- Released April 23, 1998
Executive Excess 1998: CEOs Gain From Massive Downsizing
The fifth annual executive compensation survey finds that CEOs who downsize workers are rewarded.
1. CEOs Who Downsize Workers are Rewarded. IPS and UFE studied CEO pay at U.S. corporations that announced layoffs in 1997 of 3,000 or more workers. Of the 16 firms for which data were available, all but three were rewarded last year in terms of annual compensation. Nine of the 16 increased CEO salary and bonuses by an average of 20 percent. Four of the 16 firms did not increase salary and bonus, but rewarded CEOs through generous outlays of stock options grants. Twelve of these downsizing CEOs are highlighted in The Downsizer Dozen section of this report.
2. Banking Executives Who Made Bad Loans in Asia Are Rewarded. CEOs of the six U.S. banks with the largest outstanding loans to Asia received raises in salary and bonus averaging about 16 percent last year. While the International Monetary Fund (IMF) is bailing out these banks, millions of workers in Asia and the United States will lose their jobs as a result of the Asia crisis.
3. CEOs Who Have Shifted Jobs to Mexico Have Benefited. CEOs of the 10 companies that have moved the most jobs from the United States to Mexico since the passage of NAFTA earned average salaries and bonuses last year of more than $3 million, a 15 percent increase over 1996. The leading job-shifter, General Electric’s John Welch, made nearly $40 million in total compensation—more than his 10,000 Mexican workers combined.
4. The Response to Runaway Executive Pay is Building. Finally, this report documents a growing
momentum in Congress among citizen groups and in the business community to close the wage gap. One response—the proposed Income Equity Act—would add a half-billion dollars in federal revenues by closing the corporate tax loophole on excessive CEO pay. On the other end of the pay scale, congressional leaders are calling for an increase in the minimum wage, which would now stand at $40.97 if it had increased as fast as CEO pay has increased since 1960.