Rising Angst Among Defenders of Overpaid CEOs


CEOs Now Make 300 Times More Than Their Workers. This City Is Putting a Stop to That.


(Photo: Flickr/ Democracy Chronicles)

With national policy likely to compound the income and wealth gap in the coming years, states and localities are fighting back.

Across the country, local jurisdictions aren’t waiting for federal action or corporate governance reforms to close the wage gap. In December, for example, the city of Portland, Oregon, passed an ordinance to raise the business tax on companies with CEOs who earn more than 100 times the median pay of their workers. Portland officials said the ordinance is the first of its kind in the country. And now, more cities and states are poised to follow suit.

“The huge divide in income and wealth has real-world implications,” Steve Novick wrote last October in Inequality.org. Novick sponsored the ordinance when he was on the Portland City Council. “Too many Americans cannot get a leg up,” he wrote. “Income inequality undermines the American dream.”

Portland city government projects the tax will raise $ 2.5 million to $ 3.5 million a year, which city officials have said will likely help pay for the city’s homeless programs.

Inspired by the living wage movement, Portland’s ordinance comes on the heels of decades of grassroots activism around the issue of wage inequality.

Starting in the 1990s, the failure of Congress to adequately raise the federal minimum wage gave rise to a prairie-fire movement of local activists pressing for local and state living wage ordinances. Living wage ordinances typically cover a segment of workers, such as employees of government contractors, while minimum wage laws cover all workers. By 2010, over 120 jurisdictions had passed local living wage laws, and at present, 41 jurisdictions have passed minimum wage laws.

“I expect this pay gap reform movement to spread like wildfire, just as the living wage movement did,” said Sarah Anderson from the Institute for Policy Studies. “I’ve gotten inquiries from over two dozen states and cities about how to establish a pay gap ordinance.”

Anderson lobbied the Portland City Council in support of the policy and testified at a public hearing. She has since compiled resources for communities interested in instituting a CEO-worker pay gap penalty.

Read the full article on YES! Magazine’s website. 


Tightening the Strings on CEOs Jeopardizing Work Safety


(Photo: Glynnis Jones / Shutterstock.com)

No strings attached.

Con men love this simple phrasing. They use it all the time. They make an offer too good to be true, then assure their targeted victims that if they accept the offer and turn out not to like it, they can always walk away. No strings.

Corporate executives who vie for lucrative federal government contracts love “no strings,” too. In fact, they’ve taken the “no strings” mantra to an entire new level. They’ve weaponized the concept: First they cheat, then they invoke “no strings” as an excuse to keep cheating.

Earlier this week, President Donald Trump signed legislation that turns this corporate two-step into the law of the land. Under the bill Trump inked Monday, corporate execs can violate federal worker-protection laws on wages, hours, and safety and still qualify for federal contracts.

Back in 2014, President Obama had moved to help make sure that cheating corporations could not qualify for federal contracts. He signed into law an executive order that requires companies bidding for contracts to disclose their previous labor and safety law violations and lets federal agencies bar violators from receiving future government work.

This “Fair Pay and Safe Workplaces” executive order would have gone into final effect this past October. But corporate lobby groups found a judge to put the order temporarily on ice. The bill Trump has just signed makes that ice concrete. No future President can resurrect Obama’s executive order unless Congress first gives a green light.

America’s CEOs now have what they wanted. Obama’s executive order on contracting no longer endangers their basic business model. They can continue “cutting corners.” They can double-down on squeezing workers and sidestepping the statutes meant to protect them.

Today’s CEOs have elevated this corner cutting into somewhat of a corporate art form. But their business model can only work if government plays along. That’s because private corporations depend heavily on public tax dollars. Private-sector firms with federal contracts, a recent report from Senator Elizabeth Warren details, employ over one in five U.S. workers and annually collect about $ 500 billion in taxpayer dollars.

