CEOs cut pensions, pad their own
by Caleb Reading
When International Business Machines froze its pension plan in early January, thousands of its employees suddenly felt a lot less certain about their retirement security.
Samuel Palmisano, IBM chief executive, has no such worries. Palmisano, according to IBM’s (IBM, news, msgs) regulatory filings, will receive an annual pension of $4 million when he retires at age 65. That works out to $75,000 a week — or more than $10,000 a day, including weekends.
IBM, of course, is far from alone in cutting back or eliminating pension plans.
The most recent pension plan to be phased out is Alcoa’s. As that company switches employees to a 401(k), Chief Executive Alain Belda, as of early 2005, was slated to get $1.28 million a year if he retires at 65.
Sears Holdings (SHLD, news, msgs) froze its defined-benefit plans starting this year. But more than a year before it did so, Sears generously granted some executives two years of credit — for the purposes of pension vesting — for each year worked. That means even though the pension was frozen, the executives circumvented the freeze by getting credit for years they would serve in the future.
Motorola (MOT, news, msgs), for instance, wiped out defined-benefit plans for new employees last year, offering them an enhanced 401(k) plan. But if Motorola Chairman and Chief Executive Edward Zander gets laid off or quits, he has the right to two years worth of salary, bonus and health benefits. He got $6.1 million in salary and bonus in 2004, as well as restricted stock that Motorola recently valued at $9.1 million.