Forget retirement worries: once a fat cat, always a fat cat. The top 100 chief executive are sitting on pension pots worth $4.9bn (£3.2bn) – equal to the total retirement savings of 116 million of the poorest Americans, according to a study released by the Institute of Policy Studies on Wednesday.
The average of the top 100 CEO retirement funds is $49.3m, enough to generate monthly retirement cheques of $277,686. The average monthly payment works out at 16 times the amount Barack Obama is due to receive when he leaves office.
According to the Government Accountability Office, nearly 29% of US households with members aged 55 or older have neither retirement savings nor a traditional pension plan.
But even the top 100 CEOs will be left feeling poor next to David Novak, executive chairman of Yum Brands, which owns the KFC, Taco Bell and Pizza Hut brands. According to the study, Novak has the largest nest egg: $234m, which will translate to monthly retirement payments of $1.3m for the rest of his life.
Most of the Yum’s 537,000 staff, who work part-time in 41,000 restaurants around the world, receive nothing from the company towards their retirement. Just 8,828 of its employees in the US have any money in a 401k, according to filings with the Department of Labor. Yum said it offers every company employee a 401k retirement savings plan that includes a 6% dollar-for-dollar match with no vesting period and low fees.
Novak’s pension pot comes on top of annual pay of $10.5m and benefits including $300,000 worth of private jet travel. Yum declined to comment on how many of its restaurant employees are paid the federal minimum wage of $7.25 an hour, but a large proportion are likely to be on the minimum or only a few dollars above it.
Under Novak, who recently moved to become executive chairman after 15 years as CEO, Yum has been a key player lobbying against Obama’s plan to increase the minimum wage. The proposal has fallen flat and is very unlikely to become law before the end of Obama’s tenure.
Solo Littlejohn, who works as a cook in a KFC in Cicero, Illinois, said it was “unfair” that Novak will collect so much money in retirement when hundreds of thousands of Yum employees don’t have enough money to adequately feed their children or heat their homes.
“It is a huge amount of money, and proves that they can afford to pay us $15 an hour,” said Littlejohn, who lives with his wife and three step-children. “I can’t imagine that much money. I don’t expect to make a huge amount, but I expect to be able to make a decent living wage to take care of my family.”
Littlejohn said he had no savings to speak of let alone a pension plan. “I don’t have healthcare or anything.”
A spokesman for Yum said Novak’s pension fund was so large because of the good performance of share award bonuses over his 29 years with the company. “He chose to defer the majority of his compensation in Yum stock as he believes in the long-term growth of the company, and this has been reported in the proxy every year,” the spokesman said. “During Novak’s leadership, Yum’s total shareholder return increased over 1100% compared to the S&P 500, which increased 190%.”
Much of the CEOs’ retirement money has been placed in accounts that allow far less tax to be paid than allowed in workers’ saving plans.
Sarah Anderson, one of the authors of the Institute for Policy Studies report said: “The CEO-worker retirement divide has turned our country’s already extreme income divide into an even wider economic chasm. And what few realize is that the trends of expanding CEO pensions and increasing worker retirement insecurity are inextricably linked.”
Michael Pryce-Jones, governance director of CtW Investment Group, an arm of Change to Win which campaigns for better corporate governance on behalf of workers, said: “Novak’s retirement package reflects a culture of entitlement that has little to no justification in promoting shareholder value while the gulf in the retirement security of rank and file employees exposes the company’s warped approach to human capital management.”
