CEO Voluntarily takes 40 percent salary cut
| July 4, 2008 | Posted by Roshawn Watson under Uncategorized |
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By: Roshawn Watson
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He stated that Midwest must decide whether to “fix this disparity so our costs better match our revenues, file for Chapter 11 and try to fix it there, or ignore it and fail as a business.”
Additionally, several employees are also taking compensation hits. For example, “senior vice presidents will take a 25 percent reduction in total pay, corporate officers, 17 percent, and directors and senior managers 11 percent” according to the Business Journal of Milwaukee.
In an age where the average CEO pay is 700 times that of the average employee and where CEO pay is only correlated to performance when the company does well, it is surprisingly refreshing to see a CEO and corporate officers willing to make personal sacrifices for their company during hard times. Rick Wagoner is the perfect example of what many CEO’s do. As chief executive of General Motors Corporation, he recently announced that the company had to close four North American factories and layoff about 3500 employees. Overall, the company posted an astounding $39 billion loss in 2007 (stock price fell by 19%). Wagoner, on the other hand, will receive a 64% pay raise to $15.7 million. It is not surprising that Wednesday, Merrill Lynch said that GM may be headed towards bankruptcy. (FYI: business analyst have been saying this for over 12 years!)
However, this admirable step by Midwest’s management team reflects real leadership. It is their attempt to “…lead by example and… (to) the bear ultimate responsibility for keeping our airline competitive,” Hoeksema said. If only other companies felt the same responsibility.
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Copyright 2008, Roshawn Watson, Pharm.D. All Rights Reserved.
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