Arianna > Pensions For Execs, Shaft For Workers

[Linda Wetherby]

Gotta love Arianna.    Anyone else been watching her and Dennis Miller
exchanging barbs on
"Real Time with Bill Maher"?   They've almost traded political spaces.
Dennis is getting a little scary!  L


> Pensions For Execs, Shaft For Workers
>
> By Arianna Huffington
>
> Now that the war in Iraq has been declared officially over, can the media
> please put aside their preoccupation with Scott Peterson's new hairstyle
> and focus their attention on the sputtering U.S. economy? And in a week
> when even Fortune, the corporate playbook, has adorned its cover with a
> CEO with a pig's head and the title "Oink! CEO Pay Is Still Out Of
> Control," how about starting with the guys running corporate America? They
> have, after all, in the course of the last year gone from American Idols
> to America's Most Wanted, the most stunning transformation since Ozzy
> Osbourne morphed from a bat-chomping satanic rocker into America's
> cuddliest dad.
>
> But no matter how battered their reputations may be, they still appear
> determined to rescue themselves instead of their sinking ships. For
> today's captains of industry, the maxim in a crisis seems to be: "To hell
> with the women and children -- save the lifeboats for us!"
>
> Take American Airlines. While preparing to make a rough landing in
> bankruptcy court, executives at the dead broke carrier extracted from
> workers $1.62 billion in wage and benefit concessions the bosses claimed
> were needed to keep American aloft. At the same time, the execs secretly
> safeguarded themselves with a glittering array of golden parachutes,
> including massive cash bonuses and a $41-million trust fund to guarantee
> their pensions should the airline crash and burn.
>
> Even after the secret escape plan was revealed and all hell broke loose,
> the company held fast to its priorities. It canceled the cash bonuses. It
> tossed CEO Don Carty onto the tarmac. But it refused to relinquish the
> fund protecting its execs' nest eggs.
>
> In the end, the executives kept their cushy trust fund while the workers
> were forced to go along with a deal that will lead to thousands of
> lay-offs and pay cuts of between 15 and 21 percent. I guess in today's
> business world, that's what amounts to a compromise.
>
> Besides making one reach for the nearest airsickness bag, the American
> Airlines debacle highlights the growing disparity between the ways
> corporate America is preparing for the golden years of its executives and
> its rank and file employees.
>
> In the clubby confines of America's boardrooms, the sky is the limit.
> Compensation committees are working overtime coming up with ever more
> creative -- and devious -- ways to boost the earnings of top executives.
> And super-charged pension plans are the hot new trend.
>
> Among the gimmicks being used to goose the value of these plans is an
> accounting scheme that can dramatically increase a CEO's retirement
> windfall by adding phantom years -- even phantom decades -- of service to
> the exec's pension. In theory, it works the same way as those jailhouse
> rules that reward a model prisoner with time off for good behavior -- only
> these guys get rewarded no matter how many employees or shareholders
> they've knifed in the back with a homemade shiv.
>
> Thanks to this latest innovation in corporate accounting, Leo Mullin,
> Delta Airlines' CEO, has had an additional 22 years of service tacked on
> to the less than six years he's actually worked for the company, while US
> Air's former CEO Stephen Wolf was given credit for 24 years he didn't
> really put in. And this scam isn't reserved for the high-flyers of the
> airline industry. When John Snow left CSX Railroad to become Treasury
> Secretary, he was given credit for having put in 44 years at the firm,
> even though he'd actually punched a time clock there for 25 -- a little
> fun with numbers that helped him walk away with a cool $33 million in
> pension booty.
>
> Corporate directors, who have come under increasing fire from shareholders
> for approving excessive pay packages for high-level executives, appreciate
> the fact that these pension plan adjustments allow them to fly under the
> radar while continuing to funnel millions to CEOs. Unlike salaries and
> bonuses, which are regularly reported in the business press, the details
> of executive pension plans are usually hidden away in the extra fine print
> of a company's SEC filings.
>
> And CEOs love that pension plan payouts come with none of those annoying
> tied-to-performance strings attached. US Air's Wolf, for instance, made
> off with a $15 million pension cash-out just six months before the company
> filed for bankruptcy. Richard Brown, former CEO of Electronic Data
> Systems, was rewarded for overseeing a 62 percent drop in share price --
> and steering the firm into an SEC investigation -- with a pension plan
> that will pay him $1.6 million a year for life. And Treasury Secretary
> Snow's $33 million pension prize came despite the fact that his company's
> stock underperformed its competitors' by two-thirds over the last 11 years
> of his reign.
>
> The picture is far bleaker for those down on the factory floor or crammed
> inside an office cubicle, where ordinary workers are seeing their pension
> plans slashed or eliminated altogether.
>
> Less than half of those currently employed in the private sector have any
> kind of pension coverage. And 40 percent of those companies that do offer
> pension plans are exploring the possibility of reducing benefits.
> Companies are also cutting back on matching contributions to their
> employees' 401(k) accounts. Some, like Ford, Goodyear Tire, and Charles
> Schwab, have decided to completely do away with matching contributions.
> They probably need the extra cash for their executives.
>
> There is also a major push underway, spearheaded by the Bush
> administration, to allow companies to switch their existing traditional,
> defined benefits pension plans to so-called cash balance plans, which
> could lead to a serious loss in benefits for older workers.
>
> And even those workers who are able to hang on to their defined benefits
> pensions can't rest easy: it turns out that the vast majority of corporate
> pension funds are critically underfunded. In fact, of the 343 S&P 500
> companies that offer traditional pension plans, close to 90 percent of
> them are running a deficit. And we're not talking about being a few
> dollars short. General Motor's pension plan is $25.4 billion in the red
> while Ford's has a shortfall of $15.6 billion. All told, the S&P companies
> are $206 billion in the hole; that's a shift of $457 billion since 1999
> when the same pension funds had a collective surplus of $251 billion.
>
> In just a few short years, the nest eggs of the American worker have gone
> from sunny side up to seriously scrambled.
>
> In an effort to level the lopsided pension playing field, Rep. Bernie
> Sanders (I-Vt) and Rep. George Miller (D-Calif), along with 124
> co-sponsors, have introduced legislation that would make it harder for
> companies to force older workers to switch to cash-balance pension plans.
> To drive his point home, Sanders showed how such a conversion would affect
> the pensions of his fellow Congressmen. Denny Hastert, for instance, would
> see his $540,000 lump sum benefit shrink to $164,000. And Tom DeLay's
> retirement pay-out would be cut by 60 percent, shriveling from roughly
> $608,000 to $251,000.
>
> "If members of Congress think that cash-balance payments are good for
> American workers," declared Sanders, "then they must believe that
> cash-balance pensions are good for themselves."
>
> I couldn't agree more. And the same goes for those pension-protecting
> executives at American Airlines. If their future is worth safeguarding,
> then so is their workers' present. Just think how many jobs the $41
> million they put into that trust fund could save.
>
> ------
>
> Arianna Huffington is the author of "Pigs at the Trough: How
> Corporate Greed and Political Corruption are Undermining
> America." For information on the book, visit
> www.PigsAtTheTrough.com