Countless sacrifices have been made this year as companies have been forced to adapt. In a spirit of philanthropy, many CEOs have taken pay cuts to support employees.
Looking to CEOs to Save the Economy
With thousands of businesses going under during 2020, 170,000 UK workers have lost their jobs, with more redundancies expected in the new year. As such, focus has been placed on wealthy company CEOs to help out; these figures earn, on average, 117 times more than their employees. A number of these CEOs are leading by example and sacrificing a percentage, if not the full amount, of their salary in order to support their companies during the pandemic.
What Salary Has Been Sacrificed?
Data compiled by people management organisation Impact International looked at CEOs who have publicly stated they will be giving up some or all of their earnings. It found that, of the CEOs who have sacrificed income to help their businesses during COVID, 41% have given up 100% of their base salary. A further 32% have given up between 50–99% of it.
Sectors Sacrificing the Most
Aviation and hospitality businesses are amongst the hardest-hit by the pandemic and this is reflected in CEO behaviour with 32% of all leaders sacrificing salaries. The three Airbnb founders have given up their salaries for six months. While the business was required to lay off staff, it pledged to pay them 12 weeks’ salary and finance their health insurance for up to a year. Delta Airlines’ CEO Ed Bastian has similarly given up 100% of his salary for six months.
Fashion and retail businesses form a further third, while the final third is made up of the entertainment, travel services, electric, financial services, automotive and vehicle for hire industries.
It is not just executives of struggling sectors that are showing solidarity to their employees, but also the companies who are experiencing a boom year. Leading the way is Disney’s Executive Chairman, Bob Iger, who has given up his entire salary for a year. The company’s CEO, Bob Chapek, has taken a 50% cut, while its executive-level staff will take 30% cuts. Disney has seen huge success in its streaming platform, Disney+, which currently has 10 million subscribers. The company has, however, experienced shortfalls with its theme parks closing.
Is Sacrificing Salaries Enough?
With regard to net worth, these salary cuts represent an average of about 2.7%. Although salary cuts are praiseworthy, it is true that for many of these company executives, their bonuses and additional compensation outweigh their salaries, and few have committed to giving up this additional source of income.
One leader who has also given up this additional income is Ralph Lauren, executive chairman and chief creative officer of his namesake organisation. The fashion mogul is giving up both his 2020 bonus and fiscal 2021 salary, which equates to around $11 million. What is clear is that the restoration of the economy will rely on more acts of strong leadership and leading by example.