The Affordability of Defense Contractor CEOs

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October 11, 2012

There has been a lot of talk about what America will be able to afford in the coming years. And yet for the last decade, the Pentagon has received a blank check for all kinds of pricey, and often ineffective, weapons systems too often designed to fight enemies we don't have.

Secretary of Defense Leon Panetta and many top defense contractor CEOs have said we can't afford the 10 percent budget cut to the Pentagon that would come with sequestration. Some defense contractor CEOs are arguing that sequestration will cause massive job losses, even though history doesn't support that conclusion.

On October 1, Wes Bush, CEO of top defense contractor Northrop Grumman, sent an email to Northrop employees asking them to oppose the sequestration cuts and to personally contact their representatives.

Bush closed the email by saying, "In this time of tremendous uncertainty, our customers will need to make difficult decisions—decisions influenced by how they view those who are producing the capabilities and services they seek and require. Ultimately, program performance and affordability are the drivers of these customer perspectives."

Since the U.S. taxpayer is Northrop's largest customer, it's worth noting that as Bush talks of affordability, he received $26.2 million in total compensation in 2012. That's more than the CEOs of Lockheed Martin, Boeing, or Raytheon, though the crown for highest compensated defense CEO goes to David Cote of Honeywell, who raked in $35.7 million last year.

Bush's 2011 compensation is 327 times higher than the average salary of a defense industry worker.

Interesting that Bush talked about affordability and potential job losses when he makes more in a single working day than the average defense employee makes in a year. 

Northrop is part of a bloated defense industry that produces weapons so consistently behind schedule and over budget that an on-time, on-budget program would be cause for a parade. If program performance and affordability are so crucial in this time of tight budgets, maybe Northrop and the other major defense contractors should focus on creating an industrial defense system that builds affordable, effective weapons the Pentagon wants and needs instead of spending its time raising the specter of massive layoffs.

Topics: National Security

Related Content: Defense, Wasteful Defense Spending

Authors: Andre Francisco

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