In the two years since Congress passed the Republican tax law, the richest 1 percent have been the big winners.
One puts on football pageants. Another makes mega millions on a virtual farm. They all remind us how much needs to change, economically and politically, in 2012 and beyond.
By Sam Pizzigati
The greediest among us in 2011 probably haven’t been any greedier, as a gang, than any greedy of the recent past. They just seem that way.[pullquote]You don’t have to make a million to rate as an all-star greedster.[/pullquote]
Why so? We have a whole new frame of reference. This fall’s sudden — and exhilarating — rise of the Occupy movement has helped us remember what we, as a society, had sadly forgotten: that decent, smart societies never let the few grab away rewards that ought to be shared among the many.
Who grabbed most greedily in 2011? We have no statistical yardstick to help us make that call. You don’t, after all, have to make a million to rate as an all-star greedster. You do have to be ruthless, self-absorbed, and grossly insensitive.
That description, we’ll admit, fits far more folks than our ten dis-honorees below. Maybe next year, we can hope, we’ll have a harder time filling out our top ten.
10/ Paul Hoolahan: Skimming the Sugar
Greed has never been a stranger to professional sports. But this year’s most avaricious sports character works for a nonprofit. Meet Paul Hoolahan, the chief exec at the Sugar Bowl, one of four annual college football postseason games that rotate hosting the national collegiate championship.
The Sugar Bowl enjoys tax-exempt status and regularly touts its contributions to good causes. But Hoolahan’s favorite good cause may be his own. He took home just under $600,000 in 2009, the latest year with figures available, almost quadruple his $160,500 paycheck for the same job 13 years earlier.
Hoolahan and his two top aides are skimming off $1 of every $10 the Sugar Bowl generates, a Washington Post analysis recently noted. At the same time, adds thet Arizona Republic, the Sugar Bowl and its three “Bowl Championship Series” partners are donating to charity only 20 cents from every $10 in revenue.
The Sugar Bowl disputes those figures. Hoolahan’s aides say their bowl never bothers to report many donations “as charitable giving.”
This past September, one of those unreported “donations” came to light. The Sugar Bowl had spent, a Hoolahan flack had to acknowledge, at least $3,000 on political contributions to the governor of Louisiana, a nonprofit tax law no-no.
9/ Michael Duke: Shifting the Goalposts
How do CEOs end up making so much? Ask Michael Duke, the chief exec at retail colossus Wal-Mart. Duke takes home his millions — $18.7 million in his company’s latest fiscal year alone — the old-fashioned way. He squeezes workers.
But sometimes squeezing just can’t get the job done. No big deal for Michael Duke. He just moves the goal posts that determine his “pay for performance.”
Duke moved into Wal-Mart’s CEO suite in 2009. Since then, he has ended “premium pay” for hours worked on Sundays, eliminated profit-sharing, sheared health care benefits, and cut staffing so low, Retailing Today reports, that customers sometimes can’t find shopping carts because the store where they’re shopping has no employees available to collect carts from the parking lot.
This sort of chronic understaffing may help explain why Wal-Mart’s “same-store sales” — the business “metric” that compares a retail chain’s sales at the same group of stores from one quarter to the next — started tumbling soon after Duke took over as CEO and didn’t stop sinking until this past fall.
This same-store nosedive should have cost CEO Duke big time at pay time, since same-store sales, explains a New York Times analysis, accounted for 30 percent of the factors that Wal-Mart used to calculate Duke’s bonus.
But lo and behold, all of a sudden this past spring, Wal-Mart’s board of directors compensation committee eliminated same-store sales from Duke’s bonus calculations. The immediate result: Duke would receive $16 million in “performance” pay — despite Wal-Mart’s stunning same-store sales tailspin.
Some 75 percent of Wal-Mart workers make less than $12 an hour, notes a new report on Wal-Mart’s business model, and few Wal-Mart workers get 40 hours.
8/ Robert Iger: Impersonating Uncle Walt
Imagine if you could live in “the happiest place on earth.” Even better, imagine you ran it! Then you’d be Robert Iger, the CEO of the Disney entertainment empire.
Iger became Disney’s numero uno back in 2005, and this year has been one of his best. In January, Disney announced that Iger’s latest annual compensation topped $28 million, a neat 35 percent increase over the year before.
In October, Iger picked up a new pay deal that extends his CEO contract into 2015 and adds on a cushy final year as Disney “executive chairman” — at $2.5 million — to help him make the transition into fantasyland retirement.
Not enough to make you happy? How about this: This fall Iger became the newest member of the Apple computer board of directors. He’ll get a six-figure tip for the gig, plus a free copy of any new Apple product he wants. Happy, happy, happy.
Unfortunately, some housekeepers who work at the hotels in Disneyland have been raining on Bob Iger’s Disney parade. They went almost four years without a contract because they refused to accept Disney demands they feared would force them to pay hundreds of dollars a year extra for health care.
