| BOSTON, MA - August 26 - CEOs at companies with the largest layoffs, most underfunded pensions and biggest tax breaks were rewarded with bigger paychecks, according to a new
report, "Executive Excess 2003: CEOs Win, Workers and Taxpayers Lose."
Median CEO pay skyrocketed 44 percent from 2001 to 2002 at the 50
companies with the most announced layoffs in 2001, while overall CEO pay
rose only 6 percent. These layoff leaders had median compensation of $5.1
million in 2002, compared with $3.7 million at the 365 large corporations
surveyed by Business Week.
At the 30 companies with the greatest shortfall in their employees' pension
funds, CEOs made 59 percent more than the median CEO in Business
Week's survey. The General Accounting Office has labeled the Pension Benefits Guaranty Corporation, the federal agency that insures the nation's
private pensions, "high risk." Meanwhile, many companies are protecting executives with guaranteed golden retirement packages.
Congress fueled runaway CEO pay and helped U.S. companies avoid paying
their fair share of taxes by blocking proposed stock option reforms ten years
ago. Many corporations have boosted reported profits by not counting stock
options as an expense in their financial statements to shareholders. Those
very same corporations do deduct the value of stock option exercises from
their corporate tax returns, reducing their tax burden. Between 1997 (the year
that a proposal to require expensing of stock options would have taken
effect)
and 2002, 350 leading firms received an estimated $3.6 billion in tax
deductions based on their CEOs filling their pockets with $9 billion in option
gains. A new proposal to require expensing of options is now under
consideration.
This lost federal revenue is about the same amount as the combined 2003
budget deficits of seven of the top ten largest states (Florida, Illinois,
Pennsylvania, Ohio, Michigan, New Jersey, and Georgia). It also approximates the amount by which spending on Medicaid in all 50 states exceeded
budgeted amounts in 2003. Corporate taxes' share of federal taxes dropped
from 12 percent in 1996 to 8.7 percent in 2001.
At the 25 Fortune 500 companies with the most subsidiaries in offshore tax havens, median CEO pay over the 2000 to 2002 period was $26.5 million -- 87
percent more than the $14.2 million median three-year pay at firms surveyed
by Business Week.
The top layoff leader in terms of layoff numbers is Carly S. Fiorina at
Hewlett-Packard. She fired 25,700 workers in 2001, and saw her pay jump 231
percent, from $1.2 million in 2001 to $4.1 million in 2002.
The top layoff leader by percentage pay increase is AOL Time Warner's Gerald M. Levin, who presided over 4,380 layoffs in 2001. Levin's pay increased a
staggering 1,612 percent, from $1.2 million in 2001 to $21.2 million in 2002.
The highest paid layoff leader was Tyco's Dennis Kozlowski, who took home
over $71 million in 2002, a $34.7 million raise, even though he was forced out
in disgrace mid-year. In 2001, Tyco laid off 11,300 workers. The top 50 layoff
leaders cut a total of 465,252 jobs in 2001.
Between 1990 and 2002, average CEO pay rose 279 percent, far more than
the 46 percent increase in worker pay, which was just 8 percent above
inflation. CEO pay dramatically outpaced the performance of the S&P 500,
which rose 166 percent in the same period, as well as the 93 percent rise in corporate profits.
The CEO-worker pay gap was 281-to-1 in 2002, nearly seven times greater
than the 1982 ratio of 42-to-1.
Authored by Sarah Anderson, John Cavanagh, Chris Hartman,and Scott
Klinger, "Executive Excess 2003" is the tenth annual CEO pay study by the
Institute for Policy Studies and United for a Fair Economy.
The Institute for Policy Studies is an independent center for progressive
research and education in Washington, DC. United for a Fair Economy is a national organization based in Boston that spotlights growing economic
inequality.
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