August 27, 2003
WHY, WHY, WHY... WILL IT NEVER END? CEO PAY
Back on the 24th of July I wrote about my disdain for how publicly-held companies and their shareholders are consistently rewarded for cost cutting measures that result in the laying off or firing of our fellow citizens. In my rant I pointed out that over a 24 month period Eastman Kodak made plans to cut its workforce by nearly 20 percent, and how that companyís announcement that itíd be laying off 4,500 to 6,000 employees was met with enthusiasm in the form of a nearly 10 percent increase in the value of its stock. Now, just a few weeks later, we learn that Kodakís CEO, Daniel Carp, appears to be the one who benefited the most.
In 2001, CEO Carp earned a salary of $4,582,000.00. In 2002, after announcing 8,100 layoffs, Carpís salary rose a whopping 67 percent to $7,649,000.00. CEOs at companies with the largest layoffs and the most under funded pensions are continuing to be rewarded with bigger paychecks. According to a report I heard on NPR yesterday morning, median CEO pay skyrocketed 44 percent from 2001 to 2002 at the 50 companies with the largest number of layoffs in 2001, while overall CEO pay rose only 6 percent.
The top layoff leader in terms of layoff numbers is Carly Fiorina at Hewlett-Packard. Her company reduced its workforce by 25,700 workers in 2001, and her pay jumped 231 percent, from $1.2 million in 2001 to $4.1 million in 2002.
The top layoff leader by percentage pay increase was AOL Time Warner's Gerald M. Levin, who presided over 4,380 layoffs in 2001. Levin's pay increased a staggering 1,612 percent, from $1.2 million in 2001 to $21.2 million in 2002.
By contrast, between 1990 and 2002, average CEO pay rose 279 percent... far more than the 46 percent increase in worker pay, which was just 8 percent above inflation. Will the madness never end?
Posted by Mikal at August 27, 2003 7:24 AM
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Have you read "Pigs at the Trough" by Arianna Huffington yet? I've just started it...excellent already.
Goodyear suits follow suit: http://www.msnbc.com/news/958622.asp
The announcement to layoff an additional 500 salaried workers and an undisclosed number of hourly personnel on 28 Aug led to a marked increase in the GT stock price. http://quote.bloomberg.com/apps/cbuilder?ticker1=GT&exch1=US&ticker2=&exch2=US&ticker3=&exch3=US&range=1w%3AOne+Week&type=gp_line2%3ALine+Graph&Submit.x=40&Submit.y=6
Granted, the move was less than a point, but when you're trading at $6.60/share, the move to $7 is drastic in comparision to the poor downward performance in the previous weeks. At posting time, 12:15 EST, the share price is $6.980 - a bit over more than a 5% gain off the opening price from the previous day.
It's all around us. The $3500/month mortgage of a person on our sales team. Yet, we are hiring people to do technical troubleshooting at $11.00/hr.
"Dime, quarter, nickel, penny. Damn ain't it funny how we all about the Benji's?" - Nappy Roots
It makes me wonder if there really is a democracy in this country. After all, money is power.
Political candidates need a lot of money to finance a campaign.
Those with money can afford to give some away to a political candidate that vows to support their needs.
The politicians are then bound to these corporate and individually wealthy lobbyists.
The laws and government are then indirectly controlled by the wealthy.
If the top 1% of stock owners hold 47.7% of all stocks by value and the bottom 80% of stock owners own just 4.1% of total stock holdings, then basically only those 1% with money really control, vote, and run this country.
It is no longer a democracy...
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