Local and state governments shell out hundreds of billions more in contracts with private business concerns. All these billions give, at least in theory, the public sector enormous potential power over how enterprises in the private sector behave.

And that’s what worries corporate executives. Their enormous pay packages — and their incredibly comfortable lives — rest on their “freedom” to fatten their corporate bottom lines by whatever means necessary. They don’t want any government “strings” on that freedom.

Other folks, unfortunately, end up paying quite a heavy price to keep Corporate America “free.”

In 2015 and 2016, for instance, four Goodyear Tire employees died in accidents at the company’s factory in Danville, Virginia. In October 2016, Virginia’s Occupational Safety and Health agency fined Goodyear over $ 1 million in penalties for both “willful” and “serious” safety violations.

Goodyear last year sported, despite these violations, $ 8.3 million in taxpayer-funded federal contracts.

Goodyear CEO Richard Kramer, meanwhile, personally pocketed paychecks worth $ 19.8 million in 2016, on top of the $ 73.5 million in compensation he collected the previous four years.

Now the prospect of losing $ 8.3 million a year in federal contracts might not be enough to make a big-time chief exec like Goodyear’s Kramer think twice about jeopardizing worker safety. But what if we tightened the strings? What if we went after the executive pay windfalls that give today’s CEOs an almost irresistible incentive to cut corners and cheat?

That string tightening has, in fact, already begun. Cities and states across the United States are moving to leverage the power of the public purse against excessive executive pay. From Rhode Island to California, elected officials are considering statutes that make getting government contracts and tax breaks harder for firms that pay their top execs far more than what they pay their workers.

These new strings make sense. They would also, if we gave them the chance, make our nation a whole lot more equal.

Sam Pizzigati is an associate fellow at the Institute for Policy Studies.


Drug Industry CEOs Are Profiting off Our Opioid Epidemic

Prescription Drugs Money

(Photo: DedMityay / Shutterstock)

Travis Bornstein never told his friends about his son Tyler’s drug problem. He was too embarrassed.

Then, on September 28, 2014, Tyler’s body was found in a vacant lot in Akron, Ohio. The 23-year-old had become addicted to opioid pain killers after several sports-related injuries and surgeries. Unable to afford long-term treatment, he ultimately turned to a cheaper drug — the heroin that killed him.

“Now I have no choice but to speak out,” the elder Bornstein, president of Teamsters Local 24 in Akron, told a crowd of thousands at the union’s convention in July 2016. As he proceeded to share the unvarnished tale of how a middle class, star athlete had wound up in that vacant lot, Bornstein lit a fire under the 1.4-million-member organization.

Right there on the convention floor, rank-and-file Teamsters spontaneously began gathering donations for a nonprofit organization the Bornstein family has established, Breaking Barriers — Hope Is Alive, to expand drug treatment in Ohio. Eventually, the union and its members pledged $ 1.4 million.

Bornstein also inspired a Teamsters campaign to go after the drug industry CEOs who’ve been profiting off the country’s opioid epidemic. The three largest U.S. prescription drug wholesalers — McKesson, Cardinal Health, and AmerisourceBergen — have enjoyed strong sales as the country’s opioid problem has reached epidemic proportions.

According to the Centers for Disease Control, the number of overdose deaths involving opioids (including prescription drugs and heroin) has quadrupled since 1999. In 2015, opioid deaths in the United States hit a record-breaking 33,000.

On March 2, the Teamsters held a rally outside the annual shareholder meeting of one of these wholesalers, AmerisourceBergen, demanding that the company take responsibility for their role in the epidemic and conduct a full investigation of their distribution practices. According to a Charleston Gazette-Mail investigation based on U.S. Drug Enforcement Administration documents, AmerisourceBergen delivered 118 million opioid pills to West Virginia pharmacies over a six-year period (2008-2012). During that timeframe, 1,728 people in the state overdosed on the painkillers.

Altogether, drug wholesalers shipped 780 million hydrocodone and oxycodone opioid pills to West Virginia in just those six years — 433 for every man, woman and child in the state.

