Mass Layoffs Plump CEO Pockets
Two years into the Great Recession, the United States doesn't seem to be doing much better. The majority of Americans are pessimistic about the economy. Housing sales are down. Those who have been unemployed for 99 weeks or more, 99ers, are pushing for Congress to approve further unemployment extension benefits, as the unemployment rate lingers at 9.6 percent. There is one person, however, who isn't suffering from the effects of the Great Recession: the CEO.
CEO salaries are still running at double the 1990s CEO pay average after inflation adjustment according to the 17th annual executive compensation survey, CEO Pay and the Great Recession by the Institute for Policy Studies. At a time when many laid off Americans are hurting financially, CEOs are reaping the rewards of handing out mass pink slips. Layoffs pay off for CEOs, with the money in saved wages further padding their plump paychecks. CEOs at 50 companies -- "layoff leaders" in the study -- that laid off the most employees took home an average pay of almost $12 million in 2009, 42 percent more than the average CEO pay.
Most firms -- 72 percent -- announced mass layoffs during periods of profit, reflecting a growing trend in corporate America: tightening the workforce to increase profit and maintain high CEO salaries.
Even CEOs who lost their jobs, like Fred Hassan of Schering-Plough, the highest paid layoff leader, received a $33 million golden parachute when his company merged with Merck, while 16,000 employees lost their jobs. Hassan's total 2009 compensation -- $49.6 million -- is enough to provide all 16,000 who were pink slipped average unemployment benefits for more than 10 weeks.
Five of the top 50 layoff leaders owe their high paychecks to the tax payer bailouts that followed the 2008 Wall Street collapse. As the government helped prop their companies up, American Express CEO Kenneth Chenault took home $16.8 million, including a $5 million cash bonus while his company laid off 4,000 employees and received $3.39 billion in Troubled Asset Relief Program (TARP) funding.
As Republicans cry that there is no money to extend unemployment benefits for 99ers, perhaps they should put caps on CEO wages. Most startling is that the $598 million compensation of the top 50 CEOs in layoff leader survey could provide average unemployment benefits for 37,759 workers for an entire year -- or nearly a month of benefits for each of the 531,363 employees laid off by those companies.