Surfing in Style through the Great Recession

Sam Pizzigati

American corporate CEOs, an eye-opening new study documents, have discovered a quick fix that almost guarantees good times for the executive set. They kill jobs.

If you started last year on the payroll at Verizon or Alcoa or Boeing or IBM, you may have found yourself off the payroll by year’s end. All these American corporate giants — and dozens more — have slashed their payrolls by the thousands since the Great Recession first kicked into gear.

But if you started last year in the chief executive suite of any of these companies, you ended the year with more than your job. You ended the year with many more new millions in your pocket.

In fact, details a just-released new report from the Institute for Policy Studies, CEOs at the 50 U.S. firms that have fired the most workers since our current economic meltdown began “took home nearly $12 million each on average in 2009,” a windfall 42 percent higher than the year’s overall CEO pay average.

These layoff-happy CEOs, Executive Excess 2010 makes plain, didn’t just line their own pockets while they were throwing employees out the door. These CEOs, in effect, threw people out the door to line their own pockets.

The layoffs these CEOs engineered, the new Executive Excess explains, “in no way rate as an inevitable consequence of red corporate ink.” Nearly three quarters of the nation’s corporate layoff leaders — 72 percent — actually ended last year in the black. Together, the top 50 layoff firms “enjoyed a 44 percent average profit increase in 2009.”

These stunning numbers, Institute for Policy Studies researchers point out, reflect “a broader trend in Great Recession Corporate America: squeezing workers to boost profits and maintain high CEO pay.”

Absurdly high pay. In 2009, jobless workers fortunate enough to qualify for unemployment benefits all year long collected, on average, only $15,860. The top 50 CEO job-killers averaged $11,977,128 each, or 755 times the dollars going to jobless Americans able to collect unemployment benefits.

The larger universe of the CEOs at America’s top 500 companies last year averaged $8.4 million in total compensation, a figure that translates into 263 times the average 2009 pay of employed U.S. workers.

Executive pay, across the board, did drop last year from the year before. But Institute for Policy Studies analysts see this dip as a mere blip in a long-term trend that has seen U.S. top executive pay double since the 1990s, after taking inflation into account, and quadruple since the 1980s.

Unfortunately, the new Executive Excess notes, the CEO pay reforms enacted into law earlier this summer — as part of the financial reform package — aren’t likely to turn that long-term trend around.

“Congressional and White House reform efforts, by and large, have frozen into a seldom challenged conventional wisdom,” the report relates, “that may be promising more reform than these efforts can deliver.”

CEO pay

This year’s Executive Excess, the Institute’s 17th annual CEO pay study, features a comprehensive chart that tracks all the CEO pay reforms so far enacted into law — and lists a host of other reform measures either still pending before Congress or currently getting attention in other nations.

Executive Excess 2010 rates the executive pay-deflating viability of all these reforms, ranking each one on a yardstick that emphasizes the importance of encouraging narrower CEO-worker pay gaps and eliminating taxpayer subsidies for excessive executive compensation.

The most obvious next step to more effective CEO pay reform? That step, suggests Executive Excess, would be taking action — before the next economic crisis — to cap executive pay at firms that pocket government bailouts.

signupIn 2009, one CEO at a bailed-out enterprise — James Rohr of PNC Financial — personally took home $14.8 million, after his powerhouse bank collected $7.58 billion in taxpayer dollars and slashed  5,800 jobs.

Restricting pay at bailed-out companies, Executive Excess observes, “could have an important preventive effect.”

“Given a clear warning about the consequences for their own paychecks,” concludes the report, “executives might think twice about taking actions that endanger their future — and ours.”

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

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