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The
Corporate Reform Weekly
Vol.
V #27 July 17, 2006
In
This Issue...
Executive
Pay
1.
Washington-area CEO salaries are on the rise
Corporate
Crime
2.
CNN report suggests prosecutors are “Going Soft on White Collar Crime”
3.
States sue memory chip makers for conspiring to fix prices
Lobbying
and Ethics Reform
4.
House and Senate GOP want any lobbying reform bill to have “527” group rules
5.
House Majority Boehner maintains extensive ties with lobbyists, Times
reports
This
Week’s Action Item:
Let’s
keep fighting for publicly-funded elections
Executive
Pay
1.
Washington-area CEO salaries are on the rise
In its annual
review of CEO salaries in the region, the Washington
Post found that between
2003 and 2005, the median increase in cash compensation for 282 top executives
at 109 local companies was 18.7 percent. When stock options, benefits, and
other types of long-term compensation were included, the median increase was
23.5 percent over the time, far outpacing average employee compensation.
For the 100
highest-paid executives at DC-area public companies, the average total
compensation rose 21.2 percent in 2005, from $5.2 million to $6.4 million. In
the region, the biggest compensation packages went to Sallie Mae (SLM) Corp.'s
Thomas J. Fitzpatrick ($39.6 million); Capital One
Financial Corp.'s Richard D. Fairbank ($31.6 million); United
Therapeutics Corp.'s Martine A. Rothblatt ($31.1 million); and
Sprint Nextel Corp.'s Gary D. Forsee ($30 million).
But big pay
isn’t always associated with performance. At Sallie Mae, for example, profit
declined 27.8 percent last year.
The report
comes two weeks after a well-publicized speech by Berkshire Hathaway Vice
Chairman Charles Munger on the “wretched excesses of executive compensation” at
the Stanford Law School Directors’ College.
Munger said
that CEOs, "have a duty to the larger civilization to dampen some of this
envy and resentment by behaving way more noble than other people and more
generous…People should take way less than they are worth when they are favored
by life."
Excessive CEO
pay is also the subject a recent Fortune article entitled the “Real CEO pay
problem,” which asserts that: “Voters are outraged. Big investors are demanding
change. Even some CEOs admit there's a crisis. But rewards that defy all
economic logic don't simply spring from greed. Corporate America's
executive-compensation system is broken.”
For more, see:
“Many
Executives' Paychecks Swelled, No Matter How They Did Compensation Tended to
Climb Sharply in Three-Year Period” By Terence O'Hara of the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/09/AR2006070900385_pf.html
“2005
Compensation For Top-Earning Executives Grew With Stock Option Awards,”
By David S.
Hilzenrath and Derek Willis: http://www.washingtonpost.com/wp-dyn/content/article/2006/07/09/AR2006070900429.html
“The
real CEO pay problem” By Rik Kirkland,
Fortune magazine:
http://money.cnn.com/magazines/fortune/fortune_archive/2006/07/10/8380799/
Corporate
Crime
2.
CNN report suggests prosecutors are “Going Soft on White Collar Crime”
Are federal
prosecutors starting to go easy on corporate crime again? A CNNMoney.com look
at flagging corporate crime prosecution efforts suggests that they are.
According to
CNNMoney.com: “Even as Enron founder Kenneth Lay's conviction is expected to be
expunged with his death, the memory of his crimes has started to fade. So too,
say legal experts, has our collective zeal to suss out and prosecute any more
corporate crime.”
“Legal experts
say the fervor has since died down. Now that both Lay and his co-defendant
Jeffrey Skilling have been convicted, the focus has turned away from
aggressively prosecuting white-collar criminals.”
“And from a
legal standpoint, prosecutors have faced some setbacks in the courts when it
comes to making a conviction stick. Both lower court judges and the Supreme
Court justices have criticized some of the methods that prosecutors and
overzealous judges employed to punish corporate executives charged with
crimes.”
For example,
the article notes a June New York-district judge decision that found that
federal prosecutors acted improperly when they pressured KPMG to stop paying
the legal bills of 16 former KPMG executives involved in illegal tax shelters.
The article also notes reversals of convictions of Arthur Andersen and Credit
Suisse First Boston banker Frank Quattrone.
For more, see:
“ Going soft on white collar crime: Now that the Enron trial is over, it seems
the fervor over prosecuting corporate crime has died down,” By Shaheen Pasha, http://money.cnn.com/2006/07/13/news/newsmakers/white_collar_crime
3.
States sue memory chip makers for conspiring to fix prices
Charging that
several memory-chip makers illegally conspired to keep prices high, 34 states
are filing a lawsuit arguing that consumers and state governments overpaid for
computers by hundreds of millions of dollars because of the illegal
price-fixing activity.
