posted September 22, 2010 02:54 PM         

how long can a company made up entirely of CEOs stay in business?

CEOs: Cut more jobs, make more money
A study reveals an unsettling trend from the Great Recession: Not only did many CEOs get raises while laying off workers, those who cut more got bigger pay packages.

By Michael Brush

Across America, the Great Recession and its aftermath have hit the haves and the have-nots in very different ways.

Turns out that while legions of workers got pink slips, the CEOs at some of the companies making the steepest job cuts earned some of the biggest salaries. And the issue isn't the much-discussed pay gap between executives and average workers; these CEOs earned pay packages that were often two or three times the average pay for other CEOs.

Meanwhile, the layoffs cost us all -- because of a weaker economic recovery due to a dwindling consumer class and the cost to the government of supporting an army of unemployed.

This unsettling CEO reward system, highlighted in a new report from the Institute for Policy Studies, raises an obvious question: Is one reason unemployment remains high that, for CEOs, cutting jobs pays? "By hollowing out their companies and cutting costs, CEOs can get a short-term stock price increase" and cash in on their stock and stock options, says Brandon Rees, the deputy director of the AFL-CIO Office of Investment.

Hard hit at AT&T
The phone giant AT&T (T, news, msgs) offers a great case study in how this trend of two economies is playing out in the job market. Let's take a brief glimpse into the lives of two longtime AT&T employees, Nancy McSwain and Randall Stephenson.

McSwain, who lives in New Orleans, lost her home to Hurricane Katrina in 2005. Water destroyed everything on the ground floor. Looters got what was left upstairs. A year later, she battled cancer and won. By 2008, McSwain thought she was home free as she moved back in to her rebuilt home.

But the Great Recession -- and corporate America's penchant for firing workers to support profits -- would create a whole new set of problems. Four days after Christmas in 2009, McSwain got a pink slip -- after 39 years of service.

"It's been really difficult," McSwain says. "I had major expenses from Katrina, and I needed a job desperately." She had hoped to finish out her career and work four or five more years to help pay all those bills. "I had no intentions of leaving."

Her layoff was part of a big downsizing that saw the profitable phone giant announce 12,300 layoffs over 18 months. AT&T's objective: Cut costs to prop up earnings, as a healthy 9% growth in wireless revenue failed to offset a steep decline in landline phones.

That brings us to Stephenson, who joined the company in 1982 and moved into the CEO job in 2005. He sets the cost-cutting tone and oversees the managers who carry out all those layoffs. In 2009, the year McSwain got her pink slip, Stephenson had one of his most lucrative years ever.

Stephenson realized $6.9 million when 270,000 of his stock options vested. On top of that, AT&T granted him a pay package valued at $20.2 million by The Associated Press. That's nearly 2-1/2 times the average pay for CEOs at S&P 500 companies that year.

Relentless squeezing of jobs and pay

The contrasting fates of rank-and-file managers who get laid off, like McSwain, and the richly paid CEOs overseeing layoffs, like AT&T's Stephenson, played out across many industries during the Great Recession, according to the Institute for Policy Studies report.

In fact, it's all part of "the relentless squeezing" of jobs, pay and benefits to boost corporate earnings and keep money flowing to executives, says Sarah Anderson, a co-author of the report, titled "Executive Excess 2010: CEO Pay and the Great Recession (.pdf file)."

Turns out that CEOs overseeing the most layoffs got some of the biggest pay packages, says the report, with average pay far above that of their well-paid peers.

IPS calculates that most of the major layoffs in the past 18 months happened at 50 companies, and those companies' CEOs were awarded pay packages of nearly $12 million on average in 2009. That's 42% above the average pay package of $8.42 million for CEOs at companies in the ... http://articles.moneycentral.msn.com/Investing/CompanyFocus/ceos-cut-more-jobs-make-more-money.aspx

more on the same basic route:
http://articles.moneycentral.msn.com/Investing/CompanyFocus/why-CEOs-cannot-stand-obama.aspx?GT1=33002

i don't think we are in a 100% automation ready society yet. what will they do when they have no workers? oh right, hire under the table, under minimum wage or cheap labour of whatever kind they can get. gotta love the free market.

posted September 22, 2010 03:06 PM         

but how long will it take before these companies go down with their topheavy attitude? do none of them realize they need employees to make their products and service the customers? or does the market make it possible to run a company without product or services now? let's just play monopoly all day long and make sure we keep passing go.

posted September 22, 2010 08:34 PM         

maybe you can watch this at the library?

posted September 24, 2010 12:56 AM         

halfway down this page you will find the text to the republican "pledge to america" outed today. as one of the comments mutters, "more like contract on america"...

apparently they want to repeal the healthcare act and replace it...with one that sounds identical!!

of course they think the rich should keep their bush tax cuts. never mind that the income from that 1.5% rise on income over 250,000 would go a long way to paying down the deficit they are screaming about...never mind the loopholes the rich are so good at that makes a large portion of their income "invisible" and untaxable...

they promise to grant money needed by the troops...though they refused to do this just the other day!!

yadayaadayaaaaddaaaaa....

and like jwhop they keep talking about "self-appointed elites" (those people we elected 18 months ago) who go against the will of the people (who voted for what they promised and have gone a good way toward accomplishing) and refuse to let those ELECTED people do the job we voted them in to do.

sarah palin can talk about liars. she belongs to a party full of them. oh i forgot, she is planning on starting her own party.