Retire Secretive Policy
May 10, 2005
The rich retirement benefits of corporate executives, with the exception of those granted to former
bosses Jack Welch of General Electric and Don Tyson of Tyson Foods, have been largely ignored
by investors. That's not because other big companies have been stingy with retirement perks; it's
because so little information must be disclosed that shareholders have little chance of distinguishing
between what is deserved and what is deplorable.
Perhaps new research on the overlooked cost to shareholders of executive retirement packages will
motivate investors to demand a better accounting and the Securities and Exchange Commission to
add some urgency to its review of compensation reporting rules. Lucian Bebchuk and Robert
Jackson Jr. of Harvard Law School determined, from a sampling of the biggest public companies in
the United States, that pension plans have the effect of ballooning executive compensation by an
average of more than 48 percent.
That's no small matter when executives already enjoy hefty paychecks. The average compensation
for heads of the 500 largest companies in the United States exceeded
$10 million last year, according to data gathered by Forbes magazine. The dollar amount includes
gains from exercising stock options.
Harvard's Jackson and Bebchuk correctly point out that without a clear understanding of how much
former chief executives are being paid for sitting at home, investors are in the dark about just how
much of their money is being spent on the hired help. The researchers also note that, lacking that
information, it is even more difficult for investors to compare executive pay and executive
Starting with the limited information available in proxy statements that public companies issued
before their annual meetings in 2004, Jackson and Bebchuk estimated the current value of future
retirement benefits for executives nearing retirement and those who left their companies in 2003