Sunday, January 09, 2005


Pension Plans: Ours Versus Their's

While Mr. Bush proceeds with plans to destroy Social Security through "management fees" to the financial industry, the New York Times reveals how financial industry CEOs plan for their own retirements:

But Mr. Sosa's prospective ($8,000,000 severance package) seems meager when compared with the retirement piƱata that the Bank of America plans to bestow on Charles K. Gifford when he steps aside as its chairman at the end of this month. An amiable, dedicated manager with a decidedly mixed track record as chief executive, Mr. Gifford, 62, has managed to survive strategic misfires, one bungled merger and another merger that kept him in the top ranks of the bank but no longer in control.

For his ministrations, Mr. Gifford is promised a $16.36 million cash payment, up to an additional $8.67 million in "incentive payments" for work done over the last 13 months and $3.1 million a year for life. If he dies before his wife, she will receive $2.3 million a year, also for life.

That's not all. The bank guarantees him $50,000 a year in consulting fees, 120 hours of free flight time a year on the company's jet, and an office and a secretary, according to federal securities filings. All of this is on top of $38.4 million in company stock that he has accrued over his 38-year career.

Wait. There is more: Mr. Gifford, a Bostonian, has also been offered the right to buy 60 Red Sox tickets from the bank annually for the rest of his life. Now exhale.

Source: New York Times

Of course, Bank of America's employees have a somewhat less remunerative pension plan:

Nov. 11, 2004 (Associated Press) The Internal Revenue Service is auditing the 1998 and 1999 tax returns of Bank of America Corp.'s pension and 401(k) plans, which have been the subject of a class-action employee lawsuit...

This summer, some employees sued the bank over its cash-balance pension plan, which they say the company used as part of an "arbitrage scheme" to enrich itself at the expense of participants.

According to the complaint, Bank of America encouraged employees to transfer more than $2.7 billion of 401(k) assets into the bank's pension plan in 1998 and 2000.

The lawsuit, filed June 30 in federal court in Illinois, alleges that those transfers allowed Bank of America to invest the money for higher returns than what the bank would dole out to employees.
Source: SmartPros


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