Thursday, November 19, 2009

As pensions dried up, four firms paid top execs $49.5M

Top executives at four companies that jettisoned their employee pension plans received $49.5 million in retirement and severance benefits in the years before the companies filed for bankruptcy, while retirees saw their benefits cut by as much as two thirds, congressional investigators conclude in a report released Thursday.

The Government Accountability Office (GAO) reports that pensions at the companies, United Airlines, US Airways, Polaroid and Reliance Insurance, were underfunded by more than $11 billion when the companies turned them over to a government-backed insurance fund. The report says executives at those four companies and six others that abandoned their pension plans took in a total of $350 million in pay and perks in the years leading up to the bankruptcies.

The GAO examined compensation for executives at 10 of the largest companies that turned their pensions over to the government in the past decade. At United, for example, CEO Glenn Tilton and two other executives got $7.6 million in retirement benefits from 2002 through 2006, during which time the airline shed four pension plans covering 122,000 workers. A retired United pilot told the GAO he gets only a third of the pension he had expected. PBGC benefits are limited to $4,500 per month.

United spokeswoman Jean Medina said Tilton's $4.5 million retirement trust replaced benefits he lost by leaving Chevron and "had nothing to do with a United pension plan." The trust was approved by the company's board of directors and its bankruptcy creditors, she said.

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