In January 2017, AmerisourceBergen paid $ 16 million to settle a case brought by West Virginia over their negligence. But the company’s CEO, Steven Collis, has not coughed up a penny of the tens of millions of dollars in compensation he pocketed as the firm was reaping opioid windfalls. The Teamsters are demanding that some of his pay be “clawed back,” in the same way that Wells Fargo executives involved in last year’s bogus account scandal had to forfeit some of their compensation.

“When it comes to the role of drug distributors fueling the nation’s opioid epidemic, West Virginia is the canary in the coal mine,” Ken Hall, international secretary-treasurer of the Teamsters union told the Charleston Gazette-Mail. “The [AmerisourceBergen] board cannot afford to let management sweep this issue under the carpet with ad-hoc settlements, but must rather undertake a thorough investigation of the company’s sales practices, compliance programs, and senior executives who dropped the ball.”

The Teamsters have made similar demands on McKesson, where CEO John Hammergren has taken in an astounding $ 368 million in compensation, including stock-based pay, over the past five years. In January 2017, McKesson settled a U.S. Department of Justice case over their drug distribution practices for $ 150 million. The firm also faces a case brought by West Virginia, accusing McKesson of “illegal and reckless and malicious action” in flooding the state with opioids.

Part of the problem with accountability at McKesson, according to the Teamsters, is the fact that Hammergren serves as both CEO and Chairman of the company. The union is filing a shareholder resolution this year urging the board to adopt a policy requiring the chair to be an independent director who has not previously served as a McKesson executive.

Thus far, all of the drug wholesalers have denied any wrongdoing, pointing the finger instead at corrupt doctors and pharmacists who sell pills to addicts and dealers. But as West Virginia Governor Earl Ray Tomblin told the Charleston Gazette-Mail, “Obviously, they had to know, with a state this size, and that many pills coming in, that something wasn’t right.”

Meanwhile, Travis Bornstein is continuing to speak out, telling his son Tyler’s tragic story to students, policymakers, and others as he works to expand the availability of drug treatment for communities ravaged by the opioid crisis.

Since Tyler’s death, he has learned that opioid addiction is not a moral failure, but rather a disease, like cancer or diabetes. “Now my son is my hero for everything he was able to accomplish with such a gut-wrenching disease,” Bornstein said. “I was the fool.”

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.


This Trump Appointee Says He’s Standing Up for ‘Bullied’ CEOs


(Photo: Glynnis Jones / Shutterstock.com)

Michael Piwowar has been seething for some time. Now he’s getting to take his revenge — against the new federal regulation that’s driving America’s mega-millionaire CEOs crazy.

This particular regulation spells out how corporations must go about complying with an innovative provision of the Dodd-Frank Act, the Wall Street reform legislation enacted in 2010. The provision requires corporations to annually disclose the ratio between what they pay their CEOs and what they pay their median — most typical — workers.

Piwowar has been trying to stop this disclosure from going into effect ever since he became a member, four years ago, of the five-member panel that runs the Securities and Exchange Commission, the federal watchdog over Wall Street.

In 2013, Piwowar’s initial year as an SEC commissioner, he had his first chance to fulminate against pay-ratio disclosure when a draft of the agency’s enforcement rule came up for a vote. Ratio disclosure, Piwowar charged, would “unambiguously harm investors.”

Piwowar lost that vote, by a 3-2 margin. Two years later, he had another crack at stopping corporate pay disclosure when the SEC’s draft rule came up for final adoption. This time around, Piwowar, a former Senate GOP committee staff economist, unleashed a much shriller stream of vituperation.

Pay ratio disclosure, Piwowar blasted out, rewards “Saul Alinskyan tactics by Big Labor.” Adopting a disclosure rule, Piwowar pronounced, would signal a surrender to “politically-connected special interests” and an “acquiescing to the bullying tactics of their political allies.”

