In times of crisis, it’s important for leaders to step up and do their part—and that’s exactly what these executives are doing.
In times of economic uncertainty, layoffs are often an unfortunate necessity, causing great emotional distress for both the employer and employees. However, there are some instances where corporate leaders have demonstrated genuine compassion towards their employees by taking bold steps, such as accepting pay cuts or even forgoing their salaries altogether. In this article, we will explore some notable examples of these exemplary CEOs and the positive impact they have made, not only within their own organization but also beyond.
According to Entrepreneur.com, Zoom CEO Eric Yuan has decided to slash his compensation by 98% and forgo a bonus in response to a recent layoff notice affecting around 1,300 people worldwide. In an email to staff, Yuan expressed his desire to demonstrate responsibility not just in words but also in action.
Zoom, a video communications company that benefited from the pandemic and the remote work trend, was founded by Yuan in California in 2011. Its stock hit a high of US$559 per share in October 2020 but has since declined to approximately US$80 per share, like many other pandemic winners. Nonetheless, the company’s stock rose nearly 10% after the layoff announcement.
Apple CEO Tim Cook made headlines when he voluntarily requested a 40% pay cut in 2023, according to records filed with the U.S. Securities and Exchange Commission (SEC) in January 2023. His new annual compensation target would be US$49 million.
In 2022, Cook earned about US$83 million in stock awards, US$12 million in incentives and another US$3 million in salary, along with advantages like retirement contributions, personal air travel and vacation cash-outs of more than US$46,000. Institutional Shareholder Services advised that investors vote against Cook’s remuneration at Apple’s annual meeting last year, as CEO remuneration has come under growing scrutiny from institutional shareholders.
“Taking into consideration Apple’s comparative size, scope, and performance, the Compensation Committee also intends to position Mr. Cook’s annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years,” said the compensation committee, which includes Art Levinson, Al Gore and Andrea Jung.
Goldman Sachs Group Inc. has reduced CEO David Solomon’s compensation for 2022 by 29% to US$25 million. The package includes a base salary of US$2 million and variable compensation worth US$23 million, of which US$16.1 million is in the form of restricted stock units.
According to Times Now, the bank’s remuneration committee justified the significant cut by citing the challenging operating environment the bank is facing. However, they also noted that Solomon’s outstanding individual performance and good leadership were taken into account in determining the reduction.
On February 1, Intel CEO Pat Gelsinger has announced that he will accept a 25% pay cut this year, as Intel’s stock price continues to fall after a 50% decline in the previous year. Gelsinger’s action comes as other firms have also cut CEO compensation cutbacks to avoid economy-wide layoffs.
Joining Gelsinger, top executives at Intel will take salary reductions from 5-15%. His executive team will see a 15% decrease in salary, senior managers 10% and mid-level managers 5%. The seventh tier and employees below will be unaffected.
CEO James Gorman, along with other Morgan Stanley employees, will experience a wage cut due to the firm’s lower profitability and a 13% stock price decline in 2022. Gorman’s compensation has been reduced by 10% to US$31.5 million. This comprises a US$1.5 million salary, a US$7.5 million cash bonus and US$22.5 million equity-linked bonuses paid out in shares. The pay cut was part of an industry-wide effort to reduce compensation and expenditures because of diminished business activity and concerns about how a downturn could affect Wall Street earnings.
In an attempt to save money, Morgan Stanley laid off 1,600 people from its total workforce of 82,400 at the end of last year.
Google’s CEO Sundar Pichai is likely to take a pay cut with the rest of Google’s top executives. In a recent address to employees in January 2023, he stated that senior executives’ compensation is tied to performance and can be reduced if necessary. To further reduce costs, bonuses have been delayed, with 80% to be paid in January and the remaining in March or April.
Though not yet confirmed officially, it appears likely that Pichai too will also have to take a pay cut, despite seeing a rise in his annual salary to US$2 million last year. His net worth has suffered a 20% decrease according to the IIFL Hurun India Rich List 2022.
Some may argue these pay cuts are insignificant in light of the billions that these CEOs have earned, but it is still a substantial economic loss for them. Nonetheless, these reductions could have a positive impact on employees’ lives, and it also illustrates the CEOs’ commitment to their companies and staff during these challenging times. It is commendable that some CEOs have taken such strides without hesitations. While not all opt to take this route, those who do should be applauded for their leadership in the midst of turmoil.
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