“The
defendants in this case conspired to rig the market for this essential computer
product, working together to keep prices artificially high," said
California Attorney General Bill Lockyer.
According to
the lawsuits, the memory chip manufacturers exchanged price information and
other confidential to raise prices for several years until the Justice
Department began investigating the claims
In the New
York State lawsuit, which was the first to be filed, the listed defendants
are: Micron Technology, Inc., Micron Semiconductor Products, Inc.,
Infineon Technologies AG, Infineon Technologies North America Corp., Hynix
Semiconductor, Inc., Hynix Semiconductor America, Inc., Samsung Electronics
Co., Ltd., Samsung Semiconductor, Inc., Mosel-Vitelic Corp., Mosel-Vitelic
(USA) Inc., Nanya Technology Corporation; Nanya Technology Corporation USA,
Inc., Elpida Memory, Inc., Elpida Memory (USA) Inc., and NEC Electronics
America, Inc.
For more, see:
“4 states say
chip makers fixed prices: Antitrust suit will target 7 firms, seek millions of
dollars,” By Bloomberg News: http://www.nytimes.com/2006/07/14/business/14chip.html
“STATE SUIT
ALLEGES PRICE-FIXING BY MAJOR COMPUTER CHIP MANUFACTURERS,” Eliot Spitzer press
release: http://www.oag.state.ny.us/press/2006/jul/jul13b_06.html
Lobbying
and Ethics Reform
4.
House and Senate GOP want any lobbying reform bill to have “527” group rules
It has now
been several months since both the House and Senate approved weak lobbying and
ethics reform bills. But those bills have languished in conference committee,
where no agreement has been hashed out and thus no bill has been sent to the
President to sign into law.
Now, House and
Senate GOP leaders reportedly want to make sure that any lobbying reform bill includes
restrictions on so-called “527” soft-money groups that channel millions of
dollars into campaign-related issue ads.
According to a
report in The Hill, the current Republican plan is to bring
a new lobbying reform bill with restrictions of “527” groups in the House,
where it is likely to pass. This would allow it to be part of the conference
report. House Majority Leader John Boehner (R-Ohio) told reporters that 527
reform is “the big issue standing in the way” of passing a lobbying bill. “We
would certainly want it in the conference report.”
But “527”
reform would have a much harder time in the Senate, where Democrats have vowed
to fight including it in the lobbying reform legislation. “That was part of the
understanding,” said Sen. Chris Dodd (Conn.), the ranking Democrat on the
Senate Rules Committee, which has jurisdiction over the issue, told the Hill. “Going into it we agreed to keep the
matters separate. That was the leadership’s understanding.”
It is unclear
how this will play out, but demanding “527” reform could ultimately kill
lobbying reform because Senate Democrats may filibuster any lobbying reform
bill that includes “527” reform. Democrats have so far benefited more from
“527” groups than Republicans.
For more, see:
“Lobby reform game plan, By Alexander
Bolton,” of The Hill:
http://www.hillnews.com/thehill/export/TheHill/News/Frontpage/071206/news1.html
5.
House Majority Boehner maintains extensive ties with lobbyists, Times
reports
Another
possible reason why lobbying reform is stalled in Congress: Congressional
leaders don’t want it to happen because they continue to maintain close ties
with lobbyists, particularly when it comes to fundraising.
An article in
the New York Times describes the extensive ties that House
Majority Leader John Boehner (R-Ohio) maintains with lobbyists, ties that seem
to belie the lobbying reform rhetoric that Boehner and other congressional
leaders used earlier in the year.
According to
the Times article, “far from trying to put the
brakes on lobbyists and the money they channel into Republican coffers, Mr.
Boehner, who has portrayed his ties to Washington lobbyists as something to be
proud of, has stepped on the gas…He has been holding fund-raisers at lobbyists’
offices, flying to political events on corporate planes and staying at a golf
resort with a business group that has a direct stake in issues before
Congress.”
“Tapping a
rich vein of longstanding relationships with lobbyists and their corporate
clients, Mr. Boehner, an Ohio Republican, has raised campaign contributions at
a rate of about $10,000 a day since February, surpassing the pace set by former
Representative Tom DeLay
after he became majority leader in 2002, a review of federal filings shows…Mr.
Boehner’s biggest donors include the political action committees of lobbying
firms, drug and cigarette makers, banks, health insurers, oil companies and
military contractors.”
“His
leadership committee, the Freedom Project, which in recent months has enlisted
the use of corporate planes from Federal Express, Aflac and the Florida Power
and Light Company.”
