US bosses grow fat from offshoring

Sep 02 2004 by Brian Amble Print This Article

The bosses of the 50 US companies that have outsourcing the most jobs overseas earned 28 percent more than the average large-company CEO in 2003.

A report from two US think-tanks, the Institute for Policy Studies and United for a Fair Economy, found that the average pay packet for the CEOs of the 50 US firms that 'offshored' the most jobs rose by 46 per cent in 2003 compared with the average 9 per cent increase for the CEOs of the 365 large companies whose pay is tracked by BusinessWeek magazine.

The aptly-named "Executive Excess 2004" report found that the top 50 offshoring CEOs earned an average of $10.4m (£5.8m) in 2003, while average CEO compensation was $8.1m (£4.5m).

From 2001 to 2003, these 50 CEOs earned some $2.2bn (£1.2bn) between them while sending an estimated 200,000 jobs overseas, the report said.

The average pay increase for ordinary American workers over the same period was less than four per cent.

The report also calculated that after two years of narrowing, the pay gap between CEOs and employees rose again in 2003, to 301:1 from 282:1.

The pay gap between US CEOs and American call centre workers is 400:1, while the gap between US CEOs and Indian call centre workers is 3,348:1.

"These 50 CEOs seem to be personally benefiting from a trend that has already cost hundreds of thousands of US jobs and is projected to cost millions more over the next decade,Ē the report said.

The 15 companies that outsourced the most US service jobs were: United Technologies, Citigroup, Oracle, Bank of America, Cognizant Technology Solutions, Morgan Stanley, Intuit, SBC Communications, Conseco, JP Morgan Chase, Sprint, Bank of New York, Time Warner, General Electric, and American Express.

Bank of America, for example, cut nearly 5,000 US jobs while outsourcing up to 1,100 jobs to India in 2003. In July 2004, the firm announced that it planned to cut another 12,500 U.S. jobs in the next two years.

Meanwhile, CEO Kenneth Lewis was paid $37.9m (£20.5m) in 2003, nearly 110 percent more than in 2002.