My Turn: A taxpayer’s afterthought

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Published: 6/14/2021 8:44:46 AM

Having filed my 2020 federal tax return last month, I’m still pondering how others fared under the 2017 tax law passed by Congress, especially in this past year of COVID.

Since the 2017 law dramatically reduced corporate tax rates, I also reflected on whether and how the corporate sector still assessed the legislation’s benefits. Now considered “persons” in terms of election contributions, how do we evaluate corporate ‘personhood’ vis-à-vis the current tax law? Corporate executive compensation, as outlined in some detail both on line and in the multiple 2020 annual reports, is clearly one way.

Executive compensation has been climbing over the last few years. Therefore, it wasn’t any surprise to see that 2020, in spite of COVID and its economic impact, was still another banner year for many CEOs. Their companies paid lower taxes and, in some cases, continued to use the savings generated to purchase back company shares and reward their leadership.

Take Hans Vestberg, for example, the head of Verizon. His compensation package jumped from $18 million in 2019 to $19 million last year. Ditto for Giovanni Coforia, CEO of Bristol Myers Pharmaceutical, whose total 2020 compensation was hiked up from $18 to $20 million.

As for David Ricks, the CEO of Lily Pharmaceutical, he garnered a $1.5 million raise over 2019 to earn $23,700,000. Similarly, Richard Gonzales, CEO of AbbVie & Allergen, another pharmacy company, got a pay hike from $21 million to $24 million. And, Pfizer, perhaps not surprisingly, with its COVID vaccine, rewarded CEO Albert Bourla with a $3 million boost from 2019 to $21 million. Clearly, it was a good year for drug makers.

It was also a good year for Bill Stromberg, CEO of T. Rowe Price, who got a $900,000 bonus in 2020 to put his compensation at $15 million. Tobacco executive Bill Gifford, CEO of Altria, also benefited from a banner year with a compensation package jump from $9 million in 2019 to $12 million in 2020.

As for Charles Scharf, CEO of Wells Fargo, he received a small raise bringing his 2020 compensation package to $20,400,000. On the other hand, Andrew Cecere, CEO of US Bank Corp, took a $2 million hit in his compensation. Still, $16,700,000 for the year isn’t shabby. Hopefully, his bank tellers’ salaries and benefits didn’t suffer similar cuts, but most corporate reports don’t discuss “equity pay” in their staffing.

Lynn Good, chair and president of Duke Energy, appeared to do less well in 2020 with a total remuneration bundle that dropped from $15 to $14 million. Incoming Schlumberger CEO Olivier Le Peuch pulled down only $5.6 million in 2020, far less than his retiring predecessor Paal Kipsguard, whose 2019 compensation package earned him $19 million. Similarly, Chris Kempczinski, McDonalds’ new president, began his 2020 tenure with only a $10.8 million package while his predecessor, Stephen Easterbrook, who was fired, took an estimated severance package of $42 million. Either way, the hamburger business seems profitable!

AT&T CEO John Stankey fared well, pulling down $21,020,917 in 2020. Notably, the company had two other even more handsomely paid executives: Executive Chairman Randall Stephenson and incoming CEO of WarnerMedia, Jason Kilar, whose 2020 compensations totaled $29,154,628 and $52,172,599, respectively.

CEO Daniel Glaser of Marsh took a $600,000 cut from his 2019 salary but still earned a ‘livable” $19,700,000 package. Other corporate leaders who appear to have benefited from lower taxes and strong compensation in 2020 were Thomas Fanning, CEO of Southern Company Utility, with $22.8 million, Emerson Electric’s David Farr at $16.4 million and Exxon Chairman and CEO Darren Woods who, while taking a significant cut, still topped out at close to $16 million.

Over the years, bloated compensation packages have consistently been justified by boards of directors who explain that similar business groups were paying equal levels of remuneration. Moreover, they argued that to keep and reward executive talent, they must provide multi-million dollar salary, stock and pension benefit packages. Shareholders are given an opportunity to make a non-binding vote of approval or disapproval. Negative votes, however, appear to have made little difference.

Millions of Americans who own Individual Retirement Accounts or participate in pension plans never see corporate reports or corporate compensation packages. If they did, perhaps, like me, they would flinch as they settle their 2020 tax bill and ponder why corporate America is smiling over a year of rising stock prices.

Peter Purdy is a resident of Hawley.


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