Raytheon's CEO Misses Target on Employee Satisfaction Goals

Press Release
For Immediate Release - April 23, 2001
Contact: Molly Lanzarotta
(617) 423-2148 x39

Raytheon's CEO Misses Target on Employee Satisfaction Goals

Shareholder Resolution Ties Executive Pay to Employee Security

You don’t have to be a rocket scientist to do the math: last year, Raytheon’s CEO received a 94% increase in his bonus as the company continued to announce layoffs of employees, totaling more than 18,000 from 1998 to 2000. Shareholders will present a resolution at Raytheon’s annual meeting on April 25 at the company’s headquarters in Lexington, MA, calling on the company to incorporate employee satisfaction as one factor in determining CEO pay.

CEO Daniel Burnham received his stratospheric bonus and an 8% salary increase despite Raytheon’s stock underperforming the S&P Aerospace Index, the company’s peer group, for the second year in a row. A study by the American Management Association found that only 31% of corporate downsizers experienced productivity gains following layoffs, while 77% experienced deterioration in employee morale.

The shareholder resolution, to be presented by Responsible Wealth co-director Scott Klinger, would directly link a portion of executive compensation to employee turnover rates and employee surveys. Several other corporations – Bristol-Myers Squibb, IBM, and Eastman Kodak – have tied a portion of executive pay to meeting employee satisfaction objectives. Raytheon maintains that it already conducts employee satisfaction surveys and considers them as one factor in setting CEO pay. In its year 2000 Compensation Committee report, published in its proxy statement, Raytheon reports that Mr. Burnham received financial rewards for exceeding his goals in "people-related initiatives."

"In a year when Raytheon suffered a bitter five-week strike involving 2,700 employees, settled a gender discrimination lawsuit, and continued to deal with the lingering effects of thousands of layoffs, it is preposterous to see the CEO rewarded for exceeding ”˜people-related’ goals," says Klinger.

Responsible Wealth has filed shareholder resolutions related to executive compensation at seven companies: Disney, FleetBoston, Citigroup, Household International, Exxon Mobil and AT&T, as well as Raytheon. Supporting the resolutions is a recent study by Scott Klinger which concludes that skyrocketing CEO pay foreshadows poor stock performance. The report and the texts of the shareholder resolutions can be found on this website.

Responsible Wealth, a project of United for a Fair Economy, is a growing network of over 450 businesspeople, investors and affluent Americans in the top 5 percent of income and wealth who work to promote widely shared prosperity. United for a Fair Economy is a national, independent non-profit that spotlights growing economic inequality and inspires action to narrow the wage gap.