Retirement turns into latest executive bonanza

Everyone knows that CEOs are paid huge amounts of money while they are working. Less known is just how much they make in retirement. At many of America’s biggest corporations, it is not uncommon for retired executives who were paid tens or even hundreds of millions of dollars during their tenures to receive $1 million or more in pension benefits every year — for as long as they live.

Some will take home much more. Henry A. McKinnell Jr., CEO of Pfizer, will be paid about $6.5 million a year after he retires, according to the company’s annual proxy statement filed in March. Lee R. Raymond, Exxon Mobil’s CEO, can expect $5.9 million a year.

At a time when millions of American workers have seen their pension plans pared back or shut down, and millions more are being asked to bear the risk of managing their own retirement savings, departing CEOs are making out better than ever. A total of 113 chief executives can expect retirement benefits worth more than $1 million a year; at least 31 may get twice that amount or more.

Those findings are based on a review of the 2004 proxy statements of 500 large companies done for The New York Times by the Corporate Library, an independent corporate-governance research firm. More than two-thirds of those companies — 339 — have separate retirement plans for executives only. These special plans, called supplemental executive retirement plans, or SERPs, usually offer better benefits than traditional pension plans and are sometimes guaranteed regardless of the fate of the company itself. And these executive pension plans are often in addition to the subsidized 401(k) and defined-benefit plans available to other employees.

Unlike a CEO’s salary or stock options, the cost of such pension plans is rarely laid out for investors. Instead, the information is usually so deep in a company’s regulatory filings that it is difficult to find, let alone calculate. —NYT