According to a report published last week by campaign group United for a Fair Economy, CEOs at firms which claimed the largest tax breaks, laid off the most workers and under-funded their pension funds were awarded the largest salary increases.
The report, titled "Executive Excess 2003: CEOs Win, Workers and Taxpayers Lose", claims that the median level of pay for CEOs jumped 44% from 2001 to 2002 in the 50 companies that laid off the most workers in this time, compared to an overall increase of 6%. This translates to an average pay package of $5.1 million for the 'ruthless' CEOs against an average of $3.7 million for 365 firms which were surveyed by Business Week.
Similarly, at the thirty companies which had the largest shortfall in employee pension funds, CEO pay was 59% higher than the average in the Business Week survey.
The report cites the failure of Congress to enact stock option reform in the previous decade as a major factor contributing to rising CEO pay. By allowing firms to deduct stock options from their corporate tax returns at the same time as discounting them as an expense to show higher profits for shareholders, lawmakers are fuelling excessive corporate pay hikes, UFE alleges.
The study also linked excessive CEO pay with the practice of locating subsidiaries in low-tax jurisdictions offshore. According to UFE's figures, bosses at the 25 Fortune 500 firms with the most offshore subsidiaries received a median pay of $26.5 million over the period 2000 to 2002, some 87% higher than the median for the firms included in the Business Week survey.
United for a Fair Economy describes itself as "a national, independent, nonpartisan, 501(c)(3) non-profit organization," adding that: "UFE raises awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart. We support and help build social movements for greater equality."
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