CEOs of Military Contractors and Oil Companies Making Fortunes off “War on Terror,” Oil Shortages

A new joint study by the Institute for Policy Studies and United for a Fair Economy has found that the CEOs of the top military contractors and oil industry corporations are making substantial personal profits off of the “war on terror.” A military contractor with a local presence—L-3 Communications—was identified as one of the top 34 military contractors in the report.

According to a joint study called Executive Excess 2006 by the Institute for Policy Studies and United for a Fair Economy, the CEOs of military contracting and oil corporations are making substantial fortunes off the “war on terror” and oil shortages. The CEOs—like all CEOs surveyed in recent years (the CEO to worker pay gap is now 411 to 1)—are not only making substantially more than workers in the United States, but their salaries are also far outpacing the pay of “average” CEOs. The CEOs at the top 15 oil corporations have received a 50% raise since 2004 and are now making, on average, three times more than CEOs of comparably sized businesses. The CEOs of the top 34 military contractors salaries have doubled since the terrorist attacks of September 11, 2001 and the ensuing “war on terror,” pocketing nearly a billion dollars since 9/11. Military contractor CEOs are currently earning 44 times more pay than military generals with twenty years of experience and 308 times more than Army privates.

The average compensation for military contractor CEOs has risen from $3.6 million in the pre-9/11 period of 1998-2001 to $7.2 million from 2002-2005. Their compensation has grown by 108% compared to 6% growth by CEOs of other corporations. The highest paid CEO—George David of United Technologies—was paid more than $200 million from 2002 to 2005. The report argues that the privatization of many aspects of the “war on terror”—encompassing everything from training interrogators for use in Iraq to feeding United States soldiers stationed oversees—has resulted in a landslide of contracts to corporations who are now making substantial profits from the ongoing “war on terror” and the United States’ occupations of Afghanistan and Iraq. Stock prices for the top 34 military contractors investigated in the report have increased by 48% on average as profits have increased by 189%. The increase in compensation for CEOs of military contractors has even grown faster than the government’s military budget, with the value of Defense Department contracts issued between 2001 and 2005 increasing by 75% compared to an increase of 108% in CEO pay.

Of the top 34 military contractors defined in the report, one has a presence in the Grand Rapids area. L-3 Communications Titan—ranked 18th in the report—maintains a facility in Grand Rapids that is producing materials for use in the “war on terror.” The report identifies L-3 as making “satellite, avionics, missile defense, and marine communications” with 53% of its work being done for the military while receiving slightly over $5 billion in military contracts, but the corporation has also been contracted to do “intelligence” work in Iraq. Locally, L-3 Communications has produced a variety of components for military aircraft used by the Navy, Air Force, and Army. While L-3 Communications is in the Top 34 of military contractors, there are several other corporations doing work for the military in Grand Rapids, with one other corporation—Smiths Group (Smiths Aerospace)—also being among the top 100 military contractors .

The second group of CEOs examined in the report—executives at major United States oil industry corporations—has also seen a substantial increase in compensation, being paid $32.7 million (on average) last year, or 518 times more than the average oil industry worker in 2005. This compensation has grown as the price for oil has increased from $40 per barrel to $70 in the past year and a half, with many analysts blaming the “instability” in the Middle East—caused in part by the United States’ “war on terror”—for the rising price of oil. The three highest paid oil industry CEOs were William Greehay of Valero Energy ($95.2 million), Ray R. Irani of Occidental Petroleum ($84 million), and Lee Raymond of ExxonMobil ($69.7 million). Rather than invest in infrastructure or alternative energy sources, most oil industry corporations are taking the profits and transferring them to executives in what amounts to a “massive transfer of wealth from average Americans who can’t afford it [$3 gas prices], to big oil companies who already were experiencing all-time record profits” according Senator Byron Dodge of North Dakota. The oil industry, like military contractors, spends millions of dollars lobbying the government for legislation designed to its benefit.

Author: mediamouse

Grand Rapids independent media // mediamouse.org