To help their businesses survive and succeed during the economic downturn, Main Street CEOs are reducing their own salaries and refocusing their priorities. Fifty percent of CEOs are taking a personal pay cut to help their companies get through hard times. Of those who are taking pay cuts, 28 percent plan to give up more than a quarter of their salaries and 12 percent more than half. Forty percent of CEOs plan to become more personally involved in the business, particularly in sales, in 2009.
"The pervasive bad news about the economy has caught up with our own Vistage members, who now forecast lower revenues and profits for their businesses," said Rafael Pastor, chairman of the board and CEO of Vistage International, an executive performance company. "The drop in consumer spending and the lack of credit are having a severe impact on the outlook of small and medium-sized businesses. CEOs are making their own business sacrifices and cite loosening of credit and an economic stimulus package as the top priorities for the incoming Obama administration."
Main Street Business Confidence
Forty percent of CEOs surveyed said the level of confidence they have in their own businesses for 2009 is less than in 2008. Thirty-five per cent pointed to declining sales revenues (while 28 percent said revenues will stay the same). Thirty-six percent said they expect profitability to worsen in 2009 (31 percent said it will stay the same). These findings represent the sharpest decline in CEOs’ expectations for sales revenues and profitability in the five-year history of the Index.
Economic Recovery
Three-in-five CEOs expect the economy to continue to worsen in the year ahead, twice as many as in the previous quarter. Only 10 percent of firms expect the economy to improve during 2009, while 61 percent do not expect a recovery to happen until 2010, and 28 percent in 2011 or later.
"Despite sagging executive confidence, CEOs are turning to Vistage for advice more now than ever before with Vistage CEO member inflow up nearly 13% since 2007," said Pastor.
New Administration
When asked about their confidence in the Obama administration’s ability to improve the economy, 15 percent expressed a high level of confidence, 34 percent said medium, and 32 percent said low. Nineteen percent said their confidence was no more or less than it would be for any other incoming president. Nearly one third (31 percent) said increasing the availability of credit is one of the most important issues for small and mid-size businesses.
Hiring and Layoffs
One-third of all CEOs reported lay-offs in their companies in the past year, and an additional 32 percent anticipated fewer total employees by this time in 2009. While this is by far the worst job outlook since the introduction of the national index in 2003, more than a quarter of Main Street CEOS (27 percent) said they still intend to hire new employees in 2009.
Tempered Investment Spending
Forty-four percent of all CEOs planned to decrease investments, twice as many as planned to do so in the third quarter, and four times the level recorded from 2003 to 2007.
