Verizon shareholders
gathering in Huntsville , Alabama at the company's annual meeting on
May 3 will be greeted by large crowds of protesters.
The nation's
second-largest telecom company became the latest target of the 99 Percent Power campaign — a national network of grassroots and
national advocacy organizations — by demanding huge concessions from workers,
avoiding state and federal taxes, and lavishing its CEOs with bloated pay
packages.
With lines and cell
phone towers that shape the landscape of many communities across America, few
corporations are as visible as Verizon, which provides local phone service to a
quarter of the nation and wireless service to about 100 million Americans. Last
year, Verizon's sales totaled $106 billion, and it ranked No. 16 on the Fortune
500 list. And yet it pays almost no taxes.
Between 2008 and 2011,
Verizon reported $19.8 billion in U.S. profits and yet claimed an IRS
refund on its federal taxes of $758 million. This amounts to an effective
tax rate of negative 3.8 percent, according to the non-profit
organization Citizens for Tax Justice.
Astoundingly, Verizon
also contributed very little to state treasuries to fund schools, police, and
other local infrastructure. Between 2008 and 2010, Verizon paid just 2.6
percent of its profits in state income taxes, well under the 6.2-percent
average state tax rate, according to another Citizens for Tax Justice
report co-authored by the
Institute on Taxation and Economic Policy. This is because the company has
aggressively tax subsidies and actively protests property tax assessments of everything from buildings to
telephone poles.
Over the last seven
years, Verizon has also become one of the nation's leading job destroyers,
cutting nearly 40,000 jobs worldwide since 2004. (Unlike many corporations,
Verizon doesn't disclose its U.S.
employment numbers, making it impossible for them to be tracked.)
The extremely
profitable company has demanded that remaining employees accept cuts to their
pensions and other benefits, prompting 45,000 unionized employees to strike
last fall. The company has told workers the cuts are necessary to respond to
the competitive pressures of the marketplace.
But apparently those
pressures don't extend to the corner suite. When Verizon's long-time CEO Ivan
Seidenberg retired in August 2011, the company paid him $26.4 million for just
eight months of service that year, a 45-percent increase over his haul for 12
months of work the previous year.
The company greeted its new CEO Lowell McAdam
with a compensation package that totaled $23 million last year. Seidenberg was
the highest paid telecom
CEO in 2011. McAdam was the second-highest paid that year.
Verizon executives get
half their fat bonuses for simply performing better than one-third of the
company's competitors. "In school, that would be a D or an F," said C. William Jones, a former managing
director of corporate planning at Verizon about this laughingly low hurdle.
"You certainly wouldn't get a pat on the head for it."
When the U.S. economy
was healthier, corporations had multiple responsibilities. They provided their
employees with good jobs, paid taxes that sustained their communities, and
offered valued services to customers. Then, as now, they delivered dividends
and profits to shareholders. Corporate leaders and managers understood that
meeting these obligations were necessary for long-term success. They built
their companies to last.
But Verizon and too
many other large companies have rapidly moved to a new model, one built on the
primacy of shareholder returns above all else. Built-to-last companies have
given way to corporations that are built to loot.
The angry citizens who
are raising their voices at annual shareholder meetings this spring understand
that shifting the American business model back to "built-to-last"
mode will require new rules that promote dignified work, fair taxes, and a
smaller gap between CEO compensation and workers' paychecks. Unless we change
these rules, built-to-loot companies will be a national wrecking ball.
Chuck Collins is a
Senior Scholar and Scott Klinger is an Associate Fellow at the Washington-based Institute for
Policy Studies. Collins is the author of the new book: 99 to 1: How
Wealth Inequality is Wrecking the World and What We Can Do about It.
Distributed via OtherWords (OtherWords.org)
Distributed via OtherWords (OtherWords.org)