Ceos Pocket Big Bonuses While Workers Get The Ax

Chief executives of big companies are continually being rewarded with fat compensation for laying off more employees, according to a study released last week, and apparently even some CEOs think it’s an outrageous practice.

The Institute for Policy Studies, a liberal research group, said it has found the same trend for four consecutive years: Wall Street rewards CEOs for making layoffs by pushing up stock prices, which are the basis for the the biggest component of CEO compensation stock options.

The new survey, done with Boston-based United for a Fair Economy, found that pay for CEOs at the 30 corporations with the biggest layoffs last year rose an average 67.3 percent - compared with 54 percent for CEOs at the top 365 American corporations.

“Such excessive pay should garner even less respect when the beneficiary is a leading job-slasher,” the study said.

More surprisingly, CEOs apparently agree.

A new Business Week-Harris poll shows that top executives at the nation’s largest corporations believe the current executive pay system is out of control.

Nearly half the 400 senior executives surveyed said they think CEO pay at big companies has surpassed acceptable limits. Fifty-six percent said top managers should take salary cuts if their companies post poor results - and 88 percent said those managers should lose all or most of their bonuses.

Among what the Institute for Policy Studies dubbed the “layoff leaders” and their total direct compensation - including salary, bonus and long-term compensation - in 1996:

Lockheed Martin CEO Norman Augustine: $23 million, 3,100 layoffs.

The company recently said Augustine will give up his position as CEO sometime later this year but will continue to serve as chairman of the world’s largest aerospace and defense company.

Spokesmen for the defense contractor didn’t return a telephone call seeking comment.

AlliedSignal Inc. CEO Lawrence Bossidy: $11.8 million, 3,250 layoffs.

Asked for comment, the company issued a statement saying, “We pay market-based competitive compensation to all our employees in all positions; otherwise they would choose to work elsewhere. Other companies have attempted to hire away Mr. Bossidy with compensation packages similar to the one he has at AlliedSignal.

“By any measure, Larry Bossidy is one of the nation’s most talented and valuable CEOs. … He has had to make some hard decisions which resulted in the elimination of some jobs but greater job security for the vast majority of employees.”

Alcoa CEO Paul O’Neill: $7.7 million, 3,975 layoffs.

Spokesmen for the company, known formally as Aluminum Co. of America, didn’t return a call seeking comment.

The study said 459,000 U.S. workers were laid off in the last three months of 1996, a 2 percent increase from the same period a year earlier.

Noting recent efforts by lawmakers, activists and even some companies to curb excessive CEO pay, the study called the initiatives “a sign that American society is getting fed up with excessive compensation - particularly for executives who are throwing thousands of workers out on the street.”

On Tax Day, Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., proposed a measure that would oblige companies paying top executives in stock options and taking tax deductions for them to carry the options as an expense on their books.

Congressional analysts estimate the bill would produce $933 million in new tax revenue over 10 years as some companies opted to cease taking deductions for the stock options.