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By Carol Hymowitz and Margaret Collins
Jan. 5 — 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.
Although 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.
Gregg Steinhafel, who stepped down as chief executive officer of Target Corp. in May after 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 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, received 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.
Target said its directors have changed executive compensation programs to better reflect the retailer's commitment to pay for performance and that Steinhafel was the last top executive eligible for the deferred compensation plan that paid 12 percent interest.
To contact the editor responsible for this story: Rick Schine at firstname.lastname@example.org
©2015 Bloomberg L.P. All rights reserved. Used with permission.
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