House Education and Labor Committee Chairman George Miller said he is considering drafting legislation that would freeze executive compensation at companies with significantly underfunded defined benefit pension plans.
He spoke Nov. 19 after the release of a Government Accountability Office study that found that 40 executives at 10 corporations had received a total of at least $350 million in compensation during the five years leading up to the termination of their pension plans for workers. The GAO report, which did not identify the companies studied, had been requested by Mr. Miller, D-Calif.
Ohio sues 3 agencies over ratings on MBS
Ohio is suing credit-rating agencies Standard & Poor's, Moody's and Fitch over inaccurate ratings on mortgage-backed securities that helped spur the credit crisis, Ohio Attorney General Richard Cordray said Nov. 20.
Mr. Cordray said total losses to five Ohio pension funds — the $58.2 billion Ohio Public Employees Retirement System, the $62.9 billion Ohio State Teachers Retirement System, the $10 billion Ohio Police & Fire Pension Fund, the $9.07 billion Ohio School Employees Retirement System and the $7.1 billion Ohio Public Employees Deferred Compensation Program — could be more than $457 million.
The move follows a similar lawsuit filed in July by the $202 billion California Public Employees' Retirement System, Sacramento.
Mr. Cordray said the ratings agencies are culpable because public statements from ratings agency analysts and executives show that the agencies knew the ratings were inaccurate.
Frank Briamonte, a spokesman for the McGraw Hill Cos., parent of Standard & Poor's, said in an interview that his company believes the lawsuit has “no legal or factual merit.” “It's also important to note that a recent SEC examination of our business practices found no evidence that decisions about ratings, methodologies or models were based on attracting or losing market share,” Mr. Briamonte said.
Michael Adler, a Moody's spokesman, also said the lawsuit is without merit. “Our ratings were and continue to be based on clearly defined and publicly available methodologies,” he said in an interview. “It's unfortunate that the state attorney general, rather than engaging in an objective review and a constructive dialogue regarding credit ratings, instead appears to be seeking new scapegoats for investment losses incurred during an unprecedented global market disruption.”
Fitch spokesman Kevin Duignan said the company has not officially received notice of the lawsuit and could not comment.
3 companies reveal pension contribution plans in filings
Three companies — Bristol-Myers Squibb Co., International Paper Co. and Rockwell Automation Inc. — discussed pension contributions in their latest company filings.
Bristol-Myers Squibb, New York, plans to contribute $7 million to its $4.1 billion U.S. defined benefit plans by the end of the year, according to its 10-Q filing.
The company expects to contribute a total of about $650 million, including a $400 million contribution in January. Its 2008 U.S. plan contributions totaled $250 million.
Contributions this year to the company's international plans are expected to range from $120 million to $140 million, of which $70 million was contributed in the nine months ended Sept. 30, according to the filing. Brian Henry, spokesman, said the contributions were made in cash.
Officials at International Paper could “elect” to make a discretionary contribution to IP's $6.7 billion U.S. pension plans in the next year, even though they have no obligation to do it, the company's quarterly SEC filing shows.
In the filing, the company said its U.S. non-qualified plans are only funded to the extent of benefits paid, which are expected to total approximately $40 million this year. The company did not contribute to its defined benefit plans in 2008.
Milwaukee-based Rockwell Automation contributed $28.8 million to its pension plan for the year ended Sept. 30, according to a company report issued in November. The company contributed $39.2 million the previous year; it had $2.2 billion in defined benefit plan assets and $2.8 billion in liabilities as of Sept. 30.
New Mexico council releases subpoenas
The $12.8 billion New Mexico State Investment Council, Santa Fe, has received separate subpoenas from the U.S. Justice Department, a federal grand jury and the SEC for documents pertaining to its relationship with Aldus Equity, the council's private equity consultant until it was terminated in April.
The council, which released copies of the subpoenas Nov. 17, has yet to respond to the requests for documents, Charles Wollmann, wrote in an e-mail response to questions.
“There are literally tens of millions of pages of responsive documents. We are working with investigators to prioritize, and provide them with everything they want to see,” Mr. Wollmann wrote.
The requests are part of pay-to-play investigations involving placement agents, third-party marketers and public pension plans, including the New Mexico council.
The grand jury is requesting all e-mails of Gary Bland, the state's former investment officer, since Jan. 1, 2003. The U.S. Department of Justice's requests include a list of contracts between the council and its money managers and any documents listing placement agents.
The SEC is seeking documents relating to the selection and retention of Aldus and communications between third-party marketing firms Ajax Investments, Crosscore Management and SDN Advisors and Marc Correra, the son of Anthony Correra, who worked on New Mexico Gov. Bill Richardson's transition team when he took office. The SEC is also seeking communications between the council and Anthony Correra.
Mr. Bland resigned as state investment officer on Oct. 21, the day before the council was to vote on a no-confidence motion on him. On Oct. 6, Aldus founder Saul Meyer pleaded guilty to fraud charges brought by New York Attorney General Andrew Cuomo concerning a pay-to-play probe of the $126 billion New York State Common Retirement Fund, Albany.