Some US Companies Pay Their CEOs More Than Paid Taxes
Reuters | 16 Aug 2012
Citigroup, Abbott Laboratories, and AT&T are among the 26 companies that paid more to their CEOs in 2011 than they did in U.S. federal taxes, according to a study released on Thursday.
Tax breaks on research and development, past losses, and foreign-held earnings were among those lightening the tax load for many companies on the list, said the Institute for Policy Studies, a left-leaning think tank in Washington, D.C. Citi, Abbott and AT&T all took issue with the institute's methodology. All three said they paid all taxes owed in 2011.
During a presidential election cycle in which wealth and taxes are often debated, the study's authors said the U.S. tax code has become an enabler of large CEO pay, while also offering companies ways to reduce their tax bills. Four pay-related tax breaks combined to cost taxpayers $14 billion in uncollected federal taxes, the report said.
The four included breaks dealing with performance-based chief executive pay and stock options, as well as the preferential 15 percent tax rate on carried interest enjoyed by private equity partners and other financiers, it said. Compensation for the 26 CEOs whose pay surpassed their companies' corporate tax bills averaged $20.4 million, according to the study. That average was up 23 percent over last year.
The average was also significantly higher than pay tracked by separate studies of broader groups. For instance, $10.3 million was the average 2011 direct compensation for 300 large-company CEOs tracked by pay consultants Hay Group.
Current US Taxes Paid Eyed
To get its list, the institute compared CEO pay to current U.S. taxes paid, excluding foreign and state and local taxes that may also have been paid, as well as deferred taxes that can often be far larger than current taxes paid. The group's rationale was that U.S. taxes paid are the closest approximation available in public documents to what companies may have actually written in their checks for last year to the U.S. Internal Revenue Service.
Among companies topping the institute's list:
* Citigroup, the financial services giant, with a tax refund of $144 million based on prior losses, paid CEO Vikram Pandit $14.9 million in 2011, despite an advisory vote against it by 55 percent of shareholders.
* Telecoms group AT&T paid CEO Randall Stephenson $18.7 million, but was entitled to a $420 million tax refund thanks to billions in tax savings from recent rules accelerating depreciation of assets.
* Drugmaker Abbott Laboratories paid CEO Miles White $19 million, while garnering a $586 million refund. Abbott has 64 subsidiaries in 16 countries considered by authorities to be tax havens, the institute said.
ABBOTT TAKES ISSUE
"This is a blatant misrepresentation of the facts," Abbott spokesman Scott Stoffel said.
He said Abbott did not get a rebate, but paid the U.S. government $700 million in federal income taxes in 2011, and that the report's numbers reflect a non-cash accounting adjustment caused by the resolution of various tax matters.
A Citigroup spokeswoman said that, while the company did not pay federal income tax in 2011, that was due to substantial losses it recorded in 2008 and 2009, a break available to all businesses in similar straits.
She also noted that Citi paid on average $3.7 billion a year in federal income taxes from 2000 to 2006, and paid other taxes last year, including more than $3 billion in payroll taxes, and that Pandit voluntarily took a salary of just $1 in 2010.
AT&T said in a statement its CEO's pay was closely tied to performance and was fair, and that the accelerated deductions that lowered its federal taxes stemmed in part from $20 billion spent in support of the U.S. economy and jobs. The company reported paying $3.8 billion in other taxes last year, and hundreds of millions in federal income taxes in 2010.
All the tax breaks identified in the study are legal and shareholders generally expect companies to take advantage of any reasonable tax breaks they can, said David Wise, a senior principal with Hay Group.
If the tax code changed to eliminate pay-related deductions, like the stock option deduction, he said, "individual companies could navigate that fairly easily. But collectively, those dollars would add up and increase the tax base."
Pakistan: Human Rights Disaster
A jirga in a small village in Kohistan in Khyber Pakhtunkwa condemned six men and women to death for singing and dancing at a wedding function two months ago. The centuries-old traditions of a tribal culture, mired in its archaic, primitive ways, raises a number of questions, most of which will remain unanswered, despite the uproar and protests. The unfortunate incident is shrouded in mystery as conflicting reports emerge. Reportedly, four women along with two men were caught on a mobile phone video recording singing and dancing at a wedding in the Bando Baidar village of Peech Bela union council, in the mountains of Kohistan district. According to police reports, some clerics imposed a death sentence on the ‘revellers’. Severe censure from human rights groups prompted the police to arrest some members of the jirga, but according to a local administration official, the accused cleric and his companion denied issuing any such sentence. For allegedly filming and putting the video online, an FIR against two brothers, Bin Yasir and Gul Nazar, was filed. In a startling revelation, Afzal, brother of the makers of the video, said that five women (four accused, and the fifth allegedly an ‘accomplice’) were executed in compliance with the jirga’s order. After being kept in captivity for two months and severely tortured, they were killed by their own families. The police deny the claim, saying all five women are safe in their homes, while the accused men fled the area earlier. Chief Justice Iftikhar Mohammad Chaudhry, taking suo motu notice of the death decree in Kohistan, reiterated the invalidity and illegality of jirga-issued verdicts. Calling the incident a gross violation of fundamental human rights, he ordered that the women, if alive, be brought to court on June 6. According to a Human Rights Commission of Pakistan report, at least 943 women and girls were killed across Pakistan in 2011 for allegedly defaming their family’s honour. This is highly disturbing and alarming. There seem to be no means for the eradication of inhumane practices in areas that remain outside the normal law and jurisdiction. Unless an example is set by punishing the perpetrators of such verdicts, similar crimes will continue to occur. Unless those taking the law into their own hands and treating women like disposable chattel are apprehended and punished, more women will be tortured and killed, just for wanting to breathe freely. Can the Pakistani government acknowledge the problem and act effectively in the legislative and practical implementation sphere?
Israel: 45-Day Sentence for Murderer
An Israeli soldier who shot and killed a 64-year old woman and her 35-year old daughter who were waving a white flag in Gaza in 2009 has received a sentence of just 45 days in detention. On Sunday a judge approved the plea agreement in an Israeli military court in Jaffa.
The incident was one of several highlighted in the United Nations-commissioned report (dubbed the Goldstone Report) investigating war crimes during the Israeli invasion of Gaza in 2009, in which Palestinians waving white flags were shot at by Israeli troops.
In this case, the unnamed Staff Sergeant was allegedly not ordered by his superiors to shoot, but took action unilaterally to shoot the two women. Initially, he was charged with manslaughter, but the charges were later reduced to illegal use of a weapon, and the soldier worked out a plea bargain to reduce his jailtime down to 45 days. The soldier in question was part of the Givati Brigade, a group that has been cited on multiple occasions for its brutal treatment of Palestinian civilians.
Over 1,400 Palestinians, nearly 400 of them children, were killed during the Israeli invasion of the Gaza Strip that lasted from December 27th, 2008 – January 19th, 2009. 14 Israelis were also killed, 5 of whom were soldiers killed by 'friendly fire'.