The big fat paychecks of fossil fuel company CEOs are directly hurting our environment. According to a new study, it was discovered that the executives of the 30 biggest fossil fuel companies in America tend to stick with environmentally harmful business practices because they make more money when they do.
Sarah Anderson, Global Economy Project director at the Institute for Policy Studies and an author of the report, said in an interview with Think Progress:
“One reason why our fossil fuel industries are so stuck and on this destructive path is because of the short-term and perverse executive pay structures. All of the incentives are in place for them to think short-term and to stick with business as usual.”
“The more that I’ve been talking about it and thinking about it, the more parallels I see with the financial crisis. We are already seeing coal companies go into the ground and the same thing could happen with the oil and gas.”
In the event that coal companies shut down, taxpayers could suffer – becoming responsible for retraining workers, fixing environmental damage and fronting the cost of long-term health damage. When Obama proposed his 2016 budget, he asked that federal funds be transferred to the United Mine Workers’ pension fund – a fund in “critical status” – to help workers in a disintegrating industry. Anderson said, “These companies have been able to externalize a lot of these broader costs for a long time, and the executives have reaped the windfalls from that.”
What Anderson reports in her study is infuriating. Fossil fuel CEOs averaged $14.7 million in compensation last year, which was 9 percent more than the S&P 500 average. One startling discovery of hers was that when the stock value of the 10 major U.S. publicly held coal companies dropped by 58% from 2010 to 2014, the CEOs of these companies were paid 8% more. Anderson also found that in the 30 largest U.S. oil, gas and coal firms, CEOs, CFOs and the three highest-paid workers made $6 billion altogether over the past five years – which could have funded the cost to weatherize 3.3 million homes.
Those top earners also made twice the amount that the U.S. pledged to the United Nations’ Green Climate Fund.
Depressing. As if it couldn’t get any worse, these CEOs have gathered a staggering $1.2 billion in retirement packages – which amounts to “the entire flood control budget of the U.S. Army Corps of Engineers for nearly three years.”
Anderson elaborates: “When you think about how ExxonMobil could have doubled the amount of global renewable energy research… it gives you a kind of a sense of how much resources these companies are sitting on and how much they could do help.”
Because executives’ paychecks continue to grow even as the industry struggles, they don’t feel pressured to make changes in their environmental practices. According to Anderson’s report, $600 billion every year goes into finding new fossil fuel resources because executives get bonuses when they increase resource holdings. Anderson said:
“They are rewarded for adding carbon reserves even when the reserves they are currently sitting on can’t be exploited without causing climate catastrophe.”
Due to the way these executives are paid, there is little incentive to change and be more ethical. Until the compensation system changes, these CEOs will continue with carbon-heavy practices and ignore their vital role in exacerbating climate change.
Colin Taylor is the editor-in-chief of Occupy Democrats. He graduated from Bennington College with a Bachelor's degree in history and political science. He now focuses on advancing the cause of social justice and equality in America.