Highest-paid CEOs made the most layoffs
This looks like a great analysis from the Institute for Policy Studies -- an attempt to quantify how CEOs are enriching themselves off the misery of employee layoffs. The equation has been around for years: CEOs get paid based on cash flow and profit margins and stock prices, all of which can be improved for the short term by slashing and burning among the cubicles. CEOs reap immediate, enormous bonuses -- long-term damage to the company be damned.
But I've never seen this kind of detailed look. The IPS analysis offers compelling and maddening evidence of this dynamic. The whole study is worth looking at, including scores of the Layoff Leaders. (Congratulations Fred Hassan at Schering-Plough! No. 1, with $50 million in pay, 16,000 layoffs!)
Here are some highlights:
-- CEOs at the 50 major firms that have laid off the most workers since the onset of the economic crisis took home nearly $12 million each on average in 2009, 42 percent more than the average compensation that went to S&P 500 CEOs.-- These layoffs in no way rate as an inevitable consequence of red corporate ink. Of the 50 top corporate layoff leaders, 72 percent ended last year in the black. Overall, these top 50 layoff firms enjoyed a 44 percent average profit increase in 2009.
-- Of the 50 layoff leading companies, only two reported paying corporate income tax in
2009 at the 35 percent statutory rate.-- These numbers all reflect a broader trend in Great Recession-era Corporate America: the relentless squeezing of worker jobs, pay, and benefits to boost corporate earnings and maintain corporate executive paychecks at their recent bloated levels.
Comments
How do these people sleep at night?
Posted by: Michelle Brown | September 2, 2010 8:40 AM
@ Michelle Brown;
-On top of a large pile of money, hoping that people still believe in the trickle-down theory and that taxing the top income earners will somehow hurt the economy.
Posted by: Paul_d | September 2, 2010 11:36 AM
Much of this could be cured, or at least helped, if those who own stock through a 401k or IRA got voting rights instead of those rights being assigned to the company that manages the 401k or IRA.
Posted by: Josh Dowlut | September 2, 2010 2:16 PM
Let's all just keep drinking that "trickle down" Kool Aid.
Posted by: stretch | September 2, 2010 3:40 PM
I'm having trouble understanding why this correlation is "surprising".
We would expect CEO salary to correlate with company size, and for number of employees to correlate with company size, and number of layoffs to correlate with number of employees.
In other words, the big companies have the most layoffs because they're the big companies, and the CEOs of the big companies have the biggest paychecks.
The "fix" for this, and for most everything else, seems to me to be to strive harder to link CEO compensation to _long term_ performance of the company. Slashing jobs is a quick way to boost profits this quarter or this year, but the CEO who orders it should be rewarded only if the action proves to put the company on a path of multi-year success.
Posted by: Harry | September 2, 2010 5:34 PM
I think the top salaries drawn by Mr.Fred Hassan is not due to the lay offs but due to the skills he has being a Fred Factor.He turned every sinking company arround by his principle mantras of innovation,sustainability,fixinproblems of troubled companies and merger skills.And he had been doing it since there was no economic crisis even existed existed.Sometimes lay off is not brutal but like cleaning Augean,s stable.
Posted by: Dabbir Tirmzy | September 3, 2010 2:50 AM