SEIU Private Equity ProjectSEIU Private Equity Project

Presented by:Presented by:Benenson Strategy GroupBenenson Strategy GroupAugust 31, 2007August 31, 2007

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MethodologyMethodology

The Benenson Strategy Group conducted 800 telephone interviews nationwide between June 28 and July 1, 2007.

All respondents were registered voters and likely to vote in the 2008 presidential election.

The total data set has a margin of error of ± 3.46% at the 95% confidence level, and it is larger among subgroups.

Note: Where class designations appear in the following analysis, please note that these are self-identified class distinctions based on a question asking respondents to choose which described their economic position: poor, lower-middle class, middle-class, upper-middle class, or affluent.

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Key Findings: Economic Outlook and Key Findings: Economic Outlook and Income InequalityIncome Inequality

Voters’ overwhelming negativity toward the direction of the country has spilled over to affect views of the economy. 71% say the country is on wrong track 61% rate the national economy negatively

This negativity extends across most income levels, with only the top earners rating the economy positively.

At the root of these economic concerns is a sense that our economy is out of balance, with more than 6 in 10 saying the gap between the wealthy and other Americans is wider than ever before. 77% see this income inequality as a problem in our country, Voters see income inequality as having political and moral,

as well as economic, implications for the country.

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Key Findings: Private EquityKey Findings: Private Equity

While there is little evidence of broad hostility toward Wall Street in general, the private equity industry’s activities play into voters’ sense of economic imbalance. After a neutral introduction to private equity, more than 6-

in-10 voters say buyout deals are “bad for the economy.”

Even after hearing the industry’s positive arguments, voters overwhelmingly believe buyout firms have a “responsibility to make sure workers benefit from the wealth being created,” and believe they only benefit the few.

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Key Findings: Private EquityKey Findings: Private Equity

Voters’ doubts about the buyout industry center on its effects on workers and its preferential tax treatment. They are very concerned that firms are laying off workers,

wages are stagnant while executives make enormous profits They are also concerned about the unfairness of the tax

structure that gives private equity an advantage over other companies

Voters clearly see a government role in correcting the imbalances created by private equity buyouts. To ensure that buyouts happen in a way that helps and not

hurts the economy: 55% trust government, while 16% trust the private equity

industry. 54% trust labor unions, while 18% trust the private equity

industry.

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Key Findings: Private EquityKey Findings: Private Equity

With so much skepticism toward the buyout industry, there is strong and broad support for reforms that restore balance to buyout deals and the economy at large: Honor commitments to retirement and health care

benefits made by previous owners Provide health insurance to employees Tax income at same rate as other corporate income Tax profits going to PE managers at same rate as ordinary

income Increase disclosure requirements on private equity firms Offers community and employee representatives a seat at

the table when buyout deals are negotiated

Overall, voters’ appetite for government action can be seen from the fact that of ten reforms tested, 9 received support from 70% of voters or more.

The National EconomyThe National Economy

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Americans are Overwhelmingly Pessimistic Americans are Overwhelmingly Pessimistic About the Direction of the Country and About the Direction of the Country and EconomyEconomyOnly Republicans give positive marks to the economyOnly Republicans give positive marks to the economy

Right Direction,

20%Wrong Track, 71%

Right Direction Wrong Track

Excellent/ Good, 38%

Fair/ Poor 61%

Excellent/ Good Fair/ Poor

Q6: In general, would you say things in this country are going in the right direction, or have they gotten off on the wrong track?

Q8: How would you rate the state of our country’s economy today? Would you say that it is excellent, good, fair or poor?

Direction of Country

State of Economy

• Dem: 87%

• Rep: 43%

• Ind: 77%

• Dem: 79%

• Rep: 37%

• Ind: 60%

• Dem: 8%

• Rep: 42%

• Ind: 15%

• Dem: 19%

• Rep: 62%

• Ind: 38%

Gallup

July 8: 36%

Aug 16: 33%

Gallup

July 8: 63%

Aug 16: 66%

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Most Americans See the Economy Most Americans See the Economy StrugglingStrugglingOnly highest earners rate the economy as strongOnly highest earners rate the economy as strong

26%

40% 39%42%

55%

73%

60%

45%

58% 58%

0%

20%

40%

60%

80%

<$35K $35-50K $50-75K $75-100K $100K+

Excellent/ Good Fair/ Poor

State of the Economy

Q8: How would you rate the state of our country’s economy today? Would you say that it is excellent, good, fair or poor?

