As big businesses tighten their belts, and CEO compensation is more heavily scrutinized, some companies and their leaders have opted (or have been forced) to slash pay at the top.
The Treasury Department issued new rules on executive pay for financial institutions that receive future government assistance. But executive pay cuts have also spread beyond banks.
At Hoover’s we compiled a list of several CEOs who removed a few zeroes from their paychecks as a way to supposedly cut costs and show empathy towards workers who are feeling the pain of layoffs, closings, and benefit reductions. Beware the fine print, though, as most still won’t be hurting any time soon.
1. Ed Clark, CEO of The Toronto-Dominion Bank – Clark cut his pay almost in half and turned over his scheduled increase ($3 million) to charity. But don’t feel too sorry for Ed. He still makes $8 million.
2. Howard Schultz, CEO of Starbucks Corporation – Schultz’s salary isn’t as frothy as it used to be. It sunk from about $1.2 million in 2008 to below $10,000 a year in 2009 after he requested his pay be reduced. That’s the minimum he can make and still receive company health benefits. But Schultz still receives stock options and money for perks like security and annual physicals.
3. David Barger, CEO of JetBlue Airways – Leaders in the struggling airline industry have lightened their paychecks. Barger slashed his pay by 50%, reducing his salary to $250,000 in 2008. But those pesky options and other perks are still his severance package, to the tune of more than $314,000.
4. Auto CEOs – General Motors‘ CEO Rick Wagoner dropped his compensation to a statement-making $1 a year in 2008. Chrysler head executive Bob Nardelli also makes $1 in salary, but it is unknown if the company pays him any other form of compensation since Chrysler is a private firm, and it’s not talking. The heads of the Big Three automakers were broadly criticized for their compensation and other excesses like flying to government bailout meetings on private jets.
5. Daniel Amos, CEO of Aflac Incorporated – Amos eliminated a provision in his employment contract that would have entitled him to some $26 million in potential “change of control” and severance compensations. But since he only makes that money if he leaves Aflac, it’s not all that earth shattering. He still makes more than $4 million a year in salary.
The Toronto-Dominion Bank: Clark’s pay rekindles compensation debate
Starbucks: CEO pay cuts not all they seem
JetBlue Airways: JetBlue CEO to take pay cut in ‘show of solidarity’ with workers
GM and Chrysler: Auto execs could face pay cut with new rules