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Executive Pay: We Knew They Got Raises. But This?

It turns out that the good times are even better than we thought for American chief executives.

Among the executives who registered huge gains in the value of their company stock and options in 2010 were Warren E. Buffett, the chief executive of Berkshire Hathaway, top, Lawrence J. Ellison of Oracle, center, and Jeffrey P. Bezos of Amazon.com. Together, the three men’s holdings climbed by more than $13 billion for the year.

A preliminary examination of executive pay in 2010, based on data available as of April 1, found that the paychecks for top American executives were growing again, after shrinking during the 2008-9 recession.

But that study, conducted for The New York Times by Equilar, an executive compensation data firm based in Redwood City, Calif., was just an early snapshot, and there were even more riches to come. Some big companies had not yet disclosed their executive compensation.

So Sunday Business asked Equilar to run the numbers again.

Brace yourself.

The final figures show that the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009. The earlier study had put the median pay at a none-too-shabby $9.6 million, up 12 percent.

Total C.E.O. pay hasn’t quite returned to its heady, prerecession levels — but it certainly seems headed there. Despite the soft economy, weak home prices and persistently high unemployment, some top executives are already making more than they were before the economy soured.

Pay skyrocketed last year because many companies brought back cash bonuses, says Aaron Boyd, head of research at Equilar. Cash bonuses, as opposed to those awarded in stock options, jumped by an astounding 38 percent, the final numbers show.

Granted, many American corporations did well last year. Profits were up substantially. As a result, many companies are sharing the wealth, at least with their executives. “We’re seeing a lot of that reflected in the pay,” Mr. Boyd says.

And at a time of so much tumult in the media business, it might be surprising that some executives in media and communications were among the most richly rewarded last year.

The preliminary and final studies put Philippe P. Dauman, the chief executive of Viacom, at the top of the list. Mr. Dauman made $84.5 million last year, after signing a new long-term contract that included one-time stock awards.

Leslie Moonves, of the CBS Corporation, got a 32 percent raise and reaped $56.9 million. Michael White of DirecTV was paid $32.9 million, while Brian L. Roberts of the Comcast Corporation and Robert A. Iger of the Walt Disney Company each received pay packages valued at $28 million.

“Media firms seemed to be paying a lot,” said Carol Bowie, head of compensation policy development at ISS Governance, which advises large investors on corporate governance issues like proxy votes. “Media companies in general tend to be high-payers, and they tend to feed off each other.”

Other big payers included oil and commodities companies like Exxon Mobil and a few technology giants like Oracle and I.B.M.

Some of the other highly paid executives on the new list who were not in the April survey are Gregg W. Steinhafel of Target, who had a $23.5 million pay package; Michael E. Szymanczyk of Altria, $20.77 million; and Richard C. Adkerson of Freeport-McMoRan Copper & Gold, $35.3 million.

Most ordinary Americans aren’t getting raises anywhere close to those of these chief executives. Many aren’t getting raises at all — or even regular paychecks. Unemployment is still stuck at more than 9 percent.

In some ways, chief executives seem to live in a world apart when it comes to pay. As long as shareholders think that the top brass is doing a good job, executives tend to be well paid, whatever the state of the broader economy. And some corporate boards were probably particularly generous in 2010 after a few relatively lean years for their top executives. In other words, some of this was makeup pay.

“What is of more concern to shareholders is that it looks like C.E.O. pay is recovering faster than company fortunes,” says Paul Hodgson, chief communications officer for GovernanceMetrics International, a ratings and research firm.

According to a report released by GovernanceMetrics in June, the good times for chief executives just keep getting better. Many executives received stock options that were granted in 2008 and 2009, when the stock market was sinking.

Now that the market has recovered from its lows of the financial crisis, many executives are sitting on windfall profits, at least on paper. In addition, cash bonuses for the highest-paid C.E.O.’s are at three times prerecession levels, the report said.

Of course, these sorts of pay figures invariably push the buttons of many ordinary Americans. Yes, workers’ 401(k)’s are looking better than they did in some recent years, but many investors still have not recovered from the hit they took during the financial crisis. And, of course, millions are out of work or trying to hold on to their homes — or both.

