Indecent executive paychecks in the fossil fuel industry are speeding up global warming
A report published in September 2015 by researchers from the Institute for Policy Studies exposes the crazy paychecks of the fossil fuel industry executives that are driving us off the cliff. More importantly, the study analyses the perverse reward system that encourages fossil fuel corporations executives to only seek short-term profit. This confirms the need for strong policies to prevent the fossil fuel corporations from following this path to world destruction. And given the twisted logic at play in these corporations, the way out can only come from outside the fossil fuel industry.
- 1 The fossil fuel executives that are selling their mother earth for big fat paychecks
- 2 A perverse reward system that encourages expanding fossil fuel burning
- 3 Paid to pressure government into making decisions advantageous to fossil fuels
- 4 Vast amounts of money that could be used to mitigate global warming instead of making it worse
The fossil fuel executives that are selling their mother earth for big fat paychecks[edit | edit source]
The first thing this study teaches us is the outrageously high income fossil fuel executives are getting for basically setting the planet on fire. For instance, Rex Tillerson, CEO of ExxonMobil, made $33 million in 2014, and a total of $165 million over the last five years. But he's not the only one. The CEO of ConocoPhillips, Ryan Lance, got a nice $27 million in 2014, 18% more than in 2013, a reward for having led the drilling of tar sands in Alberta, wrecking the woodlands and the way of life of Indigenous communities in the process. And the bronze medal of shameless paychecks for CEOs that are making irresponsible decisions for the future of our planet is awarded to John Watson, CEO of Chevron, alongside with a $26 million pay. That's pretty good money for a man who insists Chevron will not compensate the mess it caused in Ecuador by drilling recklessly for oil. And although their decisions are causing gigantic problems for all of mankind, these executives are actually paid more than your average CEO. The fossil fuel corporations CEOs received $14.7 million on average in 2014, that's 9 % more than their counterparts from the other companies listed on the S&P 500. So essentially, the CEOs that have the most negative effect on the planet are the ones that get the most money. If that isn't twisted, nothing is. But wait, it gets even worse. These CEOs and other executives are also accumulating retirement rights worth $1.2 billion as of now. This means that when the effects of global warming hit and ordinary people start to suffer from its adverse effects, these guys will be fine because they will still be getting the kind of money needed to shield oneself from these effects.
A perverse reward system that encourages expanding fossil fuel burning[edit | edit source]
These paychecks are not only outrageously high considering what the world is going to have to pay because of these CEOs, they also reflect a vicious system that only rewards short-term gains and that encourages corporate policies that make global warming worse. So what are the goals set for these CEOs ? What are they supposed to do to get their bonuses ? What kind of decisions are rewarded ? The very worst kind. Fossil fuel corporations CEOs are paid more if they achieve “reserve replacement”, in other words, finding new resources to replace the ones currently drilled. The fossil fuel industry spends $600 billion every year to find these new resources, even though we know that burning over 20 % of the fossil fuels still in the ground will make it impossible to limit global warming to a 2°C increase. But that's a long term logic. Fossil fuel corporate boards are obsessed with share prices and their ultimate priority is to get these prices to rise, which is in their financial best interests because a large part of their income is paid in shares ! CEOs are also rewarded for anything that improves (or appears to improve) profitability from the point of view of financial markets, like laying off employees or cooking the books. And this twisted reward system leads some fossil fuel companies to make absurd decisions. Alpha Natural Resources, one of the biggest American coal companies, paid its CEO stock options worth $33 million in the years that led to its bankruptcy.
Paid to pressure government into making decisions advantageous to fossil fuels[edit | edit source]
The CEOs are also paid to influence public policy so as to prevent any decisions that could be detrimental to fossil fuels. This pressure begins with supporting candidates that will support their agenda. In the 2014 congressional elections, the top 30 fossil fuels companies in the US gave $4.4 million to candidates that had opposed the science on climate change. The lobbying also concerns specific issues like the Keystone XL pipeline project. The senators who voted in favour of the project received six times as much funding from the oil and gas industry as the senators that didn't. This project is a key example of another thing fossil fuel CEOs are rewarded for, building useless fossil fuel infrastructure. We know that we have to reduce the consumption of fossil fuels, so why build these new pipelines and drilling platforms ? This is a strategy to constrain public policies. The idea is that if so much investment has been made on these projects, it makes no sense not to use them. And quite perversely, fossil fuel companies are managing to get some taxpayer money injected into these projects. For instance the southern route of Keystone XL is subsidized by tax breaks of over $1 billion. More generally, CEOs are rewarded for getting lawmakers to continue to heavily subsidize fossil fuel companies, with about $37.5 billion in direct handouts or tax breaks every year in the US, and about $550 billion worldwide. This is the ultimate scam. Getting taxpayers to pay for the huge companies that are wrecking our environment, which will lead to catastrophic issues that will be extremely hard to resolve, and will require even more taxpayer money. And CEOs are rewarded with vile amounts of money, whereas they could use their position to steer their companies toward the ecological transition we all need.
Vast amounts of money that could be used to mitigate global warming instead of making it worse[edit | edit source]
These crazy amounts could be put to a much better use. The study estimates that over the last five years, executives from the top fossil fuel corporations have earned $6 billion. That's enough money to weatherize about 3.3 million homes in the US, thus decreasing energy consumption and carbon emissions. Or that money could be used to install solar panel on about 270,000 homes, which would make them energy independent and, again, decrease energy consumption and carbon emissions. That amount is also twice the one the US has pledged to give to Green Climate Fund, which will help low income countries follow a path of sustainable development and adapt to the effects of climate change that will be more pronounced for them than for us. At the very least, these companies could start changing their priorities to adapt to the global warming context and shift towards renewable energies. It makes no sense to continue spending $600 billion every year to find new fossil fuels resources when the future is renewable energies ! This could be part of the targets of the fossil fuel CEOs. However, boards have consistently blocked any change of corporate strategy. The study reports that ExxonMobil shareholders have submitted 62 resolutions over the last 25 years to include climate change and the need to fight it in management goals. But they were opposed every time. So the hard truth is that fossil fuel companies are so blinded by greed and the lust for short-term profit that there is no hope whatsoever that they will change their policies on their own accord, we will have to make them change. One of the solutions is divesting from fossil fuels. This movement is a call to stop investing in fossil fuels on the financial market to make them stop their disastrous policies and drive them to act more responsibly. Another solution is public regulation. Which is why we need policymakers who don't rely on fossil fuel money and who will be able to take the decisions that must be taken, to prevent fossil fuel corporations from destroying our world.