“Acquiescing to bullies,” he then declaimed, “only gives them more ammunition and makes it worse.”

A more than slightly bemused Commission majority ignored all this invective and went on to approve the pending pay-ratio disclosure regulation. Under the Commission decision, corporations had more than a year to get prepared for calculating the new requited disclosures.

Last  month, on January 1, the Dodd-Frank pay ratio disclosure mandate finally went fully into effect, and corporate human resources departments are now calculating their fiscal 2017 CEO-worker pay differentials. The first corporate proxy statements carrying these pay ratio figures will start appearing early in 2018.

Or at least that’s how things stood before Donald Trump’s inauguration. Since then, things have changed. President Trump — who loudly inveighed against excessive CEO pay throughout his campaign for the White House — has appointed Piwowar, Washington’s most outspoken apologist for CEOs, the acting SEC chairman.

Earlier this week, as acting chair, Piwowar began flexing his CEO-friendly muscles. Corporations, he announced, “have begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline” of the new pay-ratio disclosure mandate.

“Relief” from the disclosure mandate, Piwowar continued, may be needed. Corporations will now have 45 days to share “any unexpected challenges” they “have experienced as they prepare for compliance.” Piwowar is also directing SEC staff “to reconsider the implementation of the rule based on any comments submitted.”

In other words, Piwowar wants to see the pay-ratio disclosure regulation relitigated — and delayed to whenever Congress can finally get around to repealing Dodd-Frank.

What’s driving Piwowar’s intense hostility toward disclosing how much more that CEOs make than their workers? His ostensible objections fill a 4,156-word, 76-footnote diatribe that Piwowar filed back in 2015. But just one of those objections may explain the real source of his continuing unease. Piwowar sees critics of corporate power using the “CEO pay ratio for substantive purposes.”

Those critics are indeed doing just that. This past December, in Portland, Oregon, city officials adopted the first-ever municipal tax on excessive corporate compensation. Companies doing business in Portland that pay their CEOs over 100 times what their median workers make will now face a special surcharge on their taxes due.

San Francisco has begun considering a similar move, as have a number of other cities across the United States. Action is also brewing at the state level. Rhode Island lawmakers will soon be debating legislation that both ups taxes on corporations with wide gaps between CEO and worker pay and gives corporations with narrow gaps preferential treatment in the bidding for government contracts.

The Donald Trump who campaigned for President left the unmistakable impression that groundbreaking moves like these might be right up his alley. On the campaign trail, candidate Trump labeled corporate executive pay an outright “disgrace.”

“You see these guys making enormous amounts of money,” Trump railed. “It’s a total and complete joke.”

Now the joke seems to be on voters who took Trump’s attacks on excessive executive pay seriously. President Trump has already issued an executive order that starts the process of undoing Dodd-Frank. And Trump has also nominated an elite Wall Street lawyer, Jay Clayton, to become the new SEC chairman. In short order, Michael Piwowar will be part of an SEC commissioner majority.

That prospect has some Wall Street observers describing Piwowar’s move to reopen the debate over pay ratio disclosure as “likely a first step to killing off the provision that was deeply unpopular with many corporations.”

But Piwowar, Clayton, and Trump will need a filibuster-proof majority in Congress to fully wipe out Dodd-Frank and pay-ratio disclosure. We still have time to deny them that majority.

Sam Pizzigati is an associate fellow at the Institute for Policy Studies.


One Hundred CEOs Have as Much Retirement Wealth as 41 Percent of American Families


As President Obama prepares to ride off into the sunset, among the perks he can look forward to is a presidential pension. Every month for the rest of his life, he’ll receive a retirement check for about $ 17,142 — not bad for a guy with at least a few black hairs remaining on his head.

And yet this sum is paltry compared to the retirement assets enjoyed by most big company CEOs, including some whose nest eggs were feathered by taxpayer dollars.

