The 100 largest CEO retirement accounts, worth a combined $4.9 billion, equal the total retirement account savings of 41% of American families, said a new report from the Center for Effective Government and the Institute for Policy Studies.
If converted to an annuity at age 65, CEO nest eggs, worth more than $49.3 million on average, would generate a $277,686 monthly retirement check for life, according to the report.
In contrast, nearly half of all working age Americans do not have access to a retirement plan at work. The median 401(k) balance was $18,433 at the end of 2013, enough to generate a $104 monthly retirement check for life, the report said.
“The CEOs' extraordinary nest eggs are not the result of extraordinary performance. … They are the result of rules intentionally tipped to reward those already on the highest rungs of the ladder,” said Scott Klinger, director of revenue and spending policies at the Center for Effective Government, in a news release.
Fortune 500 CEOs hold a total of $3.2 billion in special tax-deferred compensation accounts, which are not subject to the annual contribution limits imposed on other workers' 401(k) accounts. The report added that Fortune 500 CEOs saved $78 million on their 2014 taxes by putting $197 million more into their tax-deferred accounts than they could have if they were subject to the same rules as other workers.
To narrow the retirement divide, the Center for Effective Government and the Institute for Policy Studies propose ending unlimited tax-deferred compensation for CEOs, capping tax-deferred corporate-sponsored retirement accounts at $3 million and eliminating tax breaks for companies that have reduced their employees' retirement security, among other recommendations.
The report found in 2014, David Novak, then-CEO of Yum! Brands, had the largest account at $234 million. Mr. Novak moved to executive chairman from CEO in 2015.
Jonathan Blum, Yum! Brands' chief public affairs officer, said in an e-mail responding to a request for comment on Mr. Novak's compensation, “David Novak served as a senior executive with Yum and PepsiCo for 29 years, including 15 years as CEO. His deferred compensation was directly linked to the performance of the company and primarily consists of bonuses he earned and deferred into Yum stock, which appreciated 900% during his leadership. He chose to defer the majority of his compensation in Yum stock as he believes in the long-term growth of the company, and this has been reported in the proxy every year.
The report is available on the Center for Effective Government's website.
CEO retirement data were derived from SEC filings of publicly held Fortune 500 companies.
