Executives Received Hundreds of Millions of Dollars Before Dropping Workers’ Pensions, GAO Finds
WASHINGTON, D.C. – Forty executives at ten high-profile corporations that terminated their workers’ pensions collected at least $350 million in compensation in the years leading to pension termination, the Government Accountability Office reported today. The investigation was requested by U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee.The companies surveyed by the GAO – which the Congressional watchdog agency did not identify – included major airlines, electronics, insurance and steel companies that filed for bankruptcy in the last decade and dumped their pension liabilities onto the Pension Benefit Guaranty Corporation. PBGC provides pension protection for 44 million workers and is responsible for administering benefits for more than a million Americans.
“It is fundamentally wrong that executives were able to line their pockets with millions of dollars from bonuses, stock options and free joyrides on corporate jets, while watching their workers’ retirement security slip into peril,” said Miller. “Executive compensation and golden parachutes should be aligned to the fate of workers’ retirement plan. This will create an incentive for executives to fix workers’ pension plans before they go broke.”
Miller said the he is considering legislation that will freeze executive compensation if the company’s rank-and-file pension plan becomes significantly underfunded.
While rank-and-file employees face freezes or cuts in benefits if their pension plan’s liabilities significantly outstrip assets, there are no laws that link the underfunding of workers’ pension plans to an executive’s benefits. GAO found that millions of dollars in executives’ retirement and other fringe benefits were protected from bankruptcy while some workers saw a drastic reduction in benefits.
The GAO also found:
- At four companies, executives received $49.5 million in retirement, deferred compensation or severance pay. Four executives at one airline alone received $32.6 million in retirement and deferred compensation.
- Executives at some companies received salaries in excess of $10 million dollars in the years leading up to bankruptcy.
- Some executives received millions of dollars in stock awards, income tax reimbursements, retention bonuses, severance packages, and supplemental executive-only retirement.
- Some were provided other benefits such as apartments, personal trips on company airplanes and helicopters, club memberships, legal fee reimbursement, and automobiles.
- The families and executives at one insurance firm used the company’s Boeing 727 and Sikorsky helicopter for personal trips to, among other exotic locations, China, Spain, Greece and Hawaii.
To read the full GAO report, click here.
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