Company Focus
While pensions fall short, CEOs fly high
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Ford, GM, United Airlines, Continental. They're just four of the companies struggling with falling profits and pension problems as their executives get huge payouts.[/FONT]
By
Michael Brush
At companies across the country, workers are watching their pensions dwindle.
At
UALs (
UALAQ,
news,
msgs) United Airlines, workers stand to lose more than $3 billion in promised benefits as the airline passes its pension obligations on to the government.
Unfunded pension obligations at
Ford (
F,
news,
msgs) have risen to a whopping $12.3 billion, and
General Motors (
GM,
news,
msgs) is looking at shortfalls of $7.5 billion.
In the executive suites of these companies, however, there's no pain to be found. United Airlines chief executive Glenn Tilton collected $3.4 million in compensation in the year leading up to the airlines 2002 bankruptcy. He received another $4.5 million of his pre-bankruptcy pay package in 2003-2005.
And while the pension pit grows at Ford, chief executive William Clay Ford Jr. has collected $53 million over the past three years. At GM, G. Richard Wagoner Jr. got $40.7 million over that period. Start investing with $100.
It's no secret that corporate bigwigs have paid themselves handsomely while stiffing their workers and sending jobs overseas. It's particularly galling, though, to see these same executives locking in their own lifetime of luxury while rolling the dice with their workers' retirement years.
Separate and unequal pensions
Consider the case of
Continental Airlines (
CAL,
news,
msgs). Last year, with Continental and other major airlines facing massive losses and the threat of bankruptcy, outgoing Continental chief Gordon Bethune took a $22 million lump-sum payment from his retirement plan. At the same time, Continental's pension plan is underfunded by $1.58 billion.
That situation with Bethune just crystallizes the whole unfairness of it all, says Paul Hodgson, a senior research associate with The Corporate Library, a Portland, Me. company that examines executive pay and corporate governance issues for investors. The amount that (executives) have earned over the years would seem to be enough to provide for their retirement, and the idea that you have to provide retirement benefits worth 50% of their annual compensation is absurd.
Pensions don't actually shrink unless a company files for bankruptcy and passes pension obligations on to the government.
Pfizer (
PFE,
news,
msgs) has a $2.98 billion pension plan shortfall, but $19.8 billion in cash. But seemingly healthy companies can be felled by unexpected events, as United discovered after Sept. 11, 2001. GM has $35.9 billion in cash on its books (much of it tied up in its financial arm), but earlier this spring analysts speculated openly about the likelihood of the automaker filing for bankruptcy protection.
With help from Standard & Poors, we took a look at the 20 companies currently running the most underfunded pension funds. We found that the top brass at some of those firms have rewarded themselves with retirement plans that promise millions of dollars in annual income for the rest of their lives.
Heres a look at some of the most glaring examples from a Standard & Poors ranking of the 20 S&P 1500 companies whose pension plans are most deeply in the red. (See the results in the table below).
