Fat Cat CEOs Strike Back at CongressAlterNet
By Sarah Anderson and Sam Pizzigati, AlterNet
April 13, 2007
Does CEO pay in the United States need anymore fixing?
The 160 corporate CEOs who make up the Business Roundtable -- the nation's single most influential business lobbying group -- don't appear to think so. The Business Roundtable is currently leading the corporate charge against congressional efforts to legislate new checks on executive compensation.
Executive pay reforms already in place, the group's president assured Congress last month, are more than adequately addressing the concerns Americans may have about corporate behavior.
"A wave of reforms over the past five years," the Business Roundtable's John Castellani testified, "has resulted in improved investor confidence in our corporations, growth in the stock market and continued shareholder returns."
CEOs in the Business Roundtable do have one more reason -- unmentioned in Castellani's testimony -- to feel comfortable with today's executive pay status quo. They're making out like bandits.
In 2006, Business Roundtable execs took home paychecks that added up to a $9.9 million median. The comparable take-home for major corporate CEOs overall, according to just-released Wall Street Journal data: only $6.5 million.
Business Roundtable chief executives are doing even better compared to average Americans. In 2006, the CEOs who belong to the Business Roundtable saw their pay jump 10.6 percent, nearly three times more than the average wage increase of 3.7 percent that went to typical U.S. white-collar workers.
All these executive pay numbers actually understate the real pay gap in today's Corporate America. These totals, for instance, don't count the value of the towering stashes of deferred pay and pension dollars that await top execs on their retirement day.
At least 10 CEOs, researchers at the Corporate Library note, are now set to collect over $50 million in pension and deferred pay when they make their exit. AT&T CEO Ed Whitacre will walk off with $158.4 million, Occidental Petroleum CEO Ray Irani another $124 million.
We know all this because last summer the Securities and Exchange Commission, the federal agency that regulates publicly traded companies, announced new regulations that require corporations to reveal more about what they pay their top executives.
The powerful Business Roundtable publicly supports this new SEC disclosure standard -- and regularly trots out this support to demonstrate its credentials as an enlightened and responsible voice in America's corporate community. But the Business Roundtable has steadfastly opposed any efforts at CEO pay reform that go beyond disclosure or any other reforms already in place.
Two such congressional efforts are now before lawmakers.
In the House, Rep. Barney Frank's Shareholder Vote on Executive Compensation Act has already gained the approval of the Financial Services Committee. This legislation, if enacted, would give shareholders the right to take a "nonbinding" advisory vote on CEO pay plans.
In the Senate, lawmakers have passed -- as part of the minimum wage increase compromise package -- a tax code change that sets a $1 million cap on the amount of annual compensation corporate executives can have "deferred" and shielded from income tax.
Deferred pay arrangements recently helped Home Depot CEO Robert Nardelli and Pfizer chief Henry McKinnell walk off with severance packages worth about $200 million each.
McKinnell chaired the Business Roundtable from November 2003 through July 2006. His executive pals at the Roundtable are now working to deep-six the Senate deferred pay cap. At last month's House hearing on executive pay, Business Roundtable president Castellani tagged the Senate deferred pay cap and the House shareholder vote proposal as equally objectionable.
Objections from the Business Roundtable carry considerable weight. The CEOs who constitute the Business Roundtable membership lead companies that employ over 10 million workers and account for "nearly a third of the total value" on U.S. stock markets.
This enormous Business Roundtable clout on Capitol Hill, if truly focused on ending the corporate pay abuses that have average Americans upset and alarmed, could make a real difference. That's a difference that CEOs in the Business Roundtable, so far at least, apparently don't feel they can "afford" to make.
Sarah Anderson, the director of the Global Economy Project at the Institute for Policy Studies, and Sam Pizzigati, the editor of the Too Much online weekly and an associate fellow at IPS, are among the co-authors of the new report "Selfish Interest: How Much Business Roundtable CEOs Stand to Lose From Real Reform of Runaway Executive Pay."