American Federation of Labor-Congress of Industrial Organizations, never the best of friends to those in the executive suite, has noted the national disdain for CEO pay, and launched an e-campaign on its updated "Executive PayWatch" Web site.
AFL-CIO is the umbrella organization for the majority of America's labor unions. It collectively represents more than 13 million workers nationwide.
"People are sickened by watching this bear market eat up their life savings while CEOs still make out with the big bucks," said AFL-CIO Secretary-Treasurer Richard Trumka. "That's why we're giving working people the e-tools they need to take action and organize against outrageous CEO pay packages which lower the value of everyone's stock."
The newly revised AFL-CIO PayWatch Web site aims to give shareholders a shot at reining in what many consider to be exorbitant CEO pay. At PayWatch, users can research background about CEO pay, and, if inclined, e-mail the relevant corporate board or company executives to protest. The site encourages users to form activist groups and to use shareholder clout by way of casting proxy votes on compensation issues.
Since its initial launch in 1997, the site has had more than 30 million hits, including 11 million last year.
According to PayWatch, while stock prices are falling, the average CEO made a record $20 million in 2000 - which PayWatch notes is nearly 50 percent more in stock options and 22 percent more in salary and bonuses than last year.
In addition to having executive compensation information on more than 1,500 major U.S. companies, PayWatch posts compensation case studies on corporate giants including Sprint, Bank of America and Conesco.
According to PayWatch, a telephone line repairman would have to work 1,891 years to equal Sprint Chairman and CEO William Esrey's 2000 compensation - and would have to repair 6.9 million phones.
Esrey took home $69.3 million in total compensation and stock options in 2000 and $64.1 million in stock options exercised from prior grants.
A shareholder lawsuit alleges the failed merger between Sprint and its competitor MCI WorldCom unfairly entitled Sprint executives to obtain more than $1 billion in stock options years ahead of schedule. In addition, the board of directors saw fit to replace those executives' stock options that were no longer exercisable after Sprint's stock price crashed.
PayWatch notes that the "real windfall for Sprint executives came when Sprint's board changed the rules mid-game before the merger with MCI-Worldcom failed."
"Executives got their golden parachutes early - from early vesting of $1.1 billion in Sprint stock options, including $600 million for Sprint's top five executives - then got to keep both the parachutes and their jobs," the site adds.
Bank of America's Hugh McColl collected $95.6 million in cumulative pay over the last five years. In that same five-year period, Bank of America's stock returns underperformed the S&P Index by minus 34 percent, according to PayWatch.
PayWatch encourages visitors to become "cyber activists" by e-mailing their support to former Bank of America director Shirley Young, who Business Week reported was possibly forced out for being too critical of company's governance and CEO McColl's pay.
Conseco, a large insurance, financial services and consumer loan institution, is another company on PayWatch's radar. The Web site reports that when Conseco's Gary Wendt became CEO in June of last year, "Conseco gave him a golden handshake that includes a signing bonus of $45 million, stock options worth almost $59 million and restricted shares worth $18.8 million."
Also, PayWatch noted, Conseco recently took a $78 million charge against its earnings for more than $600 million in loans given to executives and directors to buy Conseco stock.
Corporate compensation committees often defend their payment packages based on the fact that a large part of the compensation is tied to stock valuation, but often new blocks of stock are issued to offset the declining price of earlier options, and as noted above, large loans are often "forgiven."
Why do the committees do this? They say it is necessary to attract and hold top talent.
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