The Securities and Exchange Commission is now requiring companies,
for the first time, to report in more detailed fashion the current
value of tops executives’ pensions and deferred compensation. It is
often true that the real riches showered on CEOs by compliant boards
(often stacked with the CEOs corporate buddies) are not in the annual
paycheck but in pensions and deferred compensation–amounts that have
been hard to uncover because corporate boards have done such a good job
at hiding the figures. As companies file their proxy statement to
report their 2006 financial results, we are going to learn a lot more
about those pensions and deferred compensation. Hold on to your seats,
folks, because this stuff is mind-boggling.

In the current issue of Pensions & Investments (which is the
leading newspaper for money management), Barry B. Burr has a story
entitled Pension goldmine awaits AT&T, Occidental CEOs.
Burr’s post child is AT&T CEO Edward E. Whitacre who will take
home–drumroll, please–$158.4 million as a pension package when he
retires as chairman and CEO of the company.

Using data compiled by The Corporate Library, Burr also reports on some other “parting gifts” awaiting others CEOs:

The Corporate Library. a research firm focusing on corporate
governance and executive and director compensation, ranked the 10 CEOs
with the largest combined pension and deferred compensation deals: In
addition to Messrs. Whitacre and Irani, they are:

•Kenneth D. Lewis, Bank of America Corp., who is also chairman and president, $83 million;

•H. Edward Hanway, Cigna Corp., also chairman, $73.2 million;

•William C. Weldon, Johnson & Johnson, also chairman, $64.2 million;

•Alexander M. Cutler, Eaton Corp., also chairman and president, $54.6 million;

•Samuel J. Palmi¬sano, International Business Machines Corp., also chairman and president, $53.8 million;

•Harold M. Messmer Jr., Robert Half International Inc., also chairman, $53.1 million;

•Nolan D. Archibald, Black & Decker Corp., also chairman and president, $52 million; and

•Daniel P. Amos, Aflac Inc., also chairman, $50.1 million.

Just to reassure you that greed does not run rampant in the
corporate suite, we learn from this article that the top pension
packages are 8 to 25 times greater than the median CEO pension package,
which is “only” $6.4 million. And you have to pause for a moment and
really reflect: how do those poor folks get by in retirement on a
measly $6.4 million? I mean, $6.4 mil just isn’t what it used to be.

So, here are some broad thoughts to consider about the ripping
off of such huge sums of money by such a tiny number of people.

The first real challenge for the rest of us regular people–and
bloggers everywhere–is to combat the rhetoric that we get from the
corporate spin machine about these obscene amounts of money. To wit,
here’s what AT&T had to say about Whitacre:

Responding to the size of the retirement package, Butler McCall,
AT&T spokeswoman, said, “Ed Whitacre is one of the longest-serving
CEOs in U.S. industry. He started with Southwestern Bell in 1963 and
became CEO in 1990. During this time, Mr. Whitacre has transformed both
AT&T, which is now one of the largest companies in the United
States, and the telecommunications industry. As CEO, Mr. Whitacre has
also delivered stockholder returns above those of our closest peers,
including a 53% total return last year alone. In fact, in 2006,
including share price appreciation, dividends paid and share
repurchases, AT&T and BellSouth combined created nearly $89 billion
in value for our stockholders.

“His pension value and deferred compensation has been building up … ever since he became an officer in 1984.”

A four-letter word bubbles up to my lips but I try to make it a
habit to keep my writing relatively clean. Excuse me, Mr. Whitacre, you
did not create the shareholder value for this company ALONE and,
arguably, you had far less to do with building the company than the
tens of thousands of people who worked for the company–many of whom
lost their jobs when AT&T shed lots of workers for the sake of
“shareholder value.”

In other words, beyond knocking down the size of these pay
packages, we need to instill in the rhetoric of our politicians, the
MSM and the broader public the rap that companies are built not by CEOs
alone but by the average worker. You may think that to be obvious but
it is not–and too many politicians will not take this on directly for,
I would guess, one obvious reason–campaign cash–and one less obvious,
but more troubling, reason: they believe the rhetoric.

