The World’s largest oil field service, Schlumberger, has been bleeding profits since an oversupply of oil drove the cost per barrel from $100 in 2014 to $33.01. CEO Paal Kibsgaard saw his company profits decrease 40 percent since the downward trend in oil prices began, and as a result he fired 25,000 people in 2015, roughly 20 percent of the company’s workforce.
The CEO felt the pain in his company’s loss of profits though as his salary decreased from $18.5 million in 2014 to $18.3 million in 2015. The drop was only due to the performance in his pension plan though, as his base salary and stock values increased from 2014.
Forbes listed Schlumberger as #123 on its list of largest public companies, with a market cap of $109.8 billion as of May 2015. The sheer size, scope and profits the company makes should inoculate it to some degree from making enormous employee layoffs, leaving thousands of men and women with families unemployed, facing inadequate compensation and the stressors inherent with re-entering the job market.
“Layoffs are often a sign of failure by top executives to properly manage a business and forecast needs,” wrote Eleanor Boxham in a 2013 Fortune magazine article. “And failure of board members to ensure that the right management is in place.”
Given this sign of failure from Schlumberger’s CEO, it is ethically abhorrent he receives such a high salary the same year the company lays off thousands of lower level employees. Despite the layoffs, the company’s stock has steadily increased lately, and unfortunately that is all these corporate leaders, especially in the oil industry, care about. These attitudes are what contribute to the growing income and wealthy inequality not just in America, but all over the World. The 62 wealthiest people in the world have as much wealth as the bottom 50 percent of the world, nearly 3.6 billion people. The wealthiest 1 percent of the World’s population have as much wealth as the other 99 percent. For nearly fifty years, wages of working people in the United States have remained stagnant while the top income earners have seen their salaries grow exponentially. In the United States since the 2008 recession, nearly 99 percent of all new generated income has gone to the wealthiest 1 percent of Americans. Current trends suggest these enormous disparities in wealth are expanding, and if CEOs like Kibsgaard are allowed to take home huge salaries while simultaneously firing thousands of people, things are only going to get worse.
Featured Image Courtesy of Flickr