The conventional wisdom is that market dynamics generate socially beneficial outcomes. It is all a matter of letting private interests freely compete to determine activities, organize resources and distribute rewards.
Hmmmm—kind of interesting, then, that a study by the Institute for Policy Studies found the following:
- Two years into the worst economic crisis since the Great Depression, executive pay — after adjusting for inflation — is still running at double the 1990s CEO pay average, quadruple the 1980s average, and eight times the average executive pay in the mid-20th century.
- CEOs of the 50 firms that have laid off the most workers since the onset of the economic crisis took home nearly $12 million on average in 2009, 42% more than the CEO pay average at S&P 500 firms as a whole.
- Combined, these 50 CEOs made $598 million while laying off 531,363 workers — accounting for more than three quarters of the 697,448 announced layoffs at the top 500 firms. And, 72% of these firms announced their mass layoffs during periods of positive earnings reports. In fact, these companies enjoyed an average 44% profit increase in 2009.
- Of the 50 layoff leading companies, only two reported paying corporate income tax in 2009 at the 35 percent statutory rate.
- Five of the 50 top layoff leaders owe their good fortune directly to major taxpayer bailouts of the financial sector. Of these, American Express CEO Kenneth Chenault took home the highest 2009 pay, $16.8 million, a sum that included a $5 million cash bonus. American Express has laid off 4,000 employees since receiving $3.39 billion in TARP funding.
For those of you that like lists—here are the ten highest paid CEOs among 2009 layoff leaders:
The highest paid was Fred Hassan of pharmaceutical Schering-Plough, which was bought by Merck. Hassan got nearly $50 million, $33 million of which was a “getaway gift” when his company was acquired.
Second was Bill Weldon of Johnson & Johnson. Weldon was paid $25.6 million.
Third was Mark Hurd of Hewlett-Packard, $24 million.
Fourth was Bob Iger of Walt-Disney, $21.6 million.
Fifth was Samuel Pamisano of IBM, $21.2 million.
Sixth was Randall Stephenson of AT&T, $20.2 million.
Seventh was Michael Duke, CEO of Wal-Mart, $19.2 million.
Eighth was Alan Mulally of Ford, $17.9 million.
Ninth was Louis Chenevert of United Tech, $17.9 million.
Tenth was Ivan Seidenberg of Verizon,$17.5 million.
You should read the entire report–lots more interesting facts. But if you are in a hurry you can watch a four minute overview below or here.