The press recently had a field day with a report from the “Institute for Policy Studies” about executive pay. The report said the of the 100-highest paid U.S. CEOs in 2011, “26 took home more in CEO pay than their companies paid in federal income taxes.” The message was not subtle at all. Americans pay a lot of money in taxes. CEOs, on the other hand, can profit richly even if they do not pay the Treasury its fair share. What the Institute does not take into account is that most CEOs are paid for financial and stock performance and not the amount of taxes being paid. The argument about tax payments and compensation, at least in part, misses the mark.

Click here to read: Companies Paying Their CEOs More Than the Taxman

Some of the outrage about tax payments and CEO pay is fair. Citigroup and AIG (NYSE: AIG) received tens of billions of dollars in government bailout money. Yet the two have been able to avoid tax payments in 2011. The taxpayers, who provided the bailout funds, feel they have been used. Citi and AIG would say that they fully comply with the U.S. tax code. The average American is still unlikely to look at the arrangement as reasonable. But without the bailout, the banking systems might have collapsed. That, in turn, could have been even worse for taxpayers. For the American who pays a normal tax rate on $50,000 a year, the bailout payments and tax treatments of these two large financial firms were a “no win” situation.

Some of the CEOs on this list almost certainly earned what they received, no matter how good or bad their tax offices were at saving money that might have otherwise gone to the IRS. Alan Mulally of Ford (NYSE: F) saved his company from the Chapter 11 fate that befell GM NYSE: GM) and Chrysler. Randall Stephenson of AT&T (NYSE: T) has presided over the expansion of one of the largest wireless carriers in the world.

What is rarely said about the companies on this list is that they do pay taxes. Each one makes the required payments to the federal and state governments on the employee benefits it pays. And the federal level is not the only one at which taxes are paid. States and municipalities may get payments when the IRS does not.

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24/7 Wall St. identified the seven companies on the Institute’s list with 2011 global profits, or net income, of $4 billion a year or more. We looked at IPS data on how much corporations paid in taxes (or received in subsidies if negative), and how much the CEOs made in 2011. We also looked at 2011 and 2010 revenue and 2010 net income, along with the stock change in 2011, to gauge whether the CEO’s pay was adequately aligned with performance. Finally, we also considered major company decisions and strategies to get a better sense of whether CEOs are fairly paid.

These are the companies that pay their CEOs than they do in taxes.

1. Ford Motor Co. (NYSE: F)
> Global profits: $20.2 billion
> Corporate income tax: -$4 million
> CEO: Alan Mulally
> CEO pay: $29.5 million
> Stock Change: -37.62%

Alan Mulally’s compensation is extravagant against most standards, but he can claim, with some level of support from facts, that he saved Ford from a fate similar to that of Chrysler and GM. Ford was the only one of The Big Three that did not go into government supported Chapter 11. Mulally had the foresight to borrow enough capital to take Ford through the recession. He also presided over the retooling of many of Ford’s products, most of which were successes. If Mulally’s predecessor William Clay Ford had stayed on as CEO, Ford would most likely not have been so fortunate. Mulally has had two years of extraordinary rewards. His compensation in 2010 was over $26 million.

2. American International Group Inc. (NYSE: AIG)
> Global profits: $17.8 billion
> Corporate income tax: -$208 million
> CEO: Robert Benmosche
> CEO pay: $14 million
> Stock Change: -60.03%

Robert Benmosche has been credited with turning around AIG, beginning when he joined the insurance giant in 2009. After a series of CEOs who replaced icon Hank Greenberg (AIG had three CEOs from 2005 until Benmosche joined), AIG continued to be in nearly as much trouble as it was at the start of the financial crisis. The federal government eventually made available $182.5 billion in credit facilities and stock purchases to aid the company. AIG largely dismantled itself through a series of sales of large divisions to raise money to pay taxpayers back in part. Benmosche had been CEO of MetLife at the time the government bailed out AIG, so he probably had little financial incentive to take the reigns over at the insurance behemoth. The Treasury continues to return its investment in AIG to taxpayers through ongoing sales of AIG stock it owns.

