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High pay of CEOs hits nerve
Source: Agencies |
September 1, 2011, Thursday
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Twenty-five of the 100 highest paid United States CEOs earned more last year than their companies paid in federal income tax, a pay study said yesterday.
It also found many of the companies spent more on lobbying than they did on taxes.
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies, a Washington think tank, quickly hit a nerve.
Democratic Representative Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation after reading it. In a letter to that committee's chairman, Republican Darrell Issa, Cummings asked "why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high," and "the extent to which our tax code may be encouraging these growing disparities."
IPS chose to compare CEO pay to current US taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.
Compensation for the 25 CEOs with pay surpassing corporate taxes averaged US$16.7 million, according to the study, compared to a US$10.8 million average for S&P 500 CEOs.
Among the companies topping the IPS list include eBay whose CEO John Donahoe made US$12.4 million, but which reported a US$131 million refund on its 2010 current US taxes; Boeing, which paid CEO Jim McNerney US$13.8 million, sent in US$13 million in federal income taxes, and spent US$20.8 million on lobbying and campaign spending; and General Electric where CEO Jeff Immelt earned US$15.2 million in 2010, while the company got a US$3.3 billion federal refund and invested US$41.8 million in its own lobbying and political campaigns.
Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.
Shareholders have responded favorably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings.
It also found many of the companies spent more on lobbying than they did on taxes.
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies, a Washington think tank, quickly hit a nerve.
Democratic Representative Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation after reading it. In a letter to that committee's chairman, Republican Darrell Issa, Cummings asked "why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high," and "the extent to which our tax code may be encouraging these growing disparities."
IPS chose to compare CEO pay to current US taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.
Compensation for the 25 CEOs with pay surpassing corporate taxes averaged US$16.7 million, according to the study, compared to a US$10.8 million average for S&P 500 CEOs.
Among the companies topping the IPS list include eBay whose CEO John Donahoe made US$12.4 million, but which reported a US$131 million refund on its 2010 current US taxes; Boeing, which paid CEO Jim McNerney US$13.8 million, sent in US$13 million in federal income taxes, and spent US$20.8 million on lobbying and campaign spending; and General Electric where CEO Jeff Immelt earned US$15.2 million in 2010, while the company got a US$3.3 billion federal refund and invested US$41.8 million in its own lobbying and political campaigns.
Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.
Shareholders have responded favorably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings.
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