The Academe Blog

The blog of Academe Magazine. Opinions published here do not necessarily represent the policies of the AAUP.

It’s Not Personal. It’s Just Business.

In a recent post, I detailed the “golden goodbyes,” the no longer extraordinary, very generous retirement packages, being negotiated by university presidents across the United States. I described this trend as salient evidence of the corporatization of our universities, but I don’t think that one can truly understand what is occurring with pensions without knowing the numbers.

Here are the CEOs with the top ten retirement accounts (source: the Center for Effective Government’s report Platinum-Plated Pensions):

John Hammergren

Company: McKesson

Personal Pension Fund: $144,278,492

Anticipated Monthly Pension Payment: $853,205

David Cote

Company: Honeywell

Personal Pension Fund: $134,458,619

Anticipated Monthly Pension Payment: $795,134

Michael Duke

Company: Wal-Mart

Personal Pension Fund: $113,157,559

Anticipated Monthly Pension Payment: $669,169

Rex Tillerson

Company: ExxonMobil

Personal Pension Fund: $69,414,577

Anticipated Monthly Pension Payment: $410,490

John Strangfeld

Company: Prudential Financial

Personal Pension Fund: $62,915,609

Anticipated Monthly Pension Payment: $372,058

Jeffrey Immelt

Company: General Electric

Personal Pension Fund: $59,289,731

Anticipated Monthly Pension Payment: $350,616

Brian Roberts

Company: Comcast

Personal Pension Fund: $57,203,495

Anticipated Monthly Pension Payment: $338,279

Larry Merlo

Company: CVS Caremark

Personal Pension Fund: $56,888,413

Anticipated Monthly Pension Payment: $336,415

Randall Stephenson

Company: AT&T

Personal Pension Fund: $52,152,319

Anticipated Monthly Pension Payment: $308,408

Alan Lafley

Company: Procter & Gamble

Personal Pension Fund: $50,263,265

Anticipated Monthly Pension Payment: $297,237

All of these CEOs are members of the Business Roundtable, and four of them are also on the Fix the Debt CEO Council. That group is concerned about the impact of chronically underfunded corporate pensions and the continued fiscal sustainability of the Social Security program. Its members have repeatedly described the underfunding of pensions and Social Security as an impending crisis in liabilities that are impossible to honor.

What they aren’t saying is that their corporations are directly responsible for the underfunded corporate pensions. Here are the ten corporations with the largest pension liabilities:

CEO: Jeffrey Immelt

Company: General Electric

Deficit in Pension Funding: $22.6 Billion

CEO’s Pension Fund: $59,289,731

CEO: W. James McNerney

Company: Boeing

Deficit in Pension Funding: $19.7 Billion

CEO’s Pension Fund: $45,873,226

CEO: Randall Stephenson

Company: AT&T

Deficit in Pension Funding: $13.8 Billion

CEO’s Pension Fund: $52,152,319

CEO: Alan Mulally

Company: Ford

Deficit in Pension Funding: $9.7 Billion

CEO’s Pension Fund: $937,959

CEO: Andrew Liveris

Company: Dow Chemical

Deficit in Pension Funding: $9.1 Billion

CEO’s Pension Fund: $30,212,412

CEO: Lowell C. McAdam

Company: Verizon

Deficit in Pension Funding: $8.5 Billion

CEO’s Pension Fund: $9,792,578

CEO: Rex Tillerson

Company: ExxonMobil

Deficit in Pension Funding: $7.2 billion

CEO’s Pension Fund: $69,414,577

CEO: D. Scott Davis

Company: UPS

Deficit in Pension Funding: $6.9 billion

CEO’s Pension Fund: $8,921,609

CEO: Alan Lafley

Company: Procter & Gamble

Deficit in Pension Funding: $5.9 billion

CEO’s Pension Fund: $50,623,265

CEO: Douglas Oberhelman

Company: Caterpillar

Deficit in Pension Funding: $4.9 billion

CEO’s Pension: $21,978,436

None of these companies can be said to be struggling. In fact, the rationale for the exorbitant executive compensation is that the CEOs are keeping these corporations extremely profitable.

So why are the pensions so underfunded? Simply put, the money that could have kept the pensions fully funded has gone to other priorities that have not just sustained profits but, rather, have increased profits to their absolute maximum and have thereby maximized stockholders’ dividends, which, coming full circle, provide the basis for the executives’ compensation.