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3. Citigroup Inc. (NYSE: C)
> Global profits: $11.1 billion
> Corporate income tax: -$144 million
> CEO: Vikram Pandit
> CEO pay: $14.9 million
> Stock Change: -46.31%

Pandit was Citigroup’s CEO throughout the banking crisis of 2008. He was appointed to his current job at the end of 2007 just after his predecessor Charles Prince was fired because of a series of massive losses at the bank. The bailout of Citi cost taxpayers more than $45 billion. But Pandit should get much of the credit for the repayment of that money and the restructuring of Citi, in part through the sale or spin off of a number of divisions. Pandit can also claim he is due one or two years of extraordinary compensation. Because of restrictions on what the senior managements of bailed out companies could receive, Pandit made only $128,751 in 2009 and $1 in 2010.

4. Abbott Laboratories (NYSE: ABT)
> Global profits: $4.7 billion
> Corporate income tax: -$586 million
> CEO: Miles White
> CEO pay: $19 million
> Stock Change: +17.59%

Miles White’s pay package could be criticized as too large based on Abbott’s performance in 2011. Revenue at the pharmaceutical company rose from $35.2 billion in 2010 to $38.9 billion last year, which looks impressive. But net income last year was $4.7 billion, up from $4.6 billion the year before. Shareholders have, for the most part, cheered the decision by White and his board to split Abbott into two companies. One of the companies will manage Abbott’s medical-products operations, which continue to grow well. The other will oversee its pharmaceuticals businesses, which continue to be threatened by patent expiration and high R&D costs. After the split, White will run the medical-products operation. If shareholders get a greater return from owning the two new stocks rather than the old one, White will have earned his keep.

5. Devon Energy (NYSE: DVN)
> Global profits: $4.7 billion
> Corporate income tax: -$143 million
> CEO: John Richels
> CEO pay: $13.9 million
> Stock Change: -21.20%

Devon made money in 2010 and 2011 after a steep loss in 2009. Since Richels became CEO in June 2010, he gets some of the credit for that. Devon revenue rose from $9.9 billion in 2010 to $11.5 billion last year. The change in net income was much more modest, moving from $4.6 billion in 2010 to $4.7 billion in 2011. Richels has run the company through part of a restructuring under which almost $10 billion in assets were sold. Devon plans to concentrate on “on shore” assets in North America. This includes a portfolio of oil, gas, and oil sands. Does the decision make sense? It will take several years to know. Morningstar commented about the plan: “Devon’s portfolio includes an attractive mix of oil and gas assets and both near-term and longer-dated projects, which should support production and reserve growth going forward.”

6. The Boeing Co. (NYSE: BA)
> Global profits: $4.1 billion
> Corporate income tax: -$605 million
> CEO: W. James McNerney
> CEO pay: $18.4 million.
> Stock Change: +10.47%

McNerney has gone from being a goat to a hero over the last two years. He joined Boeing in June 30, 2005, after serving as CEO of 3M. His tenure has largely coincided with the development and launch of Boeing’s 787 Dreamliner, which suffered repeated delays and cost the company money and the ire of customers. Boeing’s net income in 2007 was almost $4.1 billion, a level it still has not recovered by 2011 numbers. A great deal of the 787 and earnings trouble have been forgotten now that the Dreamliner has been launched. Boeing has an extraordinary backlog of $374 billion, or about five times sales. A new version of the 747 has brought that franchise new life. Next generation versions of the 737 have spurred its sales. Boeing’s rivalry with its only real competitor, Airbus, has gone Boeing’s way for the last year as it racked up record orders.

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7. AT&T Inc. (NYSE: T)
> Global profits: $3.9 billion
> Corporate income tax: -$420 million
> CEO: Randall Stephenson
> CEO pay: $18.7 million.
> Stock Change: 1.92%

Randall Stephenson has run AT&T since 2007. He was a key part of management when AT&T combined with SBC to create a mammoth telephone company. Stephenson’s record has been mixed. He has presided over the rapid expansion of AT&T’s wireless business, which has more than offset the drop in its legacy landline operations. He has also managed the launch of fiber to the home TV to compete with cable. However, his ill-planned deal to take over No. 4 wireless company T-Mobile was rejected by the U.S. government. Aside from the time and effort that went into the proposed transaction, AT&T had to pay T-Mobile owner Deutsche Telekom a $4 billion breakup fee, $3 billion in cash and $1 billion in bandwidth. Stephenson had the right intentions. A successful transaction would have leapfrogged AT&T Wireless well beyond rival Verizon Wireless in the race for leadership for wireless subscribers. But when it comes to CEO compensation, effort takes a backseat to results.

Douglas A. McIntyre

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