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Resolutions & Amendments

38th International Convention - San Francisco, CA (2008)

Corporate Greed

Resolution No. 9
38th International Convention
Moscone West
July 28 - August 1, 2008
San Francisco, CA

Wealth in America is distributed more unequally today than at any time since the 1920s. The chief executive officer (CEO) of a Standard & Poor’s 500 company received, on average, $14.2 million in total compensation in  2006, which is nearly 400 times the pay of the average U.S. worker according to The Corporate Library, a corporate governance research firm; and

Working families have been left behind while wealth has been concentrated among a few top leaders in corporations, hedge funds and private equity firms. In the last year alone the CEOs of the top 20 hedge and private equity funds took home a collective $18.7 billion; more than the gross domestic product of many countries; and

Worker productivity has increased 67 percent since 1980, while the wages of workers have not kept pace. Average family incomes are only 15 percent higher today than they were three decades ago, and even that increase is only because families are working harder and sending more members into the workforce. Stagnant wages and the resulting increase in income inequality mean that the share of the nation’s income flowing to the top 1 percent of the population rose to 22.9 percent in 2006 from 16.9 percent in 2002; and

Corporate practices that reward short-term speculation and financial manipulation over long-term growth have led to failures in the financial and banking systems that are now pulling the economy into a recession; and

Fat cat CEOs such as Countrywide’s Angelo Mozilo, Citigroup’s Chuck Prince and Merrill Lynch’s Ken Lewis have been rewarded with hundreds of millions of dollars in payoffs and golden parachutes, while causing public pension funds and other investors to lose billions of dollars. For example, Countrywide’s Mozilo made $125 million from cashing out stock awards in 2007 while the company lost more than 80 percent of its value and was threatening foreclosure on tens of thousands of homes. Lewis, rather than being fired from Merrill Lynch for mismanagement, walked away with $160 million and Prince received a $10 million performance bonus when Citigroup was in a deep financial crisis; and

Other members of the super-rich class, who run hedge funds and private equity pools of capital, pay taxes at a lower rate than average workers because of a loophole in the tax code known as “carried interest.”  These fat cats were able to structure payouts that were not taxed as ordinary income at up to 35 percent, but as capital gains at 15 percent, even though none of their own money was at risk.

That Congress close the carried interest loophole in the tax code so that super-rich private equity managers pay the same marginal tax rate as average workers; and

That the public pension systems, which manage the retirement assets of AFSCME members, continue to expand their efforts to grow their investment returns by pressing corporate compensation committees to  improve their CEO pay practices to reward practices that create true shareholder value, rather than further concentrate wealth that is neither performance-based nor earned; and

That Congress pass legislation requiring companies to put their CEO compensation programs and severance programs up to an annual vote, as is done in the United Kingdom, Australia and other modern markets, so shareholders have a “say on pay” in order to stop CEO pay from spiraling out of control and align pay with performance; and

That Congress restore a fair tax system capable of financing the key public investments and services necessary for a competitive U.S. economy.  We need a truly progressive tax system, one that looks to the super rich to pay their fair share.
SUBMITTED BY: Veronica Montgomery-Costa, President and Delegate
Clifford Koppelman, Secretary and Delegate
AFSCME Council 37
New York