Dick Cheney must be, as the old expression goes, laughing his way to the bank. Cheney may be the most unpopular VP ever, but his personal net worth has actually soared over his years as the nation's number two. He may now be worth $99 million, news reports last week revealed, an increase of as much as $29 million over his fortune back in 2001.

President George W. Bush, on the other hand, appears to have lost net worth over the course of his nearly two terms. The President hasn’t seen anything close to a financial jackpot since he and his partners sold the Texas Rangers baseball team back in the 1990s.

Meanwhile, the President’s successor as the most famous sports owner in the Dallas metro area, basketball’s Mark Cuban, seems to be doing fabulously well financially. Cuban also seems to be emerging as that most rare of super-rich birds, the “traitor to his class.” His latest act of treason: He’s now busy spilling the beans on the inner workings of America’s executive suites.

We have more on those beans and Mark Cuban in this week’s Too Much.

Tell-a-Friend

Too Much archive

Search Too Much

Subscribe 

Oil companies don’t like high oil prices. That’s what James Mulva, the CEO of ConocoPhillips, told his shareholders last week in Houston. Declared Mulva: “High oil prices have not been our friend” — because, as he explained later to reporters, higher per-barrel prices for crude have resource-rich countries demanding more control over their own oil. What about oil company executives? Do they like high prices? Some observers suspect that, deep down, Mulva may not really mind them. He took home $50.5 million in 2007, according to federal Securities and Exchange Commission figures. The 61-year-old Mulva will be collecting at least a $2.6 million annual pension when he retires . . .

The super-rich in Russia and China have really arrived. The proof: Both nations now sport a fledgling luxury helicopter industry. In Moscow last week, Deputy Prime Minister Sergei Ivanov opened a three-day “HeliRussia” exhibition that featured domestically manufactured helicopters outfitted, news reports noted, “with the same walnut parquetry, flat-screen televisions, and leather sofas favored by Middle Eastern heads of state.” In China, a Shanghai firm is partnering with Sikorsky, a top global copter maker, and has already collected over a dozen orders on sleek new whirlybirds. Still, the real luxury helicopter action remains elsewhere. In the UK, Sikorsky’s S-76 model is fetching $8 million a pop to buy and $5,000 an hour to charter. London power suits, the Guardian reports, seem to prefer charters. Notes PremiAir charter’s David Langton: “Companies these days use helicopters for any number of reasons. Once we flew to Scotland to pick up a dinner jacket someone had forgotten.”

Lawmakers in the U.S. House of Representatives last week agreed to tax the rich. A little. To pay for an expanded new education benefit for servicemen and women returning from the Iraq War, the House agreed to add a half-percentage point surcharge onto the tax bills of couples making over $1 million a year. That would mean a $2,500 hit on taxpayers making $2 million a year. Those taxpayers, says Rep. Mike Ross from Arkansas, are “not going to miss” those dollars. They’ll also not going to have to pay them. The Senate remains deadset against any tax increase on millionaires, and Capitol Hill observers, as things now stand, give the House surcharge zero chance of getting enacted . . .

The super-rich who happen to manage hedge funds have had a good May, and not just because the Senate is saving them from the tax-the-rich hordes in the House. Earlier this month, California officials dropped a proposal that would have subjected hedge funds based in the state to some minimal regulation. Hedge fund industry leaders had threatened a mass exodus if California did anything that might require hedge funds to register and open up their books to state inspection. The Connecticut state attorney general had tried and failed, in 2006, to put similar regulations in place. Last year, the nation’s top 50 hedge fund managers averaged $581 million each in income . . .

