Author Topic: Is "obligation" really the right word? (Read 539 times)

FUNKED1 · « **Reply #15 on:** July 02, 2005, 04:02:39 PM »

Anybody ever bother to do the math on whether reducing CEO salary would make even the tiniest dent in pension expenses?

Toad · « **Reply #16 on:** July 02, 2005, 04:24:32 PM »

Quote

For Chuck Starcher, a mechanic at Delta airlines, the bad news came in a letter, estimating just how much the airline plans to cut his pension every month: right off the top, the company is slashing $1,100.

As CBS News Correspondent Wyatt Andrews reports, he's not happy, because Delta is cutting the pensions of workers while guaranteeing full pensions for top executives. A year and a half ago, Delta quietly committed $65 million for executive pensions, including one for CEO Leo Mullin. The benefit is called an executive trust; Starcher calls it a raid.

"Where's he getting the cash to put into that pension plan he's going to have guaranteed?" asks Starcher. "It's definitely coming from us."

http://www.cbsnews.com/stories/2003/07/17/eveningnews/ends/main563771.shtml

Would $65 million solve the pension crisis? No. Delta is ~$5 Billion underfunded.

Would the $65 million address the fairness issue? Yeah, it would help. It'd help the CEO image, that's for sure.

Simaril · « **Reply #17 on:** July 02, 2005, 09:40:41 PM »

Part of the problem stems from a generous corporate bankrupcy law, which I understand lets companies "restructuring" include everything from outstanding debt to labor contracts and pension obligations. Once those costs are "controlled", the comapany can emerge from bankrupcy -- which seems fair enough, but which then gives them a competitive advantage over companies which havent been released from previous obligations.

That in turn pushes the previously healthy companies into price wars that they cant win, and thence into.... bankrupcy.

And each time the cycle gets run, the giovernment becomes the payor of last resort for pensions, and once again the taxpayers at large foot the bill. WE pay for the competitive cycle, on April 15th instead of at the cash register.

Toad · « **Reply #18 on:** July 02, 2005, 09:57:36 PM »

Pretty much the story of the airlines.

I remember when Delta/Eastern was a major competitive thing amongst the pilots on both sides. It was like the State football championship, hard fought with intent to win.

When EAL went bankrupt, while we were sorry for our fellow pilots...heck, my brother was one of them.... we felt we HAD won (although it was their poor management more than our competition that turned the tide) and that the fruits of victory would be ours.

No so. They lingered on and on, reviving and failing and the fare wars seriously damaged us. Damage that is now part of the cause of a failing Delta.

Maverick · « **Reply #19 on:** July 03, 2005, 01:05:27 PM »

My short answer to the obligation term question is yes it is the appropriate word.
The employees came on with a contractual "obligation" to work in a specific manner for specific number of hours per day / week / year / years for a given specified pension plan. The employer is "obligated" to provide a safe (as possible) environment, wage, benefits and funded pension as per the contract existing between the employer and employee.

Simply put, a contract has at it's core an obligation(s) on each party in the contract.

Urchin · « **Reply #20 on:** July 03, 2005, 06:33:14 PM »

Except that in a capitalist society the "capital" has no obligation, and the workers plenty.

Toad... if I were your brother I'd be grateful to the PBGC... you want to know what is monthly salary after eons of service and the retired rank of Captain would be without it? $0 monthly.

Toad · « **Reply #21 on:** July 03, 2005, 06:44:00 PM »

The PBGC really isn't the point Urchin.

The point is what Mav said.

Quote

The employees came on with a contractual "obligation" to work in a specific manner for specific number of hours per day / week / year / years for a given specified pension plan.

In negotiations "trades" are made. For example, and this is an accurate one, EAL gave up competitive pay with other airlines for improvements in the pension plan. So for maybe 5 years they made less than other pilots at other airlines because they gave up "present pay" for better "retirement pay".

Now, had all "retirement" pay been vested in the employees own name, Lorenzo would not have been able to raid the pension funds and take that money. My brother would have been able to "take his pension with him" to Trump and then US Air.

And when US Air went bankrupt, he'd still have what he earned in his pension fund in his own name and the PBGC wouldn't be in it at all.