And it’s not as if most workers are getting fat raises. The average American worker was taking home $752 a week in late 2010, up a mere 0.5 percent from a year earlier. After inflation, workers were actually making less.

On the flip side, some chief executives have consistently taken token salaries — sometimes, $1 — choosing instead to rely on their ownership stakes for wealth. These stock riches don’t show up on the current pay lists, but they can be huge.

Warren E. Buffett, for instance, saw his stock holdings rise last year by 16 percent, to $46 billion. Other longtime chief executives or founders who are sitting on billions of paper profits include Jeffrey P. Bezos of Amazon.com and Michael S. Dell, the founder of Dell.

Resurgent executive pay has some corporate watchdogs worried that companies have already forgotten the lessons of the bust. Boards have promised to tie executive pay to company success, but by some measures pay is rising faster than performance. The median pay raise for chief executives last year — 23 percent — was roughly in line with the increase in net corporate profits. But it far exceeded the median gain in shareholders’ total return, which was 16 percent, as well as the median gain in revenue, which was 7 percent.

FOR the moment, shareholders aren’t storming executive suites. And while they received a say on pay under new federal rules last year, their votes are nonbinding. In other words, boards can still do as they please.

Pay specialists say companies are taking a hard look at these votes. Still, only about 1.5 percent of the 200 companies in the Equilar study were rebuffed by their shareholders on pay. A vast majority of the votes passed overwhelmingly, with 80 percent or 90 percent support, according to Mr. Boyd of Equilar.

Mr. Boyd says companies are making an effort to explain their pay plans. “We saw companies take it very seriously,” he says of the new rule.

In some respects, the mere possibility that shareholders might reject a proposed pay plan is enough to make corporate executives think again. Ms. Bowie of ISS says that outrageous payouts — such as so-called tax gross-ups, in which companies cover executives’ tax bills on perks like corporate jets — are becoming rarer.

Disney for instance, eliminated tax gross-ups this year in the face of shareholder ire, she said.

Company directors have the power to rein in runaway executive pay, but it is unclear whether either they or shareholders will do so in 2012. “It can be done if there is the will,” Ms. Bowie says.

By: Pradnya Joshi, The New York Times, July 2, 2011

July 4, 2011 Posted by | Big Business, Class Warfare, Congress, Conservatives, Consumers, Corporations, Democracy, Economic Recovery, Economy, Equal Rights, GOP, Media, Middle Class, Minimum Wage, Politics, Republicans, Tax Loopholes, Taxes, Unemployed, Unemployment, Wall Street, Wealthy | , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

The Supreme Court’s Continuing Defense Of The Powerful

The United States Supreme Court now sees its central task as comforting the already comfortable and afflicting those already afflicted.

If you are a large corporation or a political candidate backed by lots of private money, be assured that the court’s conservative majority will be there for you, solicitous of your needs and ready to swat away those pesky little people who dare to contest your power.

This court has created rules that will have the effect of declaring some corporations too big to be challenged through class actions, as

AT&T customers and female employees at Wal-Mart discovered.

And remember how sympathetic conservatives are supposed to be to the states as “laboratories of democracy,” pioneering solutions to hard problems?

Tell that to the people of Arizona.

They used a referendum to establish a highly practical system of financing political campaigns that the court, in a 5-4 decision Monday, eviscerated. It was designed to reduce corruption and give a fighting chance to candidates who decide to forgo contributions from special interests.

The people acted, noted Justice Elena Kagan in a brilliantly scalding dissent, after a scandal in which “nearly 10 percent of the state’s legislators were caught accepting campaign contributions or bribes in exchange for supporting a piece of legislation.”

Under Arizona’s “clean elections” initiative, candidates who raised a modest amount in very small contributions could receive a lump sum of public money. They could raise no further private funds.

No candidate had to join the public system. But if a privately financed candidate or the interest groups supporting his or her campaign started outspending one who was publicly financed, the public system came to the rescue with additional cash so the “clean money” candidate wouldn’t be blown out of the race by lethal dollar bills.

Why was this important? Kagan was spot on: “Candidates will choose to sign up” for public funding “only if the subsidy provided enables them to run competitive races.” Such breathtaking common sense has been missing from the majority’s recent campaign finance decisions — notably its Citizens United ruling, also a 5-4 conservative ukase, allowing our poor, beleaguered corporations to expand their power in American politics.

