CEOs have it tough these days. It's a dirty job, but somebody's got to do it, I tell ye'...:
http://seattlep-i.nwsource.com/business/36853_execpay29.shtml
CEOs are rewarded for laying off workers
Wednesday, August 29, 2001
By MARCY GORDON
THE ASSOCIATED PRESS
WASHINGTON -- As the economy began to stall last year and companies laid off workers, chief executives of big corporations still got hefty pay raises and were rewarded for making job cuts, according to a new study by two liberal advocacy groups.
A "decade of greed" in the 1990s was followed last year by a particularly "blatant pattern of CEOs benefiting at the expense of their workers," the Institute for Policy Studies and United for a Fair Economy said in their latest annual pay survey released yesterday.
It found that chief executives of the 52 major companies that announced layoffs of at least 1,000 employees in the first half of 2000 earned about 80 percent more on average than CEOs at 365 big corporations surveyed by Business Week magazine. The "layoff leaders" received an average $23.7 million in total compensation, including bonuses and stock options, compared with an average $13.1 million for CEOs overall, the groups' study found.
It said the top job cutters got an average increase in salary and bonus of nearly 20 percent last year, compared with average raises for U.S. wage earners of around 3 percent and 4 percent increases for salaried employees.
Sarah Anderson, director of the global economy program at the Washington, D.C.-based Institute for Policy Studies, said it was galling "especially in this period of economic downturn as people are feeling very insecure about their jobs, to see that the guys at the top have cushioned themselves."
But not all executives are cashing in, especially those who work at some of Seattle's smaller publicly held companies.
Executives at RealNetworks excluded themselves from pay raises in May, two months before the company cut 140 employees.
Bsquare Corp. CEO Bill Baxter, who makes $250,000 per year, took a 20 percent pay cut and eliminated his incentive compensation last month. Other executives at the Bellevue company agreed to a 10 percent pay cut to reduce expenses and avoid layoffs.
But in many cases, leaders of large corporations are rewarded for cutting staff.
One of the "layoff leaders" cited by the study is Michael Bonsignore, Honeywell International Inc.'s chief executive until last month, who is receiving a severance package worth nearly $10 million, plus generous pension checks. He was ousted by the big manufacturer's board of directors July 3, the same day the European Union blocked Honeywell's anticipated merger with General Electric.
Honeywell announced in the spring that it would lay off 850 workers because of a significant downturn in the circuit-board industry.
A Honeywell spokesman, who declined to be identified by name, said yesterday that there was "no relationship" between the job cuts and Bonsignore's compensation. He declined further comment.
"Rightly or wrongly, the cutting of staff has tended to give a boost to a company's stock," said Charles Peck, a compensation specialist at the Conference Board, a business research and networking organization. "It's one of the ways that Wall Street evaluates top executives' performance."
The New York-based Conference Board's executive pay survey for 2000 shows little change from 1999, Peck said. It shows median total compensation for 800 manufacturing CEOs of around $1.7 million in both years.
The yearlong economic slump is taking a toll on the nation's labor markets. Thursday, the government reported that the number of laid-off workers drawing unemployment benefits had hit a nine-year high. The Labor Department said the number of Americans collecting jobless benefits rose to 3.18 million in the week ending Aug. 11, the highest level since September 1992, when the country was struggling to emerge from the last recession.
Against that backdrop, compensation packages for executives have drawn some criticism.
A shareholder of US Airways Group Inc. has sued the airline's board of directors, seeking to overturn a provision that would give $45 million in severance benefits to its top three executives if they decided to resign.
In the lawsuit made public Monday, shareholder Steven Rosenberg said the severance provision -- part of US Airways' failed plan to merge with United Airlines -- was "unconscionable" and would encourage the three executives to leave, The Washington Post reported in yesterday's editions.
The survey also said:
a.. If the federal minimum wage, which was $3.80 an hour in 1990, had grown at the same rate as executive pay over the decade, it now would be $25.50 an hour as opposed to the current $5.15.
a.. The 30 highest-paid women in big corporations each earned average total compensation of $8.7 million last year, compared with $112.9 million for the 30 highest-paid men.
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P-I reporter John Cook contributed to this report.
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