WILMINGTON, Del (Reuters) - Bankrupt Westinghouse Electric Co LLC, the U.S. nuclear technology firm owned by Toshiba Corp (6502.T), has stopped making pension payments to former executives, according to a letter seen by Reuters, removing a benefit that has helped the company retain top talent.
The move comes as the company scrambles for cash and works to extract itself from two U.S. power plant projects, the first new nuclear plants in three decades, which are years behind schedule and billions of dollars over budget.
Westinghouse notified former senior managers that the company will no longer make payments under the Executive Pension Plan, according to an April letter seen by Reuters.
Westinghouse spokeswoman Sarah Cassella said in a statement that in Chapter 11 bankruptcy, the company is not permitted to make pension payments to retired executives because it is a non-qualified plan.
Unlike “qualified” plans for rank-and-file workers that are funded from money set aside in a trust, Westinghouse’s executives receive their payments from the company’s ongoing operations.
The pension was considered a major perk. Steve Tritch, who was CEO of Westinghouse from 2002 to 2008 and is among those who lost their pension payments, told Reuters the company may struggle to keep top talent without the plan in place.
Many employees “resisted opportunities from outside the company because they were counting on those pensions,” he said.
The plan covers around 75 former managers, according to a court filing by Ronald Gellert, a Delaware lawyer who was hired to represent the plan participants. It includes retired senior vice presidents, directors, regional presidents and at least two former chief executives, Aris Candris and Tritch.
Gellert declined to comment.
Westinghouse filed for bankruptcy and has said it cannot afford to finish construction of the Plant Vogtle nuclear project in Georgia or the V.C. Summer project in South Carolina.
The plants were the first in the United States to use Westinghouse’s innovative AP1000 design, but construction has been dogged by missteps, litigation and regulatory hurdles.
Westinghouse has warned in court filings that its workforce is highly specialized and the loss of employees could complicate relationships with government agencies and customers, and could jeopardize its reorganization.
“Westinghouse is very focused on retaining our talented employees during this time and our training and development programs continue,” said Cassella, the Westinghouse spokeswoman.
Under the pension plan, the amount each former executive received was based on service with the company and final salary, according to three former executives, who asked not to be identified because they may pursue Westinghouse in court.
The three former executives told Reuters the plan also allowed them to defer compensation and take that money as part of their pension, which helped reduce taxes. The former executives who deferred compensation are losing their pension as well as money they could have received when they were still working, according to these former executives.
Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and Nick Zieminski