Here’s the stunning part: For years, opponents of campaign finance reform have accused those who want to repair the system of trying to reduce the amount of political speech. But Arizona’s law, as Kagan pointed out, “subsidizes and so produces more political speech.” And then there was this shot at Chief Justice John Roberts’ majority opinion: “Except in a world gone topsy-turvy, additional campaign speech and electoral competition is not a First Amendment injury.”

Indeed, Roberts had to argue that those terribly downtrodden candidates financed with private money had their speech “burdened,” simply because their publicly financed opponents had the means to respond.

Kagan and the dissenters stood up for free speech. Roberts’ majority defended paid speech. The dissenters want to allow candidates to talk; the majority wants to enhance money’s ability to talk.

Roberts was especially exercised over any notion of “leveling the playing field” between private-money candidates and their challengers. He even included a footnote calling attention to the Citizens Clean Elections Commission’s Web site, which once said the law was passed “to level the playing field when it comes to running for office.” Horrors!

Kagan archly noted the “majority’s distaste for ‘leveling’ ” and then dismissed its obsession, observing that Roberts failed to take seriously the Arizona law’s central purpose of containing corruption. Leveling was the means, not the end.

Nonetheless, pay heed to how this conservative court majority bristles at nearly every effort to give the less wealthy and less powerful an opportunity to prevail, whether at the ballot box or in the courtroom. Not since the Gilded Age has a Supreme Court been so determined to strengthen the hand of corporations and the wealthy. Thus the importance of the Wal-Mart and AT&T cases, the latter described by the New York Times as “a devastating blow to consumer rights.” Will the court now feel so full of its power that it takes on the executive and legislative branches over the health-care law?

In 1912, Theodore Roosevelt warned that the courts had “grown to occupy a position unknown in any other country, a position of superiority over both the legislature and the executive.” Worse, “privilege has entrenched itself in many courts just as it formerly entrenched itself in many legislative bodies and in many executive offices.”

What happens to a democracy when its highest court dedicates itself to defending privilege? That’s the unfortunate experiment on which we are now embarked.

By: E. J. Dionne, Opinion Writer, The Washington Post, Published June 29, 2011

July 4, 2011 Posted by | Class Warfare, Congress, Conservatives, Constitution, Corporations, Democracy, GOP, Government, Ideologues, Ideology, Middle Class, Politics, Republicans, Right Wing, SCOTUS, Wealthy | , , , , , , , , , , , | 2 Comments

Democrats Must Be Adults As GOP Redefines ‘Tax Increase’

OK, this isn’t exactly asking what the meaning of “is,”  “is,” but it is close.

What is a tax increase? Is it letting a previous,  temporary tax cut expire and go back to the earlier tax? Is it the “closing of a loophole” to remove a  favorable tax break put in place for a specific industry? Is it the imposition  of a fee or the increase in a fee? Is it really anything that results in an increase in revenue?

We can go on and on here, but what we are really talking  about is not an esoteric debate. If you  listen to Republicans right now, particularly Rep. Eric Cantor, who picked up his  marbles and went home from White House negotiations, you would think that  everything is a “tax increase.”

The sad aspect of the current debate is that what many  Republicans are espousing is that added revenue should be “off the table.” This is clearly a nonstarter for truly  solving our problems.

It also is inflexible and holds to the absurd notion that  taxes can never go up; they can only go down. That sort of reminds me of: Housing prices can only go up; they don’t go  down! Hmmm…

Democrats, to be honest, have to be the responsible party  when it comes to providing balance to the cuts/revenue equation. They need not fear the boogeyman crying “tax  raiser!”

Americans, by large majorities, understand that the richest  2 percent of their fellow citizens have seen rapid and large increases in  their wealth of late, and asking them to pay their fair share is a no brainer. Americans understand that providing huge tax  breaks to oil companies already making huge profits makes no sense. Americans understand that rewarding companies  for parking their profits overseas or exporting jobs is untenable, and such  behavior should not entitle them to special tax “incentives.”

In short, most Americans know that adequate revenue is part  of the critical balance that will create and keep jobs as well as attack our debt problem. It is not about  eviscerating government and tearing apart our social fabric. Republicans as conservative as Ronald Reagan  have known the meaning of a tax increase and have not hesitated to use it.

 

By: Peter Fenn, U. S. News and World Report, June 27, 2011

June 27, 2011 Posted by | Budget, Class Warfare, Congress, Conservatives, Corporations, Debt Ceiling, Deficits, Democracy, Economic Recovery, Economy, GOP, Government, Government Shut Down, Ideologues, Jobs, Lawmakers, Middle Class, Politics, Republicans, Right Wing, Tax Evasion, Tax Increases, Tax Loopholes, Taxes, Wealthy | , , , , , | Leave a comment

Gov Walker Plans To Celebrate Budget Bill With Felon Until Union Broadcasts Rendezvous

Today, Gov. Scott Walker will sign the controversial state budget bill into law. He was originally scheduled to sign his budget at Badger Sheet Metal Works, a private business operated by a man with six felony tax convictions, in Green Bay, at 2 p.m. on Sunday. However, now that Gregory A. DeCaster’s tax troubles have been publicized, the governor’s office has announced a new locationfor the ceremony: Fox Valley Metal Tech, also in Green Bay.

“While Mr. DeCaster has served his time in jail and paid his debt to society, it is fitting that the governor would choose to sign this budget at a business owned by someone who was once convicted of the felony of tax evasion,” said Marc Norberg, a Wisconsin native and assistant to the general president of the Sheet Metal Workers’ International Association.

Department of Administration Secretary Mike Huebsch said something quite similar earlier in the day when he told WisPolitics, “Green Bay, and certainly the company that we’re going to, reflects really what this budget and what Gov. Walker’s first term here is all about.”

Will the budget bill be a job creator?
According to the Milwaukee Journal Sentinel, Walker chose to sign the budget at a manufacturer “to emphasize the budget’s focus on job creation.”

Gov. Scott Walker boasted that his budget proposals and other controversial policies have created 25,000 jobs in Wisconsin since the start of the year at a discussion led by the U.S. Chamber of Commerce on Monday in Washington, D.C.

CMD contacted the Center for Wisconsin Strategy, a field laboratory for high-road economic development in the state for a bit of perspective on this spin.

“While we don’t think the governor has that much ability to affect overall employment … to the extent that he has, he has arguably hurt the state,” said Sam Munger, managing director of the Center on Wisconsin Strategy’s Center for State Innovation.

Munger said a significant amount of provisions in the budget will end up destroying the quality of jobs that currently exist.

According to a recent Center of Wisconsin Strategy report, the 8 percent wage cut Walker issued to the 380,000 jobs under his control could cost Wisconsin about 22,000 additional jobs, “because families that rely on the income from their public-sector jobs will have less to spend in their local communities.”

“If you look all the way through the budget … his primary motivation has not been keeping jobs, it’s been remaking the state as a corporate welfare haven,” Munger said, citing Walker’s refusal of federal stimulus money and federal broadband money and his refusal to engage the state in other job-generating projects, while rewarding the wealthy and corporations with a range of tax breaks.

The budget’s cuts to municipalities will suck money out of localities, Munger said, adding that pulling money out of circulation will cost jobs in an indirect or induced way. In contrast to the rosy news coming from the Governor’s mansion, the most recent data from the Department of Workforce Development shows that unemployment increased in most Wisconsin cities in the month of May. The report shows that unemployment rates increased in 25 cities with a population of 25,000 people or more, with only Stevens Point experiencing a slight drop, from 7.9 percent to 7.8 percent.

Other budgetary measures that Munger said threaten job quality are cuts to childcare subsidies for working parents, making it more difficult to obtain unemployment insurance and rolling back child labor laws.

“Everything that he has done in the budget that related to jobs or employment has either killed jobs, destroyed the quality of jobs or been a giant giveaway to corporations,” Munger said.

