Multinational Monitor

SEP 2003
VOL 24 No. 9


Fishing Off the Deep End - And Back
by Carl Safina

Dead Seas: Nutrient Pollution in Coastal Waters
by Doug Daigle

Coasts at Risk: Coastal Sprawl and the Shore
by David Helvarg

Deep Trouble: Corporate and Military Designs on the Deep Seas
by Deborah Cramer

The Seaweed Rebellion: Marine Grassroots Movements to Protect Coastal and Ocean Ecosystems
by David Helvarg


Working for a New Ocean Ethos: Ocean Activism on the Shorelines
an interview with Christopher Evans


Behind the Lines

A Sea Change to Reverse the Oceans Crisis

The Front
Executive Excess

The Lawrence Summers Memorial Award

Names In the News


The Front

Executive Excess

CEOs at U.S. companies with the largest layoffs, most underfunded pensions and biggest tax breaks were rewarded with bigger paychecks in 2002, according to a new report issued by the Washington, D.C.-based Institute for Policy Studies and the Boston-based United for a Fair Economy.

"Executive Excess 2003: CEOs Win, Workers and Taxpayers Lose" shows that median CEO pay skyrocketed 44 percent from 2001 to 2002 at the 50 companies with the most announced layoffs in 2001, while overall CEO pay rose only 6 percent. These layoff leaders received median compensation of $5.1 million in 2002, 38 percent higher than the $3.7 million at the 365 large corporations surveyed by Business Week.

The top 50 job-cutting CEOs in total received more than $570 million in compensation in 2002, according to "Executive Excess." That was the CEOs' reward for eliminating 465,000 jobs.

The report also looked at companies that are likely to pose future problems for employees and taxpayers, those that have underfunded their pension funds. Lax accounting rules have in recent years permitted companies to underfund their pensions and make overly optimistic projections about the long-term growth prospect of pension fund investments. Many of those projections now look even more silly after the collapse of the stock market. Over time, the companies with underfunded pensions will either have to make up the funding shortfall, or the U.S. federal government pension guarantee system will have to use taxpayer monies to fill the gap -- or workers will simply be shafted.

UBS Investment Research has identified the 30 companies with the largest pension fund shortfalls. The Institute for Policy Studies and United for a Fair Economy examined CEO pay at these firms. At the 30 companies with the greatest shortfall in their employees' pension funds, CEOs made 59 percent more than the median CEO in Business Week's survey.

The Enron scandal highlighted the way that large corporations are able to use offshore subsidiaries to manipulate tax and accounting rules, and how these arcane financial maneuvers can cost taxpayers.

Again, "Executive Excess" found that executives at companies exhibiting socially undesirable behavior are rewarded for overseeing bad acts. Relying on a Citizen Works compilation of the two dozen Fortune 500 companies with the largest number of subsidiaries in offshore tax havens, the Institute for Policy Studies and United for a Fair Economy went about surveying CEO pay at these firms.

The findings: At the 24 Fortune 500 companies with the most subsidiaries in offshore tax havens, median CEO pay over the 2000-to-2002 period was $26.5 million -- 87 percent more than the $14.2 million median three-year pay at firms surveyed by Business Week.

The overall CEO-to-average-worker pay ratio persists at staggering levels. The CEO-worker pay gap was 281-to-1 in 2002, nearly seven times greater than the 1982 ratio of 42-to-1.

The ratio is substantially lower than it was in 2000, when it peaked at 531-to-1, thanks to the booming stock market and CEOs' ability to cash in stock options.

"Executive Excess" focuses on stock options as a key force driving the CEO-worker pay gap, and details the history of corporate and Congressional intervention in regulatory efforts to require companies to "expense" stock options. Senator Joseph Lieberman, D-Connecticut emerges as the key figure undermining efforts to require expensing.

Under current U.S. rules, companies are not required to report stock options grants as expenses in their income statements, even though they can deduct the cost of options from their taxable income.

This arrangement -- which many expect to be eliminated by next year, in the wake of Enron and related financial scandals -- gives companies a major incentive to grant stock options. And it has made thousands of corporate executives fabulously wealthy.

Between 1990 and 2002, average U.S. CEO pay rose 279 percent, far more than the 46 percent increase in worker pay, which was just 8 percent above inflation. CEO pay dramatically outpaced the stock market performance of the 500 largest publicly traded firms, which rose 166 percent in the same period, as well as the 93 percent rise in corporate profits.

"If the average annual pay of production workers had risen at the same rate since 1990 as it has for CEOs, their 2002 annual earnings would have been $68,057 instead of $26,267," points out "Executive Excess." "If the federal minimum wage, which stood at $3.80 an hour in 1990, had grown at the same rate as CEO pay, it would have been $14.40 in 2002 instead of $5.15."

Authored by Sarah Anderson, John Cavanagh, Chris Hartman and Scott Klinger, "Executive Excess 2003" is the tenth annual CEO pay study by the Institute for Policy Studies and United for a Fair Economy.


The September 2003 Lawrence Summers Memorial Award* goes to Forest Pharmaceuticals, makers of the drug citalopram, brand name Celexa.

A Forest Pharmaceuticals-sponsored study found that citalopram, an antidepressant in the class of drugs called selective serotonin reuptake inhibitors, reduces compulsive shopping tendencies in "binge shoppers."

Two thirds of the studied "binge shoppers" taking the drug reported much improvement in their condition over a seven-week period.

"Patients said to me, ëI go to the shopping mall with my friends and I don't buy anything,'" Dr. Lorrin Koran, of Stanford University Medical Center and the lead researcher on the study, told BBC News Online.

Dr. Robert Lefever, director of the Promis recovery center in Kent, England, told the BBC News Online that using pills to cure "shopping disorder" simply replaced one addiction with another.

"Of course antidepressants help the disorder, in the same way they would help alcohol dependency," he said.

The Promis center refers people to debtors' counseling if they have shopping disorders, BBC News Online reports.

Source: BBC News Online, "Drugs ëStop Compulsive Shopping,'" July 18, 2003. Thanks to Greg Nigh's ZNet Commentary for calling this story to our attention.

*In a 1991 internal memorandum, then-World Bank economist Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" wrote Summers, who went on to serve as Treasury Secretary during the Clinton administration. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I've always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City." Summers later said the memo was meant to be ironic.


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