Mega millionaires and their legislative allies usually start fuming when anyone suggests capping outrageously high annual incomes. But not always. Deep pockets see nothing wrong with capping the incomes of trial lawyers who pull in big contingency fees winning lawsuits against corporate misbehavior. In Colorado, earlier this year, former state Senate leader Mark Hillman announced an effort to place a cap of trial lawyer contingency fees on next November’s ballot. That move didn’t exactly please state attorneys. The Colorado Trial Lawyers Association counterattacked with a ballot initiative campaign of its own that included a proposal to limit CEO pay— “to no more than 50 times” the pay that goes to a company’s lowest-paid worker. This CEO pay limit proposal would have been the first in U.S. history ever to go directly before voters. Unfortunately, Colorado corporate interests have apparently decided they’re not quite ready yet to put CEO pay up for a vote. After quickly arranged “peace talks” between the Hillman crowd and the trial lawyers, both sides earlier this month agreed to end their pay-limiting ballot initiative campaigns.

Inequality
by the numbers

CEO pay:
the scorecard

Good reads
for your bookshelf

Quote of the Week

“For all the talk of CEOs taking responsibility and earning pay based on their performance, the typical corporate leader now has more job security than an East German factory manager during the Soviet era.”
John Cassidy, The CEO's New Armor, Portfolio, May 12, 2008

New Wisdom
on Wealth

Thomas Frank, Our Great Economic U-Turn, Wall Street Journal, May 14, 2008. A perceptive analysis that wonders when Americans ever voted for plutocracy.

Will Hutton, No one to rein in the super-rich superclass, Khaleej Times (Dubai), May 14, 2008. Argues that only international action can slow the global concentration of wealth.

Billionaire Mark Cuban, the owner of the Dallas Mavericks basketball team, knows jackpots. He hit his big one in 1999 when he swapped the dot.com he had founded for over $5 billion in Yahoo stock. Earlier this month, in a Dallas Morning News column, Cuban graciously shared some of his jackpot know-how — and, in the process, gave cubicle America an unusual glimpse into how corporate life operates inside top executive suites.

Our contemporary CEOs, Cuban related, can’t lose, mainly because they take the bulk of their pay in stock, either as options to buy company stock at some future date or as outright grants of company shares. Year after year, ever more shares pour into executive pockets. If the price of these shares should rise, even slightly, CEOs can do spectacularly well.

And if the share price stalls? CEOs still can do spectacularly well. Corporate boards, Cuban points out, regularly reissue or reprice executive stock awards that have lost any appreciable part of their value.

But CEOs don't have to wait for boards to reprice their options. Top execs have the power, on their own, to artificially inflate a stagnant share price. They can take one simple step that demands not one iota of talent or managerial creativity. They simply cut what their company is spending to do business. That fattens their corporate quarterly bottom line, and that makes Wall Street happy.

This cash cost-cutting, adds Cuban, does have a downside for employees who get paid in cash — and that’s “everyone who works” for the company except “the top few in management” who get most of their pay in stock. Cutting cash outlays automatically places all average employees “at risk — of losing their jobs, benefits, raises, you name it.”

The end result: “a huge disconnect,” says Cuban, “between the CEO and shareholders doing well and those who work for the company doing well.”  

An interesting analysis. But Cuban is only telling half the story. Yes, employees certainly do suffer when CEOs start scrambling to inflate their company share price — and guarantee themselves a personal windfall. But the ranks of sufferers go beyond employees in these situations. Consumers suffer, too.

Take Citigroup, the banking giant that has been generating king-size executive jackpots ever since the 1998 merger that fused Citicorp and the Travelers Group together under one Citi roof. Citigroup’s current chairman emeritus, Sandy Weill, now ranks 271st on the Forbes list of America’s 400 richest. In 2000 alone, Weill pocketed $214.6 million.

Weill retired, as Citi CEO, in 2003. His successor, Charles Prince, left last November, vacating his chief executive suite with a $10 million bonus, $28 million in unvested stock and options, and $1.5 million in annual perks.

Citi’s current CEO, Vikram Pandit, didn’t come cheap. To get Pandit to join the Citigroup executive team, the bank last year bought the hedge fund that Pandit had founded in 2006 — for $800 million.

What have Citigroup’s top execs been doing to earn these mega rewards? Weill and Prince steered Citi into the subprime mortgage meltdown, the most reckless blunder in modern financial industry history. Current CEO Pandit, news reports noted last week, has so far “presided over nearly $15 billion” in losses.

