(This "Outrage" on CEO pay and corporate taxes has been updated to add details of Bank of New York Mellon CEO being replaced.)
NEW YORK (
) -- Stiffing the taxman is the key to success in corporate America.
If you want to join the elite club of overpaid CEOs, the ticket to the plush corner office and keys to the corporate jet must be earned by finding ways to avoid paying corporate taxes. That's just the way things work, according to a
study out today from the Institute for Policy Studies.
Sound the alarms and rally the faithful, it's time again to lead a charge for corporate tax reform.
The institute clearly feels an injustice is being done, leading off its report by saying: "Corporate tax dodging has gone so out of control that 25 major U.S. corporations last year paid the chief executives more than they paid Uncle Sam in federal income taxes."
In fact, paying lavish salaries to executives helps reduce the corporate tax bill by cutting the bottom line. The logic is solid -- if you're going to give up the money one way or the other, it should go to the CEO not the government.
Any profit left over tends to be moved offshore if possible to shield earnings from the claws of the IRS, so the study reveals. Again, a perfectly logical corporate move -- shouldn't shareholders get the money instead of the government? After all, the government is planning to double tax the profit with a dividend tax.
Among the worst offenders (in order of compensation) singled out by the study and detailed in this
Executive Pay Slide Show
by our sister site
- John Lundgren at Stanley Black & Decker (SWK) - Get Reportreceived $32.6 million in compensation while his company claimed a $75 million tax refund. (I didn't realize the tool trade paid so well).
- Aubrey McClendon at Chesapeake Energy (CHK) - Get Reportreceived $21 million in compensation while his company paid no taxes at all. (And we wonder why our energy costs are so high).
- Robert Kelly at Bank of New York Mellon (BK) - Get Report received $19.4 million in compensation while his company claimed a $670 million tax refund. (Kelly was replaced today in a presumably unrelated shakeup at the bank).
- Ivan Seidenberg at Verizon (VZ) - Get Reportreceived $18.1 million in compensation while his company claimed a $705 million tax refund. (Don't even look at your phone bill after reading this).
- John Strangfeld at Prudential (PRU) - Get Report received $17.2 million in compensation while his company claimed a $722 million tax refund. (Ever wonder where those insurance premiums go?)
- Jeff Immelt at General Electric (GE) - Get Report received $15.2 million in compensation while GE claimed a $3.3 billion tax refund (note to GE board, Immelt is underpaid by this measure).
Now before the corporate apologists get too up in arms, I should point out that the study takes pains to state that of the many tax-dodging tactics used by these companies "not all of these techniques are nefarious." It's also worth noting that the Institute for Policy Studies doesn't pay taxes either since it is a non-profit organization.
All of the companies mentioned above are profitable, by the way. Stanley Black & Decker reported $198.2 million in net income in 2010, Chesapeake posted a $1.77 billion profit, Bank of New York Mellon earned $2.5 billion, Verizon delivered $2.55 billion in net income, Prudential posted $3.2 billion in profit and GE dwarfed them all with its $11.6 billion in net income.
So tell me -- does this make sense?
and let's talk about whether we need corporate tax reform or not.
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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.