Tuesday, November 19, 2013

Pension inequality

http://www.moneynews.com/Economy/inequality-CEO-Pensions-401k/2013/11/17/id/537095


Latest Inequality Measure: CEO Pensions vs. Workers' 401(k)s

Sunday, 17 Nov 2013 05:59 PM
By Michelle Smith
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Financial disparities between executives and their workers aren't limited to salaries and stock options. CEOs' pensions are also hundreds of times larger than workforce retirement savings.

Executive compensation is a hot-button topic. Perhaps new data from NerdWalletexplains why. It shows the average CEO at the nation's top 10 companies earns over 550 times more than an average employee.

And, as American workers are forewarned of an ensuing retirement crisis, NerdWallet says the CEOs at top companies are amassing huge pensions.

On average, their pensions are 239 times larger than the average employee’s 401(k) balance.

Editor’s Note: New Video Exposes a ‘Great Retirement Heist’ 

According to the data, the most drastic divide is seen at Walmart. Valued at over $113 million, CEO Michael Duke's pension is 6,182 times larger than his average non-executive employee's retirement hoard.

Walmart's 401(k) plan is reportedly valued at $18.1 billion, and covers about 1 million employees, for an average of $18,000 in savings per person.

The smallest disparity is seen at Oracle Corp. The company does not offer a pension but CEO Larry Ellison has a deferred compensation plan. It's valued at about $14.8 million. That's 97 times higher than the average 401(k) balance of $153,000.

For the eight companies between Oracle and Walmart, CEO pensions range from 129 times larger to 943 times larger than employee retirement accounts.

NerdWallet has rolled out this data as the Securities & Exchange Commission is pushing for a rule requiring publicly traded companies to publicize the gap between executive and worker pay.

SEC commissioner Michael Piwowar is critical of the proposal. Reuters says he argues, “proponents have acknowledged the sole objective of the pay ratio [rule] is to shame CEOs.”

But, the shame should be on the five SEC commissioners, including himself, because they have no business considering this type of rule, Piwowar says.

Commissioner Luis Aguilar, disagrees, saying disclosure could provide valuable new perspective for compensation decisions. “As owners of public companies, shareholders have the right to know whether CEO pay multiples reflect CEO performance,” Reutersquotes Aguilar as saying.

“The simple fact is that large pay disparities between CEOs and their employees affect a company'sperformance,” AFL-CIO President Richard Trumka told Reuters. “When the CEO receives the lion's share of compensation, employee productivity, morale and loyalty suffer.”

Dana Lime, product manager at NerdWallet, expects that to happen in light of its newly released data. “Maybe CEOS won't be bothered, but I think workers will,” Lime toldCNBC.

Lime also expects the research to prompt change.

“This will be a wake-up call in terms of governance. There's going to be pressure just from a political standpoint to bring those multiples down,” he said.


Read Latest Breaking News from Newsmax.com http://www.moneynews.com/Economy/inequality-CEO-Pensions-401k/2013/11/17/id/537095#ixzz2l70ERZJK
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