Here is the outrage?
Retirement funds, both defined benefit and defined contribution, have been ripped off by senior corporate executives of high-flying companies that have come crashing down.
These senior executives were paid millions of dollars, sometimes hundreds of millions, in incentive compensation based on the growth of revenues and earnings of the companies. Now those revenues and earnings are seen to be largely fictional.
The prices of the stocks of the companies have collapsed, severely damaging the portfolios of pension and mutual funds that held them, yet so far these overpaid hucksters have held on to the wealth they grabbed.
The dishonesty and greed of these executives not only hurt the shareholders and employees of the companies they supposedly managed, but also it destroyed the trust of investors in virtually all publicly traded companies.
As a result, share prices across the board have plunged, dragging many defined benefit plans into an underfunded status, and setting back the retirement income accumulation of millions of participants in defined contribution plans.
And yet, while a number of public employee pension funds have launched law suits, there is no sign of outrage from the fiduciaries overseeing corporate defined benefit and defined contribution plans, and little from the money management community. Pension executives and money managers should be standing up and demanding action to correct the loopholes that allowed corporate executives to satisfy their inflated egos and gargantuan greed.
They should be demanding better policing from the Securities and Exchange Commission; better accounting rules from the rule-making bodies; better separation of investment bankers and security analysts.
They also should seek greater clout for compliance officers in securities firms; stronger punishment of corporate executives found to be breaking the rules; and stronger, more independent boards of directors.
The massive failure of corporate oversight by so many boards demands more aggressive corporate governance efforts by institutional investors of all kinds. Those leading the corporate governance movement kept their focus too narrow and were clearly too polite. Now the gloves must come off.
Until now corporate governance has been led by public employee funds with only limited participation by corporate funds and other institutional investors. Mutual fund managers have begun to step into the fray, but there is little sign of significant corporate pension executive involvement. That must change.
All pension executives must get involved - even members of boards who serve on pension committees. A first step should be to demand that those executives whose huge compensation packages were based on inflated revenues and earnings return the money to the companies because they didn't truly earn it. They really got it by fraud.