In the discussion thread: Weekend Economists Celebrate September 13-15, 2013 [View all]
Response to Demeter (Original post)
Sun Sep 15, 2013, 07:52 AM
xchrom (108,903 posts)
40. Companies Use IRS to Raise Bonuses With Earnings Goals
http://www.bloomberg.com/news/2013-09-13/six-cents-help-net-bonus-millions-as-ceos-get-lower-goals.html
After Exelon Corp. (EXC) earned less than top executives needed to reach their annual cash bonus target last year, the company's directors provided a way to help bridge the gap: nonexistent profits. The board tacked on 6 cents a share -- equal to $85 million -- that the Chicago-based power company never made, augmenting earnings solely for the purpose of calculating bonuses. Exelon said that it would have earned the sum except for a regulatory setback on electricity rates and that the pennies helped thousands of employees avoid smaller payouts. The 6 cents helped executives receive their fourth above-target bonus in five years as the company’s operating profits and its market value fell by more than half. Amid the slide, the board awarded more than $20 million in cash bonuses to top managers as tax-deductible “performance-based pay.” Exelon and dozens of other corporations demonstrate how such tax-advantaged bonuses -- which cost the U.S Treasury $3.5 billion a year, according to the congressional Joint Committee on Taxation -- can reward even subpar shareholder returns. Chief executive officers at 63 companies in the Standard & Poor’s 500 Index (SPX) got cash incentive-pay increases last year after their share returns underperformed the index’s, according to data compiled by Bloomberg. |
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Demeter | Sep 2013 | OP | |
Demeter | Sep 2013 | #1 | |
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