These CEO pay subsidies are the result of a loophole that allows firms to deduct unlimited amounts from their income taxes for the cost of stock options, certain stock grants, and other forms of so-called “performance pay” for top executives. Put simply: the more corporations pay their CEOs, the less they pay in federal taxes. And ordinary taxpayers wind up footing the bill. During the past two years, the CEOs of the top six publicly held fast food chains pocketed more than $183 million in fully deductible “performance pay,” lowering their companies’ IRS bills by an estimated $64 million.
- YUM! Brands enjoyed the biggest taxpayer subsidy for its CEO pay largesse. This firm, which owns Taco Bell, KFC, and Pizza Hut, paid CEO David Novak $94 million in fully deductible “performance pay” over the years 2011 and 2012. That works out to a $33 million taxpayer subsidy to YUM! – just for one executive’s pay.
- McDonald’s received the second-largest government handout. As CEO in 2011 and the first half of 2012, James Skinner pocketed $31 million in exercised stock options and other fully deductible “performance pay.” Incoming CEO Donald Thompson took in $10 million in performance pay in his first six months on the job. Skinner and Thompson’s combined performance pay translates into a $14 million taxpayer subsidy for McDonald’s.