By Jean Eaglesham and Inti Pacheco 

Cheesecake Factory Inc. furloughed about 41,000 hourly restaurant workers to conserve cash in the coronavirus pandemic. It also cut pay for other employees by as much 20% -- a reduction that Chief Executive David Overton matched for his $995,000 salary.

At Yum Brands Inc., Chief Executive David Gibbs is forgoing his $1.2 million salary for the rest of this year, using the money in part to pay one-time $1,000 bonuses to managers of company-owned restaurants in its KFC, Pizza Hut, Taco Bell and The Habit Burger Grill chains.

As corporate America reels from the pandemic, senior executives are taking markedly different approaches to sharing the economic pain suffered by employees, a review by The Wall Street Journal found.

Chief executives at 184 companies within the S&P Composite 1500, comprising the biggest public corporations, have announced temporary reductions in their salaries, ranging from 10% to 100%, with a median cut of 50%, according to the Journal's analysis of data from research firm MyLogIQ and securities filings. Of the 106 companies that have reported furloughing employees, 17 haven't announced CEO salary reductions, the analysis found.

A spokeswoman for The Cheesecake Factory declined to comment. Yum said in a statement that Mr. Gibbs believed giving up his salary "was simply the right thing to do during this unprecedented time."

The salary cuts that have been reported appear less dramatic in the context of the executives' overall compensation: the roughly $91 million tally of CEO salary reductions is less than 10% of their $1.57 billion total annual compensation including equity awards, the value of which can fluctuate, the Journal's analysis of the latest available data showed. For Cheesecake Factory's Mr. Overton, the 20% pay cut was equivalent to 3% of his $6.7 million total compensation last year.

The stock and bonus payments that typically account for the majority of senior executive compensation will likely fall this year because of the crisis. However, stock or option awards being made now at low prices may offer the prospect of longer-term gains.

For most senior executives, salaries are only a small portion of their pay. Robert Iger, the executive chairman of Walt Disney Co., is temporarily forgoing all of his $3 million base salary to help "shoulder the burden" of the coronavirus's impact, the Burbank, Calif., entertainment giant said last month. Tens of thousands of Disney hotel and theme park workers this week began unpaid furlough. The cut for Mr. Iger equates to 6% of his $47.5 million total compensation last year, securities filings show. Most of last year's compensation was based on measures such as movie sales and theme park revenue, which will be far lower this year.

The median CEO compensation in 2019 was $12.8 million for the 357 of the S&P 500 companies that have so far reported this data, up from $11.7 million for the same group in 2018 and on pace to set a record if the pattern holds, according to a separate Journal analysis of proxy filings. The median ratio of chief executive pay to that of the typical employee was 168 to 1 for these companies, up from 157 to 1 in 2018.

Executives at companies that may not survive the pandemic could be reluctant to sacrifice their salary. Jill Soltau, chief executive of J.C. Penney Co., which put most of its 85,000 employees on unpaid furlough this month, has not taken a cut to her $1.4 million salary. The embattled retailer is in advanced bankruptcy talks, the Journal this week reported. A spokeswoman for J.C. Penney declined to comment on Ms. Soltau's salary.

The $2 trillion economic-rescue package signed into law last month has stepped up political oversight of executive pay. Some federal aid intended for companies restricts compensation in ways that could affect executives more than their voluntary salary reductions.

Gary Kelly, the chairman and CEO of Southwest Airlines Co., said he is taking a temporary 20% cut in his $750,000 salary -- one of the lowest percentage reductions among major U.S. airline chiefs, according to the Journal's analysis.

Southwest this week said it had completed an agreement to receive $3.2 billion under a federal assistance program designed to help prevent layoffs in the airlines industry.

The money comes with strings attached. Southwest is getting aid under a section of the Coronavirus Aid, Relief, and Economic Security Act that caps compensation for high earners at $3 million plus half of the amount over $3 million that they earned in 2019.

Depending on how the rules are drafted, that could mean Mr. Kelly's pay could be capped at $5.9 million, less than the $8.8 million he got last year and his earnings in each of the three years before that.

A Southwest spokesman said Mr. Kelly hasn't had a salary increase since February 2017, and his compensation last year included more than $6.3 million in stock awards. The spokesman said the company "defers to the Treasury Department with respect to how any limits on compensation will be calculated."

Rather than cutting executive pay, some companies are holding it back until certain requirements are met. The top 300 executives at Ford Motor Co. are deferring 20% to 50% of their salaries for at least five months starting May 1.

They will get paid only after the auto maker, which has shut most of its manufacturing world-wide, has repaid about $7 billion of the extra debt it has taken on to manage through the crisis, according to the company. This structure "functions as an incentive," a Ford spokesman said.

For rank-and-file employees, their own pay matters more than any salary cut by executives.

Leain and Kimberly Vashon, who both work at the Paris Las Vegas Hotel and Casino, have been furloughed by employer Caesars Entertainment Corp. Their two weeks of furlough pay has run out, leaving them "trying to make a decision as to whether to pay bills or get food," said Mr. Vashon, a bellman captain and union shop steward.

When Caesars last month closed its properties and furloughed most of its employees, the company didn't announce salary cuts for its senior executives, many of whom are slated to leave the company following a planned acquisition this year by Eldorado Resorts Inc., according to securities filings.

When the Journal asked for a comment, a Caesars spokesman said senior executives would be donating to an employee hardship fund. .

Mr. Vashon, who said he has worked for Caesars for 40 years, would rather get more cash than have executives take salary cuts.

"I'm not looking for symbolism," Mr. Vashon said. "What would help is if [the executives] stepped up to the plate and did the right thing by their workers."

--Lisa Schwartz contributed to this article.

Write to Jean Eaglesham at jean.eaglesham@wsj.com and Inti Pacheco at inti.pacheco@wsj.com

 

(END) Dow Jones Newswires

April 24, 2020 14:08 ET (18:08 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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