Income InequalityIncome Inequality

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Income Inequality: The Gap is Growing, Income Inequality: The Gap is Growing, and It’s a Problemand It’s a Problem

Always Been a Gap/ No Different

Now, 34%

Gap Growing Wider, 62%

77%

22%

0%

20%

40%

60%

80%

Problem Not a Problem

The gap between wealthy people and other Americans is growing wider than ever before There have always been people at the top, middle, and bottom/things are no different now than they have been in the past

Gap Between Wealthy People and Other Americans Is:

Q11: Which do you agree with more?

Q12: In your opinion, would you say that the gap between the wealthy and other Americans is a problem in our country?

Serious Problem:

32%

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Voters Very Concerned About Growing Voters Very Concerned About Growing ImbalanceImbalanceBetween CEOs, Wealthiest and Average Between CEOs, Wealthiest and Average WorkersWorkers

52%

55%

62%

0% 10% 20% 30% 40% 50% 60% 70%

In 2005, the average pay for CEOs atAmerica's 350 largest corporations was

nearly $12 million per year.

Over the past 25 years, the wealthiest 1%saw their incomes rise by 175% , whilemiddle-class American incomes have

increased by only 20% .

In 1980, American CEOs made 42 times asmuch as the average worker. Today, CEOsmake more than 400 times as much as the

average worker.

Total Concern

Concern About Income Inequality Specifics

Q15-21: How much does this concern you? 7pt scale.

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While Voters See Shared Responsibility for While Voters See Shared Responsibility for Fixing Income Gap, Government Should Fixing Income Gap, Government Should Lead the WayLead the Way

38%

49%

23%

39%

16%13%

18% 18%

25%

15%

39%

23%

0%

10%

20%

30%

40%

50%

60%

Total Democrats Republicans Independents

Government Businesses Individuals

Responsibility for Dealing With Income Gap

Q23: Who do you think should have the most responsibility for dealing with the growing gap between wealthy Americans and other Americans?

Private EquityPrivate Equity

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Initial Awareness of Private Equity is Initial Awareness of Private Equity is LowLow

54%

42%

21%

16%

25%

42%

0%

10%

20%

30%

40%

50%

60%

Wall Street Private Equity

Favorable Unfavorable Unfamiliar

Favorability to Private Equity

Q28, 29, 30, 33: Do you have a very favorable view of it/them, somewhat favorable, somewhat unfavorable, or very unfavorable view? (Corporate Takeover Specialists and Buyout Industry were split sampled)

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Introduction to Private Equity Introduction to Private Equity Generates Very Negative First Generates Very Negative First ImpressionImpression

21%

12%

34%

20%

11%

63%68%

50%

68%71%

0%

20%

40%

60%

80%

Total Democrats Republicans Independents Unfamiliar withPrivate Equity

Good Bad

•Private equity buyout firms are reshaping the American economy. These buyout firms have bought up some of America’s best-known companies, such as Chrysler and Burger King.

•After buying public companies and taking them private, firms make changes to the companies, then re-sell them.

•Sometimes companies are turned around after a buyout; sometimes workers are laid off or see their benefits cut.

•When these companies are re-sold a few years later, they generally yield large profits for the private equity firm.

Q36: Given this, would you say that private equity buyouts are good or bad for our nation’s economy?

Private Equity’s Effect on Economy

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Voters Feel PE Has Responsibility to Voters Feel PE Has Responsibility to Workers: Don’t Leave Behind While CEOs Workers: Don’t Leave Behind While CEOs Make BillionsMake Billions

PE Positive:

• Private equity firms are creating value for the economy by taking over struggling companies and making them more competitive.

• Because many of their investors are pension funds, private equity firms have returned $430 billion in profits over the last 15 years to working Americans, strengthening our economy and making millions of seniors more economically secure.Response:

•Private equity buyout firms have a responsibility to make sure workers benefit from the wealth being created.

•A handful of private equity executives are personally making billions of dollars in buyout deals but workers are being left behind.

•If private equity firms valued and rewarded the work of the employees at the companies they bought, they would raise salaries and improve health and retirement benefits.

27% 65%

Q38: Which of these statements comes closer to your view?

Middle Class: 71%

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Voters Reject Buyout Firms’ Voters Reject Buyout Firms’ Arguments on Benefits to Worker Arguments on Benefits to Worker PensionsPensionsPE Positive/Pensions: Because many of the investors in private equity funds are

pension plans, profits go to help working Americans. In the past 15 years, private equity firms have returned $430 billion to pension plans.

Response/No Significant Benefit:

• Only 20% of Americans have pensions with the number declining every year.

• The returns private equity brings to pension funds don’t provide a significant benefit to our economy.

• At the same time, millions of workers are struggling to get by, with many seeing their livelihoods put at risk by buyouts.

