Put an End to CEO Excess
By nearly any measure, the party David H. Brooks threw recently for his daughter's bat mitzvah was absurdly over the top. The New York businessman flew in musical mega stars Stephen Tyler and Joe Perry (from Aerosmith), 50 Cent, Tom Petty, Kenny G. and a gaggle of other celebrity acts, many by private jet, to perform for the girl in the Rainbow Room in Rockefeller Center. That the money for the bash, estimated by the New York Daily News at $10 million, came from war profits, made this excess even more obscene.
Brooks, CEO of bulletproof vest maker DHB Industries, has seen his fortunes soar since the 9/11 terrorist attacks. Last year, he earned $70 million, most of it from stock options. That represented an increase of 13,349 percent over his pre-9/11 compensation, according to Executive Excess, co-published by the Institute for Policy Studies and United for a Fair Economy.
Brooks' flaunting of his war wealth is exceptionally tasteless, given that the equipment which boosted his fortunes appears not to work very well. In May 2005, the Marines recalled more than 5,000 DHB armored vests after questions were raised about their effectiveness in stopping 9 mm bullets. Last month, the Marines and Army announced a recall of an additional 18,000 DHB vests.
Brooks is also under investigation by the Securities and Exchange Commission for suspected financial wrongdoing and faces a number of investor class action lawsuits for fraud and insider trading.
For any CEO who has spent the war in the comfort of his executive suite to flaunt his war wealth sends the wrong message to those on the frontlines. As the body count continues to mount, news like this must be especially galling to U.S. troops. Most likely, they will never earn as much in their lifetimes as Brooks earned in one year.
Brooks is just one example of the many executives who are cashing in on the boost in military spending since 9/11. Defense contractor CEOs received raises on average of 200 percent between 2001 and 2004, compared to only 7 percent for average large company CEOs.
What can be done about war profiteering? It's important to remember that this is public money, in the form of defense contracts, which is driving these CEOs' personal profits. Taxpayers should have every right to insist that strings be attached to that money, including requirements that executive pay be restrained to reasonable levels during times of war.
In theory, U.S. law already imposes a ceiling on executive pay for defense contractors at about $430,000 per year. But loopholes in the law and technical difficulties with enforcement has made it meaningless in practice. The principle behind that law should be strengthened and loopholes closed.
Times of war call for a spirit of shared sacrifice, not greed. While those on the frontlines are paying the highest price for this war, American taxpayers are also making a tremendous sacrifice. In exchange, we should be able to feel confident that the hundreds of billions spent on the war are going to support a stable and prosperous Iraq.
Instead we see massive sums lining the pockets of defense CEOs -- and, in this case, their favorite entertainers.