Companies Freeze Worker Pension Plans While Executives Thrive
(WASHINGTON, July 10, 2006) – The reality of today’s pension plans and health care benefits in the United States is a case of the “haves” versus the “have nots,” according to A. J. “Jim” Norby, president of the National Retiree Legislative Network (NRLN). “The ‘haves’ are the corporate executives who are receiving unconscionable pension plans at the same time their companies are reducing, freezing or gutting worker and retiree pension and health care benefits,” Norby said. “And while companies like General Motors Corp. are pointing their fingers at rank-and-file pension plans as a competitive disadvantage, not a word is said about the effect executive pensions are having on their bottom line.”
Norby cited recent published reports that listed executive pension obligations for several major corporations including General Motors ($1.4 billion), General Electric ($3.5 billion), AT&T Inc. ($1.8 billion), Bank of America Corp. and Pfizer Inc. (about $1.1 billion each), Exxon Mobil Corp and IBM Corp. ($1.3 billion each). “The pension benefits of the top executives, which can approach $100 million for some individuals, are buried in the footnotes and fine print of annual reports,” Norby stated.
“These executive benefit packages represent a significant obligation for corporations – an average of 9 percent of overall pension obligations. But you never see companies like GM pointing the finger of blame at its executive pension obligations.” Specific executive pension packages reported by The Wall Street Journal included:
· Edward Whitacre, chairman and CEO of AT&T Inc., who will receive $5.4 million per year for life (an estimated $84.4 million company liability).
· William McGuire, chairman and CEO of UnitedHealth Group Inc., who will receive a $5.1 million annual pension after he retires, plus $6.4 million at retirement (an estimated $90 million corporate liability).
· Samuel Palmisano, chairman and CEO of IBM, will receive a $4.7 million yearly pension (an estimated $50.3 million corporate liability).
· Henry McKinnell, chairman and CEO at Pfizer, who will receive a pension of $6.5 million a year for life (an estimated $83 million company liability).
“At AT&T, last year’s pension liability for executives was $113 million which came directly out of corporate earnings,” Norby noted. “That amount, which covered about 1,000 executives represented 45 percent of the company’s pension expense, compared to the other 55 percent that covered nearly 190,000 rank-and-file employees.” “These figures are salt in the wound of today’s workers and retirees who are seeing their retirement dreams destroyed as companies such as UAL, Delphi and Delta have either killed off their pension plans or are threatening to do so,” Norby said.
“Even healthy companies like IBM are freezing their traditional pension plans while gorging their executives with multi-million dollar pensions.” As the fog continues to lift on lavish executive pension plans and their direct effect on corporate profitability, Norby expects to see these excesses addressed by the courts in lawsuits similar to the one filed against Viacom Inc., its directors and top executives. That suit alleges Viacom’s directors failed in their fiduciary duty when they voted for $160 million in compensation to its top executives at the same time the company reported an $18 billion loss.
“Meanwhile, we hope our congressional representatives will take notice of this inequity and require that companies keep the promises they made to their workers and employees for their years of loyal service. It’s time they take action and pass meaningful pension reform legislation that provides retirement security for workers and retirees and address the current double standard we’re seeing today,” Norby added. Based in Washington, D.C.,
NRLN is dedicated to securing federal legislation that will guarantee the fair and equitable treatment of retirees in private and public sector health and pension programs. NRLN represents a non-partisan, grass roots coalition of retiree associations with a combined membership of more than 2 million men and women who are seeking to protect their pension and health care benefits.
For more information, visit the NRLN Web site at www.nrln.org.
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