No one who watches Wall Street has failed to notice the way in which the stocks of companies that cut employment always seem to spike right after layoff announcements are made.
In a country that used to make things, the pressure is on corporate executives to move production - and jobs - out of the United States and over to countries where wages are low, and protections for the environment and human rights are weak.
But even the most cynical Wall Street watchers had to be surprised this week when two groups with a long history of ably monitoring U.S. corporate policies and practices distributed a shocking new study of the connection between job cuts and executive compensation.
According to the Boston-based United for a Fair Economy organization and the Washington-based Institute for Policy Studies, median CEO pay rose 44 percent from 2001 to 2002 at the 50 companies that reported the most layoffs in 2001, while overall CEO pay rose just 6 percent. The CEOs who laid off the most American workers collected median compensation of $5.1 million in 2002, compared with $3.7 million at the 365 large corporations surveyed by Business Week.
CEOs also appear to be collecting greater compensation when they put employee pension plans at risk. According to the study, at the 30 companies with the greatest shortfalls in employee pension funds, CEOs collected 59 percent more compensation than the median CEO.
A good example of CEOs making money by making employees miserable can be found at Procter & Gamble, where chief executive Alan Lafley oversaw deep cuts in production of P&G products in the United States, which were accompanied by the loss of almost 10,000 jobs. His reward? A pay increase of almost 400 percent.
Lafley's case is not an anomaly. As United for a Fair Economy and the Institute for Policy Studies have illustrated in shocking detail, the link between layoffs and executive pay hikes is a constant. Yet, while the job-slashing CEOs are rewarded as if they are corporate champions, the CEOs who preserve jobs and receive more modest pay increases are frequently more efficient and more profitable.
Unluckily, too many CEOs go for the big bucks for themselves - even if cutting U.S. jobs ultimately harms their firms and their communities.
No wonder, then, that the gap between the pay of U.S. workers and the CEOs of their companies has leapt from 42-1 in 1982 to 282-1 in 2002.
If this keeps up, the U.S. will be a land of a few very rich CEOs and a lot of unemployed workers. That may sound fine to the CEOs who go for the big bucks. But the CEO buccaneers might want to consider this caution: When there are no more American workers to lay off in the name of corporate "efficiency," it will no longer be possible for swashbuckling corporatists to foster the fantasies they now use to justify excessive pay hikes.
Copyright 2003 The Capital Times
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