Shareholders Pressure Raytheon to Freeze CEO Pay

Press Release
For Immediate Release - April 24, 2000
Contact:">Stacie Garnett
(617) 423-2148 x19

Shareholders Pressure Raytheon to Freeze CEO Pay

Want executives to share sacrifice during hard times

Despite a shattering year for shareholders, employees, and customers, Raytheon’s CEO still received compensation to the tune of over $8 million in 1999. Shareholders will present a resolution at Raytheon’s annual meeting on April 26 in Washington DC calling on the company to freeze CEO pay during periods of downsizing.

Responding to financial challenges, Raytheon announced significant layoffs in 1998 and 1999, increasing their estimate multiple times to a total of 17,800 workers. Raytheon management argued these layoffs would reduce costs and boost profits.

But profits have continued to decline and stock prices have tumbled. Raytheon’s profits fell from $844 million in 1998 to $404 million last year. Meanwhile, its stock plummeted from a 52-week high of $74.93 in July 1999 to a seven-year low of $26.56 by year-end.

Also feeling burned by Raytheon are the taxpayers of Massachusetts and customers such as the Pentagon. Raytheon lobbied hard to win a tax break from Massachusetts they said would save them $20 million a year in exchange for a promise to keep jobs in state. Yet, since the bill was passed in 1995, Raytheon has eliminated 1,300 jobs in Massachusetts, outraging the public. In 1999, the Pentagon was disappointed by an embarrassing failure in the first airborne test of the multi-billion dollar "Star Wars" anti-missile defense project.

Despite shortchanging major stakeholders in the corporation, Raytheon executives were rewarded handsomely in 1999. Mr. Burnham, the CEO, received a raise in his base salary, and stock options worth $6.4 million (50,000 more options than in 1998), although his cash bonus was cut 40 percent to $900,000. In 1999, each of Raytheon’s top officers received at least as many stock options as they did the previous year.

"Why should the corporate executives reap all the reward while their workers on the shop floor, their shareholders, their customers, and the taxpayers who subsidized them are all making sacrifices? If cost-cutting is needed, let that be reflected in the executive suite, too," said Daniel Solomon, a member of Responsible Wealth who will present the resolution at the meeting, to be held at the United States Chamber of Commerce in Washington, DC.

As corporations continue to downsize in attempts to cut costs and increase profitability, Responsible Wealth is urging CEOs to delay personal gains and share in the sacrifice until the results of restructuring have played out, especially since downsizing has been shown to have a negative effect more than half the time.

Meanwhile, outside the meeting, members of Responsible Wealth and their supporters will stage a humorous tableau to educate shareholders and passers-by about the issue.

The shareholder resolution is one of 14 filed by Responsible Wealth to encourage companies to share rewards more widely.

Responsible Wealth is a growing network of over 450 business owners and investors in the top 5 percent of income or wealth in the United States. Responsible Wealth is affiliated with United for a Fair Economy, a national non-profit that spotlights growing economic inequality

Click here for a copy of the resolution.