AFL-CIO PRESS RELEASE
For Immediate Release Contact: Amaya Smith 202-637-5018
AFL-CIO’s 2009 Executive PayWatch Highlights 10 of the Worst CEO Pay PracticesPopular Website Includes Latest CEO Pay Data;
Bailout Bonuses www.paywatch.org
(Washington, April 14)- Retention bonuses. Golden coffins. Turbo-charged pension plans. Hefty severance packages. Lavish “executivephysicals.” These are some of the outrageous CEO pay practices highlighted in the AFL-CIO’s 2009 Executive PayWatch website launched today at www.paywatch.org ( http://www.paywatch.org/ ). Despite the worst economic slump in decades, companies continue to heap millions of dollars in pay, bonuses and perquisites on CEO for poor performance, according to the latest data for 2008. The 2009 PayWatch site highlights 10 of these worst CEO pay practices through case studies and includes a comprehensive database of new CEO pay figures.“Americans are rightly angered by CEOs who haven’t learned their lesson,” said AFL-CIO Secretary-Treasurer Richard Trumka. “After driving the economy into the ground and gambling with the nation’s retirement savings, these same corporations are giving out huge bonuses for bad behavior.” The 2009 PayWatch includes a new section on pay practices at companies which received taxpayer assistance under the Troubled Asset Relief Program (TARP). The new PayWatch also includes companies which are actively lobbying against workers’ ability to form unions and bargain collectively for fair pay and benefits.
Corporations and pay practices featured in the 2009 Executive PayWatch are:‘Super-Sized’ Stock Options: SunTrust (STI) received $4.9 billion from the TARP bailout fund and wants shareholders to approve a mega-grant of $7.7 million in stock options for James Wells, its chairman and chief executive officer, even as investors have lost billions of dollars.Pay for Failure: Bank of America Corp’s (BAC) board of directors subscribes to a philosophy that rewards executives regardless of performance. Experts say this practice encouraged CEO Ken Lewis to make risky acquisitions of troubled financial companies such as MerrillLynch and Countrywide Financial.
Retention Bonuses: American International Group A.I.G. (AIG) has been kept afloat by more than $170 billion in federal assistance since September 2008 - about $1,500 for every household in the nation. But the New York-based giant insurer that nearly brought down the global financial system paid out more than $500 million in salaries and bonuses to hundreds of senior employees even as it was being bailed out by the government.Executive Physicals: Employees of Wal-Mart (WMT), the world’s largest retailer, have a strong incentive to stay healthy. Only 48% are enrolled in Wal-Mart’s health care plan for its employees, according to an internal company memo, and 46% of Wal-Mart employees’ children are either on Medicaid or uninsured. To put that in perspective, 11% of children in America were uninsured in the U.S in 2007, according to the U.S. Census Bureau. Meanwhile, the CEO and top executives receive an annual “senior executive physical” examination paid for by the company. While Wal-Mart doesn’t list the exact cost of the executive physical it is listed as part of the $431,446 received by former CEO H. Lee Scott Jr. under the category of “all other compensation.”Moving the Performance Goalposts: Toll Brothers (TOL), the nation’s largest luxury home-builder, benefited from the housing bubble. As the housing market cratered in 2007 and it became clear that Robert Toll, the founding chairman and chief executive officer, would not qualify for a bonus under the existing plan, the company decided to move the performance goalposts. Instead of linking Toll’s bonus to the company’s net income, the new plan is tied to a percentage of the company’s income before taxes and bonus, revenues of at least $1.5 billion, and several squishy factors such as “management enhancement and efficiencies, and financial market visibility and access.”Job Security for the CEO, insecurity for workers: FedEx Corp.’s (FDX) Frederick Smith, the chairman, president and chief executive officer, receives a generous salary, assurance of a severance if the company gets bought, perks and a traditional pension. Yet FedEx has a double standard for its workers. FedEx Ground classifies drivers as independent contractors so it doesn’t have to provide them with basic benefits, such as overtime pay or expense reimbursements. FedEx Ground drivers also are required to pay for their own delivery trucks, as well as for the insurance, repairs, gas and tires they need to do their jobs. By arguing that the drivers are independent contractors, not employees, FedEx maintains they can’t unionize. FedEx even opposes the Employee Free Choice Act, legislation that would ensure all workers can have the freedom to form unions to bargain for fair pay and better benefits. Lavish Perquisites: While most working Americans struggle to file their federal tax returns by April 15, that’s one thing Ray Irani, chief of Occidental Petroleum (OXY), doesn’t need to worry about. In 2008, the company provided Irani with more than $400,000 in tax preparation and financial planning services. That’s nearly eight times the $50,233 median U.S. household income in 2007, and more than the $400,000 salary of the President of the United States.‘Golden Coffin’ Death Benefits: Americans have lost nearly one-fifth of their household wealth in the past year, leaving many wondering about the legacy they will leave their children. But James Bernhard’s heirs are well taken care of. When the founding chairman, president and chief executive officer of the Shaw Group (SGR)dies, the Baton Rouge, La. construction giant will pay more than $40 million to his heirs through “golden coffin” benefits, including pay, stock awards, life insurance and health benefits.‘Golden Parachute’ Severance Benefits: Workers laid off by companies in these tough economic times are lucky if they receive more than their last paycheck and their legal right to extend healthcare benefits, but chief executive officers at many of America’s largest companies often receive a “golden parachute,” or a generous severance package, when they depart. Richard L. Bond, president and top executive of Tyson Foods Inc. (TSN) until January 5, stood to collect more than $14 million in severance.Turbo-charged Pension Plan: Deere & Co. (DE) workers and pensioners have good reason to fret over their retirement. Deere expects to earn 8.3% on its pension plan investments in fiscal 2009, but the stock market decline makes that highly unlikely, jeopardizing the company’s$683 million pension surplus.Overall, the nation’s pension funds lost roughly $1 trillion in assets by last summer alone. But CEO Robert Lane’s retirement income is secure: the value of his total pension benefits increased $5.5 million in fiscal 2008 to $22.5 million - or about $1.6 million annually. Lane and other senior executives participate in not one, but three different pension plans.The AFL-CIO launched Executive PayWatch in 1997 to draw attention to runaway CEO pay packages and the widening gap between the compensation of corporate chieftains and workers. In 1980, CEOs of large U.S. companies made 42 times the wages of the average worker; by 2006 the gap had widened to more than 364 times. The AFL-CIO represents 11 million workers in 56 unions nationwide and works to advance the interests of America’s working families.
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