A wave of chief executive pay cuts is washing across Corporate America. So are CEOs suddenly hurting — or turning hard times into still more good times at the top of the corporate ladder?

By Sam Pizzigati

Beware of CEOs who feel your pain. These days, that’s not easy. They seem to be just about everywhere. With the economy in free-fall, CEOs all across the United States have begun waging a veritable empathy offensive. From Wall Street to America’s ultimate Main Street — in Peoria, Illinois — top execs are announcing what appear to be painfully deep pay cuts in their own personal compensation.

That’s the least we CEOs can do, the message goes, in these most difficult of economic times. You average folks may be hurting, but we’re hurting, too.

In Peoria, the CEO of the world’s biggest construction equipment company will this year see his total pay drop by up to 50 percent. The company, Caterpillar Inc., announced this executive pay slash in December, along with plans to trim employee wages by up to 15 percent, lay off workers, and subject plants to temporary shutdowns.

“We understand these decisions will disrupt the lives of many of our employees and their families,” Caterpillar CEO Jim Owens noted apologetically, “and we regret the need to take these steps.”

At Citigroup, the flailing global banking giant, top executives are regretting their plans to lay off 52,000 workers so much that they’re denying themselves all the 2008 bonus cash they’re entitled, by contract, to collect.

“The most senior leaders,” Citi CEO Vikram Pandit nobly announced in a new year’s memo, “should be affected the most.”

Last week, Bank of America CEO Ken Lewis joined the ranks of CEO self-sacrificers. He’ll be asking Bank of America’s board of directors not to a times ward any bonuses to the bank’s top executive team.

“It is only fair,” proclaimed Lewis, “that our most senior executives, who have been rewarded in past years when our company and stock price performed, should now share in the pain as performance has lagged.”

Overall, notes the corporate consulting firm Watson Wyatt, about half of 264 recently surveyed major U.S. companies say they’ll be cutting executive compensation in 2009. Another corporate consulting firm, Equilar, has found that 26 major companies actually filed papers locking in CEO salary cuts in 2008’s final weeks.

So have we all become just one big economic family, with everyone sharing the sacrifices that hard times demand? Not exactly. The paycheck hits that CEOs have been so proudly announcing turn out, upon closer inspection, to be a lot more pinprick than pain. 

Take, for instance, the 20 percent “salary cut” that FedEx CEO Fred Smith is now swallowing. Or the 25 percent salary dip for Motorola co-CEOs Greg Brown and Sanjay Jha. Or the 33 percent ax to the salary of Western Digital chief exec John Coyne.  

These all seem serious sacrifices. But salary cash only makes up a minor part of CEO pay packages. Top executives take in much more in stock and other incentive awards than they do from straight salary.

Essentially, notes Equilar research manager Alexander Cwirko-Godycki, CEOs who announce “salary cuts” are merely “cutting a portion of the smallest part of the pay package” that comes their way.

And all those bonuses that the top execs in high-finance are giving up? Maybe not such a mammoth sacrifice either. Consider the now bonus-less Citigroup CEO Vikram Pandit.

Citi’s share price last year plunged from just under $30 to just over $3. The stock is currently trading under $8. Last January, Citi rewarded CEO Pandit with a grant of 1 million Citi shares. If taxpayer bailout billions help the Citi share price rise just another $5 in 2009, Pandit’s personal portfolio — from that share grant last year alone — will gain $5 million.

Situations like Pandit’s abound. The Conference Board, a business research group, last month revealed that CEOs at the largest 10 percent of U.S. corporations are holding stocks and stock options in their companies worth “about 100 times” the value of their annual salary.

In other words, even modest increases in company share prices — and experts expect modest increases as the stock market begins to recover from last year’s record plunge — can translate into huge windfalls for company CEOs.

Some companies are already turbocharging these windfalls. Mike Ullman, the CEO of the J.C. Penney retail chain, last month received a new pay deal that guarantees him $25 million in cash if the Penney share price rises from its depressed $20 December level to $32.75 over the next three years.

The Peoria-based Caterpillar, at first glance, doesn’t seem to be playing by the same CEO pay cut scam playbook. Caterpillar CEO Jim Owens is facing a 50 percent cut in his total pay, not just salary and bonus. But shed no sympathy for Owens. He’s coming off a 15 percent pay hike in 2007 that brought his total take-home to over $17.1 million.

Actually, we need to go considerably further back than 2007 to understand the colossal emptiness of Caterpillar’s current share-the-pain rhetoric. In the 1990s, Caterpillar helped lead Corporate America’s assault on the good union jobs that created modern America’s middle class.

Caterpillar prepped for that assault, in the 1980s, by expanding operations overseas to gradually reduce the unionized share of its workforce. Then, in 1991, Caterpillar execs provoked a strike by demanding the right to hire new workers at half the going rate.

In April 1992, five months into the strike, the union’s walkout ended — after Caterpillar threatened to hire permanent replacements for all the strikers. The union would strike again two years later, but no contract would be signed until 1998. By that time, Caterpillar annual profits had soared nearly four-fold and the company’s share price had tripled.

Caterpillar’s CEO at the time, Donald Fites, did quite well, too. Over the course of Caterpillar’s five most bitter years of 1990s labor strife, he collected $10 million. Workers, meanwhile, ended up with a contract that allowed Caterpillar to replace retirees with new hires paid 70 percent of the old wage.

Fites himself retired in 1999, but he re-emerged in the news this past November — just a month before Caterpillar’s current CEO announced his personal pay cut — as the latest inductee into the Association of Equipment Manufacturers hall of fame. Fites, noted one tribute at the hall of fame induction, guided Caterpillar “through some very difficult times.”

Those difficult times left Fites with a handsome personal fortune. His CEO successors, in our current “difficult times,” see no reason to settle for anything less.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality.