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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

The Minnesota Shutdown – A Glimpse Into The Nation’s Future And The GOP’s True Intentions

A telephone help line service for the elderly will not be ringing today in Minnesota.

Blind residents reliant on state funding for reading services will remain in the dark for as long as the government’s lights are turned off. Poor families who receive subsidies for childcare are on their own. The St. Louis Park Emergency Program’s food shelf will have bare pickings for those who depend on the program for sustenance. The Community

Action Center of Northfield will likely be forced to close down its homeless shelter without the state funding upon which it relies to house the homeless.

And yes, 23,000 state workers will be trying to figure out how to care for their families without a paycheck for the duration along with an estimated 5,000 to 10,000 construction workers who will be laid off as the state shuts down dozens of road and highway projects.

These are but a few of the consequences of the shutdown of Minnesota’s government.

At issue is how to close a $5 billion deficit in the state left by the previous Minnesota governor, Tim Pawlenty.

Minnesota Governor Mark Dayton, a Democrat, had tried to bargain his way toward an agreement by offering up massive cuts in state services. In return, he asked the Republicans to agree to a tax increase for the wealthier citizens of the state to make up the remainder of the funding required to close most of the gap in the budget.

But the Republicans held firm on taxes – even when Dayton made his final offer that would have placed an additional 3% tax on only those Minnesotans earning over $1 million a year, a burden that would have been placed on just .03% of all Minnesotans.

It’s not so much that the state’s GOP leaders had a violent, allergic reaction to those earning seven figures a year having to pay a few percentage points more in taxes. What appears to have ended negotiations were the

Republican demands that Governor Dayton agree to their social agenda issues, including Voter ID legislation and abortion restrictions, as the price for the Republicans allowing the very wealthy to pay a little more.

When the Governor refused to swallow the notion that the conservative social agenda should be used as a tool to resolve budgetary issues, the talks broke down and the lights at the statehouse were turned off.

So, you might wonder, how did the Minnesota GOP suggest that the gap in the finances be met even as they seemed to realize that there was little left for the Governor to offer on the cutting side of the ledger?

You won’t believe it.

The Republicans actually proposed creating more debt to close the gap.

The GOP proposed delaying another $700 million in payments owed to schools, which would add to the more than $1 billion the state already owes K-12 schools.

Republicans also offered to issue “tobacco bonds” of an unspecified amount to cover any remaining budget gap. Sources said Dayton considered the offer, but he criticized it as unwise borrowing late Thursday. Via The Star Tribune

I guess a Republican has to do what a Republican has to do when it comes to protecting the wealthiest in the state from paying a higher tax rate- even if it means creating more debt despite a GOP platform that, allegedly, abhors debt.

If you find the lessons of Minnesota disturbing, get used to it.

What you are seeing is simply the national debate playing out on a smaller stage. I suppose this is what Republicans mean when they suggest using the states as laboratories for what will and won’t work on the national level.

You can bet that every political player on the national stage will be watching to see how the Minnesota public reacts to their situation along with which party gets the lion’s share of the blame for bringing this blight upon their land.

If Governor Dayton caves and simply accepts the GOP budget, we can expect that our Congressional Republicans would take great heart in such an occurrence and be emboldened to stick with the plan.

If the GOP legislators begin to fear that their jobs may be in jeopardy as punishment for shutting down the state in order to protect a little more than 7,000 Minnesotans earning at least a million bucks a year, that too will be noticed.

Watch the polls in Minnesota over the next week or two. They may tell you everything you need to know about what is likely to happen as we move towards resolving the debt ceiling debate.

 

By: Rick Ungar, The Policy Page, Forbes, Junly 1, 2011

July 3, 2011 Posted by | Class Warfare, Conservatives, Deficits, Democracy, Economy, GOP, Government, Government Shut Down, Governors, Ideologues, Ideology, Lawmakers, Middle Class, Politics, Public, Public Employees, Republicans, Right Wing, Seniors, State Legislatures, States, Union Busting, Unions, Wealthy | , , , , , , , , , | 1 Comment

Mitch McConnell’s Insincere Invitation

One can only dream of a Republican Party led by grown-ups. Instead, we have this.

Senate Republican Leader Mitch McConnell (R-Ky.) challenged President Obama on Thursday to meet with Senate Republicans to hear firsthand about the political reality of passing tax increases through Congress.

A day after Obama challenged Republicans to give up special tax breaks for corporate jets and major oil companies, McConnell issued a challenge of his own on the Senate floor.

“I’d like to invite the president to come to the Capitol today to meet with Senate Republicans. Any time this afternoon if he’s available, to come on up to the Capitol,” McConnell said. “That way he can hear directly from Senate Republicans … why what he’s proposing will not pass.”

McConnell says once Obama learns from GOP lawmakers that ending special tax breaks for oil companies and wealthy families has no chance of passing the Senate, “we can start talking about — maybe, finally — start talking about what’s actually possible.”

Let me summarize the message McConnell announced this morning: “If the president has some free time in a few hours, he should stop by and listen to us tell him we want to lower the deficit, but only in ways we see fit.”

Soon after, White House Press Secretary Jay Carney told reporters the president need not hear Republicans “restate their maximalist position,” adding, “We know that position. That’s not a conversation worth having.”

Of course not. Everyone knows what everyone thinks and everyone’s position at this point. Obama doesn’t need to listen to Republicans demand 100% of what they want, anymore than McConnell needs to listen to Democrats tell him he can’t get 100% of what he wants.

This entire process made a right turn at farcical quite a while ago. Mitch McConnell isn’t just threatening to crash the economy, he’s also threatening to make mockery of the institution he claims to serve and turn the American political process into a reality-show circus.

Not to be outdone, NRSC Chairman John Cornyn (R-Texas) said President Obama has “diminished” his office by urging lawmakers to do their duty. If anyone explain what on earth Cornyn was blabbering about, I’m all ears.

And then there’s Sen. John Thune (S.D.), the chairman of the Senate Republican Policy Committee, who told Fox News this morning that the president goes golfing too much.

These aren’t random House backbenchers — McConnell, Cornyn, and Thune are three of the top four highest-ranking Republican members of the Senate. And they all appear to be rambling incoherently.

I was about to type that there are no adults left in the Republicans’ room, but that’s not entirely true. There are still a couple left, but they’re stuck in primary fights, so they have to go along with the madness to save their careers.

It’s a pathetic display.

 

By: Steve Benen, Contributing Writer, Political Animal, The Washington Monthly, June 30, 2011

July 1, 2011 Posted by | Congress, Conservatives, Debt Ceiling, Debt Crisis, Democracy, Economic Recovery, Economy, Federal Budget, GOP, Government, Government Shut Down, Lawmakers, Politics, President Obama, Republicans, Right Wing, Taxes, Wealthy | , , , , , , , | Leave a comment

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

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