A new study shows the CEOs who fired the most workers during the economic recession have also taken home the highest pay. According to the Institute for Policy Studies, the CEOs of the fifty corporations responsible for the worst layoffs were paid an average $12 million — 42 percent more than the average for the Standard & Poor’s 500. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
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.
JUAN GONZALEZ: Can you tell us of some other companies? Wasn’t General Motors one of the —-
SARAH ANDERSON: Yeah, mm-hmm.
JUAN GONZALEZ: —- ones that laid off the most workers in the past year?
SARAH ANDERSON: Yeah, General Motors, the CEO there didn’t have the highest pay, but it was substantial, I think around $15 million or so. Everybody’s hoping that GM will turn things around and get people working again. And we think that in a severe crisis like GM has gone through, it really would have been the best thing for the CEO of the company to also really tighten his belt. I mean, I’m not going to deny that job cuts are necessary sometimes. In situations where it might mean the survival of a company, you just — you have to make cuts in some certain situations. But then the CEOs themselves should also have to tighten their belts. And we should be looking to lift up examples of CEOs who use creative ways to avoid layoffs, to maintain jobs. There are ways you can work with your workforces to work these things out. And we’re not seeing recognition going to those kinds of CEOs. We’re seeing the recognition going to the ones that are making the big job cuts.
JUAN GONZALEZ: And are there any in particular that you think should be noted for keeping their salaries down and keeping layoffs down?
SARAH ANDERSON: I’m not really aware of examples. We don’t really hear much about them in the media, at least not recently. You can look for some ideas at European countries, where they have policies that discourage layoffs by requiring higher severance payments and other things to really promote preserving jobs. They also have a system called — well, in German it’s called Kurzarbeit, but it’s where the government can help pay for part of a worker’s salary with reduced hours, just to be able to keep them on payroll through tough times. And I think there are some experiments with that in some of the US states, as well. Overall, the European countries have tried to avoid the kind of real devastating effects that we’ve seen in the US and, of course, have stronger social protection and unemployment insurance programs there, as well. So we can learn from other countries. In Europe, also, in about a dozen countries, they require big companies to have representatives of workers on their boards. We think that could really help with the executive pay problems, as well.
JUAN GONZALEZ: OK, well, Sarah Anderson, we’ll have to leave it there. The Global Economy Project Director at the Institute for Policy Studies, she’s the lead author the new "Executive Excess” report.