US executive pensions reportedly on the rise

The value of top executives's pensions rose an average of 19 per cent last year even as their companies' share prices dropped, The Wall Street Journal reported yesterday.

Over 200 executives saw pensions jump over 50 per cent. The spike, the Journal said, was due in part to "generous" pension formulas based on executive pay and to "arcane" techniques that trigger the increases.

Executive pensions grew even though the share prices at the firms dropped an average of 37 per cent in 2008, while many companies froze employee pensions and suspended contributions to retirement plans, noted the newspaper.

Its analysis was based on two years of disclosures from 340 of the Standard & Poor's 500-stock index.

The journal cited as an example pharmaceutical company Merck & Co. chief executive officer Richard Clark, who saw the value of his pension jump from $11.9 million to $21.7 million, thanks in part to a six-million rise in the portion of his compensation used to calculate his pension.

By including "certain incentive payments" in the compensation used to calculate its CEO's pension, oil giant ConocoPhillips boosted Jim Mulva's pension by $9.5 million dollars to reach $68.2 million.

Exxon Mobil chief executive officer Rex Tillerson's $4 million bonus helped bring his pension from $23 million to $30 million, because the company uses the top three bonuses in the five years prior to retirement to calculate executive pensions.

After Constellation Energy Group Inc. obtained record results in 2007 and awarded chairman and CEO Mayo Shattuck an additional two years of service, his pension grew by 45 per cent - $10.3 million.

Gas and electric company PG&E Corp. awarded its chief executive officer, Peter Darbee, another five years of service in 2008, which helped fuel a 38 per cent increase in his pension, from $3.8 million to $5.2 million.