CEOs who sack more get paid more

The CEOs who laid off the most employees during the recession are also the CEOs who took home the biggest pay checks, according to a study released last week.

While redundancies are a grim fact of the recession, CEOs of the 50 US firms that slashed the most jobs between November 2008 and April 2010 took in 42 per cent more than the average CEO at an S&P 500 firm, according to the 17th annual Executive Excess study by the Institute for Policy Studies, a progressive Washington think tank.

The study also found that 36 of the 50 layoff leaders "announced their mass layoffs at a time of positive earnings reports," suggesting a trend of "squeezing workers to boost profits and maintain high CEO pay."

The 10 highest-paid CEO layoff leaders (see table) ranked in the report include the CEO of Hewlett-Packard, Mark Hurd, who earned $24.2 million in 2009 as the company laid off 6,400 workers and Walmart CEO Michael Duke, who earned $19.2 million as the company laid off 13,350 workers.

No Wall Street banks were included in this list, but three banks - Citigroup, Bank Of America and JP Morgan - showed up on the study's list of the 50 firms that laid off the most employees.

Overall, the study found that executive pay remains astronomically high compared to previous decades.

"After adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century," the study says.

Currently, CEOs of major US companies average 263 times the average compensation of American workers, the study claims.

Golden Parachuter: Fred Hassan of Schering-Plough, by far the highest-paid layoff leader, last year pocketed nearly $50 million. Hassan received a $33 million getaway gift when his firm merged with Merck, while 16,000 workers were receiving pink slips. Hassan's 2009 pay could have covered the average cost of these workers' jobless benefits for more than 10 weeks, the study claims.

Drug Recaller: Ranking second on the layoff leader list, William Weldon of Johnson & Johnson took home $25.6 million, more than three times as much as the S&P 500 CEO average, at a time when his firm was slashing 9,000 jobs and facing charges of drug quality control violations, the study highlighted.

Tax Dodgers: Of the 50 layoff leading companies, only two reported paying corporate income tax in 2009 at the 35 per cent statutory rate. Hewlett-Packard, under recently fired CEO Mark Hurd, remitted $47 million in federal corporate income tax, a mere 2 per cent of the company's reported pre-tax domestic net income. HP's federal tax bill came to just twice CEO Hurd's $24.2 million pay package, the report pointed out.

Bailout Barons: 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.

CEO Pay and Unemployment Insurance: The $598 million combined compensation of the top 50 CEOs in our layoff leader survey could provide average unemployment benefits to 37,759 workers for an entire year - or nearly a month of benefits for each of the 531,363 workers their companies laid off, the study said.

10 Highest-Paid CEO Layoff Leaders

Company CEO in 2009 2009 total compensation Announced layoffs*

1. Schering-Plough - Fred Hassan - $49,653,063 - 16,000**
2. Johnson & Johnson - William Weldon - $25,569,844 - 8,900
3. Hewlett-Packard - Mark Hurd - $24,201,448 - 6,400
4. Walt Disney - Robert Iger - $21,578,471 - 3,400
5. IBM - Samuel Palmisano - $21,159,289 - 7,800
6. AT&T - Randall Stephenson - $20,244,312 - 12,300
7. Wal-Mart - Stores Michael Duke - $19,234,269 - 13,350
8. Ford - Alan Mulally - $17,916,654 - 4,700
9. United Technologies - Louis Chenevert - $17,897,666 - 13,290
10.Verizon - Ivan Seidenberg - $17,485,796 - 21,308

*Announced layoffs between November 2008 and April 2010
** Includes all layoffs announced by the new firm resulting from merger between Schering-Plough and Merck.

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