The top 100 U.S. CEOs have as much in their retirement accounts as more than 50 million American families combined, a recent analysis shows.
At a time when over half of older American households have little if any retirement savings, the top 100 U.S. CEOs have company-sponsored retirement accounts worth a combined $4.9 billion, shows a recent analysis by the Center for Effective Government and the Institute for Policy Studies.
That $4.9 billion is equal to the collective retirement savings of over 50 million U.S. families, the report found.
The average CEO retirement account is valued at $43 million, an amount large enough to cover monthly retirement checks of $277,686.
By contrast, the median 401(k) account balance was $18,433 at the end of 2013, which translates into a monthly retirement check of $104. Among U.S. households headed by someone aged 55 or older, 29 percent have no pension plan or retirement savings in a 401(k) or Individual Retirement Account (IRA).
"The lavish retirement packages for executives and growing retirement insecurity for the rest of us are inextricably linked," the report reads. "The rules now in place create powerful incentives to slash worker retirement benefits as a way of boosting corporate profits and stock prices. And since more than half of executive compensation is tied to the company's stock price, every dollar not spent on employee retirement security is money in the CEO's pocket."
David Novak, former CEO and current executive chairman of Yum Brands (owner of Taco Bell, KFC and Pizza Hut), has the largest retirement fund, which was worth $243 million at the end of 2014.
Novak's $243 million in retirement assets is enough to generate monthly retirement checks of $1.3 million, according to the research.
Yum employs some 537,000 employees worldwide. Nearly 9,000 of its U.S. workers had 401(k)s with an account balance at the start of 2015, the report showed. The average balance was $70,167, which works out to be a monthly retirement check of $395.
The company said it offers its U.S. employees a 401(k) plan that includes a 6 percent dollar-for-dollar match with no vesting period and low fees.
Novak, meanwhile, has been with the company for 29 years, a Yum spokesman said.
"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 percent during his leadership," said Yum spokesman Jonathan Blum. "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. During Novak's leadership, Yum's Total Shareholder Return (TSR) increased over 1,100 percent compared to the S&P 500, which increased 190 percent."
Many CEOs have retirement assets in special tax-deferred compensation accounts, which unlike ordinary 401(k)s have no annual limits on how much tax-free income can be invested. Money can grow tax-free in the accounts until funds are withdrawn.
According to the analysis, 341 Fortune 500 CEOs had $3.2 billion in retirement money in deferred compensation accounts at the start of this year.
Report co-author Scott Klinger with the Center for Effective Government stressed that the "extraordinary nest eggs" of the top CEOs "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," he stressed.
The authors say there should be limits on tax-deferred compensation for chief executives.
"Corporate executives should be subject to the same rules that govern the retirement assets of the people they employ," the report reads. "At present older workers may set aside a maximum of $24,000 in their corporate 401(k) accounts; younger workers, $18,000. The same limits should apply to CEOs."