Defense, Oil CEOs Rake in Wartime Profits

September 1st, 2006 - by admin

Washington Times – 2006-09-01 23:31:50

Defense, Oil CEOs Rake in Wartime Profits
Washington Times

(August 31, 2006) — CEOs in the top US defense companies have doubled their paychecks since 2001, compared with the four years prior, according to a new report.

The report, Executive Excess 2006, was issued Wednesday by the Institute for Policy Studies and United for a Fair Economy. The report also says the top 15 oil company executives got a 50 percent raise in 2005 over their 2004 salaries, even as gas prices reached $3 a gallon.

Much of the increase in gas prices in 2005 has been attributed to the devastation Hurricane Katrina wreaked on the US oil infrastructure in the Gulf of Mexico.

“Executive Excess,” the thirteenth annual report of its kind, surveyed all publicly held US corporations among the top 100 defense contractors that had at least 10 percent of revenues in defense.

The combined paychecks of the 34 defense CEOs since the Sept. 11 terrorist attacks totals $984 million, according to the report. The average annual pay, including stock options, jumped from $3.6 million in the 1998 to 2001 period, to $7.2 million from 2002 to 2005.

The best-paid CEO was George David of United Technologies, who earned $200 million over the last five years, $88 million of that in 2004 alone.

Halliburton CEO David Lesar made $26.6 million in 2005, more than double his earnings in 2004. Halliburton is the parent company to KBR, which has a more than $13 billion contract to provide logistical and life services to US troops in Iraq.

CEO benefits at publicly traded companies are often tied to increases in stock prices, which are usually tied to increased profits. The US government has allocated more than $300 billion for the Iraq war. A significant portion is for war consumables — food, ammunition, weapons and gear.

Soldiers Die, CEOs Prosper
Derrick Z. Jackson / The Boston Globe

(August 30, 2006) — More than 2,600 US soldiers have died in Iraq. July’s toll for Iraqi civilians was 3,500, the deadliest month of the US occupation. Iraq’s civil war is on pace to kill 25,000 to 30,000 civilians by year’s end. If you add in the tens of thousands of deaths from the 2003 invasion (we do not know the exact number because the Pentagon won’t comment), researchers will inevitably say that the body count has crossed 100,000.

All of this madness to stop a madman, Saddam Hussein. The litany of US mistakes and excessive force has the Pentagon commissioning at least two secret strategy studies in Afghanistan and Iraq. “This is a struggle for the soul of the Army,” said Colonel Peter Mansoor, the head of the Army and Marine Corps Counterinsurgency Center.

Just as odorous, a mountain of corporate cash grows next to the piles of bodies. In this bizarre war where Iraqi civilians fear both suicide bombers and the United States, the biggest sacrifice that President Bush asked of American civilians was to get on a plane and show those terrorists a thing or two by going to Disney World.

Defense contractors took that request to a logical extreme. They built their own fantasy land.

There is no evidence of a contractor having a soul in the 13th annual Executive Excess CEO survey by the Institute for Policy Studies, a progressive think tank, and the Boston-based United for a Fair Economy. The report found that 34 defense CEOs have been paid nearly $1 billion since the Sept. 11, 2001, terrorist attacks. As soldiers have died in displaying personal

patriotism, the pay gap between soldiers and defense CEOs has exploded. Before 9/11, the gap between CEOs of publicly traded companies and army privates was already a galling 190 to 1. Today, it is 308 to 1. The average army private makes $25,000 a year. The average defense CEO makes $7.7 million.

“Did this surprise us? No, because we’ve been watching since Sept. 11,” said Betsy Leondar-Wright, communications director for United for a Fair Economy. “While the rest of us were worrying about terrorism and mourning the people who died, the CEOs were maneuvering their companies to take advantage of fear and changing oil supply, not just for competition but for personal enrichment.”

The top profiteers after 9/11 were the CEOs of United Technologies ($200 million), General Dynamics ($65 million), Lockheed Martin ($50 million), and Halliburton ($49 million). Other firms where CEO pay the last four years added up to $25 million to $45 million were Textron, Engineered Support Systems, Computer Sciences, Alliant Techsystems, Armor Holding, Boeing, Health Net, ITT Industries, Northrop Grumman, Oshkosh Truck, URS, and Raytheon.

While Army privates died overseas earning $25,000 a year, David Brooks, the disgraced former CEO of body-armor maker DHB, made $192 million in stock sales in 2004. He staged a reported $10 million bat mitzvah for his daughter. The 2005 pay package for Halliburton CEO David Lesar, head of the firm that most symbolizes the occupation’s waste, overcharges, and ghost charges on no-bid contracts, was $26 million, according to the report’s analysis of federal Securities and Exchange Commission filings.

“Those examples take the cake, especially because it’s all related to their government contracts, which is money straight out of the taxpayer’s pocket,” Leondar- Wright said.

The Executive Excess report, with the help of the Wall Street Journal’s 2006 survey of executive compensation, made similar observations of oil executives as their firms enjoy record profits during war. The pay gap between the average oil and gas CEO and the average oil worker is 518 to 1. The general national CEO to worker gap is 411 to 1. The report said that the typical oil construction laborer would have to work 4,279 years to match the $95 million pay last year for Valero Energy CEO William Greehey.

This is so out of line that the authors of the Executive Excess report recommend wartime pay restraints for defense CEOs and a permanent congressional watchdog panel for contract fraud and waste. Companies that cannot adhere to restraints should be ineligible for contracts, they said. The report said “democracies decay when one segment of society flourishes at another’s expense.” Leondar- Wright said, “It is now at the point where we have lost any sense of proportion. There is no sense of shared sacrifice, no sense that we’re all in this together.” Spreading democracy to Iraq is far-fetched when defense and oil CEOs speed its decay at home. They are all in it for themselves, at our expense.

Derrick Z. Jackson’s e-mail address is

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