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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

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WSJ: Exec Pensions
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Posted by: Jack Ciesielski 6/23/2006 5:35 AM
Interesting article on executive pension plans in this morning's Wall Street Journal by Ellen Schultz and Theo Francis.

The current investor outrage is about backdated stock options, making it easy to overlook the kinds of compensation quietly being accumulated in non-qualified pension plans. ("Non-qualified" meaning there's no tax benefit for prefunding the obligation, as would be in a "qualified" pension plan.)

Will the issues raised in the article resonate in quite the same way? After all, there's a commonality between the two issues in that the shareholders approve such plans, and then find out later the size of the check they signed. But it's doubtful that the executive pensions issue will resound the same way: there isn't the same element of the executives possessing better information about corporate prospects and translating that into a market advantage - or outright "shooting fish in a barrel" by selecting an option grant date that makes things work. Nope - this kind of benefit relates more to boring old compound interest, which doesn't generate nearly as much attention as stock market pseudo-wizardry.
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