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Entries tagged "Executive Excess"Page Previous 1 • 2
August 31, 2011 · By Chuck Collins
As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here's a stunning fact to contemplate: 25 hugely profitable U.S. companies paid their CEOs more last year than they paid Uncle Sam in taxes.
In other words, the more CEOs dodge their civic responsibilities, the more lavishly they're paid. That's the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored.
These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Qwest Communications, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year's average of $10.8 million for the CEOs of S&P 500 companies.
Instead of paying their fair share, these companies spend millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year.
Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions — and then feign losses from their U.S. operations at tax time.
Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment.
Here are a few examples of these champion tax-dodgers:
- Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract — while lobbying to preserve antiquated tax breaks for oil and gas industry.
- Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay' 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy.
- Insurance brokerage Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda — a favorite locale for insurance companies seeking to avoid both taxes and regulation.
These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets.
They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam's investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars.
These CEOs profess to love America. But when it comes time to pay the bills, they'd rather outsource that job over to you or the small business down the road.
Congress should pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans. In the face of growing fiscal austerity, these companies should contribute to the solution and pay their fair share of U.S. taxes.
Chuck Collins is a co-author of the new Institute for Policy Studies report, Executive Excess 2011: The Massive CEO Rewards for Tax Dodging.
September 1, 2010 · By Kevin Shih
Over 15 million workers were fired from their jobs from January 2007 through December 2009, according to the Bureau of Labor Statistics.
Keep that in mind while looking at these numbers from IPS’s just-released 17th annual Executive Excess Report, CEO Pay and the Great Recession:
- Fred Hassan, the ex-CEO of Schering-Plough, received a $33 million golden parachute when his firm merged with Merck in late 2009. The merger led to 16,000 workers being fired.
- William Weldon of Johnson & Johnson took home $25.6 million, more than three times as much as the S&P 500 CEO average, at a time when his firm slashed 9,000 jobs and while the company was facing a massive drug recall scandal.
- Mark Hurd of Hewlett-Packard, currently famous for failing to cover up a relationship with a contractor/erotic film star, has been awarded $24.2 million for laying off 6,400 workers. On top of that, he received an additional $28 million in severance.
These two sets of data illustrate a pretty dire picture, especially at a time when we are experiencing record unemployment. Both the government and the private sector are unwilling to take sufficient measures to put Americans back to work. The federal government is moving away from job-creating stimulus to supposedly austere measures, like cutting much needed social safety net programs (see here for an obvious example). The private sector, on the other hand, is making record short-term profits by eliminating jobs—furthering the income gap between the rich and the poor, while also significantly decreasing the consumption and taxpaying power of regular workers.
CEO Pay and the Great Recession is a report we released today that illustrates this irresponsible behavior in the corporate sector. According to the report, the 50 top CEOs that have laid off the most workers in 2009 received $12 million on average, while the S&P 500 companies have earned around $8.5 million on average.
Some additional key findings:
- Five of the 50 top layoff leaders were recipients of major financial bailouts. Of these, American Express CEO Kenneth Chenault took home the highest 2009 pay, $16.8 million, including a $5 million cash bonus. American Express has laid off 4,000 employees since receiving $3.4 billion in taxpayer bailout funds.
- The $598 million combined compensation of the top 50 CEO layoff leaders could provide average unemployment benefits to 37,759 workers for an entire year — or nearly a month of benefits for each of the 531,363 workers their companies laid off.
At a time when we're experiencing the worst economic crisis in the past 80 years, CEOs who slash jobs should have to tighten their own belts, not just so they’re in line with today’s S&P norm, but moving towards CEO pay levels in previous decades when the U.S. economy was more stable. This is a move that is necessary to establish robust sustainable economic growth. It would also help prevent future economic crises like the one we are experiencing today.