Executives Take Pay Cuts to Minimize Layoffs

April 10, 2023
Hall Benefits Law, LLC

According to a recent Resume Builder survey of 1,000 U.S. companies with more than 100 employees, 66% of executives have taken a pay cut during the last six months, with 94% of those executives stating that they took a pay cut to avoid layoffs of other employees. Additionally, 67% of the executives claimed that other executive employees at their company also had taken pay cuts in the past six months. Similarly, Forbes recently reported that several top CEOs, including those at Alphabet, Apple, JP Morgan, and Zoom, have taken pay cuts.

Despite these pay cuts, respondents to the survey also indicated that layoffs are increasing, with 78% stating that layoffs have occurred in the last six months. In addition, another 70% of companies expect layoffs over the next six months.

The survey results also indicated that of the executives who have not taken pay cuts, 36% said they would take a pay cut to prevent layoffs, whereas another 31% said they probably would do so.

CEOs and other executives willing to take pay cuts to prevent employee layoffs can make themselves appear empathetic to employees. Employees also overwhelmingly agree that executives should take pay cuts before laying off employees or cutting employee wages. In contrast, employees largely are unwilling or unable to take even temporary pay cuts to avoid layoffs. Cutting compensation for anyone, whether executives or employees, can harm company morale. It signals that the company is in danger and their jobs may be at risk.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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