Recession Fears Spark a Round of CEO Pay Cuts
A growing list of high-profile companies are trimming CEO pay as fears of recession mount among major corporations.
$Zoom Video Communications(ZM.US$ became the most recent major company to announce a pay cut for its top executive this week when CEO Eric Yuan said he was taking a 98% salary cut, following major firms such as $Apple(AAPL.US$ , $Intel(INTC.US$ , and $Goldman Sachs(GS.US$ .The companies cited the same clouded economic outlook in recent earnings calls, and are taking cost-cutting measures.
$Zoom Video Communications(ZM.US$ became the most recent major company to announce a pay cut for its top executive this week when CEO Eric Yuan said he was taking a 98% salary cut, following major firms such as $Apple(AAPL.US$ , $Intel(INTC.US$ , and $Goldman Sachs(GS.US$ .The companies cited the same clouded economic outlook in recent earnings calls, and are taking cost-cutting measures.
CEO pay cuts have become a common move during economic downturns in past years. When the pandemic struck in 2020, 647 out of the Russell 3000 companies announced CEO pay cuts (with 512 following through), according to an analysis of compensation data by Fortune and compliance company Diligent in 2021.
Despite the cuts, CEOs are extremely well compensated, and some employees may view the cuts as symbolic.
The salary cuts were spurred by a downturn in the tech and finance sector brought on by the Federal Reserve's anti-inflation interest rate hikes.
Corporations' outlook for the economy has soured, with many predicting a recession in the year ahead, earnings calls show.
The salary cuts were spurred by a downturn in the tech and finance sector brought on by the Federal Reserve's anti-inflation interest rate hikes.
Corporations' outlook for the economy has soured, with many predicting a recession in the year ahead, earnings calls show.
For example, Elon Musk, CEO of electric carmaker $Tesla(TSLA.US$ , said the U.S. was likely headed for a “difficult recession” in 2023 in an earnings call Jan. 26. $Ford Motor(F.US$ ’s Chief Financial Officer John Lawler predicted a “mild recession” in an earnings call last week, and $McDonald's(MCD.US$ ’s CEO Christopher J. Kempczinski forecast a “mild to moderate” one. $United Parcel Service(UPS.US$ CFO Brian Newman said 2023 would be “a bumpy year due to rising interest rates, decades-high inflation, recession forecasts” in an earnings call last week.
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