culture, politics, commentary, criticism

Thursday, May 04, 2006
Q: Why won't Bush tax dividends?

A: Because they're so damn rewarding for the secret earnings of his base, the CEO class, of which his vice president is a premier member (
Amid the drive to tie executive pay more closely to company results, a little-known and poorly disclosed practice is allowing many executives to receive hundreds of thousands of dollars a year in dividends on performance stock -- shares that they may never earn.

The money involved isn't huge by the standards of overall executive pay, but it can add up. General Electric Co. Chief Executive Officer Jeffrey Immelt, who gets a growing share of his compensation through what GE calls "performance share units," received more than $1 million last year in dividends on unearned restricted and performance shares.

Gary Neale, chairman and former CEO of NiSource Inc., a Merrillville, Ind., utility-holding company, is in line to receive more than $827,000 in dividends this year on performance shares he hasn't yet earned.

Performance, or "phantom," shares are a form of restricted stock paid to an executive only if the company meets certain performance targets. Dozens of other CEOs are paid dividends on unvested restricted stock, which typically requires the recipient only to wait several years before actually receiving the shares, regardless of performance.

Bank of America Corp. CEO Kenneth Lewis is in line to receive $2.89 million in dividends on restricted stock this year. Altria Group Inc. CEO Louis Camilleri received more than $2 million in dividends on restricted stock last year, even though he won't earn some of the shares until 2011.

All told, among the 50 large-company CEOs who received the largest dollar grants of restricted stock over the past three years and whose companies pay dividends, 37 are paid dividends in cash before the shares vest, according to an analysis for The Wall Street Journal by Equilar Inc., a San Mateo, Calif., compensation-research firm.
According to the article: "It's more stealth compensation," said Paul Hodgson, a senior research associate at the Corporate Library, which monitors corporate governance.

Well, duh. But at least there's some truth in nomenclature for once, in that these stealth CEO dividends are officially called both "phantom" and "unearned." After all, earning your keep is not consistent with our wildly underperforming CEO class (cf. Jeff Skilling, Ken Lay, et al.).

This form of compensation screws ordinary Americans in two principal ways: (1) for shareholders in 401(k) and pension plans, the insane excesses of executive compensation are reducing shareholder value and therefore literally lowering the account balances and taking the savings of tens of millions of US workers; and (2) the lack of taxation on these "unearned" and "phantom" dividends is like a drainpipe on the US Treasury, sucking out millions of dollars that could be used for, say, making the ever-growing mortgage payments on "rebuilding" Iraq.

No Taxation on Dividends™ — an essential part of the Republican class war against ordinary Americans.

Greatest Hits · Alternatives to First Command Financial Planning · First Command, last resort, Part 3 · Part 2 · Part 1 · Stealing $50K from a widow: Wells Real Estate · Leo Wells, REITs and divine wealth · Sex-crazed Red State teenagers · What I hate: a manifesto · Spawn of Darleen Druyun · All-American high school sex party · Why is Ken Lay smiling? · Poppy's Enron birthday party · The Saudi money laundry and the president's uncle · The sentence of Enron's John Forney · The holiness of Neil Bush's marriage · The Silence of Cheney: a poem · South Park Christians · Capitalist against Bush: Warren Buffett · Fastow childen vs. Enron children · Give your prescription money to your old boss · Neil Bush, hard-working matchmaker · Republicans against fetuses and pregnant women · Emboldened Ken Lay · Faith-based jails · Please die for me so I can skip your funeral · A brief illustrated history of the Republican Party · Nancy Victory · Soldiers become accountants · Beware the Merrill Lynch mob · Darleen Druyun's $5.7 billion surprise · First responder funding · Hoovering the country · First Command fifty percent load · Ken Lay and the Atkins diet · Halliburton WMD · Leave no CEO behind · August in Crawford · Elaine Pagels · Profitable slave labor at Halliburton · Tom Hanks + Mujahideen · Sharon & Neilsie Bush · One weekend a month, or eternity · Is the US pumping Iraqi oil to Kuwait? · Cheney's war · Seth Glickenhaus: Capitalist against Bush · Martha's blow job · Mark Belnick: Tyco Catholic nut · Cheney's deferred Halliburton compensation · Jeb sucks sugar cane · Poindexter & LifeLog · American Family Association panic · Riley Bechtel and the crony economy · The Book of Sharon (Bush) · The Art of Enron · Plunder convention · Waiting in Kuwait: Jay Garner · What's an Army private worth? · Barbara Bodine, Queen of Baghdad · Sneaky bastards at Halliburton · Golf course and barbecue military strategy · Enron at large · Recent astroturf · Cracker Chic 2 · No business like war business · Big Brother · Martha Stewart vs. Thomas White · Roger Kimball, disappointed Republican poetry fan · Cheney, Lay, Afghanistan · Terry Lynn Barton, crimes of burning · Feasting at the Cheney trough · Who would Jesus indict? · Return of the Carlyle Group · Duct tape is for little people · GOP and bad medicine · Sears Tower vs Mt Rushmore · Scared Christians · Crooked playing field · John O'Neill: The man who knew · Back to the top

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