We may still be in a recession, but not all American CEOs are feeling your pain. In fact, some are actually gaining from it, according to a new report released by the Institute of Policy Studies.
The report “CEO Pay and the Great Recession” found that CEOs of the 50 firms who laid off the most workers since the start of the economic crisis took home 42% more pay in 2009 than other Standard & Poor 500 executives who let fewer employees go.
The layoff leaders received $12 million on average in 2009, compared to the total S&P 500 average of $8.5 million. Perhaps this is why so many Americans are still nervous about losing their job. Each of the corporations surveyed laid off at least 3,000 workers between November 2008 and April 2010.
According to the report, the CEOs that have profited the most from company layoffs last year were Fred Hassan of Schering-Plough (Stock Quote: SGP), who was paid $50 million while his company laid off 16,000 workers; William Weldon of Johnson & Johnson (Stock Quote: JNJ), who took home $25.6 million while his firm slashed 9,000 jobs; and Mark Hurd, formerly of Hewlett-Packard (Stock Quote: HPQ), who added $28 million severance to his 2009 pay package of $24.2 million after a year in which his company eliminated 6,400 jobs.
“Business leaders are too short-termist in their thinking,” Sarah Anderson, one of the study’s authors, explained to MainStreet. “They tend to put immediate personal gain ahead of their company’s long-term success.”
Anderson pointed out that while CEO pay on average has declined since the financial crisis, it is still eight times as high (inflation included) as it was in the ‘60s, ‘70s and ‘80s, decades in which the country enjoyed much more financial stability. As such, Anderson maintained “there’s no real argument that executive pay needs to be this high.”
More worrisome, however, is the fact that 72% of the surveyed firms announced mass layoffs while simultaneously releasing positive earnings reports. Anderson said while these stats may not be entirely driven by a CEO’s conscious effort to fatten his or her own wallet, they are the product of close-minded, flawed business practices.