Major media outlets have just begun publishing their annual CEO surveys, and, in next week’s Too Much, we’ll review the early numbers. This week we take a look at a former CEO who has moved on to more political pastures.

This ex-CEO, Carly Fiorina, used to run Hewlett-Packard. Now she’s serving as a top adviser for GOP Presidential hopeful John McCain, and she couldn’t be more tickled with her new role. McCain, she feels confident, gets it on the economy. Says Fiorina: “He understands innovation.”

We may have a bit of irony here. As Hewlett-Packard CEO, Fiorina didn’t exactly display much of an innovative streak. In fact, she followed standard, raze-and-reap CEO operating procedure chapter and verse. She merged. She purged. She walked off with a fortune.

We have more, below, on McCain’s economic numero uno.

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The tax returns Hillary and Bill Clinton released this past Friday give us a fairly clear picture of the former First Family’s finances — and a distorted view of life in their lofty income bracket. The Clintons have averaged over $10 million per year since the 20th century began. They’ve paid federal income taxes on that income at a 31 percent rate. Their fellow deep pockets in the over $10 million neighborhood pay taxes at a considerably lower rate. How much lower? In 2005, IRS data show, the 13,776 taxpayers who reported at least $10 million in income paid just 20.9 percent of that income in federal tax . . .

State and local taxes in the United States can actually tilt more to the benefit of the top than federal taxes. In Colorado, noted an analysis last week in the Fort Collins Coloradoan, households making over $692,000 — the state’s richest 1 percent — shell out about 6 percent of their incomes in state and local taxes. The bottom 60 percent, the under $47,000 crowd, pay over 9 percent. Many of Colorado’s top 1 percent have congregated in Aspen, the mountain town that “has spent the past few decades,” notes former Aspen Times editor Andy Stone, “firmly establishing itself as a haven for the super-rich.” People in Aspen, Stone observed last week, once “cared about their community.” And now? “Instead of a community,” says Stone, “Aspen has become an investment opportunity.”

By every measure, jobless figures released last week confirm, the U.S. economy is skidding into trouble. Why isn't Congress moving faster to address the squeeze on average working families? Too few members of Congress, suggests Center for Responsive Politics director Sheila Krumholz, personally “feel the same pain” as average Americans. A new Center report on lawmaker personal financial wealth, published last month, found that U.S. senators and representatives together hold $3.6 billion in net worth. Out past the Beltway, only 1 percent of American families hold over $1 million in assets, beyond their home. By contrast, 58 of the Senate's 100 members now sport financial net worths over $1 million. The House millionaire rate: 44 percent . . .

Power-suits on Wall Street are always talking about the “risks” they take. But Manhattan's real risk-takers may be the construction workers who operate the city’s tower cranes. Seven people died last month when one New York tower crane failed. Two workers also died last month in a Miami crane accident. In North Carolina, ten have died in crane accidents over the past decade. What could be done to limit real workplace risk? In the UK, lawmakers have just enacted a Corporate Manslaughter Act that subjects companies to unlimited fines if their managements can be found “responsible for gross failings leading to a death.” British unions, noting that top execs have too often “taken an overly casual approach” toward worker safety, last week urged tougher measures that would subject executives to personal fines and imprisonment . . .

One top business exec who won’t be going to prison anytime soon turns out to be a billionaire California real estate developer who pled guilty in December to filing a false 2002 tax return — and later admitted he had lied on all his tax returns from 1998 through 2004. The billionaire, the 64-year-old Igor Olenicoff, could have faced three years in jail for his guilty plea. But Olenicoff has forked over $52 million in back taxes and fines and agreed to bring back into the United States all the money he had stashed away in the Bahamas, Liechtenstein, and other foreign tax havens. In return, prosecutors have agreed that Olenicoff should have to serve only one year of probation. Forbes estimates Olenicoff’s net worth at $1.6 billion.

Inequality
by the numbers

CEO pay:
the scorecard

Good reads
for your bookshelf

Quote of the Week

“We've been through one of the most intense periods of wealth creation and wealth concentration probably since the industrial revolution.”
Denis Bastin of Oliver Wyman management consulting, after announcing that the world's financial millionaires now hold $50 trillion in assets, Wall Street Journal, April 5, 2008

New Wisdom
on Wealth

Michael Eric Dyson, The Prophetic Anger of MLK, Los Angeles Times, April 4, 2008. Why Dr. Martin Luther King Jr. came to conclude that the United States needs “a better distribution of wealth.”

Carly Fiorina, the lead public voice on matters economic for the John McCain campaign team, began her years as the CEO of Hewlett-Packard, America’s 11th biggest company, with a four-year contract worth $90 million. Less than six years later, in 2005, that CEO stint would end with a kick out the door and $42.5 million in severance.

What did Hewlett-Packard, in between that entrance and exit, get for all those millions? A textbook display of how CEOs routinely operate in contemporary Corporate America. Sadly, that display came at a company with a corporate culture that once stood tall as a counterpoint to corporate business as usual.

That culture, nurtured over the years by company co-founders Bill Hewlett and Dave Packard, went by the name of the “HP way” and gave Hewlett-Packard something close to mythic status in Silicon Valley. Alone among the nation's computer giants, HP stood for something more than getting rich quick.

The company, for instance, had avoided layoffs in the hard times of the late 1970s by cutting pay 10 percent across the board, executives included. The company’s CEO, even into the 1980s, worked out of a cubicle and not an opulent corner office. HP top executives did make good money, but nowhere near the magisterial sums pulled in by executives elsewhere.