The article
also notes that, “More than 10 of Mr. Boehner’s former staff members have gone
to work for lobbying firms, and his former chief of staff, Joyce Gates, is
married to a lobbyist, Bruce Gates.”
The Times properly notes that none of these
activities are illegal and are in fact quite common in Congress.
During debate
over lobbying reform back in February, Boehner suggested that banning all
privately funded travel, was "childish" and instead called for mere
disclosure, arguing that “"Sunlight is the best disinfectant.” He also
insisted that current laws have worked in catching violations of ethics rules
and an independent office of public integrity to check for abuses is
unnecessary.
For full
article, see: “New House Majority Leader Keeps Old Ties to Lobbyists,”
By MIKE
McINTIRE of the New York Times: http://www.nytimes.com/2006/07/15/washington/15boehner.html
This
Week’s Action Item:
Let’s
keep fighting for publicly-funded elections
While lobbying
reform is going nowhere in Congress and despite the recent Supreme Court ruling
that money is still protected speech, efforts to fix our broken pay-for-play
system are still gaining momentum.
In California,
voters will have the chance to vote this November on Proposition 89, which
provides public funding of elections.
According to
the California Clean Money Campaign, “Under Proposition 89, candidates would
qualify for public funding once they show they have community support by
collecting a set number of $5 contributions. Once qualified, Clean Elections
candidates agree to take no private contributions and must adhere to strict
spending limits. Candidates running for state assembly, state senate, and all
statewide offices, including the governorship, would be eligible”
California
Clean Money Campaign has a petition to demonstrate grassroots support for
Proposition 89. As this week’s action item, we urge you to sign the petition
at: http://www.caclean.org/petition/
Even if you
don’t live in California, it’s still a great opportunity to show support for
publicly-funded elections.
We also
encourage you to check out the new “Voters First” pledge unveiled by Common
Cause, Public Campaign Action Fund, Public Citizen, and the U.S. Public
Interest Research Group (US PIRG)
The “Voters
First” pledge, which the groups will ask all congressional candidates to sign,
includes “specific policies to make elections fair for all, restore
congressional accountability, and protect voters’ right-to-know. Activists will
use the pledge in congressional districts across the country to press
candidates for federal office to support a comprehensive agenda to clean up
Congress.”
Specifically,
The Voters First Pledge calls on candidates to put voters ahead of lobbyists by
supporting legislation to:
1. Make
Elections Fair. Establish and enforce campaign spending limits by providing a
set amount of public funding for all candidates who agree to take no private
contributions.
2. Restore
Accountability. Pass and enforce meaningful new restrictions on gifts and
travel from lobbyists and other powerful interests for members of Congress.
3. Protect
Voters’ Right-To-Know. Require full disclosure on the Internet of all
lobbyists’ contributions and any fundraising help members of Congress get from
lobbyists.
To find out
how you can get involved see: http://www.commoncause.org/site/apps/nl/content2.asp?c=dkLNK1MQIwG&b=194883&ct=2673077
Help
spread the word about The People's Business
We encourage
you to tell everyone you know about the Citizen Works book, The People's
Business and to distribute promotional flyers locally. Flyers are available
online, or if you would like to have some flyers mailed to you, please e-mail news@citizenworks.org.
The People's
Business, which is available in stores everywhere, examines the very nature of
corporate power, presenting a range of strategies to curtail it, explaining how
ordinary people can restore citizen control. Bringing together the
recommendations of the Citizen Works Corporate Reform Commission—a coalition of
leading authors, activists, scholars, and professionals—The People's Business
is a vital, clearheaded plan for strengthening individual rights, transforming
corporations into engines of public prosperity, and creating a sustainable,
life-respecting society where the people have the power.
Bolstered with
relevant history and examples, The People's Business is a lively book that will
appeal both to deeply-committed long-time activists looking for a coherent
approach in the struggle for corporate accountability as well as thoughtful
citizens everywhere who may be looking for immediate measures that serve as
effective means of corporate reform.
It is our hope
that The People's Business will serve as an important tool in educating people
about what they can do to challenge corporate power. But it will only be an
important tool if people actually read it. That's why we need your help in
spreading the word!
Why not pick
up your copy at a bookstore today if you haven't already?
MAKE YOUR
VOICE HEARD
* White House Comment Line: 202.456.1111
* White House Fax Line: 202.456.2461
* E-mail President George W. Bush
* E-mail Vice President Dick Cheney
* White House Address: 1600 Pennsylvania Ave, Washington, DC 20500
* US Capitol Switchboard: 202.224.3121
*
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