Workers lose jobs, CEOs get pay raise
The CEOs of 50 US companies that laid off workers between Nov 2008 and Apr 2010 were paid more in 2009. These CEOs were paid $12 million on average in 2009, or 42 per cent more than the average across the Standard & Poor's 500.business Updated: Sep 01, 2010 12:53 IST
As US companies shed millions of workers during the recession, the CEOs who laid off the most people brought home pay that was significantly higher than that of their peers, a study has found.
The CEOs of the 50 US companies that laid off the most workers between November 2008 and April 2010 were paid $12 million on average in 2009, or 42 percent more than the average across the Standard & Poor's 500, according to a study by the Institute for Policy Studies, a Washington think tank.
The companies in the list range from ones that were hard hit by the slump, such as General Motors and Citigroup Inc, to better-positioned businesses including Verizon Communications Inc and Caterpillar Inc.
The cuts also came at a time when the companies were increasing profit -- 72 percent of companies announced planned layoffs even while earnings were rising, the study found.
"There is still this general notion that when CEOs slash a lot of jobs they are being the tough guy, making the hard decisions necessarily to make their company lean and mean and that it's going to be a good thing for the bottom line," said Sarah Anderson, global economy project director at IPS and the study's primary author.
"We are trying to encourage people to think long-term, that there are all kinds of costs to mass layoffs, in terms of morale problems with remaining workers, in terms of when you may have to rehire and train workers if conditions improve ... It was more a way to boost their profits in the short terms and line the pockets of their CEOs," she said.
The study found that pay of the CEOs of the 50 companies that announced the largest layoffs rose 7 percent in 2009, at a time when overall compensation for the CEOs of the S&P 500 companies fell 11 percent.
Job cutting can pay off a quick boost in the bottom line, though investors are aware of the short-term nature of that lift, as reflected in the number of companies whose shares sold off after reporting second-quarter profit growth, as Wall Street worried about a hazy outlook for demand.