This “egalitarian” Hewlett-Packard, to be sure, had faded considerably by the late 1990s. But the final insult to the “HP Way” would start with Fiorina’s 1999 hiring. The company would welcome its new CEO superstar with $66 million worth of shares, the biggest no-strings stock grant up to then in U.S. corporate history, and assorted other pay goodies worth another $24 million.

A small price to pay, the HP board figured, for a CEO who could rev up Hewlett-Packard’s fortunes — and Fiorina would quickly reveal a plan to do that revving. To jump start the company, she would ask HP’s 93,000 employees worldwide to accept voluntary cutbacks.

Employees would be able to pick their poison, either a 10 percent pay cut, a 5 percent pay cut and the loss of four vacation days, or the loss of eight vacation days. Workers could also choose none of the above.

Remarkably, 86 percent of HP’s workforce picked one of the three cutback options. One company spokesperson credited this willingness to sacrifice to the legacy of the HP Way. The voluntary cutbacks would save HP $130 million.

Less than a month after HP employees made this noble collective sacrifice, Fiorina rewarded them for it. Management, in a surprise announcement, revealed plans to lay off 6,000 workers.

But the pay cuts and layoffs would produce no upsurge in HP’s fortunes. Fiorina proceeded to the predictable. She brokered a $19 billion merger with rival Compaq Computer, then moved quickly to make her new enterprise profitable — by eliminating over 15,000 of the merged company’s 150,000 jobs.

Fiorina and her Compaq top executive counterpart, Michael Capellas, had made sure, of course, that their newly merged company would have plenty of room for them, Fiorina as chief executive, Capellas as president. They would work under two-year contracts worth a combined $117.4 million.

Capellas would go on to leave HP a half year after the 2002 merger, with $16 million in severance. That exit left Fiorina in full command, but she was running out of options. Cutting jobs and benefits hadn’t jumpstarted HP. Nor had swinging a huge merger deal. Nor had reshuffling HP’s internal corporate bureaucracy, another well-worn trick in the standard contemporary CEO playbook.

By early 2005, a majority of the members on HP’s board had had enough. They dumped Fiorina. The CEO they brought on to replace her, Mark Hurd, would win cheers from employees in his very first speech as HP’s top exec.

“Building a great company isn't all about a CEO,” Hurd inspiringly proclaimed to a workforce worn down by years of superstar grandstanding. “It's a team sport.”

Alas, Hurd would soon display not much more team spirit than Fiorina. Shortly after his debut, HP workers learned that Hurd had arrived with a welcome package worth $20 million. Four months later, he ended HP’s traditional pension, for younger employees, and announced plans to cut another 15,000 HP jobs.

Not to be outdone by his predecessor, Hurd also reshuffled the HP bureaucracy, essentially undoing the reshuffling that Fiorina had wrought.

In Corporate America, that’s called innovation.

Dedrick Muhammad, 40 Years Later: The Unrealized Dream. Institute for Policy Studies Project on Inequality and the Common Good, Washington, D.C.

Forty years ago this April, an assassin’s bullet struck down Dr. Martin Luther King Jr. — and silenced America’s most electrifying advocate for greater equality. Five years later, the gap between America’s rich and everyone else, a gap that had been narrowing for a quarter-century, once again began widening. Meanwhile, at just about the same time, economic progress for African Americans rapidly slowed to a frustrating crawl.

How slow? The per-capita gap between African American and white income, notes this cogent new analysis from the Institute for Policy Studies, has closed over the last three-plus decades at the glacial pace of less than one tenth of 1 percent per year.

None of this surprises Dedrick Muhammad, the author of 40 Years Later: The Unrealized Dream. He sees — and documents — widening overall U.S. economic inequality and stalled progress for African Americans as reflections of the same dynamic. And that’s the way, he believes, that Dr. King would have seen our current world, too.

Before his death, 40 Years Later observes, Dr. King described the next phase of the civil rights struggle as “one that would focus on the economic divide between the wealthiest Americans, the working class, and those left to suffer in poverty.”

Today, author Muhammad goes on to note, at a time when “10 percent of the wealthiest Americans control 70 percent of the country’s wealth and African Americans have only 10 percent of the wealth of white Americans, King’s analysis of economic inequality as the foundation of racial inequality remains as valid” — and timely — as ever.

To translate Dr. King’s analysis into action, 40 Years Later advises, Americans who believe in Dr. King’s dream ought to be pressing for policies that “advance America as a whole while at the same time dealing with the unique problem of Black-white inequality.”

One example: We need to bolster the federal investment in wealth development for all asset-poor Americans, by “scaling up” the matched savings programs that “have been tested on a small scale in the United States for years.”

But we’ll never be able to do broaden wealth through programs like these, 40 Years Later contends, until we tax wealth. On this score, Dedrick Muhammad notes, we’ve been going backwards ever “since the time of Dr. King.” The estate tax rate on grand fortunes has dropped by 46 percent since 1980, the capital gains tax rate by 31 percent.

“Overall,” Muhammad points out, “the trend has been one that has shifted the tax burden off of the wealthy and onto the middle and working classes.”

“Returning to the progressive tradition of taxing concentrated wealth to spread wealth and equality of opportunity,” 40 Years Later sums up, “will benefit all Americans and help turn back our growing economic inequality.”

Stat of the Week

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.