Take, for example, Michael Neidorff, the CEO of Centene, which manages health plans for Medicaid recipients and other poor Americans. Since Obamacare began expanding health coverage in 2010, Neidorff’s company retirement account has grown 658 percent, to nearly $ 140 million. That’s enough to generate a monthly check of $ 744,000—43 times as much as Obama’s.

If you think that’s a big gap, consider the retirement divide between top business leaders and working families. A new report I co-authored for the Institute for Policy Studies finds that in 2015, the 100 CEOs with the largest nest eggs had $ 4.7 billion in their combined company accounts. That’s as much as the entire retirement savings of the 41 percent of American families with the smallest nest eggs.

Compared to African Americans and Latinos, the gap is even wider. These 100 CEOs’ retirement savings are equal to those of 59 percent of African-American families and a whopping 75 percent of Latino families.

According to the Economic Policy Institute, 39 percent of workers nearing retirement age (56 to 61 years old) have no retirement account savings whatsoever. That means they’re likely to be entirely dependent on Social Security, which currently pays an average benefit of just $ 1,239 per month.

This grim picture will become even grimmer if Republicans manage to push through their new plan to overhaul Social Security. Introduced last week, the plan would cut benefits for all but the lowest earners by 17 percent to 43 percent by the year 2080, and hike the retirement age to 69 by 2030.

In the richest country in the world, why do so many millions of working people have to worry about paying their bills in their golden years?

One major factor is the demise of the traditional pension. While feathering their own nests, CEOs have stripped employees of plans that guarantee a monthly check. Instead, if ordinary workers get any retirement benefits at all, they tend to be the much less generous and riskier 401(k)-type plans. As of 2013, only about half of private sector workers had a 401(k) and the average account balance was just $ 18,433.

The drug wholesaler McKesson is one example of this trend. In 1997, it froze its employee pension fund, but continued to offer executives lavish benefits. CEO John Hammergren has amassed $ 147 million in his own company retirement funds over the past 20 years. General Electric CEO Jeff Immelt closed the employee pension in 2010 and replaced it with a 401(k) scheme. Meanwhile, his company retirement account has ballooned to $ 92 million.

CEOs actually have a powerful personal incentive for reducing worker retirement benefits. More than half of executive compensation is now tied to the company’s stock price, so boosting short-term profits through cost-cutting is a way to pad their own pockets.

Rather than pushing a reform that will only increase retirement inequality, policymakers should be focused on ensuring a dignified life for all seniors. And to achieve that, CEOs and other wealthy Americans will need to pay their fair share.

One way to generate some revenue to expand Social Security would be to ban the special tax-deferred retirement accounts most Fortune 500 companies set up for their top executives. While ordinary workers have strict limits on how much they can put in 401(k) plans every year ($ 24,000 max for older workers), CEOs are allowed to shelter unlimited amounts from the IRS in these accounts. Our report finds that Fortune 500 CEOs have nearly $ 3 billion stashed in such deferred plans.

Much larger sums could be raised by lifting the cap on Social Security payroll contributions, which is currently set at $ 118,500 per year. Almost all other American workers have to chip in a share of all of their earned income. Why should it be any different for CEOs?

We’ve heard a great deal this election year about rising economic anxiety in communities that have lost jobs which were once a source of decent pay and retirement benefits. Now it’s time to do something about it. Everyone should be able to enjoy their golden years—not just former CEOs and presidents.

The post One Hundred CEOs Have as Much Retirement Wealth as 41 Percent of American Families appeared first on Institute for Policy Studies.

Sarah Anderson directs the Global Economy project at the Institute for Policy Studies.


Retirement Divide: 100 CEOs v. the Rest of Us

Media Contacts:

(Washington, D.C. ) – The presidential election put a spotlight on the economic insecurity millions of voters are feeling as the result of the loss of millions of unionized factory jobs that were once a major source of both decent pay and retirement benefits.

