But the practice has many defenders who argue that it's tough to lay off thousands of workers, so CEOs deserve big compensation. All that stress, you know.If you were one of those callous populists who failed to get all teary upon hearing of the financial plight of top CEOs during the economic downturn, you might want to have a good cry now. Because the Institute for Policy Studies released its comprehensive 17th annual look at executive pay Wednesday, CEO Pay and the Great Recession.
IPS identified the 50 firms that laid off the most workers between November 2008 and April 2010 and compared them against 2009 compensation totals. Altogether, these companies chopped 531,363 jobs. Their CEOs averaged $12 million in compensation - salary, stock options, bonuses. That clocked in at 42 percent more than the average compensation for all CEOs on the Standard & Poor's 500. Ouch. As lead author Sarah Anderson said: “CEOs are squeezing workers to boost short-term profits and fatten their own paychecks.”
But the practice has many defenders who argue that it's tough to lay off thousands of workers, so CEOs deserve big compensation. All that stress, you know.
While the headlines lament that CEOs are hurting from the economic situation, the report's authors concluded otherwise:
Corporate executives, in reality, are not suffering at all. Their pay, to be sure, dipped on average in 2009 from 2008 levels, just as their pay in 2008, the first Great Recession year, dipped somewhat from 2007. But executive pay overall remains far above inflationadjusted levels of years past. In fact, after adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century.
American workers, by contrast, are taking home less in real weekly wages than they took home in the 1970s. Back in those years, precious few top executives made over 30 times what their workers made. In 2009, we calculate in the 17th annual Executive Excess, CEOs of major U.S. corporations averaged 263 times the average compensation of American workers. CEOs are clearly not hurting.
Top pay, the institute said, went to Schering-Plough CEO Fred Hassan. He got paid $49.7 million in 2009, including a $33 million golden parachute that came his way when Merck bought the company. The merger resulted in 16,000 layoffs.
Johnson & Johnson CEO William Weldon collected $25.6 million, triple the average CEO compensation for big companies. That occurred at the same time the company was laying off 9,000 workers and embroiled in a scandalous drug recall.
Among the report's other findings:
• Most of the companies announced their mass layoffs even though they were showing profits.
• Only two of the 50 leading layoff companies reported paying corporate income tax in 2009 at the 35 percent statutory rate.
• Five of the 50 received major taxpayer bailouts.
• IPS included a "comprehensive analysis" of whether newly passed laws, pending laws and proposed initiatives that haven't gotten much attention yet would actually curb excessive executive compensation in the future.
Total compensation for all 50 CEOs on the IPS list was $598 million. The institute said that would supply a year's worth of unemployment benefits for 37,759 workers, or a month's worth for the 531,363 workers these companies dumped.
It made no calculation for how many pitchforks those millions would buy.