So what’s Pandit’s strategy for setting things right? For starters, he’s following the standard CEO cash-cutting playbook, just as Mark Cuban has described. He’s lopping off employees right and left. Citigroup last year announced 17,000 firings. In January, Pandit added 4,200 more employees to the must-go list. Last month, he added another 8,700.

But Pandit has a “strategic vision” that goes far beyond layoffs. He’s now busy undoing the mergers that made Sandy Weill a billionaire — and turned Citigroup into what Reuters calls a “sprawling mess.” And he’s squeezing consumers.

No originality here. Other banking giants are squeezing, too, “jacking up fees and rates and tightening rules on all sorts of consumer loans — from credit cards to auto loans — to cushion their losses,” says USA Today, from subprime loans gone bad.

Citi and the nation’s other top lenders last year collected $18.1 billion in credit card penalty fees alone, 69 percent more in penalties than they collected in 2003. Many penalized consumers, public interest groups fear, will this year be paying credit card interest at 32 percent, this at a time when the Federal Reserve is reducing the cost of what banks pay to get their capital.

Banks like Citi have made penalizing an art form. One neat trick: Banks change their monthly credit card payment due dates. Consumers who pay by automatic electronic fund transfer then find themselves “guilty” of late payment.

One Indiana man, for instance, told ConsumerAffairs.com that he had set up his accounts to pay his Citibank credit card bill on the 24th of every month. But Citi “moved my due date to cause me to be late and give them the ability to charge a late fee.” This consumer’s monthly bill went from $211 to $495.

Last September, Citi CEO Pandit purchased a ten-room Manhattan apartment, complete with 20 windows facing Central Park and eight walk-in closets, for $17.9 million. He probably isn’t worrying about making any monthly payments.

John Davison, editor, Death and Taxes: the true toll of tax dodging. A Christian Aid report. London: May 2008.

The world could cut the number of individuals living in poverty by half — and save the lives of 350,000 children every year — if global governments committed $40 to $60 billion a year to the war against want. So says the World Bank.

The world’s super-rich — and the corporate giants they run— could easily foot that bill, three times over, if they simply stopped cheating on their taxes. So says Death and Taxes, a new study from Christian Aid, an anti-poverty effort that joins the Church of England and 41 other UK denominations.

“This report,” the just-released study announces at the outset, “seeks to expose the scandal of a global taxation system that allows the world’s richest to duck their responsibilities while condemning the poorest to stunted development, even premature death.”

How do the super-rich do this ducking? They’re exploiting, Death and Taxes documents, an international web of tax havens “to shelter and boost profits.” Fifty percent of world trade now goes through at least one tax haven.

Is this all legal? Well, yes and no. The secrecy around tax havens breeds behavior that clearly bends the law. One example: To evade taxes, corporations are routinely selling goods or services back and forth, either to their own subsidiaries or other companies, “at manipulated prices.”

These “mispricing” and “false invoicing” practices are costing governments $160 billion a year. That’s over 50 percent more than the $103.7 billion that all the governments in the developed world spent last year on aid to poor nations.

Death and Taxes didn’t snatch these stats out of thin air. The figures come from “550 interviews with heads of trading companies in 11 countries.”

All this cheating wouldn’t be possible without the aid and abetting of the banks and accounting firms that have set up shop in the world’s 72 top tax havens. The Cayman Islands alone currently host 270 banks.

We now have, as the Center for International Policy's Raymond Baker puts it in Death and Taxes, “an entire integrated global financial structure the basic purpose of which is to shift money from poor to rich.”

To understand how that system works — for the super-rich — just download Death and Taxes to your desktop.

Stat of the Week

Only 30 years ago, Carnegie Endowment for International Peace visiting scholar David Rothkopf noted last week, the world's richest nation had 88 times more wealth than the poorest. The current ratio: over 270 times. The richest 1,100 people in the world today have a net worth that almost doubles the combined wealth of the 2.5 billion people earning the least.

Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org.