The Institute for Policy Studies has released an eye-opening report on how 25 of the biggest corporations in the U.S. are paying their chief executives more money than they did in corporate income taxes.
Among them are eBay, General Electric, Boeing, Verizon, International Paper, Bank of New York Mellon, Marsh & McLennan, Chesapeake Energy, Prudential and Dow Chemical. The think tank found that last year, the 25 CEOs averaged $16.7 million in compensation, well above last year’s $10.8 million average for S&P 500 CEOs. Most of their companies collected tax refunds from the IRS, with an average of $304 million.
CEOs in 22 of the 25 corporations in the report also received pay increases in 2010. In 13 of the companies, the CEO paychecks increased while the corporate income tax bill either declined or the size of the corporate tax refund expanded.
Meanwhile, the 25 companies that paid their CEOs more than they did in corporate income taxes last year reported average global profits of $1.9 billion. Only one of the companies reported negative global profits.
One of the most commonly employed strategies for lowering tax bills was the use of foreign subsidiaries in low-tax countries. Eighteen of the 25 companies last year operated subsidiaries in offshore tax haven jurisdictions. The corporations, combined, had 556 tax haven subsidiaries.
Only seven of the 25 companies reported losses in U.S. pre-tax income. Five of the companies have a combined total of 267 subsidiaries in tax haven countries, while a sixth, Nabors Industries, is headquartered in Bermuda.
Meanwhile, many CEOs were reaping the benefits of the lower tax bills, even though the average worker was not. In 2009, according to calculations by the Institute for Policy Studies, the major corporate CEOs took home 263 times the pay of America’s average workers. Last year, that gap jumped to a ratio of 325-to-1.
Among the S&P 500 corporations, CEO compensation last year averaged $10,762,304, up 27.8 percent over 2009. As for the average amount of worker pay in 2010, it finished at $33,121, an increase of only 3.3 percent over the prior year.