3M is an American manufacturing giant, and like most others, it is cutting retirement benefits for its workers while fattening benefits for the people in its executive suite. The company announced that it is freezing the company pension plan for nonunionized workers in favor of a 401(k).
Therefore, workers will keep the benefits they have gotten so far, but new contributions will end in 2028. Unsurprisingly, this will not affect the company’s chair and chief executive, Mike Roman. According to several reports and company documents, Roman’s pension is flourishing.
In fact, the 63-year-old received a staggering $19.3 million boost to his company pension. This includes a $3 million gain in 2021, $7.7 million in 2020, $5.6 million in 2019 and $3 million in 2018. Put together, the present value of his pension is $25.8 million.
According to immediateannuities.com, this guaranteed Roman a monthly lifetime income of $165,000! Moreover, this only quantifies some of his accumulated income over the years. Since becoming CEO in 2018, the company has paid him $65 million in cash, stock, options, and other benefits.
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Furthermore, this amount does not include the 2023 fiscal year pay or pension benefits. The company would disclose those later in spring. Looking at the discrepancy between the CEO’s earnings and pension compared to the other workers, it is clear that there is a significant difference.
Moreover, Roman’s tenure as CEO is not a lot to write home about. In his nearly six years in power, his company’s stock has been reducing significantly. They underperformed compared to their peers, thereby reducing their clients’ investment returns.
To put into perspective, if you invested $10,000 in 3M on the day Roman took over, then held onto the stock and reinvested all dividends, today you would be sitting on about $7,000. That’s a big decline of about $3,000. Also, the $7k value is ignoring taxes.
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However, if you invested that $10,000 in the SPDR Dow Jones Industrial Average exchange-traded fund, which tracks the Dow, you’d have roughly $17,400. That’s an increase of $7,400 and a significant ROI. If you’d invested in the S&P 500, you would have more than $19,000.
Clearly, Roman’s tenure has not been very beneficial to the company over the years. Therefore, it is understandable to see workers angry about the pension plans. Several news outlets contacted the 3M to speak on the issue.
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However, they declined to comment on the CEO’s compensation. Regarding the pension plan, the company says the latest announcement will only affect 9,000 of its more than 32,000 non-unionized workers in the U.S. This is still a major number as it affects the lives of 9,000 people.
A spokesperson responded to MarketWatch by email, explaining its recent move. “By moving to a 401(k) retirement plan structure, the company is focused on providing employees with more flexibility and control when it comes to investing in their future,” she wrote.
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