Luxurious interior of a private corporate jet
It’s not enough that we incurred trillions of dollars of increased deficit to cut US corporate taxes, where approximately 50 of the largest Fortune 500 corporations still pay no federal taxes at all, from 35% to 21%, a 2017 tax cut that provided virtually no new jobs. Just dividends, stock repurchase agreements and more than a few mergers and acquisitions. True, those trends were accelerated by exceptionally cheap corporate borrowing rates and a pandemic that allowed these behemoths to implement massive employee layoffs, many permanently replaced by AI-driven automation, driving stock prices through the roof. It’s also not enough that private equity fund managers, as to their upside in asset appreciation regardless of whether they have invested any of their own capital, get favorable capital gains tax rates. CEOs of big companies make an unconscionable level of compensation that simply cannot be justified.
Back in 2013, Bloomberg found that: “The ratio of CEO-to-worker pay has increased 1,000 percent since 1950… Today Fortune 500 CEOs make 204 times regular workers on average, Bloomberg found. The ratio is up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950.” I’m laughing even at that 204-times number, because by 2021, that multiple has risen by well over 50%!!! Writing for the June 3rd FastCompany.com, Kristin Toussaint describes the latest research on point:
“[She cites a May 27th] preliminary report from the Economic Policy Institute, which each year reports on CEO compensation trends based on data from the 350 largest firms. That annual report uses information these firms file by June, but 281 of those 350 firms have already reported their CEO compensation for 2020, so Lawrence Mishel, distinguished fellow at and former president of the EPI, decided to put out some analysis early. ‘We think this is a proper early look at what we can expect,’ he says. And what he’s expecting is fast CEO compensation growth: ‘We would estimate that CEO compensation will hit, by far, its historic peak in 2020.’
“That means the ratio of CEO pay to worker pay could peak too. In 2019, CEOs earned 320 times more than a company’s typical worker. The full picture of how that ratio will change in 2020 isn’t yet clear, since all the same firms have not yet reported their CEO compensation, but there is evidence it’s rising. In 2019, the firms that reported early for this preliminary report had a CEO-to-worker compensation ratio of 276.2-to-1; now, it’s 307.3-to-1. For the firms that retained their same CEO all year, the difference was even greater: 341.6-to-1.
“This picture of rising CEO pay ‘conflicts with the struggles that most people had’ in 2020, Mishel says, but it’s also not all that surprising, given the growth of the stock market. There may be something a bit sneakier going on too. People who defend sky-high CEO compensation often point to the fact that these business leaders are paid for their performance. ‘But there’s a lot of documentation of firms changing their performance metrics to ensure that CEOs got big pay increases, even though the predetermined metrics would not have allowed that,’ Mishel says.”
In English: These CEOs get raises regardless of the corporate performance and without any reference to their personal efforts to generate growth and profits. They get credits for any growth, whether from tax cuts or dumb luck, but even without positive numbers, boards find excuses to raise executive pay.
The above noted EPI report tells us that preliminary data “show CEO pay jumped nearly 16% in 2020, while average worker compensation rose 1.8%.” adding these basic embellishments:
“An examination of the early filings of 281 large firms shows:
The offer by CEOs to forgo salary increases during the pandemic was largely symbolic. Salaries were stable, but many CEOs pocketed a windfall by cashing in stock options and obtaining vested stock awards, compounding income inequalities laid bare during the past year.
CEO compensation, including realized stock options and vested stock awards, rose 15.9% from 2019 to 2020 among early reporting firms. Growth in CEO compensation was slightly faster than last year’s strong growth—14.0% between 2018 and 2019—while the annual compensation of the average worker increased just 1.8% in 2020.
Strong CEO compensation growth and modest growth in worker annual compensation yielded a remarkable growth in the CEO-to-worker compensation ratio…”
And yet, as the nation desperately needs tax revenue to pay for long-deferred infrastructure and human resources support upgrades and expansion, the Republican constituency in the Senate is prepared to reject (by filibuster/cloture) any attempt to raise taxes on those one-percenters, most definitely including those CEOs and major corporate shareholders and fund managers. Yup, those poor bastards simply cannot afford to pay higher taxes, right? Climate change, racial injustice, economic growth and unsustainable favoritism for the richest taxpayers in the land are the biggest issues we face in a post-pandemic America. And the gridlock-driven GOP congressional delegation is on the wrong side of every one of these issues.
I’m Peter Dekom, and the argument against continuing that Senate filibuster rule have never been stronger.
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