The chief executive of Dick's Sporting Goods announced a token salary reduction but his losses were more than offset with additional share options. Photo / 123RF
LEX OPINION:
Business, culpable for the 2008-09 crisis, bears no blame for this year's downturn. But widespread financial distress — and a swath of job losses — prompted many chief executives to share modestly in the pain.
Temporary salary cuts were often highlighted in company announcements. Unaltered incentive schemes, however,
were rarely mentioned. Salary losses were sometimes covered by discretionary awards. The executive gravy train has suffered only temporary delays.
Pay sacrifices by US bosses mirrored downturns in economic sectors. Travel, leisure and retail bore the brunt. Oscar Munoz took action in March, pledging to forgo an entire quarter's worth of pay. The United Airlines boss was the first of almost 500 Russell 3000 chief executives to take pay reductions worth US$173 million ($243.8m) this year, says the Stanford University.
FTSE 100 heads followed suit. About a third took salary reductions. On average the cuts amounted to about a fifth of the total. Changes to performance-based pay formulas have been less forthcoming, although returns have slumped in some industries, automatically trimming awards.
