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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 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

Mitt Romney Is Unemployed: Freeloading Former Government Employee Seeks Handout

Mitt Romney is just like you: He doesn’t have a job. And that’s hilarious!

Mitt Romney sat at the head of the table at a coffee shop here on Thursday, listening to a group of unemployed Floridians explain the challenges of looking for work. When they finished, he weighed in with a predicament of his own.

“I should tell my story,” Mr. Romney said. “I’m also unemployed.”

According to Jeff Zeleny, the room full of unemployed people laughed at this, which would make it the first recorded instance of someone laughing at something Mitt Romney intended to be funny.

But should they have laughed at poor Mitt Romney? Like so many Americans, the longer Mitt Romney has gone without a job, the worse his chances of finding new employment have become. There are not very many openings in his chosen field, and he has no other marketable skills. Poor Mitt Romney is in many respects a modern-day “forgotten man.”

Should Mitt Romney just rest on his laurels, waiting for some government handout? No! In fact, his insistence on getting another job in government is exactly what is preventing him from swallowing his pride and taking any work that is available. He’s too good to work at Walmart now? He should stop looking to Washington for a solution to his problem, get some part-time minimum wage work, and consider going back to school. There are many fine for-profit institutions that offer night courses for adults just like him.

Mitt Romney needs to pick himself up by his bootstraps and quit complaining.

 

By: Alex Pareene, Salon War Room, June 16, 2011

June 17, 2011 Posted by | Class Warfare, Conservatives, Economy, GOP, Government, Governors, Income Gap, Jobs, Middle Class, Mitt Romney, Politics, Public Employees, Republicans, Right Wing, Unemployed, Unemployment, Wealthy | , , , , , , , , | 1 Comment

Thousands Protest at Capitol Against Walker Budget, Supreme Court Ruling

Crowds of protesters who flocked to the Wisconsin state Capitol June 14 anticipating Assembly action on the divisive collective bargaining bill, which essentially eliminates collective bargaining for public workers, were shocked to learn the Supreme Court had reinstated the law in a hotly contested 4-3 decision.

Speakers at a planned 5:00 p.m. rally were quick to lift the faltering spirits of the Wisconsin Democracy Movement. Mahlon Mitchell, president of the Professional Fire Fighters of Wisconsin, told the crowd of thousands, “We’re going to be here every day. We didn’t pick this fight, but if it’s a fight they want, it’s a fight they’re going to get.”

Mary Bell, a middle school English teacher from Wisconsin Rapids serving as president of the Wisconsin Education Association Council, urged protestors to hold Republican legislators accountable for their actions by voting in various recall elections across the state.

“This extreme agenda has to be seen for what it is and what it does to our Wisconsin values. Change begins when we stand up and speak out for what we believe in,” Bell said.

Republicans Signal Approaching Court Ruling, File Fake Candidates

The 4-3 ruling reflected the sharp conservative-liberal divide that many believed would determine the outcome of the Court’s decision. In her dissent, Chief Justice Shirley Abrahamson attacked the implicit “partisan slant” in Justice Prosser’s concurrence and the shaky rhetorical foundation of the majority opinion.

In hastily reaching judgment, Justice Patience D. Roggensack, Justice Annette K. Ziegler, and Justice Michael J. Gableman author an order, joined by Justice David T. Prosser, lacking a reasoned, transparent analysis and incorporating numerous errors of law and fact,” wrote Abrahamson. “This kind of order seems to open the court unnecessarily to the charge that the majority has reached a pre-determined conclusion not based on the facts and the law, which undermines the majority’s ultimate decision.”

The timing of the decision surprised those who had been keeping an eye on collective bargaining proceedings. Assembly Speaker Jeff Fitzgerald announced just yesterday that comittee hearings would be held Tuesday on the collective bargaining proposal, and that his Republican caucus was prepared to vote on it irregardless of a Supreme Court decision. The hearings were delayed several times throughout the day, raising a few eyebrows at the Capitol despite Fitzgerald’s categorical denial of any wrongdoing or insider information.

Some protesters did in fact speculate that not all is as it seems.

“The way they passed the budget bill initially was wrong, and the fact they did this behind closed doors is wrong,” said Sarah Fuelleman, a writer at the University of Wisconsin-Madison Department of Ophthalmology, adding, “I’m not a conspiracy theorist, but I’m starting to become one.”

Lauren Schmidt, a 22-year-old home health care worker from Madison, didn’t mince words.

“I think its horseshit,” she said, before joining a contingent of protesters screaming and blowing vuvuzelas outside the window of Rep. Stephen Nass’s office, where the Republican lawmaker quietly ignored, and at times playfully provoked, impassioned Walkervillians.

Tuesday’s other big piece of news — that Republicans officially filed “fake Democrat” candidates in six Democratic primaries for the upcoming recall elections — didn’t come as much of a surprise. Republicans have openly admitted their intention of delaying the elections by fielding puppet candidates, but have been less forthcoming about the tactic’s collateral damage. According to a Milwaukee Journal Sentinel investigation, the GOP plan would cost taxpayers upward of $428,000.

