Cat to cut executive pay, offer buyouts
This should warm the hearts of UAW leaders everywhere: Caterpillar’s taking a whack at management pay this time, according to Dow Jones NewsWires:
Caterpillar Inc. (CAT) will slash executive compensation by as much as 50% next year, with lower cuts for other employees, as the manufacturing giant becomes the latest to cut salaries to cope with slumping demand.
In addition, most U.S.-based employees will be eligible for buyouts as Caterpillar announced a hiring freeze and continues to look for other cost-saving opportunities, including layoffs.
Oh, and there’s this:
The company has benefited from a five-year boom led by emerging markets in big need for the heavy construction equipment made by Caterpillar. During that time, the work force rose nearly 50% to 101,000 as revenue more than doubled.
Let’s hope most of those folks keep their jobs, but the fact a bust almost always over-corrects the excesses of the boom is worrisome.
A post at MarketWatch on the same news item has some interesting comments about what to do about excessive executive pay.
As long as we’re talking jobs, the New York Times reports that lots of companies are avoiding layoffs by cutting hours and other tactics that fall short of outright layoffs:
Some of these cooperative cost-cutting tactics are not entirely unique to this downturn. But the reasons behind the steps — and the rationale for the sharp growth in their popularity in just the last month — reflect the peculiarities of this recession, its sudden deepening and the changing dynamics of the global economy.
Companies taking nips and tucks to their work force say this economy plunged so quickly in October that they do not want to prune too much should it just as suddenly roar back. They also say they have been so careful about hiring and spending in recent years — particularly in the last 12 months when nearly everyone sensed the country was in a recession — that highly productive workers, not slackers, remain on the payroll.
The worry for most companies is what to do when the fat is gone and they have to start cutting into the muscle. Anybody who survived the bloodbath of the early ’80s remembers what that was like.