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A tale of two pension plans: regular vs. CEO
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Retirement plans for the rich
Bebchuk, director of the Program on Corporate Governance at Harvard Law School, co-wrote a white paper called "Executive Pensions" with Robert J. Jackson Jr., which was released in December. They collected information from the SEC filings of 51 large corporations.

"We use these disclosures to make estimates of the value of pension plans awarded to the CEOs in our sample," the authors say in the white paper. "But such estimates are not accessible to outsiders without closely analyzing company disclosures and making a series of actuarial assumptions and calculations."

In other words, you and I wouldn't be able to make heads or tails of these filings.

SERPs take the form of defined-benefit plans -- yes, the very same plans that are heading toward extinction for the average worker. For these plans, the company promises a specific benefit based on tenure and assumes all investment risk.

Except that, for the CEO, tenure is one of those variables that can be fudged. Extra years, in the form of "service credits," can be added on an executive's tenure for the purpose of awarding a larger retirement benefit.

Time Magazine reported last fall on this phenomenon in its cover story, "The Great Retirement Ripoff." The article pointed out that, for example, Leo Mullin, former CEO and chairman of Delta Air Lines, received service credits amounting to 21 years that were added to his actual tenure of about 7.5 years, an allowance that greatly augmented his retirement benefits.

And here's the corker: "Under Mullin's stewardship, Delta killed the defined-benefit pension of its nonunion workers and replaced it with a less generous plan," Time reporters Donald Barlett and James Steele noted.

What stunning leadership!

Anyway, Bebchuk and Jackson set out to determine how much a CEO's retirement benefit compares to his or her total compensation. Was it just a teeny weeny fraction of the big picture, or was it major? They discovered that it was rather significant, not only as a percentage of the CEO's total compensation, but sometimes even as a percentage of the total value of the companies they headed.

The researchers looked at two sets of data. The first comprised CEOs who retired during 2003 and the first five months of 2004. The second included all CEOs between the ages of 63 and 67 at the end of 2003 who would retire soon and who headed companies listed in the S&P 500. In both sets, roughly two-thirds of the CEOs were covered by a company-sponsored pension plan. (Roughly one-third had no pension plan coverage at all, though they may instead participate in a deferred compensation plan -- another type of retirement plan favorable to executives that bypasses public scrutiny.)

It may not shock you to learn that the average payout for CEOs that are already collecting retirement checks is $1.1 million a year. Those CEOs who hadn't begun collecting checks yet are set to get $1.5 million annually.

Next: "These guys aren't exactly hurting for cash to begin with."
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