Corporate CEOs should go without pay - Houston Chronicle

Every corporate CEO in America who makes $1 million or more should go without pay until their employee’s jobs are secure.

After years of telling everyone about the importance of their people, now’s the time to show it.

During the Iraq War, I embedded in more than a dozen military units, spending time with young platoon leaders all the way up to two-star division commanders. The troops’ behavior was always uncannily a reflection of their officers’ attitudes.

In a time of crisis, we look to our leaders for stability, unity and direction. A weak or selfish leader sets the standard for how everyone else will react.

Leaders show their true character in a crisis, and organizations succeed or fail on their leaders’ decisions. Boards and CEOs claim that is why they deserve to be paid 221 times more than the average employee, according to corporate filings.

Tomlinson’s Take: U.S. responds to COVID-19 with needed socialism

From the collapse of cruise lines to the spike in demand at grocery stores, no one is doing business as usual. COVID-19 is challenging every company in the world.

Plunging revenues give CEOs a choice of either spending strategic reserves to keep employees on the payroll or scale back and lay them off. If a CEO is making 221 times the average employee at the company, that’s a clear opportunity to save jobs.

Airline CEOs were the first to understand the enormity of the new coronavirus pandemic. United Airlines’ Chief Oscar Munoz and President Scott Kirby said they would stop collecting their base pay. Stock options are now their only income, and they will need to save the company to preserve that.

United’s leadership did the right thing after spending way too much money on stock buybacks, which boosted their compensation. Giving up their salary and ending buybacks are the least they can do in return for a government bailout.

Southwest Airlines CEO Gary Kelly, meanwhile, only took a 10 percent cut to his $750,000 a year salary. He made $7.76 million in 2018, mostly from stock, so a $75,000 reduction is a pittance.

Executives are also taking pay cuts at Jet Blue, El Al Israel Airlines, Singapore Airlines, Air New Zealand, Australia’s Qantas Airways, U.K.-based Virgin Atlantic, Sweden’s SAS and Cebu Air, the largest budget carrier in the Philippines.

Hotels have seen occupancy rates plummet, and money is no longer coming in. Marriott CEO Arne Sorenson and Executive Chairman Bill Marriott plan to layoff tens of thousands of employees, but they promised executives would share in the pain through pay cuts.

Collapsing crude prices triggered by the pandemic and a price war have sent energy executives scrambling to slash spending and avoid bankruptcy.

Parsley Energy cut capital spending from $1.6 billion to less than $1 billion, and its chief executive, Matt Gallagher, said executives would cut their salaries by at least 50 percent.

“This is not a time for indecision or half measures,” Gallagher said in a statement.

Indeed not. Oil field service provider Halliburton is rejiggering it’s $10 billion in debt and furloughing 3,500 workers without pay for 60 days. But no word from the company spokeswoman on whether Chairman and CEO Jeffrey Miller will cut his $1.4 million salary. He collected $16.9 million in compensation in 2018.

If Miller were to waive his compensation, he could save 290 jobs. Frankly, he and other CEOs owe us.

Tomlinson’s Take: America needs broader measures of success beyond GDP

President Donald Trump cut taxes in 2017, promising that subsequent economic growth would float all boats, not just benefit the wealthy. But two years later, data show that 44 percent of Americans saw no benefit from the tax cuts. Wages did not rise; benefits did not increase.

CEO compensation, on the other hand, rose 5.4 percent, according to an analysis by my colleague Erin Douglas. That’s three times faster than the average worker’s wages.

Executive pay cuts will not save a company from bankruptcy, but they could save a few lower-paid workers their jobs. It’s also about honor. Sergeants in the U.S. Army always eat after their troops are through the chow line because a good leader puts his or her needs last.

Every business leader who ever bragged about their team or thought of themselves as a noble and selfless leader has an unprecedented opportunity to show the world their true colors.

Are you going to hole up in your corner office, or stately mansion to issue pink slips to your valued employees?

Or will you share in the sacrifice, make sure an average worker can still pay their rent and feed their kids. Because that is where we are now, and your employees are looking to you for leadership.

Tomlinson writes commentary about business, economics and policy.

twitter.com/cltomlinson

chris.tomlinson@chron.com

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Corporate CEOs should go without pay - Houston Chronicle
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