While white working class families have been the focus of much of this attention, a new Institute for Policy Studies report shows that the real retirement security divide lies between those at the top of corporate America and nearly all the rest of us.

Report and related graphics are available here.


Just 100 CEOs have company retirement funds worth $ 4.7 billion — a sum equal to the entire retirement savings of the 41 percent of U.S. families with the smallest nest eggs.

This $ 4.7 billion total is also equal to the entire retirement savings of the bottom:

  • 59 percent of African-American families
  • 75 percent of Latino families
  • 55 percent of female-headed households
  • 44 percent of white working class households

On average, the top 100 CEO nest eggs are large enough to generate for each of these executives a $ 253,088 monthly retirement check for the rest of their lives.

  • Among ordinary workers, those lucky enough to have 401(k) plans had a median balance at the end of 2013 of $ 18,433, enough for a monthly retirement check of just $ 101.
  • Of workers 56-61 years old, 39 percent have no employer-sponsored retirement plan whatsoever and will likely depend entirely on Social Security, which pays an average benefit of $ 1,239 per month.

With nearly $ 3 billion in special tax-deferred accounts, Fortune 500 CEOs stand to gain enormously from Trump’s proposed tax cuts on top earners.

  • If President-elect Donald Trump succeeds in cutting the top marginal tax rate from 39.6 percent to 33 percent, Fortune 500 CEOs would save $ 196 million on the income taxes they would owe if they withdrew their tax-deferred funds.
  • Unlike ordinary 401(k) holders, most top CEOs have no limits on annual contributions to their tax-deferred accounts. In 2015 alone, Fortune 500 CEOs saved $ 92 million on their taxes by putting $ 238 million more in these accounts than they could have if they were subject to the same rules as other workers.
  • Michael Neidorff, the CEO of Centene, a provider of health plans to Medicaid recipients and other low-income Americans, has nearly $ 140 million in his deferred compensation account, up 658 percent since the 2010 launch of Obamacare.

The retirement asset gap between CEOs mirrors the racial and gender divides among ordinary Americans.

  • The 10 white male CEOs with the largest retirement funds hold a combined $ 1.4 billion, more than eight times more than the 10 CEOs of color with the largest retirement assets and nearly five times as much as the top 10 female CEOs.

“While slashing jobs and benefits for ordinary workers, CEOs of large companies have been feathering their own nests,” says Sarah Anderson, report co-author and director of the IPS Global Economy Project. “It’s no wonder so many American workers are concerned about whether their golden years will be tarnished by financial stress.”

This is the Institute’s second report on the CEO-worker retirement gap. Last year’s edition received coverage in BloombergUSA TODAYReutersCNN MoneyThe GuardianCBS Moneywatch, and Fortune, among other outlets.

The post Retirement Divide: 100 CEOs v. the Rest of Us appeared first on Institute for Policy Studies.


What the Public Wants: A Guide for Clueless CEOs


(Photo: Flickr / Glenn Halog)

The Wall Street Journal recently reported that “Populist Tone Rankles America’s Executives.”

Apparently the CEOs and board members of big American companies are “increasingly frustrated” by the anti-business rhetoric of both parties, and concerned such sentiments might translate into meaningful public policy change after the election.

“The precipitousness of the political debate is a little scary right now,” Boeing CEO Jim McNerney told The Wall Street Journal. General Electric CEO Jeff Immelt informed investors that relations between government and big business are “the worst I have ever seen.”

Former Republican U.S. Senator Judd Gregg, currently a board member of Honeywell, complained that the GOP has “been captured by a large number of people who basically do not like big.”

Bernie Sanders has shined a bright spotlight on Wall Street greed and millions of voters are cheering him on. With GOP candidates Cruz and Trump both opposed to the U.S. Chamber of Commerce agenda on free trade, corporate mergers, and immigration, the corporate elites are running scared.

How clueless can you be? Our imperial CEOs need a little populism 101. Here are a few clues on what the public is demanding:

Clue #1: Pay Your Taxes: General Electric, Boeing, Verizon and 23 other profitable Fortune 500 firms paid no federal income taxes from 2008 through 2013, according to Citizens for Tax Justice. Show some love to the country that pays for the infrastructure upon which you transport your products, protects your intellectual property in global tribunals, and educates your workers and takes care of them when they are sick or retired.

Clue #2. Stop Squeezing Us. Your global business model seems to be focused on squeezing your workers, your customers, and the communities where you’re based. Verizon is hammering their workers for another healthcare cut. General Electric just squeezed $ 151 million in tax breaks in their relocation to Boston.

It seems like what passes for “innovation” in corporate America is an experiment in “how hard can we squeeze customers and workers until they push back?” So are you really surprised that people are pushing back?

Have any of you luxury jet flying CEOs been on a commercial airline flight in the last ten years? Talk about squeezing your customers, physically in seats and literally for every nickel and dime. This is the capitalism we are living through. Big corporations take things away (like legroom, checked bags, and snacks) and sell them back to us.

Clue #3. Support Young Workers. Have you talked to any college students lately who don’t have daddy CEOs to pay their tuition? Do you know what it’s like to graduate from college with $ 100,000 in debt? Imagine entering a workforce where, thanks to corporate lobbying, the minimum wage is insufficient to live on.

This populism isn’t anti-business. But people are enraged with disconnected business elites at global companies that use their considerable clout to shape the rules of the economy – like trade policy, minimum wage, deregulation – and don’t pay their fair share of taxes to continue basic services.

Many small and medium-sized businesses in our communities are appreciated and valued. They are rooted in place and understand that you can’t keep squeezing your customers, workers, and communities before no one comes to your door. It’s the big boys that squeeze the hardest and then wonder, “why are people upset?”

The chairman of a medium-sized steel company, Jim Philipsky, tried to explain rising populism to his CEO brethren. He told The Wall Street Journal, “The establishment has been at the wheel for a long time, and the system has worked well for them, but not for everyone else.”

There’s a CEO who’s been paying attention.

The post What the Public Wants: A Guide for Clueless CEOs appeared first on Institute for Policy Studies.

Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies.


Report: 100 CEOs Have as Much in Retirement Assets as 41% of American Families

Two RetirementsCover(Washington, D.C.) A just-released report by the Center for Effective Government and the Institute for Policy Studies, A Tale of Two Retirements, is the first to provide detailed statistics on the staggering gap between the retirement assets of Fortune 500 CEOs and the rest of America.

The report’s major finding: just 100 CEOs have as much in their company retirement assets as the entire retirement savings of 41 percent of American families (50 million families total). The report comes on the heels of a Social Security Administration announcement that beneficiaries will not receive a cost of living increase in 2016.

 Additional key findings from A Tale of Two Retirements:

 More on the top 100

  • The 100 largest CEO retirement accounts are worth an average of more than $ 49.3 million—enough to generate a $ 277,686 monthly retirement check for each executive for the rest of their lives.
  • David Novak of YUM Brands (who was CEO in 2014 and has since become Executive Chairman) had the largest retirement nest egg, with $ 234 million. Hundreds of thousands of YUM employees at Taco Bell, Pizza Hut, and KFC have no company retirement assets whatsoever.

Special tax-deferred compensation accounts

  • Fortune 500 CEOs have $ 3.2 billion in special tax-deferred compensation accounts that are exempt from the annual contribution limits imposed on ordinary 401(k)s.
  • In 2014, these CEOs saved $ 78 million on their tax bills by putting $ 197 million more in these tax-deferred accounts than they could have if they were subject to the same rules as other workers. These special accounts grow tax-free until the executives retire and begin to withdraw the funds.

Government contractors

  • Fifteen CEOs of major federal contractors can expect to receive monthly retirement checks that are larger than President Obama is set to receive.
  • David Cote of Honeywell has the largest retirement account, with $ 168 million. This will deliver him a monthly check of more than $ 950,000—56 times larger than the $ 16,975 monthly check President Obama will receive.

