By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – One of the most frustrating subjects we've confronted in the past couple of years is back in the limelight: executive compensation - or properly stated, excessive executive compensation. I'm Maxine Shapiro with KERA Marketplace Midday.
How's this for a frightening statistic? Of the 50 companies that announced the biggest layoffs in 2001, the median pay for the CEO's of those companies soared 44 percent. The average CEO pay increase was 6 percent. This is just one of the findings by two different think tanks, Institute for Policy Studies and United For a Fair Economy. And wouldn't you know, three of the worst culprits are airline carriers. While laying off about 33-thousand employees, Delta, Northwest and Continental Airlines executives enjoyed a compensation increase ranging from 76 percent to 115 percent in 2002. Delta's Leo Mullin wins the 115 percent award. His whole compensation package for last year was $4.7 million. But I bet he's pretty jealous of his friend Gordon Bethune at Continental. Gordon took home $7.6 million. That includes exercised options.
And speaking of exercised options, an AOL Time Warner spokeswoman is giving that as the main reason why former CEO Gerald Levin took home the trophy for the biggest pay increase while laying off almost 4,400 employees. His compensation went up 1,612 percent. As CNN financial Editor Myron Kandell points out, Wall Street generally likes to hear about layoffs. It's an obvious cost cutting measure. Cost-cutting is good. Most of the time the company stock rallies and the executives who receive these huge stock option and bonus plans benefit by exercising their options.
There's more to this study and I would like to think some of these companies are crawling under the table right now. But who am I kidding? For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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