Firms paid more to CEOs than taxes
NEW YORK - Twenty-six big US companies paid their CEOs more last year than they paid the federal government in tax, according to a study released Thursday by a liberal-leaning think tank.
The study, by the Institute for Policy Studies, said the companies, including AT&T, Boeing and Citigroup, paid their CEOs an average of US$20.4 million ($1.8 billion) last year while paying little or no federal tax on ample profits, according to regulatory filings.
The study said deductions and credits are allowing companies to lavish big pay packages on executives so they can cut their tax bills while Washington gets less money in a time of trillion-plus deficits.
On average, the 26 companies generated net income of more than US$1 billion in the US, the study said.
The study blasted tax rules allowing unlimited deductions for CEO "performance-based" pay, like many stock options. It said the five biggest performance payers among the 26 companies took US$232 million of these deductions last year.
Among the "kingpins" it criticized was CEO James McNerney Jr of Boeing. It said he got US$18.4 million in pay last year while his company received a tax refund of US$605 million.
The study also laid into Citigroup for paying CEO Vikram Pandit US$14.9 million while the bank received a net US$144 million in tax benefits.
Eighteen of the 26 companies received cash back or credits to apply against tax in the future, according to the report.
"Our nation's tax code has become a powerful enabler of bloated CEO pay," the study said.
The report also criticized the use of tax havens that allow technology companies, for instance, to assign intellectual-property rights to shell companies in the Cayman Islands, so they can run profits through them and avoid taxes. It noted that 26 companies have a combined 537 subsidiaries in tax-haven countries.