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Labor Day "Executive Excess" Report: CEOs Profit from Layoffs, Pension Shortfalls, and Tax Dodges Download Executive Excess 2003 (PDF, 221 KB) Or, email [EMAIL PROTECTED] and we will email you a PDF. 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 24 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.
