Boeing, Ford Among Firms Where CEO Pay Tops Taxes, Study Shows

Boeing Co., Ford Motor Co. and Chevron Corp. are among 29 U.S. companies whose chief executive officers were compensated more last year than their corporations paid in federal income taxes, according to a policy and research firm whose mission is challenging corporate influence.

The 29 companies reported $24 billion in U.S. pretax profits and received $238 million in tax benefits, according to the report by the Institute for Policy Studies in conjunction with the Center for Effective Government. That’s an effective tax rate of negative 1 percent, the study said. The CEOs at those firms were paid $32 million on average last year.

“For corporations to reward one individual, no matter how talented, more than they are contributing to the cost of all the public services needed for business success reflects the deep flaws in our corporate tax system,” the report said. The Institute for Policy Studies, based in Washington, opposes tax deductibility for executive performance pay.

The report comes as Congress approaches the end of its session with an extension of 55 tax cuts headed for renewal, 80 percent of which benefit businesses, the report said. Those reductions include ways that allow firms to pay little or no taxes, according to the report. A similar report published in 2011 was disputed by the companies mentioned as distorting the U.S. corporate tax burden.

Chicago-based Boeing, the U.S.’s biggest exporter, has made IPS’s list of companies paying their CEOs more than the government in all three years that it has been published. Boeing’s Chief Executive Jim McNerney received total executive compensation of $23.3 million last year, while Boeing received a federal tax benefit of $82 million, the report said.

Significant Investments

The plane-maker’s total income tax expense in 2013 was $1.6 billion, according to spokesman Chaz Bickers, much of which was deferred because of investments the company made in new airplane development and production.

“We make very significant investments in high value engineering and manufacturing at Boeing facilities in the U.S., creating jobs designing, developing and producing new airplanes,” Bickers said in an e-mail. “That investment, which happens before we receive sales revenue at delivery, reduces the current portion of our total tax expense.”

Ford and Chevron took second and third place after Boeing among seven of the 30 largest U.S. companies that pay their chief executives more than the federal government.

Chevron’s John Watson received $20.2 million in total executive compensation in 2013, according to the study, and it paid $15 million in income taxes.

In Context

Chevron, based in San Ramon, California, said its U.S. federal income tax expense last year was “much lower than normal,” due to lower income for U.S. operations.

“This figure needs to be viewed in context to our overall global income tax liability in 2013 of $14.3 billion, with an effective income tax rate of 39.9 percent,” Kurt Glaubitz, a company spokesman, said in an e-mailed response to questions.

Alan Mulally, CEO at Dearborn, Michigan-based Ford, was paid $23.2 million in 2013, as the company got a tax benefit of $19 million.

“During the financial crisis, we were in a situation where we faced severe losses, which threatened the company’s very survival,” Whitney Eichinger, a Ford spokeswoman, said in an e-mail. “We had to absorb these losses at the worst possible time, and only now does the tax code allow us to use these attributes to offset taxable earnings.”

Executive compensation data disclosed in the U.S. Securities and Exchange Commission-mandated summary compensation table reports some awards in the year they’re granted rather than for the year they’re earned. Some awards are restricted, vesting over time, and the receipt of others may depend on achieving performance goals in the future. The disclosure also counts changes in pension and the value of perks.

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