CEO Pension Benefits: Bigger Than the Pay Advantage?

Source: Carol Hymowitz, Margaret Collins, Bloomberg Businessweek, January 8, 2015

For many new retirees, the biggest worry isn’t about how they’ll keep themselves busy after years of the 9-to-5 grind. It’s whether they’ll have enough money to get by during their golden years. Not so for Gregg Steinhafel, who stepped down as chief executive officer of Target last May following a massive credit card data breach. The 35-year veteran of the retailer received retirement plans valued at more than $47 million—1,044 times the average balance of $45,000 that workers have saved in the company’s 401(k) plan.

That’s far different from the experience of Ron Pierce, who worked from 2007 to 2012 at the retailer’s distribution center in Stuarts Draft, Va. At the time of his departure, he had $32,000 in his 401(k) account, which had been bolstered by Target’s 100 percent match of workers’ contributions up to 5 percent of their pay. Pierce also left the retailer with a one-time payout of about $4,600 from a pension, which the company ended for new employees in 2008. …

For years, public attention has been fixed on the rising gap in the U.S. between the highest- and lowest-paid workers. Less noticed has been the gulf in retirement savings, which has grown along with executive compensation. Most workers are left only with their 401(k) plans when they leave the workforce, but top managers often receive far more lucrative executive pensions….