 

By: Jessica Opoien, Opinion Writer, Center For Media and Democracy, June 26, 2011

June 26, 2011 Posted by | Class Warfare, Collective Bargaining, Conservatives, Corporations, Democracy, Economy, GOP, Gov Scott Walker, Government, Governors, Ideologues, Ideology, Jobs, Labor, Middle Class, Politics, Public Employees, Republicans, Right Wing, State Legislatures, States, Tax Evasion, U.S. Chamber of Commerce, Union Busting, Unions, Wisconsin, Wisconsin Republicans | , , , , , , , , , | Leave a comment

The Two Labor Fallacies: Public or Private, It’s Work

As New Jersey throws its weight behind Wisconsin and Ohio in rolling back the collective bargaining rights of public sector employees, we are once again going to hear the  argument that public sector unions ought not to be confused with their private sector counterparts. They’re two different animals entirely.

Private sector workers, so the argument goes, have historically organized to win better working conditions and a bigger piece of the pie from profit-making entities like railroads and coal mines. But public sector employees work for “us,” the ultimate nonprofit, and therefore are not entitled to the same protections.

This is a fond notion at best. Yes, public school teachers were never gunned down by Pinkerton guards; municipal firefighters were never housed in company-owned shanties by the side of the tracks. But none of this cancels their rights as organized workers. No ancestor of mine voted to ratify the Constitution, either, but I have the same claim on the Bill of Rights as any Daughter of the American Revolution. Collective bargaining is an inheritance and we are all named in the will.

The two-labors fallacy rests on an even shakier proposition: that profits exist only where there is an accountant to tally them. This is economics reduced to the code of a shoplifter — whatever the security guard doesn’t see the store won’t miss. If my wife and I have young children but are still able to enjoy the double-income advantages of a childless couple, isn’t that partly because our children are being watched at school? If I needn’t invest some of my household’s savings in elaborate surveillance systems, isn’t that partly because I have a patrol car circling the block? The so-called “public sector” is a profit-making entity; it profits me.

Denying this profitability has an obvious appeal to conservatives. It allows a union-busting agenda to hide behind nice distinctions. “We’re not anti-union, we’re just against certain kinds of unions.” But the denial isn’t exclusive to conservatives; in fact, it informs the delusional innocence of many liberals. I mean the idea that exploitation is the exclusive province of oil tycoons and other wicked types. If you own a yoga center or direct an M.F.A. program, you can’t possibly be implicated in the more scandalous aspects of capitalism — just as you can’t possibly be to blame for racism if you’ve never grown cotton or owned a slave.

The fact is that our entire economic system rests on the principle of paying someone less than his or her labor is worth. The principle applies in the public sector no less than the private. The purpose of most labor unions has never been to eliminate the profit margin (the tragedy of the American labor movement) but rather to keep it within reasonable bounds.

But what about those school superintendents and police chiefs with their fabulous pensions, with salaries and benefits far beyond the average worker’s dreams?

Tell me about it. This past school year, I worked as a public high school teacher in northeastern Vermont. At 58 years of age, with a master’s degree and 16 years of teaching experience, I earned less than $50,000. By the standards of the Ohio school superintendent or the Wisconsin police chief, my pension can only be described as pitiful, though the dairy farmer who lives down the road from me would be happy to have it.

He should have it, at the least, and he could. If fiscal conservatives truly want to “bring salaries into line” they should commit to a model similar to the one proposed by George Orwell 70 years ago, with the nation’s highest income exceeding the lowest by no more than a factor of 10. They should establish that model in the public sector and enforce it with equal rigor and truly progressive taxation in the private.

Right now C.E.O.’s of multinational corporations earn salaries as much as a thousand times those of their lowest-paid employees. In such a context complaining about “lavish” public sector salaries is like shushing the foul language of children playing near the set of a snuff film. Whom are we kidding? More to the point, who’s getting snuffed?

 

By: Garret Keizer, Op-Ed Contributor, The New York Times Opinion Pages, June 24, 2011

June 26, 2011 Posted by | Businesses, Class Warfare, Collective Bargaining, Conservatives, Constitution, Corporations, Democracy, Economy, Employment Descrimination, GOP, Government, Governors, Ideology, Labor, Lawmakers, Middle Class, Politics, Republicans, Right Wing, State Legislatures, States, Teachers, Union Busting, Unions, Wealthy | , , , , , , , , , , , | Leave a comment

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