General Electric announced Monday it would be freezing its pension plan for around 20,000 current employees, while offering to buy out around 100,000 former employees from their pension. USA Today reports that GE has said it will offer up “lump-sum payouts to former U.S. employees who have not yet begun receiving their pensions.” GE stopped allowing employees into the pension plan in 2012, moving toward self-directed retirement funds like 401(k)s. The company says that the 20,000 active employee pensions affected “won't accrue additional benefits nor make employee contributions after January 1, 2021.”
GE chief human resources officer Kevin Cox released a statement explaining that freezing pensions was one of the “hard decisions” necessary to return “GE to a position of strength.” Cox became the head of GE’s human resources in February 2019 and is reportedly worth somewhere in the vicinity of $39 million. Don’t worry: CBS News reports that at least 700 “executives” who began working at GE before 2012 will have their “supplemental pensions” frozen, too. Quick math, seven executives for every 200 employees? Seems about right.
General Electric has been one of the biggest beneficiaries of corporate tax welfare over the years. This was before the Republican-led Congress passed sweeping tax cuts for the rich. According to analysis reported on in The New York Times, GE received almost $15.5 billion in tax incentives between 2008 and 2016. However, the once-great giant of industry has been struggling with soaring debts, and paying top dollar to c-suite executives has not seemed to fix anything. Last year, GE brought in former Danaher Corp CEO Larry Culp to helm the struggling empire. He was rewarded with a stock-heavy compensation package worth hundreds of millions of dollars.
Culp’s top priority since coming to the company is to pay down the debt. The Wall Street Journal explains that GE’s pension fund, which has cost the company around $11 billion during the past two years, was still “underfunded by $27 billion as of the end of 2018” and remains a large financial liability. Culp has called 2019 a “reset year” for the company, and it’s an interesting position to be in.
Culp stands to raise his stock shares, meaning tens of millions of dollars in yearly compensation packages for him, while GE employees who have worked at the company no less than seven times as long as him get the short end of a stick that GE plans on breaking off and then pretending never existed.