Qwest among companies whose CEO pay exceeded tax bills
UPDATED: 08/31/2011 05:45:36 PM MDT
Former Qwest Communications chief executive Ed Mueller appears in a report to be released today that identifies CEOs whose income was more than their companies paid in federal income taxes.
The report from the Washington, D.C.-based Institute for Policy Studies lists 25 U.S. corporations whose CEOs earned more in 2010 total compensation than their firms paid in taxes.
Mueller's compensation package — including salary, bonuses, stock awards and other benefits — was $13.4 million.
Because of previous financial losses and other accounting provisions, Qwest in 2010 paid no federal income taxes and, in fact, earned a federal tax benefit last year of $14 million.
"There is a whole set of special rules that favor large corporations and allow them not to pay their fair share," said Scott Klinger, an associate fellow at the institute, known as the IPS.
Klinger said the report, titled "Executive Excess 2011: The Massive CEO Rewards for Tax Dodging," is a critique both of tax laws that favor large corporations and of excessive compensation for CEOs.
The IPS is a liberal think tank that annually publishes studies with variations on the theme of corporate excess.
Qwest was acquired earlier this year by Monroe, La.-based CenturyLink. Mueller serves on the CenturyLink board of directors but no longer holds an executive position. He could not be reached for comment.
CenturyLink spokesman John Hall declined to comment on the IPS report.
"Mr. Mueller's compensation was set by the Qwest board prior to the closure of the merger" with CenturyLink, Hall said.
Mueller's 2010 compensation package included $1.2 million in salary, $7.6 million in stock awards and $4 million in cash incentives.
Qwest in a 2010 financial filing said it has accrued net operating losses from previous years totaling $5.6 billion. Those losses can be used to offset federal income taxes in future years.
Other companies listed in the IPS report include Ford, Coca-Cola, Verizon,, General Electric, eBay, Honeywell and Boeing. All had CEOs with 2010 compensation packages larger than their federal taxes owed.
"I had to laugh at the phrase 'tax-dodging' CEOs. If their corporations are just following the federal tax laws and IRS regs, then it's hard to see how they are dodging paying taxes if they are not doing anything illegal," said Dan Pilcher, chief operating officer of the Colorado Association of Commerce and Industry.
"If the institute doesn't like the federal tax code, then it should lay out its agenda for reform with specific recommendations concerning corporations," Pilcher said.
University of Colorado Leeds School of Business finance professor Sanjai Bhagat said that to his knowledge, Qwest has complied with tax regulations.
"We have tax laws, and for better or for worse, as long as companies are doing everything legally, that's the way the system works," Bhagat said.
John Holcomb, a professor of business ethics at the University of Denver's Daniels College of Business, said the IPS report "helps them shine the spotlight on their populist agenda."
He said he views the report as "not one of the more valid comparisons" between executive compensation and corporate profits or taxes.
For companies that paid no federal taxes because of losses or accounting provisions, Holcomb said, "even if the CEOs made only $1, they'd still be making more than their companies paid in taxes."
Steve Raabe: 303-954-1948 firstname.lastname@example.org
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