Paying Dearly....for the CEO Pay

http://www.democracynow.org/2010/9/3/study_ceos_who_fired_most_workers

JUAN GONZALEZ: Two years into the recession, there’s one small group of Americans who are not feeling the bite of the economic downturn: CEOs. Chief executive pay in 2009 more than doubled the CEO pay average for the decade of the 1990s. It 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-twentieth century.

And a new study from the Institute of Policy Studies shows that CEOs who fired the most workers during the recession took home the highest pay. According to that study, the CEOs of the fifty corporations responsible for the biggest layoffs were paid an average $12 million—42 percent more than the average pay for the Standard & Poor’s 500. The study covered the period from November 2008 to April of this year. For 72 percent of companies, mass layoffs were announced during periods of profit and high CEO salaries.

For more on this story, I’m joined now from Washington, DC, by the lead author of the report, titled "Executive Excess 2010: CEO Pay and the Great Recession." Sarah Anderson is Global Economy Project Director at the Institute for Policy Studies.

Welcome to Democracy Now!

SARAH ANDERSON: Great to be here, Juan. Thanks.

JUAN GONZALEZ: Well, Sarah, lay out what you found.

SARAH ANDERSON: Yeah. Well, we thought, obviously, since we’re in the middle of such a terrible jobs crisis, that it would be a good idea to look at the companies that have cut the most jobs under this crisis, and then look at how the CEOs at those companies were doing. And I guess it wasn’t any surprise to us to find that the CEOs at these top job-cutting companies weren’t really tightening their own belts. But what was truly outrageous was to find out that they were actually making significantly more than their overpaid peers at other big US companies. And so, to be specific, what we looked at were the fifty companies that have had the most layoffs. All of them have cut more than 3,000 jobs since November 2008. And as you said, on average, they made $12 million last year, which was 42 percent more than S&P 500 CEOs as a whole.

JUAN GONZALEZ: What are some of those companies, and name the executives and their pay?

SARAH ANDERSON: Yeah. Well, one that’s very interesting, I think, is Mark Hurd at Hewlett-Packard, because he’s been all over the headlines lately because he got fired a couple of weeks ago. He was fired because he tried to conceal a relationship with a female contractor who also happened to be a former erotic film star and a reality TV star. And, you know, I find stories like this as titillating as the next person, but I was amazed to see that these stories all ignored the fact that this is a guy who has laid off more than 30,000 workers at Hewlett-Packard over the last few years, while earning more than $20 million a year. Now, to me, that is the real scandal at Hewlett-Packard. But we’re not hearing much about these kinds of stories.

There’s still the impression, I think, the misconception, that when CEOs make these big mass layoffs, that they’re being the good tough guys—they’re making the tough decisions necessary to make their companies mean and lean. And yes, that might boost their profits in the short term by cutting all of those costs, but we want to point out that these kinds of layoffs can have very serious long-term costs for the companies, not just the workers themselves. That’s obvious. But there’s a lot of costs associated with these kinds of mass layoffs in terms of lower worker morale, in terms of costs associated with having to train and rehire workers down the road. And so, we see it as just another example of the kind of short-termism, the short-term thinking of business leaders that got us into this crisis in the first place.

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