These spoilsport housekeepers testified earlier this year at a community forum that made poor Bob Iger seem the reincarnation of Uncle Scrooge McDuck. The original Walt Disney, the hotel workers union pointed out, made 108 times what his housekeepers were making in 1966. Iger now makes 781 times as much.
Those housekeepers just don’t understand. Uncle Walt could always whip out a pencil and draw Mickey Mouse when he wanted to feel happy. Robert Iger can only count his money.
Iger may now have to be content with a teeny bit less. Disney officials and hotel workers finally agreed on a new contract the first week in December.
7/ Doug Oberhelman: Threatening an Exit
Lawmakers in Illinois, early in 2011, modestly raised their state’s corporate income tax rate to help fill a gaping state budget shortfall. That modest hike soon had the CEO at the Peoria-based Caterpillar strongly “suggesting” that his Fortune 500 firm might have to exit the state.
Mused Caterpillar chief exec Doug Oberhelman: “I have to do what’s right for Caterpillar.”
And maybe himself, too. In 2009, a year that saw only three U.S. corporations lay off more workers than Caterpillar, Oberhelman took home just under $3 million. His last year’s paycheck: $10.4 million.
Caterpillar workers, meanwhile, have a new six-year contract that, one news report notes, includes no wage raises and a big boost in health care premiums.
Caterpillar seems to exploit tax loopholes as systematically as employees. From 2004 to 2009, the company paid in Illinois income tax only 1.04 percent of its $30.4 billion in earnings.
6/ William Weldon: Seeing No Evil
Contact lenses. Hip implants. Over-the-counter children’s medicines. You name it, Johnson & Johnson — the world’s second-largest health care products company — has recalled it over the past three years.
That’s one reason J&J sales have failed to increase the past two years — for the first time since the Great Depression. Jobs at J&J have fallen, too. The company has announced nearly 10,000 layoffs since 2004, the Institute for Policy Studies reports, despite $49.6 billion in profits the last three years alone.
Could any of this profiteering, job cutting, and chronic recalling be related? Absolutely not, says Johnson & Johnson CEO William Weldon. He declared last year that J&J had no “systemic problem.”
That may be right. Johnson & Johnson’s prime problem may be Weldon’s personal greed. In 2007, the CEO “restructured” the company and slashed J&J’s corporate quality control operation by 35 percent. The next two years, a hiring freeze made replacing newly vacant quality positions almost impossible.
These moves were soon paying big dividends — for Weldon. He took home $25.6 million in 2009. Then came the flood of recalls and assorted other scandals from kickbacks to illegal drug marketing. The Johnson & Johnson board response? The company dropped Weldon’s annual pay — to $23.2 million.
This past summer, a special J&J board member investigative panel cleared Weldon and his management buddies of any blame for the company’s recall disasters. Explained the panel: “Senior management never issued any directives to the effect that quality should be sacrificed for production.”
Weldon, notes an Associated Press analysis, also serves as chairman of the Johnson & Johnson board and, as such, has nominated a host of J&J board members to their current positions.
5/ Lloyd Blankfein: Stiffing the Sisters
Back two years ago, Wall Street’s most powerful banker — Goldman Sachs chief Lloyd Blankfein — impishly told a British journalist he was “doing God’s work.”
God apparently pays well. In 2007, on the eve of the financial meltdown banks like Goldman did so much to fire up, Blankfein collected a $68 million bonus, the largest in Wall Street history. The year before, his bonus hit $54 million.
In other words, Blankfein has done more than his share to help make New York one of the world’s most unequal cities. In 2011, Blankfein had a chance to hit the restart button. He didn’t.
In April, a Goldman Sachs required filing revealed that Blankfein, after going two years without taking a cash bonus, had gobbled up $5.4 million in bonus cash for the bank’s latest fiscal year. And plenty more in stock awards and salary. His total pay for the year: $19 million, about double his total pay the year before.
In May, at the Goldman Sachs annual meeting, Blankfein faced a shareholder resolution — brought by four groups of nuns — that would have initiated an investigation into whether executive pay at the firm rated as “excessive.”
Blankfein didn’t seem to think that investigation would be a good idea. At the time, he held a stash of Goldman shares worth $527.6 million. Blankfein and his allies would go on to have the nuns’ resolution crushed in shareholder voting.
4/ Alan Mulally: Shrinking to Riches
Alan Mulally took the Ford Motor CEO reins in 2006. Over his first three years, Ford lost $30 billion. Over his last two, Ford has gained back $9.3 billion, and that gain has become cause for corporate celebration — and a windfall for Mulally.
In March Ford handed the chief exec $56.5 million in stock and then, a month later, announced that Mulally last year pulled down an additional $26.5 million in annual pay. That amounted to 910 times the pay of entry-level Ford workers. They had been making, ever since a 2007 concessions pact, just $14 an hour.
United Auto Workers president Bob King calling Mulally’s spring-time take-home bonanza “morally wrong.”
Added another UAW leader representing Ford’s Canadian workers: “It’s unconscionable that a CEO gets paid this much money as a result, quite frankly, of shrinking a company into profit.”
