In fact, according to the Institute for Policy Studies and United for a Fair Economy, median CEO pay at the 50 companies with the most layoffs in 2001 soared 44% from 2001 to 2002, while overall CEO pay climbed just 6% during that period. It’s not just a big plan phenomenon, either. The report, titled Executive Excess 2003, notes that median CEO pay at the so-called “50 Layoff Leaders” was 38% higher than median CEO pay at 365 large companies surveyed by Business Week magazine.
According to the report, the typical US CEO made $3.7 million last year while the typical “Layoff Leader” got $5.1 million.
While large firms are more likely to have pension funds – and these days more likely to have funding shortfalls in those plans – the report notes that at the 30 US companies with the largest gaps (according to David Bianco of UBS Investment Research), CEOs earned 59% more than the median pay at the Business Week sampling of large firms. Ten of the 30 CEOs saw their pay more than double in 2002, according to the organization’s tenth annual report.
Perhaps not surprisingly, the gap between the growth in median worker pay and median CEO pay was even starker. While acknowledging that average CEO pay dropped between 2000 and 2002, the report cites a CEO-worker pay gap of 282-to-1, nearly 7 times the 1982 gap of 42-to-1. The report notes that if workers’ wages had risen since 1990 at the same rate as CEO pay, the average US production worker in 2002 would have earned $68,057 instead of $26,267.
The report’s authors also come down hard on opponents of stock option expensing – notably Senator Joe Lieberman (D-Connecticut) – for leading congressional opposition against a 1993 proposal by the Financial Accounting Standards Board (FASB) to do so. They also call for:
- expensing of stock options on corporate income statements
- establishment of “meaningful” limits on how much corporations can deduct from their taxes based on compensation-related expenses (including closing a loophole in a 1993 law that failed to cap nonperformance-based executive pay)
- allowing shareholders to vote on executive severance and retirement packages and/or eliminate the tax deductibility of executive pensions that are more generous than the retirement benefits available to other employees
- closing tax loopholes that allow executives to avoid taxes on executive perks
- requiring public disclosure before an executive can sell any stock
- ensuring greater director independence on corporate boards
- eliminating the ability of companies to incorporate under the lax corporate accountability standards required by the state of Delaware, which it describes as a haven for incorporations, by federalizing corporate charters.
The 31-page report is online at http://www.faireconomy.org/press/2003/EE2003.pdf .
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