Tag: Human Capital

About a Third of Companies Cut Employee Pay in Response to COVID-19, Survey Finds

As bad as the pandemic job losses have been, with around 31 million Americans on unemployment rolls, it could actually have been worse. Some companies have managed to cut their labor costs to save money, without resorting to permanent layoffs — at least so far.

In a recent survey of HR managers, outplacement firm Challenger, Gray & Christmas found that 1 in 3 companies cut employee pay in response to the pandemic.

“Of that group, 55% reported the cuts allowed them to avoid layoffs,” said senior vice president Andy Challenger.

The thinking from these companies, Challenger said, is “we’ll have our team intact, it won’t hurt morale so bad by letting people go.”

Companies Choose Furloughs Over Layoffs to Manage Coronavirus Slowdown

When meat orders from restaurants, hotels and other food-service clients dried up at two of Hormel Foods Corp.’s plants in April, finance chief Jim Sheehan chose to furlough roughly 350 workers, but didn’t lay them off. These furloughed employees didn’t receive pay but got benefits such as health care.

It was a careful calculus. After years of effort to secure talent in a tight labor market, many finance chiefs responding to the shock of the coronavirus pandemic have so far preferred to furlough workers instead of severing ties completely, even if it means spending a little more.

“Our employees are long-term investments for us and they’re a precious resource, so we needed to do what we could,” Mr. Sheehan said.

Other finance chiefs made a similar choice as the coronavirus pandemic shut down businesses across the country. Of the 87 firms in the S&P 500 to announce staff reductions from early March through the end of June, 65 chose to furlough workers, according to an analysis of securities filings by data provider MyLogIQ.

Investors Probe Companies on Covid-19 Transition Plans

Investors are pushing companies to address things like hazard pay and whether temporary policies and practices related to employees need to stay in place as businesses transition out of the depth of the pandemic.

Yesterday, New York City comptroller Scott Stringer sent a letter to the Amazon board’s leadership development and compensation committee asking chair Judith McGrath to address at its upcoming annual meeting scheduled for May 27 “media reports regarding widespread Covid-19 health and safety concerns among Amazon employees, including reports that the company has retaliated against some employees and is pressuring sick employees to come to work.”

“While Amazon management has announced numerous initiatives to keep their employees safe, the onus is on the independent members of the Amazon Board of Directors to report on how they are overseeing the progress of these initiatives and to ensure that these investments produce outcomes beneficial for both employees and shareowners,” the letter states. It asks the board to report to investors on the impacts and outcomes of the steps the company says it has taken to protect employees, including volume trends in Coronavirus cases among employees, days lost due to Covid-related illnesses and complaints filed with the Occupational Safety and Health Administration. The letter also asks for the frequency of committee meetings during the pandemic, noting that it has only met three times per year each year for the past five years. Other boards are likely to see similar versions of this letter from investors, if they haven’t already.

McDonald’s CEO Makes an Hour What the Average Worker Makes a Year

McDonald’s Corp. has been among the American companies that pay its workers the least. As some evidence of the ongoing pay problem at the fast-food chain, the U.S. Securities and Exchange Commission has released the compensation of McDonald’s CEO Stephen Easterbrook. He was paid $15.9 million in 2018. That is 2,124 times the median employee salary of $7,473. It means that Easterbrook, who has been CEO since 2015, earns in an hour what it takes a median employee to make in a year, according to data from public company intelligence firm MyLogIQ.

Easterbrook’s pay ratio is the sixth highest among chief executives included in MyLogIQ’s data. In our earlier report on the 100 highest-paid CEOs, Easterbrook was No. 57. It is not the first year he has been paid well. He made $21.8 million in 2017.

McDonald’s has approximately 210,000 workers worldwide, and over 36,000 locations. In its recent proxy statement, the company said that its median employee in 2018 was a part-time restaurant crew employee located in Hungary. The company had revenue of $21 billion last year, down 7% from 2017. Net income was $5.9 billion, up 11%.

Industrial Firms Report Big Swings in Typical Worker’s Pay

A union job at a shipyard, mine or factory usually comes with a steady paycheck, but some U.S. industrial companies are having a hard time figuring out who their typical workers are and how much they make.

Several S&P 500 companies in the industrials and materials sector posted big swings in what they said their median worker was paid in 2018 compared with 2017, according to an analysis by The Wall Street Journal of annual disclosures for hundreds of big U.S. companies as provided by MyLogIQ.

Shipbuilder Huntington Ingalls HII -0.88% Industries Inc. and potash producer Mosaic Co. MOS -0.72% reported the typical worker got half as much as the year before. At Honeywell International Inc., HON 0.06% it was 33% higher.

McDonald’s CEO Makes an Hour What the Average Worker Makes a Year

McDonald’s Corp. (NYSE: MCD) has been among the American companies that pay its workers the least. As some evidence of the ongoing pay problem at the fast-food chain, the U.S. Securities and Exchange Commission has released the compensation of McDonald’s CEO Stephen Easterbrook. He was paid $15.9 million in 2018. That is 2,124 times the median employee salary of $7,473. It means that Easterbrook, who has been CEO since 2015, earns in an hour what it takes a median employee to make in a year, according to data from public company intelligence firm MyLogIQ.

Easterbrook’s pay ratio is the sixth highest among chief executives included in MyLogIQ’s data. In our earlier report on the 100 highest-paid CEOs, Easterbrook was number 57. It is not the first year he has been paid well. He made $21.8 million in 2017.

Uber Drivers React to CEO Pay

In a highly anticipated announcement, Uber this month took the leap to go public. In the ride-hailing company’s registration statement, the company revealed that its top officers raked in between nearly $10 million and $48 million last year.

Directors serving on the boards of the new gig-economy unicorns that either have filed or are expected to file IPOs this year face different compensation challenges from some traditional companies, particularly because their workers are classified as contractors, not employees.

Uber CEO Dara Khosrowshahi was tasked with coming in to replace disgraced co-founder Travis Kalanick and clean up the brand after reports of companywide sexual harassment and discrimination surfaced in 2017. Khosrowshahi has a pay package worth more than $45 million, which is arguably in line with chief executives in his peer group, but given Uber’s non-traditional workforce, its past problems and its veritable online existence, it remains to be seen whether Khosrowshahi’s pay appears appropriate in the eyes of the company’s drivers.

Biden’s Climate Test

Former Vice President Joe Biden (D., Del.) is running for President again. And one of Donald Trump’s 2016 rivals thinks that Mr. Biden is the most formidable of the potential 2020 rivals.

The website Mediaite notes that former New Jersey Governor Chris Christie, who ran against Mr. Trump in the last round of Republican primaries, sees a potential GOP problem in the Midwest: