by Mike Hall
Did you know that the CEOs of the Campaign to Fix the Debt, the corporate front group that wants to cut Social Security and Medicare and lower corporate taxes, have parked more than $418 billion of untaxed corporate profits overseas? Overall it is estimated that U.S. corporations have as much as $1.9 trillion sheltered overseas. That would make a nice down payment on fixing the debt.
You can read about “Fix the Debt” and more in the 2013 edition of the AFL-CIO’s Executive PayWatch launched today. PayWatch not only shines a light on Fix the Debt hypocrisy, but it also explores the huge wage gap between CEO pay and the average U.S. worker. PayWatch started in 1997.
AFL-CIO President Richard Trumka notes that since 1982, the CEO versus worker pay gap has jumped from 42 times more than the average rank-and-file worker to 2012’s record 354 times greater. In real dollars, a CEO of a Standard and Poor’s 500 Index company averaged $12.3 million a year in total compensation, while the average rank-and-file worker earned $36,654. Says Trumka:
Runaway CEO pay is fueling economic inequality in the U.S. and undermining our shared prosperity. In addition, high levels of CEO pay can encourage excessive risk by CEOs, which hurts the long-term prospects of the companies they run.
PayWatch also unveils several new features this year, including:
- The retirement multimillion-dollar nest eggs of the leading Business Roundtable CEOs—the same group that wants to cut Social Security benefits;
- The records of 40 of the largest mutual funds and their votes on CEO pay proposals for the companies in which they invest;
- The CEO to worker pay gap around the world; and
- Trends in CEO pay.
As in past years, visitors to PayWatch can compare their pay and benefit package to that of a CEO, search the CEO pay database and take action to rein-in CEO pay.
Here’s a closer look.
Fix the Debt
Behind Fix the Debt are more than 80 of the nation’s most powerful chief executive officers. This group says it wants to lower the deficit by “reforming” Medicare and Medicaid, “strengthening” Social Security and passing “comprehensive and pro-growth tax reform” that “lowers rates.” Translation: cut workers’ retirement security to pay for tax cuts for rich people and corporate America.
The group claims U.S. corporations are overtaxed and that’s why U.S. firms have sheltered as much as $1.9 trillion offshore. It also has estimated that 63 companies whose CEOs are members of Fix the Debt have accumulated $418 billion in overseas cash. Keeping this money overseas deprived the U.S. government of an estimated $134 billion in tax revenue, adding to—rather than cutting—the country’s deficit.
BTW on corporate taxes? Corporate taxes fell from 26.4% of total tax revenue in 1950 to just 7.4% of total tax revenue in 2010. The Washington Post found that in the late 1960s and early 1970s, companies in the Dow Jones Industrial Average routinely paid up to 50% of their worldwide profits in federal taxes. Today, most of these companies pay less than half that rate.
Business Roundtable’s Golden Nest Eggs
The Business Roundtable, which represents more than 100 CEOs of the nation’s blue-chip companies, wants to increase the retirement age for Social Security and Medicare to 70. Under current law, the retirement age for collecting full Social Security benefits will rise to 67 for those born after 1959 from 65, where it’s at presently. The current eligibility age for Medicare is 65. On top of that the group wants to cut Social Security benefits by changing the way cost-of-living increases are calculated—known as chained CPI.
While seniors under the Business Roundtable proposals will work longer, pay more for health care and earn less in retirement, Business Roundtable CEOs are well prepared for retirement. On average, the CEOs on the Business Roundtable’s executive committee have accumulated more than $35 million in pension and deferred compensation benefits. In contrast, 57% of America’s workers have less than $25,000 in savings for their own retirement.
Mutual Funds and CEO Pay
The AFL-CIO’s Mutual Fund Votes Survey examines the votes cast by 78 of the largest mutual fund families on executive compensation at the public companies they are invested in. Mutual funds own more than one-fifth of all shares in U.S. public companies, giving them a great deal of influence in determining executive pay at these companies.
Each fund received a letter grade (A to F) for votes on shareholders’ proposals to reform executive compensation, from pay to golden parachutes and more; on executive compensation plans firms submit for shareholder votes; and say-on-pay votes that are advisory resolutions on executive compensation that are submitted for shareholder approval at company annual meetings.
Five mutual funds received an overall A grade for their executive pay actions, seven flunked every test.
CEO Pay Around the World
Not only do U.S. CEOs make a lot more money than their own employees (354 times more) but they also make far more than CEOs of comparably sized companies in other developed countries. The AFL-CIO Executive PayWatch interactive map lets you click on each country to compare.
Mike Hall is a writer for the AFL-CIO NoW blog, where this report first appeared.