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| Hefty payouts for US CEOs amid massive layoffs: study |
| Press Trust of India / New York Sep 05, 2010, 19:40 IST |
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Cost-cutting moves might have cost thousands of US jobs, but many CEOs at companies' that resorted to massive layoffs saw their pay packets fatten in 2009, says a study.
An in-depth survey of 50-listed American companies by the Institute of Policy Studies showed that many of them, which slashed the most number of jobs, also paid around 42 per cent higher compensation to their respective CEOs.
The study on the 50 companies in the broader S&P 500 Index that had laid off the maximum number of workers, revealed that their CEOs enjoyed larger payouts in comparison to their peers heading other S&P firms.
"Our findings illustrate the great unfairness of the Great Recession. CEOs are squeezing workers to boost short term profits and fatten their own paychecks," Institute for Policy Studies' study author Sarah Anderson said.
The 50 top CEOs, better described by the institute as "layoff leaders", on an average received a pay packet of $12 million in 2009. Interestingly, their peers at other S&P 500 companies earned just $8.5 million on average.
As per the report, firms headed by these 50 CEOs had laid off at least 3,000 workers between November, 2008-April, 2010.
Ironically, the majority of the job cuts (72 per cent) were announced at a time when these companies saw good earnings, the study pointed out.
Among the 50 US firms surveyed by the institute, Schering-Plough CEO Fred Hassan received a golden parachute of $33 million when his firm merged with Merck in late 2009. The mega merger had resulted in at least 16,000 workers losing their jobs.
Johnson & Johnson CEO William Weldon took home $25.6 million at a time when his firm slashed 9,000 jobs. The firm was also grappling with massive drug recall issues when this huge payout was given to Weldon.
Commenting on the increasing job cuts, the India head of executive search firm BTI Consultants, James Agrawal, said entities having global operations have to be more cautious about overall productivity as well as achieving their goals.
"Setting the right tone in the short-term is very important for meeting long-term goals, hence they view huge manpower costs as a major hindrance to optimum productivity levels," Agrawal noted.
Interestingly, five of the 50 top firms that laid off workers were also recipients of major state bailouts. Out of them, American Express CEO Kenneth Chenault pocketed a compensation of $16.8 million, one of the highest in 2009. The company has laid off at least 4,000 workers since the financial meltdown.
Commenting on the study, an expert said that CEOs should not be rewarded for slashing jobs. "Realigning the interests of CEOs with their employees and the rest of our country would be good for the economy and national morale," the expert noted.
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