A new report, Restaurant Industry Pay: Taxpayers’ Double Burden, from Institute for Policy Studies (IPS) demonstrates that while restaurant executives are fighting living wages for their workers, they’re benefiting from tax subsidies for their own pay. The report calculates the cost of CEO pay subsidies at the 20 largest corporate members of the National Restaurant Association, a leading opponent of efforts to raise the minimum wage.
The new analysis from IPS focuses on the loophole that allows corporations to deduct unlimited amounts from their income taxes for the cost of executive compensation —as long as the pay is in the form of stock options and other so-called “performance pay.” This loophole serves as a massive subsidy for excessive executive compensation.
Among full-service restaurants, the company that has enjoyed the largest CEO pay subsidy is Darden, the owner of Olive Garden, Red Lobster, and several other chains. CEO Clarence Otis took in nearly $9 million in fully deductible “performance pay” over the years 2012 and 2013. That works out to a more than $3 million taxpayer subsidy.