Big business is looking out for you:
At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives’ retirement benefits and pay.
In recent years, companies from Intel Corp. to CenturyTel Inc. collectively have moved hundreds of millions of dollars of obligations for executive benefits into rank-and-file pension plans. This lets companies capture tax breaks intended for pensions of regular workers and use them to pay for executives’ supplemental benefits and compensation.
The practice has drawn scant notice. A close examination by The Wall Street Journal shows how it works and reveals that the maneuver, besides being a dubious use of tax law, risks harming regular workers. It can drain assets from pension plans and make them more likely to fail. Now, with the current bear market in stocks weakening many pension plans, this practice could put more in jeopardy.
I am sure Red State or Hot Air can convince us this is an act of patriotism. After all, defrauding your workers in order to get tax breaks that you can pass on to your executives just sounds patriotic, doesn’t it? And then when the shit fails, you can just pass it on to the taxpayers. I mean, it is a win all the way around, right?
As someone said to me when I im’d him this link, “That is so evil I almost have to admire it.”
cleek
the market will fix this. if people don’t want to spend their whole lives working for companies who will cheat them out of their pensions, they can just find a job elsewhere.
i hear the Army’s hiring.
Perry Como
Bringing this up is class warfare.
jake
I tried to think of something that would be lower than this but all I came up with is kidnapping employees’ family members and harvesting their organs when the CEO’s innards start sag under the weight of too much high living.
El Cid
Thinking you can retire on a pension tomorrow reduces your incentive to work harder today, thus hurting America.
Chris Johnson
Bringing this up is ALSO class warfare :)
In b4 Michael shows up to explain how this is good because it rewards the people who really EMBODY the work…
John Cole
This is seriously 18th century Ebeneezer Scrooge fucked up.
There is a movie plot in this shit.
Zifnab
If the dumb stupid lazy stupid dumb liberal pension fund contributors hadn’t signed up for such a rank socialist welfare communist liberal union-inspired bad evil socialist liberal bad system evil then this wouldn’t have happened, now would it have?
Perhaps those dumb unions should just go away so that the American worker can enjoy the freedom and fair pay afforded their illegally hired alien counterparts working at Walmart.
Stupid liberals.
r€nato
someone needs to go check the kitchen countertops of those employees, I bet they don’t really need a pension.
Zifnab
Avast. I appear to have run afoul of John’s board moderating program. You win this round, Mr. Cole.
r€nato
this clearly calls for more deregulation.
bago
But they’re so pensive about getting that yacht!
Gus
That’s America in a nutshell. The transfer of wealth to the already wealthy over the last few decades is really astonishing. I wouldn’t be surprised to see some unrest among the folks who realize they’ve been taking it in the ass for the last 30 years. Then again, as long as there’s beer and television, probably not.
strawmanmunny
You all are a bunch of anti-American hippie traitors..and pinko Communist/Socialists.
This is the free market working. Why shouldn’t execs get the same kind of tax breaks that ordinary workers get? If workers didn’t demand such high wages, then they would still have their jobs. Obviously, these people don’t work hard enough, have crappy skills and just want to sit on their asses all day and ask for gov’t handouts.
MattF
It enhances shareholder value because an executive benefit that was a corporate liability is now paid for by the American taxpayer. So, what’s the problem-o?
jake
The fecal matter will hit the air circulation device when people get hungry and have to cut cable/sattelite. Unfortunately, 99.9% of the unrest will be directed at people who represent one of the many ReThug scapegoats.
Paul Weimer
This is Evil.
This is also the American Way.
Noah
Did you hear that God burned down Fred Phelps’s Church?
Davis X. Machina
There is a movie plot in this shit.
They made it. Twenty years ago. Made no difference then, and things have gotten worse. It’s called Wall Street.
Punchy
Somebody alert Andrew Sullivan.
Shinobi
Last year our (former) CEO laid off 20 people (15% of our company) the month after she received a substantial pay raise.
I think that is just about as evil as this, but that might be because I know for a fact that at least 2 of those workers are still out of work.
What’s with the evil?
jake
Already done, and it includes one hell of a fight scene.
Brachiator
There has got to be some kind of golden parachute provision that protects the retiring execs if the employee pension plan goes belly up.
Somewhere in Hell, Kenneth Lay is thinking, “Damn, too bad I didn’t get to fuck my Enron employees with that pension trick before I got found out!”
No wonder the Republicans want to privatize Social Security. It would give the rat bastard financial CEOs even more of other people’s money to play with.
d0n camillo
They’re already working on it. Google Dead Peasants’ Insurance.
RSA
As it turns out. . .
So, who else on hearing “pension” and “profit sharing” think “workers” and “management” in that order, rather than the reverse?
