From: Dickey, Michael F (michael_f_dickey@groton.pfizer.com)
Date: Wed Aug 29 2001 - 08:22:45 MDT
Of course I dont think it absolutely necessary to point out that if one
company lays of workers and gives the money to a CEO they will be less able
to compete with another company that spends that money more effeciently on
thier employees or procedurs for developing thier products. Notice this is
mentioned in the article...
"But not all executives are cashing in, especially those who work at some of
Seattle's smaller publicly held companies. "
"Executives at RealNetworks excluded themselves from pay raises in May, two
months before the company cut 140 employees."
"Bsquare Corp. CEO Bill Baxter, who makes $250,000 per year, took a 20
percent pay cut and eliminated his incentive compensation last month. Other
executives at the Bellevue company agreed to a 10 percent pay cut to reduce
expenses and avoid layoffs."
Is it not obvious that if two companies have Identical overhead and one has
20% more employees while the other has 20% fewer employees and a CEO that
makes 20% more money that one will be a much greater competitor? Please
point out the fallacy in this logic...
I had already mentioned why the 'CEO makes too much money' argument against
free markets does not work, but I have re-iterated it in this post since it
has been brough up again. CEO's have difficult jobs and have to make
difficult decisions (the most difficult in the company in fact) and they get
paid accordingly. But if they make too much, that company can not compete
in a market with another company that pays a similiar CEO less.
Regards...
Michael D
CEOs have it tough these days. It's a dirty job, but somebody's got to do
it, I tell ye'...:
http://seattlep-i.nwsource.com/business/36853_execpay29.shtml
<http://seattlep-i.nwsource.com/business/36853_execpay29.shtml>
CEOs are rewarded for laying off workers
Wednesday, August 29, 2001
By MARCY GORDON
THE ASSOCIATED PRESS
WASHINGTON -- As the economy began to stall last year and companies laid off
workers, chief executives of big corporations still got hefty pay raises and
were rewarded for making job cuts, according to a new study by two liberal
advocacy groups.
A "decade of greed" in the 1990s was followed last year by a particularly
"blatant pattern of CEOs benefiting at the expense of their workers," the
Institute for Policy Studies and United for a Fair Economy said in their
latest annual pay survey released yesterday.
It found that chief executives of the 52 major companies that announced
layoffs of at least 1,000 employees in the first half of 2000 earned about
80 percent more on average than CEOs at 365 big corporations surveyed by
Business Week magazine. The "layoff leaders" received an average $23.7
million in total compensation, including bonuses and stock options, compared
with an average $13.1 million for CEOs overall, the groups' study found.
It said the top job cutters got an average increase in salary and bonus of
nearly 20 percent last year, compared with average raises for U.S. wage
earners of around 3 percent and 4 percent increases for salaried employees.
Sarah Anderson, director of the global economy program at the Washington,
D.C.-based Institute for Policy Studies, said it was galling "especially in
this period of economic downturn as people are feeling very insecure about
their jobs, to see that the guys at the top have cushioned themselves."
But not all executives are cashing in, especially those who work at some of
Seattle's smaller publicly held companies.
Executives at RealNetworks excluded themselves from pay raises in May, two
months before the company cut 140 employees.
Bsquare Corp. CEO Bill Baxter, who makes $250,000 per year, took a 20
percent pay cut and eliminated his incentive compensation last month. Other
executives at the Bellevue company agreed to a 10 percent pay cut to reduce
expenses and avoid layoffs.
But in many cases, leaders of large corporations are rewarded for cutting
staff.
One of the "layoff leaders" cited by the study is Michael Bonsignore,
Honeywell International Inc.'s chief executive until last month, who is
receiving a severance package worth nearly $10 million, plus generous
pension checks. He was ousted by the big manufacturer's board of directors
July 3, the same day the European Union blocked Honeywell's anticipated
merger with General Electric.
Honeywell announced in the spring that it would lay off 850 workers because
of a significant downturn in the circuit-board industry.
A Honeywell spokesman, who declined to be identified by name, said yesterday
that there was "no relationship" between the job cuts and Bonsignore's
compensation. He declined further comment.
"Rightly or wrongly, the cutting of staff has tended to give a boost to a
company's stock," said Charles Peck, a compensation specialist at the
Conference Board, a business research and networking organization. "It's one
of the ways that Wall Street evaluates top executives' performance."
The New York-based Conference Board's executive pay survey for 2000 shows
little change from 1999, Peck said. It shows median total compensation for
800 manufacturing CEOs of around $1.7 million in both years.
The yearlong economic slump is taking a toll on the nation's labor markets.
Thursday, the government reported that the number of laid-off workers
drawing unemployment benefits had hit a nine-year high. The Labor Department
said the number of Americans collecting jobless benefits rose to 3.18
million in the week ending Aug. 11, the highest level since September 1992,
when the country was struggling to emerge from the last recession.
Against that backdrop, compensation packages for executives have drawn some
criticism.
A shareholder of US Airways Group Inc. has sued the airline's board of
directors, seeking to overturn a provision that would give $45 million in
severance benefits to its top three executives if they decided to resign.
In the lawsuit made public Monday, shareholder Steven Rosenberg said the
severance provision -- part of US Airways' failed plan to merge with United
Airlines -- was "unconscionable" and would encourage the three executives to
leave, The Washington Post reported in yesterday's editions.
The survey also said:
* If the federal minimum wage, which was $3.80 an hour in 1990, had
grown at the same rate as executive pay over the decade, it now would be
$25.50 an hour as opposed to the current $5.15.
* The 30 highest-paid women in big corporations each earned average
total compensation of $8.7 million last year, compared with $112.9 million
for the 30 highest-paid men.
_____
P-I reporter John Cook contributed to this report.
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