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Costcutting Us Bosses Earn 42% More Than Rivals, Says Ips Research

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http://www.guardian.co.uk/business/2010/sep/01/costcutting-us-bosses-earn-more-ips-research

The good times keep rolling for "slash and burn" managers in America. Bosses of the 50 US companies that sacked the most staff during the recession earned 42% more than their peers, according to research to be published today.

A report by the Washington-based Institute for Policy Studies (IPS) will conclude that US chief executives shared little of the pain felt further down their workforces as house prices slumped, consumer spending dried up and unemployment peaked at 10.2% last year.

The average leader of a Standard and Poor's (S&P) 500 company in the US saw a modest fall in remuneration last year, down from $9.4m (£6.12m) in 2008 to $8.4m in 2009. But this was still 263 times the typical net pay of an American worker.

Those who took the most aggressive approach to cost-cutting often fared the best. The IPS found that at the 50 companies in the S&P 500 index which shed the most employees, average chief executive compensation was $12m.

The highest paid "layoff leader" was Fred Hassan, former head of drugs company Schering-Plough, who earned $49.7m, largely through a $33m golden parachute as he left following a merger with rival Merck. As a result of that tie-up, some 16,000 employees lost their jobs.

Sarah Anderson, director of the IPS's global economy project, said that there was a perception that axing staff meant chief executives were "big, tough guys making tough decisions necessary to make their companies lean and mean". But in some cases, she suggested, they were sacrificing long-term prosperity for short-term profits.

"You see really serious long-term consequences of layoffs. You get lower morale in the workforce which can turn into lower productivity over time. You have the cost of having to rehire and retrain people when things pick up," she says. "While these CEOs are getting very well rewarded, and they're getting short-term improvements in profit, there are long-term problems being stored up for the future."

The study comes out just days before August unemployment figures that are forecast to show a drop of about 105,000 jobs in the US, keeping unemployment close to 10% and adding to pressure on the Obama administration to find a way out of the jobless morass. Peter Morici, a finance professor at the University of Maryland, described the unemployment situation as "an abysmal performance 14 months into a recovery from a deep recession".

Other top-paid bosses who slashed jobs included Johnson & Johnson boss William Weldon who received $25.6m despite 8,900 layoffs, Hewlett-Packard's former boss Mark Hurd who got $24.2m after 6,400 job losses and Walt Disney supremo Robert Iger who made $21.6m after 3,400 redundancies.

Joe Sorrentino, an expert at pay consultants Steven Hall & Partners in New York, pointed out that bosses can face difficult decisions in cutting workforces for the good of their companies: "Making decisions that are right for a company as a whole can, unfortunately, lead to job losses. That's not a great outcome but it's the reality at this point in the economy."

Nice to see the big boys are still earning, and they've only suffered an avg pay cut of a mere $1m.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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