension setups that every other big company I have heard of gives senior managers because retirement benefits for regular employees just aren't good enough.

Price doesn't have a SERP. Roche and other bosses get the same pension as the young people staffing Price's phone lines: a 401(k) plan with a company match.

Roche didn't have a lawyer wheedle over every comma and hyphen in his employment contract because, unlike most Fortune 1,000 bosses and cable game-show hosts, he didn't have an employment contract. None of the top Price bosses do.

It's weird, but I guess they figure that they work at the pleasure of their employer and that their duty is to do a good job whether or not they get the near-guaranteed, multiyear tenure that contracts bring.

Roche's salary was pitiful compared with those of his corporate peers and even those of bosses at much lesser companies. Running T. Rowe Price, at No. 963 in the Fortune 1,000, Roche made a salary of $350,000 last year, according to filings at the Securities and Exchange Commission. And that was after getting a $50,000 raise for 2005. Whee!

At No. 962 on the Fortune list, on the other hand, the CEO of newspaper company Belo Corp. pulled down a salary of $880,000, say SEC documents.

Roche didn't even insist on making more salary than people working for him.

The top five bosses at Price all made a salary of $350,000 in 2005.

Even his bonus - $3.3 million - was less than that of one of his vice presidents. And, strangest of all, unlike people under him Roche got no stock-option grants last year and the year before. Why? T. Rowe Price's board - of which Roche was boss - thought he already had enough company stock.

Doesn't he know the Sandy Weill-Citigroup principle that you never have enough stock?

Roche passed up numerous other money-making opportunities. He held onto his stock for years, refusing the common excuses of diversification and estate planning to cash it out.

He didn't pull up stakes and move Price to Georgia for tax discounts and other bribes. He didn't pile customers into stupid technology stocks in the late 1990s, like Janus and so many other mutual-fund vendors. He got an earful from clients about it - until, oh, 2002 or so, when they began to be grateful.

And, in an industry rife with fraud and sharp practice, Roche refused to cheat. In the greatest testament to his and the other Price bosses' stewardship, the firm was untouched by bull-market slime.

Despite all these violations of prevailing practice, Price's employees, shareholders and, yes, senior executives, have thrived. Since April 17, 1997, when Roche took over, $1,000 worth of Price stock has turned into $3,870, including dividends, despite the worst bear market since the 1970s in between.

Wait - maybe Price and Roche succeeded because they were different.

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