Some US firms cut pay to preserve jobs

CIOL Bureau
New Update

Jamie LaReau


NEW YORK: Right around his one-year anniversary with technology firm Acxiom

Corp., Todd Cullen learned his pay check would be cut by 5 per cent for at least

the next year. Far from being disappointed, Cullen said that, in the current

economic environment, he was happy just to keep his job with the firm, which is

based in Little Rock, Arkansas, and which manages customer data for clients.

"I'm excited to have a job," Cullen said. "I think we all

are." To stave off massive job cuts and trim costs, Acxiom told its 6,000

employees on Monday that, effective immediately, anyone earning more than

$25,000 a year would have to take a 5 per cent pay cut.

On Thursday, a much bigger company, network testing equipment maker Agilent

Technologies announced a 10 per cent temporary pay cut. Agilent said business

was worse than expected and sales were faltering to customers like big

communications firms.


"We are trying to avoid across-the-board layoffs," Agilent

president and chief executive Ned Barnholt said on Thursday. Agilent shares fell

9.2 per cent on Friday to $27.80, a fraction of its 52-week high of $124.94.

Agilent and Acxiom are among the first companies to propose such a plan,

according to employment experts, who say other firms may follow suit.

"This is a creative way to attempt to accomplish what most employers

would like to do in a period when they envision the downturn to be short-lived

and would like to keep their employees," said Fred Braid, a partner and

labor law expert at the law firm of Holland & Knight.


Employment law experts favor options

In an economic downturn, employers might want to axe people who make the highest
salaries, said Lois Schlissel, partner at New York-based law firm Meyer, Suozzi,

English and Klein. Schlissel, who practices employment law, often advises

companies against that because it could open the company to age discrimination

suits, because older workers are typically better paid.

"It's with the intent to show that the lay off is not a pretext for

purging the company of all their workers, but truly a program geared to reduce

the payroll," Schlissel said of the pay cuts. Earlier this year, Charles

Schwab Corp. asked employees to take Fridays off for a short period in order to

scale back on payroll expenses rather than make massive layoffs.

Thomas Palley, assistant director of public policy for the AFL-CIO

confederation of labor unions, said organized labor would frown on pay cuts as

well as job cuts. "We'd be against both," Palley said. "Both

would be the wrong way of going against a national economic problem."



Charles Morgan, known at Acxiom as "company leader" instead of chief
executive, took a 20 per cent, or $140,000, pay cut along with his employees.

"We wanted to maintain the motivation and excitement about our business at

the same time we were cutting expenses," Morgan said.

Acxiom's shares closed at $13-3/16 on Nasdaq on Friday, down 3.2 per cent on

the day and well below its year high of $45-3/4. The company offset the pay cut

with a stock option plan, under which the company gave the 5,100 workers,

affected by the cut the chance to buy shares that will be matched one-for-one by

the company.

Cullen, who said he volunteered to lose another 1 per cent of his paycheck in

order to get more stock options, said he viewed the move positively. "It

could be a lot worse, there could have been some serious layoffs," Cullen


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