CEOs of the 50 firms that have laid off the most workers since the onset of the economic crisis took home 42 percent more pay in 2009 than their peers at S&P 500 firms, according to “CEO Pay and the Great Recession,” the 17th in a series of annual Executive Excess reports from the Institute for Policy Studies.
“Our findings illustrate the great unfairness of the Great Recession,” says Sarah Anderson, lead author on the Institute study. “CEOs are squeezing workers to boost short-term profits and fatten their own paychecks.”
The 50 top CEO layoff leaders received $12 million on average in 2009, compared to the S&P 500 average of $8.5 million. Each of the corporations surveyed laid off at least 3,000 workers between November 2008 and April 2010. Seventy-two percent of the firms announced mass layoffs at a time of positive earnings reports.
Highest-Paid “Layoff Leaders”:
- Fred Hassan, Schering-Plough: Hassan received a $33 million golden parachute when his firm merged with Merck in late 2009, while 16,000 workers faced pink slips. Hassan’s total 2009 pay of nearly $50 million could cover the average cost of these workers’ jobless benefits for more than 10 weeks.
- William Weldon, Johnson & Johnson: Weldon took home $25.6 million, more than three times as much as the S&P 500 CEO average, at a time when his firm was slashing 9,000 jobs and facing a massive drug recall scandal.
- Mark Hurd, Hewlett-Packard: While his failure to cover up a relationship with a contractor/erotic film star has been banner news, Hurd’s slashing of 6,400 jobs last year has largely escaped the headlines. After getting the axe himself in August, Hurd added more than $28 million severance to his 2009 pay package of $24.2 million.
Additional Key Findings:
- Bailout Barons: Five of the 50 top layoff leaders were recipients of major financial bailouts. Of these, American Express CEO Kenneth Chenault took home the highest 2009 pay, $16.8 million, including a $5 million cash bonus. American Express has laid off 4,000 employees since receiving $3.4 billion in taxpayer bailout funds.
- CEO Pay and Unemployment Insurance: The $598 million combined compensation of the top 50 CEO layoff leaders could provide average unemployment benefits to 37,759 workers for an entire year — or nearly a month of benefits for each of the 531,363 workers their companies laid off.
At a time when we should be pulling together to strengthen our shared economic futures, CEOs should not be rewarded for slashing jobs,” says IPS Senior Scholar Chuck Collins. “Realigning the interests of CEOs with their employees and the rest of our country would be good for the economy and national morale.”
NEW EXECUTIVE PAY REFORM SCORECARD
For the first time, this year’s Executive Excess report includes a comprehensive scorecard which rates pay reforms that have been recently enacted, as well as those that are pending in Congress and a few that are not yet on the table. Despite recent advances in the financial reform bill, IPS veteran pay analysts argue that much more needs to be done to rein in the executive pay practices that were a key factor in the financial crisis.
The Executive Excess report has never been as timely as it is today, boldly illustrating the gluttonous corporate practices that have continued even during the worst economic crisis since the Great Depression,” says IPS Interim Director Joy Zarembka.
Report co-authors include Sarah Anderson, Chuck Collins, Sam Pizzigati, and Kevin Shih. Forbes magazine called their 2009 Executive Excess report “the most definitive look at who made the most money during the most troubled years on modern Wall Street.”