The outrage, of course, is that this legal raiding of the
corporate treasury by a few people who take tens of millions of dollars
out of a company, leaves no money for decent real pensions for
hard-working Americans and, actually, puts many companies in financial
peril. Last year, I pointed out how rich executives, not workers, are the cause of the pension crunch
and financial troubles facing many big companies. Almost daily, we read
about the crisis facing private pensions in many industries–but the
truth is that it is often the top CEOs who are creating that very
crisis because of their personal greed.

Coupled with the attack on public pensions
(where pension woes are mainly a result of the obliteration of a
progressive taxation system), we, then, have a narrative that repeats
itself: real pensions (by which I mean a defined benefit that you can
count on in your retirement years) are a thing of the past and workers
should not expect a secure retirement beyond Social Security and
whatever they can make in the stock market through their own
investments or contributions made to 401k plans. In this narrative,
however, CEOs are, of course, exempt from that gamble about the future.

We should be even more infuriated by this because of a couple of
related trends. A couple of years ago, I pointed out that, while
productivity had been increasing for many years (though it may be
leveling off now), workers were not sharing in those productivity gains.
Taking into account productivity, the minimum wage should be
$19.12—-which would make it almost 50 percent above today’s median
wage. No matter how hard people have worked, they don’t get a fair
return on your labor. Beyond the unfairness, it also tears at the
country’s social fabric because an economic system cannot endure if it
is perceived to be unfair and fails to deliver a rising standard of
living.

Put another way in English: Mr. Whiteacre and his cronies have
succeeded because of the hard work of a lot of people but he and his
ilk have pocketed the gains and left nothing for the rest.

The second trend is the insistence on the part of Republicans and
too many Democrats that workers would be much better off in retirement
if they practiced more “personal responsibility,” meaning that they
should save more and stop living so high off the hog. Over the weekend,
I pointed out an article in The New York Times that described the plight of auto workers who are leaving their jobs. What caught my eye was this fact:

Across America, more than 30 million people have been forced out of
jobs since the early 1980s, the Bureau of Labor Statistics reports, and
regaining lost incomes has not been easy. Nearly 50 million new jobs
have been created over that same period, according to the bureau, so
there are always new opportunities but more often than not at lower
pay. Among those who have lost work, only a third held new jobs two
years later that paid as well as those that were lost, according to the
bureau’s surveys of displaced workers. Another third of those displaced
were in jobs that paid, on average, 15 to 20 percent less than their
previous employment — while the final third had dropped out of the
labor force entirely.

People can’t save and they are in debt because they don’t have
jobs that pay a decent wage–and they work for corporations headed by
folks like Whitacre who are unwilling to shortchange themselves a few
million for the sake of the workers who make a company successful.

Real pensions–defined benefit pensions–are not a thing
of the past IF we have a set of rules in the economic system that
values those pensions, protects those pensions, requires that companies
provide those pensions and, last but not least, makes unacceptable the
kind of legal robbery that Whitacre and his ilk get away with.

One of the things I detest about politicians and think-tanks who
claim to represent the “middle class” is that few of them will speak
forthrightly about corporate greed. Until they start calling out the
Whitacres of the world, they don’t deserve the support of the workers
who are facing a very scary future.

I always try to end these types of ruminations with suggestions. So, here are three:

1. There outta be a law…that penalizes companies for
   granting pensions and deferred compensation to its executives beyond a
   certain multiple of what the average worker gets. You pay your CEO a
   Whitacre pension, fine–you get hit with a huge tax penalty and those
   revenues are then put in a fund to strengthen Social Security or fund
   national health care (hey, we have targeted taxes for highway
   construction).

2. Change the bankruptcy laws. I’m really sick and
   tired of reading about companies that have used bankruptcy laws to
   terminate pensions–yet they continue to give executives hundreds of
   millions of dollars even at companies in financial distress. We should
   push for changes that essentially impose a proportional hit on
   executives to whatever hit workers take–and I would say, given the
   level of pensions granted executives, it should not be a one-to-one hit
   but a ratio that significantly scales back executive pensions in
   comparison to the rank-and-file worker.

3. On a positive note, companies that agree to create
   defined benefit pensions and limit CEO pensions would be treated far
   more favorably because they would be investing in the long-term health
   of their workers and the company.

Well, I can dream, right?