Printable Version
Friday Alert
Thursday, March 20, 2008
(Alliance for Retired Americans)
Retirement
Security of Bear Stearns Employees Up in the
Air
Sunday’s sale of Bear Stearns,
the nation’s fifth largest investment bank,
to J.P. Morgan Chase for $2 per share has not
only shaken financial markets, but also left
the retirement of many of the company’s
14,000 employees up in the air. According
to The New
York Times, Bear Stearns employees own
approximately 30% of the firm. As many as
one third could lose their jobs if the purchase
is approved, and many have little retirement
investments outside of company stock. Shares of
Bear Stearns traded at $132 last fall, and the
$2 offered by J.P. Morgan represented less than
one-tenth of their value on Friday. Many
employees are now hoping to ruin the deal in
order to sell their stock at a higher
price. Former CEO James E.
Cayne, who was paid more than $232
million between 1993 and 2006, is expected to
receive around $13.4 million in the deal.
“Loyal employees who gave decades of their
lives to this company are about to walk away
with nothing,” said George J. Kourpias, President of
the Alliance. “Corporate executives
must be held accountable and subject to the
same pension deals and retirement benefits as
their employees.”
Pfizer Executives
Rake in $56.8 Million for
Retirement
While pharmaceutical
companies have recently sought to justify
rising drug prices by claiming an industry-wide
decline, two Pfizer executives also retired in
2007 with sweet deals - a combined $56.8
million in compensation. Research Chief
John
LaMattina left the company with a
departure package worth $22.6 million, which
included $3.3 million in severance pay, $13.5
million through a Pfizer retirement plan, and
$5.3 million as a “pension
enhancement.” Former CFO and Vice
Chairman David
Shedlarz retired with $34.2 million in
compensation, largely invested in the Pfizer
plan. Company CEO Jeff Kindler,
who remains in place, received $9.5 million as
part of his regular package. “These
golden parachutes are paid for on the backs of
seniors struggling to afford their
medicines. I am appalled at the unchecked
power and greed of these companies,” said
Edward
Coyle, Executive Director of the
Alliance.
Plans for New Votes in Florida and
Michigan “Dead” and “All But Dead”
Senator Hillary Rodham
Clinton’s hopes of ending the
Democratic presidential primaries with dramatic
victories in Florida and Michigan grew dim this
week, as Florida officially scuttled plans for
a new vote and Michigan lawmakers appeared far
from a deal. The Washington Post reported
that Florida Democrats on Monday had declared
dead their plans to hold a do-over presidential
primary to settle the dispute over whether
their delegation to the national convention in
Denver will be seated. Karen
Thurman, Democratic Party chair in
Florida, announced the decision, saying
thousands of people had responded negatively to
her proposal for a vote-by-mail primary in
early June. That leaves the fate of the
state's delegation in the hands of the
Democratic National Committee and the campaigns
of Sens. Clinton, who captured the most votes
when Florida held a primary on Jan. 29, and
Obama. Similarly, Michigan
State Senate Democrats emerged from a
closed-door caucus on Tuesday morning and
proclaimed that an idea floated by top Michigan
Democrats to create a special June 3 primary
election is all but dead. The Michigan
Legislature, which would vote on approving a
new election, is deeply torn because of cost,
legal questions and logistical
difficulties. Some party officials voiced
guarded hope that a deal could be reached
before the week ends, when lawmakers start a
two-week recess. Florida and Michigan
were stripped of their delegates for violating
party rules when they held their contests in
January.
Workers Raid Their 401(k) Accounts in
Effort to Stem
Foreclosures
Struggling to save their
homes from foreclosure, more Americans are
raiding their 401(k) retirement accounts to pay
their bills — and getting slammed with taxes
and penalties in the process, according to
retirement plan administrators. Rather
than borrow money from their 401(k) accounts,
which would have to be paid back, a growing
number of beleaguered families have been
cashing out. According to USA Today,
new figures from plan administrators show the
number of 401(k) "hardship withdrawals" is up
in early 2008 compared with the same period
last year. During the first month of the
year, as the economic slowdown tightened
pressure on mortgage holders, hardship
withdrawals rose 23% at plans that Merrill
Lynch administers, compared with the same
period in 2007. Merrill Lynch found that
the primary reason for the rise in hardship
withdrawals was to prevent foreclosure or
eviction. Likewise, in the first month of
the year, compared with January 2007,
Great-West Retirement Services saw a 20%
increase in hardship withdrawals to save a
home. For workers, the consequences of
raiding a 401(k) plan can be severe.
About 85% of employers bar employees from
making contributions for six months after
taking a hardship withdrawal. Worse,
employees who pull money out of tax-deferred
401(k) plans before age 59 1/2 generally must
pay a 10% penalty on top of the taxes
owed. “The repercussions of the housing
crisis are all around us, including in depleted
401(k) plans,” said Ruben Burks, Secretary-Treasurer
of the Alliance.
Western Regional
Conference is This Monday
Starting in
just four days – March 24-26 – the Alliance
will hold its first regional conference of 2008
in Las Vegas, NV. Featuring speakers such
as U.S. Rep. Shelley Berkley (NV-01), the
Western Regional Conference will provide a
forum for activists to work together and
prepare for November’s Presidential
election. Attendees will learn how to get
seniors and other retirees registered and
voting, increase grassroots advocacy and
educate federal, state and local legislators on
issues like Medicare, Social Security,
prescription drugs, and retirement
security. Locations and dates for later
conferences are: Northeastern Regional
Conference, April 17-18, 2008 in Philadelphia,
PA; Midwestern Regional Conference, April
28-29, 2008 in St. Louis, MO; and Southern
Regional Conference, June 4-5, 2008 in Orlando,
FL. For copies of the official
registration form for any of the four regional
conferences, call 1-888-373-6497, email Joni Jones at
jjones@retiredamericans.org,
or visit our website at www.retiredamericans.org.
Did You
Know…
Wholesale prices for the
top-selling 50 brand-name medications rose by
about 6% in 2005, 7% in 2006, and 8% in 2007
(Los Angeles
Times).
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