3/ Larry Ellison: Loving that Real Estate
How much more incentive to “perform” does Larry Ellison, the top exec at business software giant Oracle, need? Apparently, $77.6 million. That’s how much Ellison collected for the Oracle fiscal year that ended this past May 31.
That piece of change added less than two-tenths of 1 percent to Ellison’s $39.5 billion personal fortune, the world’s fifth largest.
Why does Oracle, at this point, bother ladling still more loot on Ellison? His continuing rewards, says the Oracle board compensation committee, rest on a “subjective evaluation of Mr. Ellison’s performance, the unique contributions he makes to Oracle as its founder and various other factors.”
Among those “various other factors” may be the annual upkeep of the at least 15 personal residences Ellison owns. That upkeep may be getting to the billionaire. Or maybe just boredom. This past fall Ellison put up for sale a 6.9-acre home and horse farm combo he owns in Northern California.
Ellison is asking $19 million for the property. He paid $23 million for it in 2005. But the $4 million haircut he’s now facing won’t be a big deal. The loss amounts to around one-hundredth of 1 percent of his fortune.
2/ Don Blankenship: Prepping for a Comeback
This past May, West Virginia state investigators found Massey Energy directly to blame for the 2010 blast that left 29 miners dead at the company’s Upper Big Branch coal mine. Massey CEO Don Blankenship’s management team, probers charged, had nurtured a “culture bent on production at the expense of safety.”
Earlier this month, federal regulators agreed. They found “systematic, intentional, and aggressive efforts” to flout basic safety regulations. Under Blankenship, Massey managers kept two sets of books, one accurate for internal use and another fake for regulators.
Says the top federal mine safety official: “Every time Massey sent miners into the UBB Mine, Massey put those miners’ lives at risk.”
That risk taking paid off handsomely for Blankenship. He pocketed $38.2 million from 2007 through 2009, after $34 million in 2005, and retired this past December with a $5.7 million pension, $12 million in severance, another $27.2 million in deferred pay, and a lush consulting agreement.
What about the families of the lost miners? Federal prosecutors have just reached a settlement with Alpha Natural Resources — the company that bought out Massey this past June — that will provide $1.5 million to each family.
Blankenship could still face criminal charges. But we’ll more likely see him back in the mine business. The mega millionaire retiree has signed Kentucky state incorporation papers that identify him as the president of a new company that calls itself the McCoy Coal Group Inc. Who says Blankenship has no heart? “McCoy” turns out to be his mom’s family name.
1/ Mark Pincus: Reaping What He Sows in FarmVille
Mark Pincus, the venture capitalist who runs the Zynga online gaming goliath, wants it all. Money and power. Pincus appeared, early in 2011, on track to get them both.
The 45-year-old Pincus had spent the previous four years building up Zynga — and an awesome buzz on Wall Street. Analysts were predicting that Zynga’s initial public stock offering might be the biggest IPO blockbuster since Google.
This past March, in a preview of the IPO bonanza to come, Pincus would sell off a chunk of his Zynga shares and clear a neat $110 million.
This lucrative sale in no way loosened the Pincus lock-grip over Zynga. The Harvard MBA had structured the company’s stock to make him the only owner of Zynga’s “Class C shares,” stock that has 70 times more voting power than Zynga’s regular shares. Elsewhere in the high-tech industry, special shares typically carry only ten times the voting power of regular shares.
But then this fall things started unraveling.
High tech start-ups typically attract talent by offering shares of stock in their new concern, and Pincus had done just that with Zynga. But Pincus had apparently concluded, with the big IPO pending, that he had given away too many shares.
Pincus, in response to the Journal story, sent out what amounted to a non-denial denial. But follow-up news reports would soon reinforce the image of Zynga as more shark tank than romper room of inspired gamers.
The New York Times would describe a “messy and ruthless” Zynga workplace chock-full of “loud outbursts from Mr. Pincus, threats from senior leaders, and moments when colleagues broke down into tears.”
This coverage would come on top of news that the Securities and Exchange Commission, the federal watchdog over Wall Street, had told Zynga to stop using certain “non-traditional accounting measures” that could mislead investors.
Industry insiders were also starting to question Pincus’ supposed strategic business genius. The online future of gaming, analysts pointed out, rests in the mobile market. Other companies in that market were eating Zynga’s lunch.
And those other companies wanted nothing to do with Pincus. Several, including the maker of Angry Birds, rejected Zynga’s offers to buy them up, fearing that “Pincus’ hard-driving personality and iron-fisted control” was going to make keeping talent a constant uphill battle.
Early in December, amid the torrent of negative news, Pincus and Zynga signaled that the company would be asking no more than $10 per share in its upcoming IPO. That put the company’s total value at about $7 billion, only a little more than a third the estimated value that had floated around earlier in the year.
Pincus, our greediest American of 2011, still insists he’s only creating a “meritocracy” at Zynga. The question he can’t answer: What has he — or anyone, for that matter — ever done to merit a billion dollars?
Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.