Pentagon Contractor CEO Compensation is Second to None

By BEN FREEMAN, Ph.D.

$21.5 million.

A lottery winner's prize? The cost of a private plane or
yacht?

How about the annual compensation of a major defense
contractor’s Chief Executive Officer?

A Project On Government Oversight analysis of executive compensation at the top
five Pentagon contractors – Lockheed
Martin, Boeing,
General
Dynamics, Northrup
Grumman, and Raytheon
– found that the average compensation package of a CEO at one of these firms
was approximately $21.5 million last year, according to the firms’ Securities
and Exchange Commission filings. Total compensation is the sum
of base salary, bonuses, stock awards, option awards, incentive compensation,
deferred compensation (including changes in pension value), and all other
compensation.

Given the apocalyptic
rhetoric some of these
CEOs are using to describe planned reductions in Pentagon spending and
their poor
track record on job creation, we at POGO wanted to see just how many jobs
could be provided for the price of just one of these CEOs. Here’s what we
found:

• The average worker in the U.S. earned $45,230 last year. These CEOs were paid more in an average
  day than the average American worker was paid all of last year.
• According to a 2011 Congressional Budget Office analysis,
  the median compensation (including basic pay, allowances for food and housing,
  and tax advantages) for enlisted U.S. military personnel with ten years of
  experience was about $64,000. Thus, the Pentagon could afford to pay the salary
  of 335 soldiers with the money from just one top defense contractor’s
  compensation package.
• The CEOs of these top Pentagon contractors are
  also making significantly more than their own workers. According to a Deloitte
  study, the average wage (just salary, not benefits) for the entire
  aerospace and defense industry in 2010 was $80,175. For the price of one CEO
  then, these firms could pay the salary of 268 defense and aerospace industry
  workers.
• Even compared to other CEOs these Pentagon
  executives are making an enormous amount of money. An Associated Press study
  of S&P 500 CEO’s (i.e. the
  largest publicly traded companies) found that the typical CEO received $9.6
  million in total compensation last year. Thus, the top Pentagon contractors
  could afford two CEOs with the compensation they’re using to pay their current
  CEOs.

These five CEOs weren’t even the highest paid heads of
Pentagon contractors. That honor goes to David Cote, the CEO of Honeywell,
whose $35.7 million compensation package made him the sixth highest paid CEO in
the U.S. last year, according to the Associated Press study.

And, taxpayers are paying for part of this lavish
compensation – a practice POGO has long fought against. A
provision that passed the Senate Armed Services Committee and legislation that
was introduced in the House this summer would reduce the cap on taxpayer-funded
compensation for defense contractors, legislation POGO
applauds.

“Private companies can pay their employees whatever they
want, but federal contractors should not be able to pass on salary costs to
taxpayers that are more than three times what a member of the President’s
cabinet makes,” said
Sen. Chuck Grassley (R-Iowa) in a statement regarding the Senate’s
provision.

If these CEOs are genuinely interested in minimizing job
loss as they cut costs, they should realize that the most effective option is
staring back at them in the mirror. In this tight economic climate taxpayers
simply cannot afford to pay for this lavishness.

Ben Freeman is an investigator for the Project On Government Oversight.

Follow @BenFreemanDC

2012-08-22 20:02:28

Source: http://pogoblog.typepad.com/pogo/2012/08/pentagon-contractor-ceo-compensation-is-second-to-none.html