Gus
I knew what movie you were referring to immediately. The plot of that movie seems less and less outlandish…
Brachiator
If someone made a cynical remake of “It’s a Wonderful Life,” Mr. Potter would ground George Bailey into dust. At the end of the film, all the towns people who tried to save George find out that bad subprime mortgages have bankrupted all of them. An ominous bell tolls and Potter’s evil nephew says,
“Look, Uncle Henry. Teacher says, every time a bell rings a devil gets his horns.”
Dreggas
O/T but: PARTY UBER ALLES!
Shygetz
No, I’m pretty sure class warfare involves considerably more guns.
Incertus
I was thinking of http://www.imdb.com/title/tt0106856/“>this one. While it doesn’t have a great fight scene, it does have a lead that a lot of people can identify with.
Shinobi
And we all know guns disproportionately favor the rich.
David Hunt
To steal a riff from John Rogers, the only context in which that makes sense is if it’s done in the control room of a giant killer robot while destroying Metropolis.
jcricket
Yeah, that whole “liberals and unions are the devil” crap your former party has been screaming for 30 years? Guess who the f* stopped Scrooge from raping the average joe? Liberals and unions.
The weekend, pensions, retirement, overtime, minimum wage, OSHA, child labor laws – all brought to you by the ancestors of today’s liberals and unions. In other countries liberals and unions have even gotten workers in mandatory vacation and sick time, etc.
It blows my mind that the Republicans have been able to convince the 95% of the population that would benefit from increased worker power (whether in the forms of unions or not) that their interest instead lie with giving the top 5% increased ability to avoid oversight and tax cuts.
Dennis - SGMM
OT: It was reported that ten employees of the Hess corporation and/or family members each donated $28,500 to the joint RNC-McCain fund raising committee. Turns out that two of the donors live in a rented house, make around 100K a year total and still managed to donate the $28,500 each on the same day as the other Hesses. Now that’s giving! How many of us can say that we donated half of our annual income to elect Obama?
Rosali
As workers’ pensions wither, those for executives grow
jake
Your link didn’t work Incertus X Hussein Bin Laden.
Martin
Meh. You can still buy some damn nice countertops on $43,000 a year.
Bruce Moomaw
“The rich are the scum of the earth in every country” — G.K. Chesterton. (Although it was possible to confirm that simply by listening to those tape-recorded phone conversations of energy traders giggling over their plans to raise the electricity costs in California and “freeze Grandma” by arranging artificial electricity-grid breakdowns.)
Martin
I blame John for the failed attempt at embedding. If only our nanny blogger wasn’t riding our ass telling us how to link.
Alan
Rush Limbaugh likes to refer to these managers as “risk takers.” No one would have a job if it weren’t for them.
Noah
John, did you see this picture the RNC put up, which looks like a tire gauge bashing Obama over the head?
Just Some Fuckhead
Fixed.
cleek
but what kind of countertops do they have ?!
Just Some Fuckhead
Prolly the same # of Hesses that can claim to have donated half their annual income to elect McCain: 0.
Dennis - SGMM
Ever notice how these hearty risk takers, no matter how badly they screw up a company, always walk away with more money than most of us will make in our lifetimes? Risk takers – right. The risk takers at GM, Ford and Chrysler have done such a bang up job that Toyota is the #1 car manufacturer. The risk takers at innumerable other companies have managed their respective companies so brilliantly that it’s nearly impossible to buy anything made in America. The risk takers in our government managed to move us to an economy two-thirds of which is based on selling each other foreign made shit – only now we’re all getting squeezed so hard by food and gas prices that we can’t afford it any more. It’s a pity that there are so few old fashioned lamp posts when there are so many who deserve to be hanged.
Svensker
A friend of ours (a Wall Street type, who is still a friend only because of longevity), when we were arguing against huge CEO compensation while workers are being laid off, said, “Why? The workers are just over spending, buying luxuries when they should be economizing. A lot of them are scum. The managers and executives have MBAs and went to good schools. They earned the big bucks.”
We agreed to change the subject.
Dreggas
Laura Ingraham: People know what dead troops look like because they see it in teh movies
Un-fucking-real.
rawshark
Reagan believed the movies too.
ThatLeftTurnInABQ
What’s missing in this equation is who they are taking risks on behalf of. That would be you and me. They are taking risks with us and our lives, which means if they screw up or miscalculate or just get unlucky (who could have known?), we get the bill.
The funny thing is, the rewards for taking these risks don’t seem to follow the risk around. Also, past performance does guarantee future results, in this particular case. We can count on them to keep on doing more of the same.
Jim
Not to nit-pick, but wasn’t Ebeneezer Scrooge a 19th century character?
And to paraphrase another immortal figure from the 1800’s, government of the corporate elite, by the corporate elite and for the corporate elite shall not perish from the Earth.
rawshark
Socialize the risk, privatize the reward!
Tax Analyst
…and the other 1/3 is just BS paper-churning that produces nothing but scratch paper, fodder for the shredder, and richer rich people
Conservatively Liberal
Good to hear! There is nobody more deserving of this happening than Phred Yelps and his family of hatemongers.
If there is a god, thank you very much.
Regarding the topic, executive pay has been off the scale for years now. When it first started happening, I pointed out to my wife that each company is now using the next company to justify the outrageous pay and golden parachutes (actually, golden showers for the employees) they were handing out.
You would hear of one executive failure after another across the corporate spectrum, but no real accountability. No matter how bad they fuck up, the executives walk with big cash and everyone else pays for it.
If they want to compensate executives for performance, the company should keep the payout in hand until the executive leaves. If the executive blows it, penalize their ‘performance fund’. If they excel, pay into it. All the while, pay them a fair salary for their work. Simple, but I bet they would find a way to abuse that too.
There is a lack of accountability across our country, and it runs from the top to the bottom.
Same goes for ignorance.
J. Michael Neal
No offense, but the original is bad enough. Note that the things that George Bailey decides to do in order to be heartwarming are exactly the things (though, from a different motive) that produced the mortgage crisis.
J. Michael Neal
That would be me. Of course, being into my third year of unemployment made it very easy to make it to half of my income.
jbarntt
I am sure Red State or Hot Air can convince us this is an act of patriotism. After all, defrauding your workers in order to get tax breaks that you can pass on to your executives just sounds patriotic, doesn’t it? And then when the shit fails, you can just pass it on to the taxpayers. I mean, it is a win all the way around, right?
I’m shocked that companies take advantage of the tax laws to their best benefit. Of course when I do my income taxes, I do no such thing, much preferring to pay more taxes than I am obligated to.
I thank Pelosi and Reid for not tightening up on these laws, although I would prefer the Republicans to be in charge in congress, the Democrats seem to be a reasonable Xerox.
cain
You should tell them if they did that he would be crying that the economy is tanking because nobody would be spending. This economy only survives because of middle and lower class spending our hard earned dollars. Don’t worry that’ll happen then we’ll see what happens.
cain
Mike
I’ll tell you what the justification is: attracting top executives raises profits, while paying pensions does not. Since we owe it to out shareholders to maximize our return to them, we have no choice but to screw our rank and file.
John Cole
I guess it would be too much to ask for jbarntt to read the article.
Mme. Dufarge
This scarf collection is getting out of hand – could we get started with the revolution already?
Xoebe`
Sometimes a friend needs a punch or two in the face, to help him get his mind straight.
Original Lee
I think that somebody was taking notes after Robert Maxwell died and figured out a way to screw over American workers the same way he screwed over his UK employees.
I still have a copy of the Robert Maxwell Joke Book, BTW.
Brachiator
No offense taken. The movie is a comedy, not a documentary, so you can’t take it as an accurate portrayal of lending practices. But even in the world of the film, Bailey’s problem is caused by Potter stealing the bank deposit, not by any lending irregularities.
By the way, some sharp observers note that Potter is never punished for attempting to ruin George Bailey. That the rich get away with their perfidy is an unexpectedly realistic touch.
Not much of a risk when the government bails your ass out after you crap out while playing with other people’s money.
jcricket
Yes, someone with his fancy Harvard MBA seems to have forgotten that consumer spending is something like 70%+ of GDP. So basically all the lying, thieving, good-for-nothing, no-MBA shlubs (read: you and me) are the ones enabling the super-genius, only-there-because-of-talent, worth-every-million business executives to rake in an ever larger piece of the pie.
I don’t want us to actually turn into Sweden, or France, or Germany, but the level of power the workers have in those countries is something to be envied and copied, not feared and avoided. The average worker would benefit immensely if we stopped thinking that executives and corporate profits are all we need to “juice” and protect.
Oh, and the economies in most of those countries are just fine (same ups and downs as us, unemployment not as bad as you think, etc.).
jbarntt
Hi John,
Reading the article I found this in it:
The trick is to find a way to move some of the obligations for supplemental pensions into the plan that qualifies for tax breaks. Benefits consultants market sophisticated techniques to help companies do just that, without running afoul of IRS rules against favoring the highly paid.
In other words the practice simply takes advantage of our fine tax code, as written by our class of 2006 Democratic congress and regulated by the IRS. Note the part about “not running afoul of the IRS”.
Again, if you disagree with the tax code, perhaps you should contact Harry Reid or Nancy Pelosi. Not sure what Red State or Hot Air have to do with this. As to patriotism, if you think the tax code is too generous to you, do you then pay more than what the code requires ?
Anyway, why is it unpatriotic of Intel to follow the law and IRS regulations as best they understand them ?