CEO compensation totaled $598 million at the 50 companies that laid off the most workers
By DIANE STAFFORD - The Kansas City Star
The nation’s biggest job-cutting companies paid their top executives an average of $12 million last year, according to a report released today.
The 50 U.S. chief executives who laid off the most employees between November 2008 and April 2010 eliminated a total of 531,363 jobs, according to the Institute for Policy Studies, a research group that works for social justice and against wealth concentration.
In “CEO Pay and the Great Recession,” the institute said the $598 million in combined pay for the 50 executives would have paid one month’s worth of average-sized unemployment benefits for each of the laid-off workers.
The top 50 layoff firms reported a 44 percent average profit increase for 2009, the report said.
“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,” the authors wrote.
In the 17th annual executive compensation report, the institute once again focused on the gap between big-company CEO pay and average wages for American workers.
Last year, the report said, median CEO pay in the 50 largest U.S. firms was $8.5 million, or more than double the $4.1 million median in the 1990s. But the 2009 median was down from the $9.2 million median in the 2000-05 period.
In 2009, median CEO pay was 263 times the average pay of U.S. workers. In the 1970s, the CEO-to-employee pay ratio was about 30-to-1. The report noted that management guru Peter Drucker, who coined the term “knowledge worker” and was instrumental in shaping American management theory until his death in 2005, believed the ratio of pay between worker and executive should be no higher than 20-to-1.
Fred Hassan, former CEO of Schering-Plough, presided over announced layoffs affecting 16,000 workers after a 2009 merger with Merck. He resigned after the merger, receiving “golden parachute” compensation in 2009 of more than $49.6 million to rank as the highest-paid layoff leader.
The top five companies announcing the most layoffs for the study period were General Motors (75,733); Citigroup (52,175); Bank of America (35,000); Caterpillar (27,499) and Verizon (21,308).
Among those top five, the biggest compensation package — nearly $17.5 million — went to Ivan Seidenberg, CEO of Verizon.
Sprint Nextel made the layoff leader list at No. 15, with 10,250 announced cuts. CEO Dan Hesse drew 2009 compensation of $12.3 million.
Scott Sloat, a Sprint spokesman, said: “Like many companies, in 2008 and 2009 Sprint was required to enact tough cost-cutting measures that included reducing the size of its work force. Every Sprint employee’s compensation, including the majority of Dan Hesse’s, is tied to company performance and our success in three key priorities — improving the customer experience, strengthening the brand, and generating cash and profitability.”
The report said five of the top 50 layoff-leader companies received taxpayer bailouts: American Express, PNC Financial, Citigroup, Bank of America and JPMorgan Chase.
In addition to high CEO pay, the report noted that lower-ranking executives at a few of the bailout-leading firms also earned multimillion-dollar compensation on the order of $12 million to $30 million each.
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