Layoffs increase CEO pay
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Chief executive officers at the 50 companies that announced the biggest layoffs since the recession intensified in late 2008 made 42 percent more last year than the average large company CEO, according to a study released today by a Washington research group.
Three Pittsburgh companies made the The Institute for Policy Studies' list, which ranked CEOs based on the number of announced layoffs. Alcoa finished ninth, with 13,985 layoffs; CEO Klaus Kleinfeld's pay was $11.2 million. U.S. Steel placed 23rd, with 6,705 layoffs and CEO John P. Surma's $1.5 million pay. PNC Financial Services Group ranked 28th, with 5,800 layoffs and CEO James E. Rohr's pay of $14.8 million.
"Our findings illustrate the great unfairness of the Great Recession," said Sarah Anderson, who co-authored the study. "CEOs are squeezing workers to boost short-term profits and fatten their own paychecks."
The Institute for Policy Studies said the average CEO on its list of the 50 layoff leaders made $12 million in 2009 compared to the average $8.5 million that CEOs at S&P 500 companies received. The average CEO on the list announced 10,627 layoffs at his or her company between Nov. 1, 2008, and April 1, 2010, the institute said.
The institute identified Schering-Plough CEO Fred Hassan as the highest-paid CEO on the list. His 2009 pay of $49.7 million included a $33 million golden parachute Mr. Hassan received when Merck bought the pharmaceutical company in late 2009, the study said. It cited layoffs of 16,000, including jobs eliminated at both companies as a result of the merger.
The 50 CEOs on the list received total compensation of $598 million. That's enough to provide unemployment benefits to 37,759 workers for a year, the institute said.
PNC spokesman Fred Solomon said the bank's employment doubled to 56,098 during the period the institute examined as a result of its acquisition of Cleveland's National City Corp. PNC eliminated 5,800 jobs when it combined the staffs of the two operations, much of which was accomplished through attrition, he said. PNC also shed 500 jobs as part of the government-ordered sale of 61 branches in Western Pennsylvania, Mr. Solomon said.
Alcoa spokesman Kevin Lowery said the company reduced its head count 38 percent between the second quarter of 2008 and the end of last year because of an unprecedented 60 percent drop in aluminum prices over a three-month period. "Action had to be taken immediately," Mr. Lowery said. "It's never pleasant to have to lay off people."
U.S. Steel declined comment. Mr. Surma took a 20 percent pay cut in mid-2009 and declined grants of restricted stock and options last year that typically account for a hefty portion of a CEO's overall compensation.
Only four other CEOs on the list of layoff leaders made less than the $1.5 million Mr. Surma was paid last year. Three of those CEOs came from financial institutions that received assistance as a result of the federal government bank rescue package: Citigroup's Vikram Pandit, former Bank of America CEO Kenneth Lewis and JPMorgan Chase's James Dimon.
First Published September 1, 2010 12:00 am