After filing my 2020 federal tax return last month, I'm still pondering how others fared after the tax bill passed by Congress in 2017 – especially last year of COVID.
Since the 2017 law drastically lowered corporate tax rates, I also thought about whether and how the corporate sector is still assessing the benefits of the law. Considered as “persons” in relation to election contributions, how do we rate the “personality” of companies with regard to current tax law? Executive compensation, which is detailed both online and in the multiple 2020 annual reports, is clearly one way to go.
Executive compensation has increased in recent years. So it came as no surprise that despite COVID and its economic impact, 2020 was another bright year for many CEOs. Their companies paid lower taxes and in some cases continued to use the savings they made to buy back company shares and reward their leadership.
Take, for example, Hans Vestberg, the head of Verizon. His compensation package rose from $ 18 million in 2019 to $ 19 million last year. Same goes for Giovanni Coforia, CEO of Bristol Myers Pharmaceutical, whose total compensation increased from $ 18 million to $ 20 million in 2020.
David Ricks, the CEO of Lily Pharmaceutical, received a $ 1.5 million raise in 2019 to make $ 23.7 million. Likewise, Richard Gonzales, CEO of AbbVie & Allergen, another pharmacy company, received a raise from $ 21 million to $ 24 million. And Pfizer, perhaps unsurprisingly, rewarded CEO Albert Bourla with its COVID vaccine, increasing from $ 3 million in 2019 to $ 21 million. It's clearly been a good year for drug manufacturers.
It's also been a good year for Bill Stromberg, CEO of T. Rowe Price, who received a $ 900,000 bonus in 2020 to increase his compensation to $ 15 million. Tobacco executive Bill Gifford, CEO of Altria, also benefited from a stellar year with the compensation package increasing from $ 9 million in 2019 to $ 12 million in 2020.
Charles Scharf, Wells Fargo CEO, received a small raise, bringing his 2020 compensation package to $ 20.4 million. On the other hand, Andrew Cecere, CEO of US Bank Corp., suffered compensation of $ 2 million. That said, $ 16.7 million for the year isn't shoddy. Hopefully, its bank employees' salaries and benefits have not suffered similar cuts, but most company reports do not discuss "equity payments" in their staffing.
Lynn Good, chairman and president of Duke Energy, appeared to be doing less well in 2020, with an overall compensation package that dropped from $ 15 million to $ 14 million. Schlumberger's new CEO Olivier Le Peuch pulled out just $ 5.6 million in 2020, far less than his retired predecessor, Paal Kipsguard, whose 2019 compensation package earned him $ 19 million.
Similarly, McDonald’s new president Chris Kempczinski began his term in 2020 with a package of just $ 10.8 million, while his predecessor Stephen Easterbrook, who was laid off, received an estimated $ 42 million severance pay took. In any case, the hamburger business seems to be profitable!
AT&T CEO John Stankey has done well, collecting $ 21 million in 2020. Notably, the company had two more, better-paid executives: Executive Chairman Randall Stephenson and WarnerMedia's new CEO Jason Kilar, whose compensation for 2020 totaled $ 29.2 million and US $ 29.2 million, respectively.
Marsh CEO Daniel Glaser took a $ 600,000 cut from his 2019 salary but still earned a $ 19.7 million "livable" package. Other corporate leaders who appear to have benefited from lower taxes and strong pay in 2020 included Thomas Fanning, CEO of Southern Company Utility with $ 22.8 million, David Farr of Emerson Electric with $ 16.4 million, and Exxon Chairman and CEO Darren Woods, cut, still topped with nearly $ 16 million.
Over the years, inflated compensation packages have been justified time and again by board members who state that similar groups of companies pay equal compensation. Additionally, they argued that in order to retain and reward executives, they must provide multi-million dollar salary, stock, and retirement packages.
The shareholders are given the opportunity to give non-binding approval or rejection. However, negative voices seem to have changed little.
Millions of Americans who own individual retirement accounts or participate in retirement plans never see company reports or company compensation packages. If they did, they might wince like me when they settle their 2020 tax bill and think about why American companies are smiling over a year of rising stock prices.
Peter Purdy is a resident of Hawley.