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Study: CEOs still getting big pay as more workers get the ax in sagging economy
By Marcy Gordon, Associated Press, 08/28/01
WASHINGTON -- As the economy began to stall last year and companies laid off workers, chief executives of big corporations still got hefty pay raises and were rewarded for making job cuts, according to a new study by two liberal advocacy groups.
A "decade of greed" in the 1990s was followed last year by a particularly "blatant pattern of CEOs benefitting at the expense of their workers," the Institute for Policy Studies and United for a Fair Economy said in their latest annual pay survey released Tuesday.
It found that chief executives of the 52 major companies that announced layoffs of at least 1,000 employees in the first half of 2000 earned some 80 percent more on average than CEOs at 365 big corporations surveyed by Business Week magazine. The "layoff leaders" received an average $23.7 million in total compensation, including bonuses and stock options, compared with an average $13.1 million for CEOs overall, the groups' study found.
It said the top job-cutters got an average increase in salary and bonus of nearly 20 percent last year, compared with average raises for U.S. wage earners of around 3 percent and 4-percent increases for salaried employees.
Sarah Anderson, director of the global economy program at the Washington-based Institute for Policy Studies, said it was galling "especially in this period of economic downturn as people are feeling very insecure about their jobs, to see that the guys at the top have cushioned themselves."
The yearlong economic slump is taking a toll on the nation's labor markets. Last Thursday, the government reported that the number of laid-off workers drawing unemployment benefits had hit a nine-year peak. The Labor Department said the number of Americans collecting jobless benefits rose to 3.18 million in the week ending Aug. 11, the highest level since September 1992, when the country was struggling to emerge from the last recession.
Against that backdrop, compensation packages for executives have drawn some criticism.
After attorneys for troubled bicycle maker Schwinn/GT asked a bankruptcy judge to keep confidential the details of a $2 million bonus plan for its top managers and executives, he questioned the plan's fairness to rank-and-file employees and expressed reservations about keeping the information under wraps.
"I'm going to do a little research," U.S. Bankruptcy Judge Sidney Brooks in Denver said last week, delaying immediate approval. "There are some pretty hefty bonuses here." Schwinn attorneys said the compensation plan was designed to keep key personnel from quitting while the bike maker goes through Chapter 11 bankruptcy reorganization.
The Conference Board, a business organization, has criticized the liberal groups' executive pay surveys in the past because they include stock options for CEOs, whose value can fluctuate depending on the market.
Spokesmen for the New York-based Conference Board had no immediate comment on the latest survey.
The survey also said:
If the federal minimum wage, which was $3.80 an hour in 1990, had grown at the same rate as executive pay over the decade, it now would be $25.50 an hour as opposed to the current $5.15.
The 30 highest-paid women in big corporations each earned average total compensation of $8.7 million last year, compared with $112.9 million for the 30 highest-paid men.
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