Q37: Which of these statements comes closer to your view?

67%

17%

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Voters Concerned: Effects on Workers, Voters Concerned: Effects on Workers, Use of Tax Loopholes, Executive Use of Tax Loopholes, Executive ProfiteeringProfiteering

84%

87%

88%

88%

89%

61%

61%

66%

71%

70%

0% 20% 40% 60% 80% 100%

The handful of people who run PE firms make billions,while average workers often see no improvement to

the salaries or benefits.

Because of a loophole in tax laws, PE firms pay federalincome taxes at less than half the rate that applies to

other companies.

When a PE firm buys a company, it often results inmass layoffs and workers losing pensions and health

benefits.

In order to cut costs, PE firms have often laid offworkers or cut retirement or health care benefitswhile executives take home millions in profits.

People who run PE firms make billions from a buyout,while average workers often lose their jobs.

Total Concerned Very Concerned

Concern About Effects of Buyout

Q41-51: How concerned are you about this effect of a private equity buyout?

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Conflicts of Interests, Fees, Lack of Conflicts of Interests, Fees, Lack of Disclosure All Generate High Levels of Disclosure All Generate High Levels of ConcernConcern

74%

79%

80%

83%

84%

85%

44%

43%

47%

48%

46%

55%

0% 20% 40% 60% 80% 100%

When a PE firm buys a company, it is no longer subjectto public disclosure laws

PE firms borrow as much as 90% of the money theyuse to buy out companies, creating very high loan

payments / risk of bankruptcy

PE firms charge billions in fees to the companies thatthey buy out, in effect making companies pay to be

taken over.

PE firms often take out huge loans to pay specialdividends to the executives involved in a buyout.

PE firms often pay millions to CEOs of the companiesthey are trying to buy/ creates conflict of interest

They're more interested in quick profits, not the long-term welfare of the companies they buy or the

employees who work there.

Total Concerned Very Concerned

Concern About Effects of Buyout

Q41-51: How concerned are you about this effect of a private equity buyout?

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Voters Trust Government, Unions to Voters Trust Government, Unions to Keep Buyouts from Harming the Keep Buyouts from Harming the EconomyEconomy

Both, 3%

Unsure, 9%

Neither, 17%

Private Equity

Industry, 18%

Labor Unions,

54%

Trust More to Ensure Buyouts Are Done in a Way that Helps not Hurts Economy

Q54,55: Who do you trust more to ensure that private equity buyouts are done in a way that helps and not hurts the economy? (split-sampled)

• Dem: 61%

• Rep: 43%

• Ind: 56%

Unsure, 6%

Both , 5%Neither,

17%

Private Equity

Industry, 16%

55%Government

• Dem: 65%

• Rep: 51%

• Ind: 51%

Government Labor Unions

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Very Strong Appetite for Reforms to Very Strong Appetite for Reforms to Restore Balance, Protect Workers, Restore Balance, Protect Workers, Increase DisclosureIncrease Disclosure

79%

82%

86%

88%

92%

0% 20% 40% 60% 80% 100%

Tax PE income at the same rate as other corporateincome, rather than at the lower capital gains rates

Require PE firms to disclose the impact their buyoutwill have on workers/ environment/ others, prior to

deal being completed.

Require that employee/ community reps are involvedin discussions over buyout deals to ensure concerns

are heard.

Require any company with 100,000+ employees toprovide health insurance for all employees who work

20+ hrs/ week.

Require PE firms to honor retirement and health carebenefit commitments that previous owners made to a

company's workers and retirees for five years after thebuyout takes place.

Total Support

Q65-74: Do you strongly support this proposal, somewhat support it, somewhat oppose it, or strongly oppose this proposal?

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Proposals for Reform, Cont’d: Voters Show Proposals for Reform, Cont’d: Voters Show Very Strong Support for Wide Range of Very Strong Support for Wide Range of ReformsReforms

62%

70%

76%

78%

0% 20% 40% 60% 80% 100%

Eliminate conflicts of interest by prohibiting companyexecutives who assist the private equity firms duringthe deal from continuing to work for their company

after the deal is completed.

Prohibit private equity firms from taking out loansthat add debt to the companies they buy to pay

dividends to themselves.

Protect employees of companies bought out byprivate equity firms by allowing them to form a union

if a majority of employees sign cards to do so.

Tax the profits going to private equity managers atthe same rate as ordinary income, rather than at the

lower rates at which capital gains are taxed.

Total Support

Q65-74: Do you strongly support this proposal, somewhat support it, somewhat oppose it, or strongly oppose this proposal?