WASHINGTON/BOSTON Ten large U.S. companies paid senior executives a total of $350 million in the few years prior to dropping traditional pension plans for employees, a Congressional watchdog said on Thursday.
Forty executives in a range of industries received the compensation in base salaries, bonuses, severance and perks in the five years before the pension plans failed, the non- partisan Government Accountability Office said in a new report.
U.S. Rep. George Miller, who chairs the House Education and Labor Committee, said in a statement he is considering legislation to freeze executive compensation if a company's rank-and-file pension plan becomes significantly underfunded.
"It is fundamentally wrong that executives were able to line their pockets with millions of dollars ... while watching their workers' retirement security slip into peril," said Miller, who requested the GAO's investigation.
Four cases in particular were singled out where the dropped pensions covered a total of more than 202,000 participants and were left underfunded by some $11 billion.
A source familiar with the report said the four most egregious cases cited by the GAO involved UAL Corp's UAUA.O United Airlines, U.S. Airways Group Inc LCC.N, electronics company Polaroid and insurer Reliance Motors and Drivers.
The other cases involved auto parts maker Harvard Industries Inc HAVA.PK , steel-makers Republic Technologies, National Steel and LTV Steel and textile companies Westpoint Stevens Inc WSPTQ.PK and Pillowtex, the source said.
In the case linked to United -- by far the largest of those analyzed by the GAO -- the airline missed nearly $1 billion in required pension contributions.
At the same time, it awarded its top three executives more than $50 million in salary, bonuses, stock and supplemental retirement benefits, the report said.
At Reliance, a family-owned insurance company, the CEO, COO and their families logged over $200,000 in company plane and helicopter costs for personal trips to China, Greece, Hawaii and elsewhere.
The report looked at publicly-traded companies with more than $100 million in unfunded liabilities.
Failing pensions deplete the resources of the Pension Benefit Guaranty Corporation, a government agency that insures traditional corporate pension plans designed to pay fixed amounts to some 44 million American workers and retirees.
Many U.S. companies have dropped traditional, defined- benefit plans in favor of less-costly 401(k) programs that put more risks onto workers.
The pension guaranty agency said last week its annual deficit nearly doubled to $22 billion in fiscal 2009 from $11.2 billion in fiscal 2008.
The PBGC this year has assumed responsibility for pension plans at auto parts supplier Delphi Corp DLPIV.PK, retailer Circuit City Stores Inc CCTYQ.PK, IndyMac Bank IBFSL.PK, Lehman Brothers Holdings Inc LEHMQ.PK and textile maker Dan River Inc, among others.
The GAO report was posted at: here
(Reporting by Kim Dixon in Washington and Ross Kerber in Boston; editing by Ros Krasny and Andre Grenon )