 Gender and race gaps

  • The 10 largest CEO retirement funds—all held by white males—add up to $ 1.4 billion, compared to $ 280 million for the 10 largest held by female CEOs, and $ 196 million for the 10 largest held by CEOs who are people of color.
  • Among ordinary Americans, 62 percent of working age African-Americans and 69 percent of Latinos have no retirement savings, compared to just 37 percent of white workers.

 “The CEOs’ extraordinary nest eggs are not the result of extraordinary performance,” notes Scott Klinger, director of Revenue and Spending Policies at the Center for Effective Government. “They are the result of rules intentionally tipped to reward those already on the highest rungs of the ladder.”

“The CEO-worker retirement divide has turned our country’s already extreme income divide into an even wider economic chasm,” says Sarah Anderson, Institute for Policy Studies Global Economy Project director. “And what few realize is that the trends of expanding CEO pensions and increasing worker retirement insecurity are inextricably linked.”

The percentage of private sector workers covered by a defined benefit pension, which guarantees monthly payments, has dropped from 35 percent in the early 1990s to 18 percent last year. Nearly half of all working age Americans have no access to any retirement plan at work.

The report examines various policy shifts that have favored corporate executives and identifies reforms to limit CEO retirement subsidies and ensure a dignified retirement for ordinary Americans.

The full 30-page report and related graphics are available at: http://www.ips-dc.org/tale-of-two-retirements/

More Information:
Sarah Anderson, Institute for Policy Studies
(202) 787 5227sarah@ips-dc.org


 Report co-authors:

 Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies (IPS-DC.org). She has co-authored 22 IPS annual reports on executive compensation and regularly contributes commentaries on this issue to Fortune.com, Huffington PostCNBC.com, and other publications. Contact: sarah@ips-dc.org202 787-5227.

 Scott Klinger is Director of Revenue and Spending Policies at the Center for Effective Government. He crafted the first shareholder proposals on executive pay while working as a social investment portfolio manager. Scott is a CFA charterholder. Contact: sklinger@foreffectivegov.org

 This is Anderson and Klinger’s third joint report on executive retirement assets. Previous reports have received coverage in the Washington Post, CNN Money, Los Angeles Times, and Fortune, among other outlets.

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Our 100 Most Overpaid Corporate CEOs


Briefcase with money inside

(Photo: Pixabay)

You may already think most — if not all — CEOs of major U.S. companies fully qualify as overpaid. But who among them rate as the most overpaid?

The shareholder advocacy group As You Sow has just released a list of the 100 S&P 500 CEOs the group sees as the most deserving of this distinction.

Topping the list: Anthony Petrello of the oil drilling company Nabors Industries.

Shareholders at Nabors, As You Sow’s heavily researched 40-page report details, suffered net losses of nearly 21 percent during the period 2009-2013 — and yet Petrello saw a 2013 payout of $ 68.2 million. The firm earned additional demerits for giving Petrello massive bonuses not conditioned on company performance.

According to the Wall Street Journal, Nabors Industries ranks as one of only two companies whose shareholders have voted down executive pay packages four years in a row. But since such “say on pay” votes are only advisory, the Nabors board went ahead and doled out the dough anyway.

Report author Rosanna Landis Weaver points out that the problem of excessive compensation affects all of us. CEO pay excess is expanding our inequality — and draining value from our pension funds.

“The pay packages analyzed in this report are from the companies that the majority of retirement funds are invested in,” Landis Weaver points out. “If someone has a 401(k) through their employer, it’s likely they are invested in a company with an overpaid CEO.”

Let’s hope As You Sow makes the top 100 overpaid CEO list an annual exercise in shaming the worst offenders of executive excess. 

The post Our 100 Most Overpaid Corporate CEOs appeared first on Institute for Policy Studies.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.