Given the continued underfunding, it was inevitable that the pension deficits would balloon, and even so, it is not as if the corporations lack the resources to keep the pensions solvent. It is simply more expedient to claim that meeting the pension obligations will ruin the company and to therefore try to wipe the liability off the books. No executive wants to be responsible for any decline in the shareholders’ stock dividends because most shareholders will not care that those dividends have been artificially inflated by underfunding the pensions. So thirty years’ worth of liabilities are frequently juxtaposed against one’s year’s revenues or, worse, one year’s net profits, and it appears to most casual observers that the corporation might collapse as a consequence of having to pay “extravagant” pensions to its workers, who, not coincidentally, are typically unionized and therefore demonized as being somehow privileged.

So, the problem isn’t pensions per se. Rather, the problem is our pensions.

Let’s look, then, at what the average worker’s pension looks like in comparison to the average CEO’s pension:

The average CEO on the Business Roundtable has a pension fund of $14,550,089 and can expect to receive a monthly pension check of $86, 043 and a monthly Social Security check for $2,533, for a total monthly retirement income of $88,576.

In contrast, the average worker in one of those corporations will have a retirement fund of $12,000 and can expect to a monthly pension check of $71 and a monthly Social Security check for $1,237, for a total monthly retirement income of $1,308.

The average CEO’s corporate pension is 1,212 times as large as the average worker’s.

So, when ordinary American workers advocate strenuously for actual funding of the pensions that they have been promised contractually, the corporate leadership and their media mouthpieces immediately accuse the workers of engaging in class warfare.

It’s a cute trick. For what is the failure to meet pension obligations if not class warfare? The retirement income that is owed to ordinary workers is being transferred to corporate stockholders and to the executives who insure that the dividends that the stockholders receive remain as high as possible, basic ethics be damned. Worse, all Americans are asked to be concerned about any reduction in the wealth of the most affluent, even if the meager resources of the rest of us need to be sacrificed to maintain that maximum level of wealth.

To understand the gross injustice of what is occurring, one might consider whether the loss of the average worker’s $71 monthly pension check will cause that worker more harm than the average CEO’s loss of the equivalent of the worker’s entire monthly retirement income.

In losing the pension check, the worker will lose 5.5% of his monthly income.

In losing the equivalent of the average worker’s entire monthly retirement income, the average CEO would lose 1.4% of his monthly retirement income.

Pensions are a significant part of a worker’s compensation.

If failing to honor pension obligations is not criminal, then why are corporate executives so insistent that their own pensions remain untouchable?

Yet, this sort of grand theft seems no longer to be illegal.

But that doesn’t make it any less criminal, any less immoral.

As Jon Stewart pointed out in one of the segments of his show tonight, if corporations are indeed people, when are the people who are the public faces of those corporations going to start going to jail for the kinds of crimes that any other person would be serving serious time for committing?

About martinkich

I am a Professor of English at Wright State University, where I have been a faculty member for almost 25 years. I serve as the president of the WSU chapter of AAUP, which now includes two bargaining units, as the vice-president of the Ohio Conference of AAUP, and as a member of the executive committee of AAUP's Collective Bargaining Congress. As co-chair of the Ohio Conference's Communication Committee, I began to do much more overtly political writing during the campaign to repeal Ohio's Senate Bill 5, which would have eliminated the right of faculty to be unionized.

3 comments on “It’s Not Personal. It’s Just Business.

  1. lamm9
    December 5, 2013

    Great column, Marty. I would have hit the “like” button, but for some reason or other, none exists on my screen.

    • martinkich
      December 5, 2013

      Mike:

      Last night when I was posting it, I must have inadvertently hit the “like” button. This morning, when I noticed that I had “liked” my own post, I could not figure out how to “unlike” it; so I resorted to hiding the feature. By that point, however, about 50 readers had already looked at the post and no doubt came away thinking that I was pretty unabashedly self-congratulatory.

  2. martinkich
    June 26, 2014

    Reblogged this on Ohio Labor.

Your comments are welcome. They must be relevant to the topic at hand and must not contain advertisements, degrade others, or violate laws or considerations of privacy. We encourage the use of your real name, but do not prohibit pseudonyms as long as you don't impersonate a real person.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 6,550 other followers

%d bloggers like this: