Companies Use IRS to Raise Bonuses With Earnings Goals
After Exelon Corp. (EXC) earned less than top executives needed to reach their annual cash bonus target last year, the board of directors provided a way to help bridge the gap: nonexistent profits.
The board tacked on six cents a share -- equal to $85 million -- that the Chicago-based power company never made, augmenting earnings solely for the purpose of calculating bonuses. Exelon said that it would have earned the sum except for a regulatory setback on electricity rates and that the pennies helped thousands of employees avoid smaller payouts.
The six cents helped executives receive their fourth above-target bonus in five years as the company’s operating profits and its market value fell by more than half. Amid the slide, the board awarded more than $20 million in cash bonuses to top managers as tax-deductible “performance-based pay.”
Exelon and dozens of other corporations demonstrate how such tax-advantaged bonuses -- which cost the U.S Treasury $3.5 billion a year, according to the congressional Joint Committee on Taxation -- can reward even subpar shareholder returns. Chief executive officers at 63 companies in the Standard & Poor’s 500 Index (SPX) got cash incentive-pay increases last year after their share returns underperformed the index’s, according to data compiled by Bloomberg.
“Taxpayers are losing billions of dollars; shareholders are being taken for ride,” said Robert Reich, the secretary of labor under former President Bill Clinton.
"Exelon and dozens of other corporations demonstrate how such tax-advantaged bonuses -- which cost the U.S Treasury $3.5 billion a year, according to the congressional Joint Committee on Taxation --"
Because the government didn't steal it, it was somehow a cost to the government?
Companies Use IRS to Raise Bonuses With Earnings Goals
ReplyDeleteAfter Exelon Corp. (EXC) earned less than top executives needed to reach their annual cash bonus target last year, the board of directors provided a way to help bridge the gap: nonexistent profits.
The board tacked on six cents a share -- equal to $85 million -- that the Chicago-based power company never made, augmenting earnings solely for the purpose of calculating bonuses. Exelon said that it would have earned the sum except for a regulatory setback on electricity rates and that the pennies helped thousands of employees avoid smaller payouts.
The six cents helped executives receive their fourth above-target bonus in five years as the company’s operating profits and its market value fell by more than half. Amid the slide, the board awarded more than $20 million in cash bonuses to top managers as tax-deductible “performance-based pay.”
Exelon and dozens of other corporations demonstrate how such tax-advantaged bonuses -- which cost the U.S Treasury $3.5 billion a year, according to the congressional Joint Committee on Taxation -- can reward even subpar shareholder returns. Chief executive officers at 63 companies in the Standard & Poor’s 500 Index (SPX) got cash incentive-pay increases last year after their share returns underperformed the index’s, according to data compiled by Bloomberg.
“Taxpayers are losing billions of dollars; shareholders are being taken for ride,” said Robert Reich, the secretary of labor under former President Bill Clinton.
http://www.bloomberg.com/news/2013-09-13/six-cents-help-net-bonus-millions-as-ceos-get-lower-goals.html
don't steal small, steal big....
"Exelon and dozens of other corporations demonstrate how such tax-advantaged bonuses -- which cost the U.S Treasury $3.5 billion a year, according to the congressional Joint Committee on Taxation --"
ReplyDeleteBecause the government didn't steal it, it was somehow a cost to the government?
Reich is a socialist.