May 10, 2023
CEO Pay in the News – Corporate Crises and Layoffs
The news has been chock full of corporate crises and mass layoffs this year, and there’s been no shortage of media reports criticizing high CEO pay in the wake of these events and calling out CEO pay increases staying ahead of inflation while median employee pay stagnates. This CNN article notes that sometimes – like Dire Straits said – it was just that the time was wrong. Hiring and compensation decisions, and even prior year performance, might be said and done before a crisis occurs. And in times of trouble, retention may be key.
On the other end of the spectrum, the article also notes that some large companies significantly reduced CEO pay earlier this year in light of macro trends. After recent layoffs, Zoom’s CEO announced that his salary was being reduced by 98% and he was forgoing his fiscal 2023 bonus. But pay cuts can be criticized as well, with Forbes recently highlighting stock price increases after pay cuts and layoffs, saying the salary and bonus cuts look “performative.” As highlighted by the Wall Street Journal, pay-versus-performance disclosure may make the impact of stock price fluctuations on CEO pay even more evident.
As Dave recently blogged on TheCorporateCounsel.net, in our current polycrisis environment, crisis management is critical. I hate to add to your list of everything, everywhere all at once, but the reasonableness and optics of CEO pay – always a hot topic – also need to be front and center for your compensation committee (and your PR and IR teams) in times of crisis.
– Meredith Ervine