Budget Cuts Start to Hurt

Teachers, steel workers, firefighters, and other union workers began their Capitol Square march at 11:00 a.m., hoisting signs that read “Recall Walker” and “RIP Democracy.”  Many expressed concern that various budget provisions would leave their families reeling financially.

Stacy Farasha Rhoads, adance instructor from Milwaukee who wore an all pink outfit to symbolize her opposition to proposed Planned Parenthood Cuts, worried that her two children, one of whom is autistic, would suffer from reduced funding for state-provided health services.

“I’m a single mother. I’ve got two children who are on Badgercare and I have a daughter with special needs. So all of the services that my family needs on a regular basis are under attack,” said Rhoads.

Rhoads marched in solidarity with other parents and families anticipating economic hardship, such as Chris Breihan, a part time teacher at Milwaukee Area Technical College. Proposed cuts to Family Care threaten to prevent her 21-year-old special needs son from attending an adult day services program recently recommended to him.

The mood was relaxed for most of the day, as Assembly Democrats and Republicans spent the majority of the afternoon behind closed doors at party caucus meetings. At a midday press conference, Representative Peter Barca and his Democratic caucus announced their intention to offer “a couple dozen” amendments to Governor Walker’s proposed budget, as part of their effort to push back against budget cuts targeting working class families.

At the end of the rally, firefighters led protesters in a “hands around the Capitol,” ceremony. The Beatles’ “Revolution,” written in response to the anti-war protests of the late 1960s, blared from event loudspeakers as pro-union activists took their places along the square. Hand in hand, the group sang a Sconnified version of “We Shall Overcome,” signaling their intent to keep fighting back against Governor Walker’s anti-middle class agenda.

Debora Marks, a 1st grade teacher at Lindbergh elementary, vowed to keep returning to Walkerville for “as long as it takes.” The frequent trips to the Capitol haven’t, however, distracted her from what she considers her top priority.

“My job is about something far more important than Scott Walker: its about educating future generations, and that’s something teachers can not stop doing, whether the Governor wants us to or not,” said Marks.

 

By: Eric Carlson, Center for Media and Democracy, June 15, 2011

June 15, 2011 Posted by | Class Warfare, Collective Bargaining, Conservatives, Democracy, Elections, GOP, Gov Scott Walker, Government, Governors, Ideologues, Ideology, Lawmakers, Middle Class, Planned Parenthood, Politics, Public Employees, Republicans, Right Wing, State Legislatures, States, Union Busting, Unions, Wisconsin, Wisconsin Republicans | , , , , , , , , , , , , | Leave a comment

Flashback 2007: Tim Pawlenty Proposed Establishing A Health Insurance Exchange

Politico’s Kendra Marr and Kate Nocera reviewthe health care records of the GOP presidential candidates and find that Mitt Romney isn’t the only contender who previously supported parts of the Affordable Care Act. Tim Pawlenty, Jon Huntsman, and Newt Gingrich all flirted with various provisions that ultimately ended up in the health law.

ThinkProgress Health reported on Pawlenty’s past support for “universal coverage” here, and his positive assessment of Massachusetts’ individual mandate, but Cal Ludeman, his commissioner of the Minnesota Department of Human Services, recalls that Pawlenty also advocated for establishing an exchange:

Minnesota’s exchange proposal would have required all employers with more than 10 employees to create a “section 125 plan” so workers could buy cheaper insurance with pre-tax dollars. During a 2007 news conference, Pawlenty said launching such a system would only cost employers about $300.

“Remember how new that idea was, even back then,” said Ludeman. “Everybody was talking about how this was a new Orbitz or Travelocity, where you just go shop. It was never talked about in our conversations as a hard mandated only channel where you could go. But that’s where Massachusetts ended up.”

Pawlenty advanced the non-profit Minnesota Insurance Exchange in 2007, arguing that it could “connect employers and workers with more affordable health coverage options.” “If just two of your employees go out and buy insurance through the exchange, the benefits to the employer on a pre-tax basis — because of their payments to Social Security and otherwise into the 125 plan — more than cover the cost of setting up the plan,” Pawlenty explained.

The exchange originated as a Republican idea and was developed in part by the Heritage Foundation’s Stuart Butler. The measure was eventually adopted by Mitt Romney and later became part of the Democrats’ health reform plan. Under the Affordable Care Act, states that don’t establish their own exchanges by 2014, cede control of the new health market places to the federal government. In 2010, while still governor of Minnesota, Pawlenty rejected the ACA’s “insurance exchanges,” dubbing them a federal takeover.

 

By: Igor Volsky, Think Progress, June 13, 2011

June 14, 2011 Posted by | Affordable Care Act, Conservatives, Democrats, GOP, Government, Governors, Health Reform, Ideologues, Ideology, Individual Mandate, Politics, Republicans, Right Wing, States, Under Insured, Uninsured | , , , , , , , , | Leave a comment

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