Executive teams announce salary cuts
As pandemic spreads, restraints on pay seen as way to ease financial woes
Murray Mullen says he was focused on the bigger picture when he approached senior executives and directors at his trucking and logistics business about taking pay cuts in response to the COVID-19 crisis.
The chief executive of Mullen Group Ltd. projected how the virus could wreak havoc on the Alberta-based business, which was founded by his family and is now traded on the Toronto Stock Exchange. He said it was essential to start making plans for the company to sustain itself into the early summer.
“My primary objective is this: How do I make sure the business is strong so that I’m around when demand improves?” Mullen explained by phone from his home in Victoria.
The board committed to forgoing any pay for 90 days, while his senior teams have “taken somewhere up to a 50 per cent pay cut,” he said.
Several other Canadian companies have made similar financial commitments in recent days that put temporary restraints on executive salaries, an effort partly to show employees that belt tightening isn’t just happening in the lower ranks. But the move can also help companies slow the bleeding of cash that might happen as the bottom falls out of their revenues.
In the oil and gas industry, executives at Canadian Natural Resources and Ensign Energy Services Inc. were among the first Canadian operations to commit to lower salaries in the short term as part of broader reductions in capital spending. These moves have drawn skepticism from some, including Larry Savage, a professor of labour studies at Brock University, who said he sees alternative motivations behind what are seemingly goodwill efforts.
Savage said he believes some companies are voluntarily lowering executive salaries now in hopes of heading off the federal government, which could require reduced compensation practices for industries that want to qualify for COVID-19 bailout packages.
“As government is asked to step up and play a larger role in figuring out how to deal with the crisis, people are going to turn their eyes to which companies have proactively taken steps to demonstrate they buy into this idea of: ‘We’re all in it together,’ ” he said.
“For a company seen as focused exclusively on its profitability, and not on the public good, I think there may be some repercussions over the long term.”