That's just one conclusion of an analysis by The Wall Street Journal, which pointed out in its June 23 edition that many large companies often do not disclose the effect on their bottom line of fat pensions for their fatter executives.
It's just another example of how out-of-control executive compensation and other forms of corporate greed penalize customers, workers and stockholders. It also contributes to growing plutocracy in the United States.
In the case of GM, according to The Journal, the pension account for regular workers actually is overfunded by about $9 billion. Earnings from investment of those funds contribute to GM's bottom line.
However, executive pensions are a different matter. They are unfunded, meaning that there are no current assets committed by the company to pay for them. They are a debt. So, the $1.4 billion for executive pensions, and the carrying costs, come directly out of the company's earnings.
The Journal's report also points out that this situation is hardly unique to GM. Other large companies, including General Electric, AT&T, Exxon Mobil, IBM, Bank of America and Pfizer, to name a few, now have unfunded pension obligations for executives that exceed $1 billion. Yet that is disguised because companies often do not break out executive pensions from their overall pension obligations in their financial filings.
As a consequence, the money that companies save by cutting pension benefits to Joe and Jane worker often mask the rising costs of rich pension benefits for their executives.
As is often the case with other forms of outrageous executive compensation, the companies defend this by saying that they must pay corporate chieftains huge benefits to attract the top talent.
We're not buying it. It's just greed.
