Executive Excess: Final CEO Pay Numbers Reveal Jaw-Dropping Retirement Packages

The final data are in on 2005 CEO pay and benefits—and it looks like the 21st century Gilded Age for Corporate Titans, according to Daniel Pedrotty from the AFL-CIO Office of Investment, who reports that the numbers stack up big time for U.S. CEOs.

The final 2005 CEO compensation numbers are in, and the results are truly jaw-dropping. Leading the pack is Exxon Mobil Corp. CEO Lee Raymond, who stands to collect more than $8 million a year in retirement. According to The New York Times, Raymond collected more than $686 million from 1993 to 2005 ($144,573 for each day he headed the company). 

But wait—Raymond’s retirement package is even more outrageous because of all the biggest U.S. corporations, ExxonMobil has the largest funding deficit in its employee pension, according to BusinessWeek. ExxonMobil’s assets are $11.2 billion short of its projected obligations, according to company figures as of Dec. 31. ExxonMobil, with $27 billion in its coffers, could write a check for its underfunding this afternoon. Meanwhile,  Raymond’s total compensation package was short just $49 million.

ExxonMobil could top off the tank for its employees but chooses not to. Nor does the company seem to care that its CEO gets the cushiest retirement while its employee pension plan is the most underfunded. Says media relations adviser Dave Gardner on ExxonMobil’s decision not to fully fund its employee pensions: 

We basically chose not to. That’s not an investment we want to put more into at this point. 

ExxonMobil isn’t alone among companies that put golden CEO retirements before their workers’ retirement well-being. As companies freeze or eliminate pensions for workers, their executives are building up even bigger pensions, causing their financial obligations to balloon. Among the top 25 companies in the AFL-CIO PayWatch, executive pension obligations include $3.5 billion at General Electric Co., $1.8 billion at AT&T, $1.3 billion at IBM and ExxonMobil and $1.1 billion at Pfizer Inc. and Bank of America, according to The Wall Street Journal. 

Ballooning executive pensions reflect the larger trend of runaway CEO pay. While the typical CEO made 42 times the average worker’s pay in 1980, that number rose to 85 times in 1990 and a whopping 431 times in 2004. In 2005, the average CEO of a Standard & Poor’s 500 company received $11.75 million in total compensation. This represents a 3.66 percent increase in CEO pay over 2004.

Private-sector pensions typically replace between 20 percent and 35 percent of the salary of most employees, while executive pensions replace 60 percent to 100 percent of compensation. In percentage of pay replaced, Pfizer Chairman and CEO Hank McKinnel does best of all. His $6.5 million a year pension will replace 100 percent of his current salary and bonus. Despite the security of his own pension, McKinnel led President George W. Bush’s effort to privatize Social Security last year on behalf of the Business Roundtable. 

Social Security provides America’s working families a guaranteed annual retirement benefit for life. Nearly two-thirds of America’s retirees count on Social Security for most of their retirement income. Members of the Business Roundtable, the exclusive club for the top CEOs of America’s biggest companies, think this promise should be ended.

But first, they are making sure they’re more than sitting pretty when they retire.

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