Executives Enjoy Job and Retirement Security but Oppose Rights for Workers

Passage of the Employee Free Choice Act would level the playing field for workers seeking to join a union. Corporations, represented by groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers, vehemently oppose the Employee Free Choice Act. Corporations also are lobbying against the legislation through several front groups.

The Employee Free Choice Act, supported by a bipartisan coalition in Congress, would enable working people to bargain for better benefits, wages and working conditions by restoring workers’ freedom to choose for themselves whether to join a union. It would:

• Remove current obstacles to employees who want collective bargaining.
• Guarantee that workers who can choose collective bargaining are able to achieve a contract.
• Allow employees to form unions by signing cards authorizing union representation.

In addition to providing for higher wages, union contracts frequently boost job security, retirement and health care benefits. For example, 80 percent of union members receive health and retirement benefits compared with less than half of all nonunion workers.[1]

Corporate executives who oppose expanding workers’ rights through the Employee Free Choice Act do not stint on lavish benefits for themselves, raising the suspicion of self-dealing. Many top executives have written employment agreements. According to an academic study, 46 percent of CEOs at Standard & Poor's companies had an explicit employment agreement as of 2000.[2] In contrast, only some 14 percent of all workers have a written contract, in large part because of decades of union-busting and weak labor laws.[3]

Typical CEO Employment Agreements[4]

Even executives who do not have written employment agreements receive far more generous benefits than those negotiated by workers. They may receive “golden parachutes,” or lavish severance pay, enhanced health and welfare benefits and supplemental retirement plans.

Is there a double standard between corporate executives and workers? Consider the executive benefits at three corporations that oppose the Employee Free Choice Act.

Wal-Mart and the Employee Free Choice Act

Lee Scott Jr., who retired as president and chief executive of Wal-Mart Stores Inc. in early 2009, warned securities analysts at a meeting last fall that the passage of the Employee Free Choice Act would hurt the nation’s competitiveness for decades. “It'll be generations in the impact it has on this country. And it won't be positive, I guarantee you that. But for Wal-Mart, in the short term and in the long term on a relative basis with our peers, we’re going to run this business.”[5]

Wal-Mart mobilized thousands of store managers and department supervisors around the country in advance of the 2008 elections to warn against voting for Democrats who might support the Employee Free Choice Act.[6] At one such meeting, a human resources manager warned that if Democrats “get the votes they need and elect a Democratic president, they said it will be the first bill presented and that’s scary.”[7]

Wal-Mart’s Executive Employment Benefits

Job security: Wal-Mart has entered into “post-termination and non-competition agreements” with its top executives. These contracts offer Wal-Mart executives two years’ salary if they are terminated for any reason other than a violation of company policy.[8]

Retirement benefits: Wal-Mart executives participate in a nonqualified deferred compensation plan that allows them to defer up to 100 percent of their base salary and annual incentive awards. In 2008, Wal-Mart paid executives 7.36 percent interest rate on their account balances. Additionally, Wal-Mart credits these accounts with 20 percent of the executive’s deferrals plus interest after 10 years of contributions and an additional 10 percent after 15 years.[9]

Welfare benefits: Executives receive medical benefits, as well as life, accidental death and dismemberment insurance and a free annual executive physical examination.[10]

FedEx Corp. and the Employee Free Choice Act

Frederick Smith, chairman, president and chief of FedEx Corp., is outspoken in his opposition to the Employee Free Choice Act. “I think the opposition to card-check is so broad and so deep in American industry that all we can do is to say we do not think that is good public policy,” he told securities analysts in an earnings’ conference call last December. In particular, I think the mandatory arbitration provision would be very ill advised. We strongly oppose it but we are just one of many people in that regard.”[11]

FedEx threatened to cancel an order for billions of dollars of cargo planes if Congress passes legislation that would allow its workers to organize unions on a location-by-location basis under the National Labor Relations Act. FedEx is currently subject to the Railroad Labor Act, and only 4,700 out of 290,000 FedEx employees are unionized, compared with its 240,000 of the total 425,000 employees at UPS. FedEx’s competitor is subject to the National Labor Relations Act.[12] FedEx also argues that its FedEx Ground delivery drivers cannot unionize because they are independent contractors.[13]

FedEx’s Executive Employment Benefits

Job security: FedEx has entered into “management retention agreements” with its top executives. The agreements guarantee three years’ salary, incentive compensation and benefits if an executive is terminated without cause after a merger or acquisition.[14]

Retirement benefits: FedEx offers management a supplemental retirement plan on top of benefits capped by the Internal Revenue Code.[15] Additionally, stock options granted before June 1, 2006, will vest upon retirement, and restrictions on restricted stock held for six months lapse upon retirement at age 60.[16]

Welfare benefits: FedEx pays for comprehensive annual physical exams for its executives.[17] It also provides a $1.5 million life insurance policy and a supplemental long-term disability program to its executives.[18]

Bank of America Corp. and the Employee Free Choice Act

Three days after receiving $25 billion in federal bailout funds last fall, Bank of America Corp. hosted a conference call to encourage people to fight passage of the Employee Free Choice Act by contributing to candidates opposed to the legislation. The call was led by Bernie Marcus, co-founder of Home Depot, and Rick Berman, a longtime Washington, D.C., corporate lobbyist.[19] Ken Lewis, Bank of America’s top executive, does not hide his opposition to the legislation. “Doing what’s in the best interest of your company is always the best thing to do,” he replied to a lawmaker’s query about whether the Troubled Asset Relief Program (TARP) funds were used to lobby against the Employee Free Choice Act.[20]

On the call, Marcus described the Employee Free Choice Act as “the demise of a civilization.” He urged participants to influence the national elections by contributing millions of dollars to Berman’s anti-union organization, the Center for Union Facts.[21] The AFL-CIO and Change to Win have formally requested that the Internal Revenue Service investigate the Center for Union Facts and the Marcus Foundation for violating their tax-exempt status through their lobbying efforts in the call.[22]

Bank of America’s Executive Employment Benefits

Job security: Under the conditions of the TARP bailout funds, Bank of America is banned from paying severance benefits to senior executives until it repays the federal government. However, restricted stock and stock option grants may continue to vest if a departing executive complies with a non-compete agreement.[23]

Retirement benefits: Bank of America maintains a Pension Restoration Plan and a 401(k) Restoration Plan for senior executives to supplement benefits capped under tax-deferred plans by the Internal Revenue Code. Lewis and some senior executives also receive enhanced benefits through a frozen supplemental executive retirement plan and a deferred compensation plan.[24]

Welfare benefits: Bank of America executives receive group medical, group life and long-term disability coverage.[25] Meanwhile, the company opposes a shareholder resolution by the AFL-CIO that urges its board of directors to adopt health care reform principles for universal and affordable health care.[26]