US CEOs get richer, poor get poorer

This video from the USA is called The Rich Get Richer – New Facts.

By David Brown in the USA:

US CEO pay continues to climb

28 May 2012

Two recent studies on executive compensation show a marked increase in the pay of America’s top business figures.

A report by the Hay Group, a consulting firm, picked up by the Wall Street Journal, showed that CEO compensation in the US increased 2.8 percent last year to a median of $10.3 million. Total compensation for the 301 CEOs examined amounted to $3.9 billion and ranged from “only” $842,400 for Walter Robb of Whole Foods to $376.2 million for Tim Cook of Apple.

The other study, by the Associated Press (AP), came up with the smaller median of $9.6 million by excluding CEOs who had been employed for less than two years, most notably Cook, hired in the wake of Steve Jobs’ death.

In addition to vast quantities of stock and cash, many top executives are receiving perks worth millions. Louis D’Ambrosio, the CEO of Sears Holdings Corp., for example, received a jet allowance of $793,224 last year, so he could make the commute from his home in Philadelphia to Sears headquarters near Chicago. Les Moonves, CEO of CBS, received $69 million in compensation, including $500,000 to build a room for screening television shows and movies at his home, dubbed a “dedicated work area.”

The unbridgeable gulf between CEOs and working class Americans is readily apparent when the executives’ pay and perks are compared to the national median income of $39,312, or the minimum wage income of $15,080.

The highest paid executive in the AP survey is David Simon, who made $137 million in 2011, equivalent to 9,084 years for a minimum-wage worker and 3,484 years for someone earning the median income. The AP report’s median CEO income for one year amounts to 636 years working at the minimum wage and 244 years, or about five lifetimes of labor, for the average worker.

Both the AP and Journal attempt to sidestep the implications of this vast inequality and present the trends in CEO pay in a positive light. Unlike 2010, in 2011 there was actually more of a correlation between CEO pay and company stock performance, and both reports credit the Dodd-Frank bill with restoring executive accountability. But what does this “accountability” consist of?

One of the “constraints” that the Dodd-Frank Bill puts on publicly traded companies is that they must allow their shareholders an advisory vote on CEO pay. The vote is non-binding, but, according to the AP, “shame has proved to be a powerful motivator.”

How little shame there is within the boards of directors can readily be seen by the shining example of corporate conscience represented by Hewlett-Packard. In 2010 shareholders voted against the compensation package for former CEO Mark Hurd, who resigned amid allegations of sexual harassment. Now, the current CEO, and former California gubernatorial candidate, Meg Whitman, is being paid only $1 a year in salary, but she receives given stock options potentially worth $16 million if HP’s stock price goes up.

This may have made Whitman more accountable to the shareholders, but it clearly has not made her accountable to her employees or society at large. Earlier this month Hewlett-Packard announced that it would eliminate 27,000 jobs, its largest round of layoffs ever, in order to “increase efficiency.” HP made over $7 billion in profits last year.

Nearly a quarter of Californians live in poverty, according to modified Census figures: here.

37 thoughts on “US CEOs get richer, poor get poorer

  1. In 2009 the corp I work for froze my wages because of the economic troubles in the US, meanwhile, the CEO gave himself a 27% pay bump.


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  16. For American companies ‘Tis The Season To Be Greedy’.

    America’s largest companies Pay their CEOs more than they pay in taxes.

    America’s largest companies are using a wide variety of loopholes to bring their collective tax bills into negative digits. Following are the 10 highest-paid CEOs of 2013.

    Anthony Petrello, Nabors Industries, $68.2 million.
    Leslie Moonves, CBS, $65.6 million.
    Richard Adkerson, Freeport-McMoRan Copper & Gold, $55.3 million.
    Stephen Kaufer, TripAdvisor, $39 million.
    Philippe Dauman, Viacom, $37.2 million.
    Leonard Schleifer, Regeneron Pharmaceuticals, $36.3 million.
    Robert Iger, Walt Disney, $34.3 million.
    David Zaslav, Discovery Communications, $33.3 million.
    Jeffrey Bewkes, Time Warner, $32.5 million.
    Brian Roberts, Comcast, $31.4 million.

    Out of 30 of the largest companies in the United States last year, nearly a quarter paid more to their chief executive than they did in federal taxes, according to new research.

    That proportion appears to hold true for a larger sample of US companies, as well. Of the country’s 100 top-paid CEOs last year, 29 received more in compensation than their companies paid in taxes.
    And that trend appears to be strengthening.

    ‘The last two times we looked at these figures, 25 out of the top 100 fell into this category. This time it’s gone up to 29,’ Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies said.

    She is also the co-author of the new report, titled ‘Fleecing Uncle Sam: A growing number of corporations spend more on executive compensation than federal income taxes’.

    She added: ‘So clearly there isn’t a lot being done to crack down on the massive tax loopholes that these very large corporations, in particular, are able to take advantage of. In fact, the problem is getting worse.’

    This was the first time that the report, jointly produced by the Institute for Policy Studies and the Centre for Responsive Government and released last week, has included exploration of the compensation and tax-payment practices of the country’s 30 largest companies.

    Of these, the seven companies that paid their CEOs more than what they paid the US Treasury are among the most well-known names and brands in the world – Boeing Co., Ford Motor Co., Chevron Corp., Citigroup Inc., Verizon Communications Inc., JPMorgan Chase & Co. and General Motors Co.

    Further, each of these corporations was extremely profitable in 2013, collectively taking in some $74 billion in profits before taxes, according to estimates in the new report.

    Yet these companies were also able to make use of a spectrum of tax breaks that resulted in significant refunds.

    Using public information, the researchers were able to estimate that these seven companies got back nearly $2 billion in tax refunds for last year.

    That would result in ‘an effective tax rate of negative 2.5 per cent,’ the report states.


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