Executives Preach 401(k) Plans But Keep Pensions For Themselves

The gap in the U.S. workplace between the highest and lowest paid has been growing for years. Far less noticed has been the growing gulf in retirement pay.

While the very top often continue to receive executive pensions as well as other benefits, most workers are left only with their 401(k) plans.

CEO compensation at large U.S. companies was 204 times higher than the pay of workers on average in 2013, up 20 percent since 2009, according to data compiled by Bloomberg. And the retirement benefits divide “perpetuates income inequality into old age,” said Paul Hodgson, a corporate governance consultant who has researched executive compensation.

Some industries illustrate this trend more starkly than others. Big retailing chains, with their armies of lower-paid floor workers and their elite executive ranks, can be especially emblematic of the retirement gap.

Gregg Steinhafel, who stepped down as chief executive officer of Target Corp. in May following a massive credit-card data breach, received retirement plans worth more than $47 million. When he joined Target in 1979, the Minneapolis-based company offered generous retirement programs -- so generous for executives that it included a deferred compensation plan that paid a guaranteed 12 percent interest.

That’s quite a contrast with the average Target employees’ retirement plans. Steinhafel’s total package is 1,044 times the average balance of $45,000 that workers have saved in the company’s 401(k) plan.

Steinhafel’s Package

Steinhafel’s package included $27.7 million from a combined pension plan for top executives and a deferred compensation plan, according to proxy filings. He was also paid $9.8 million from an earlier deferred compensation plan, as well as an additional $9.9 million in interest payments on that sum.

In addition, Steinhafel, a 35-year Target employee, got a $7.2 million cash severance payment and $4.1 million from vested stock awards when he left at age 59. This was on top of the more than $20 million in cash salary and bonus he earned over the prior five years and $56.4 million in realized equity gains over the same period, according to company filings.