Benefits August 12, 2004

Pension Fund Limits Board Member Travel

August 12, 2004 (PLANSPONSOR.com) - Marin County, California's pension board has voted to limit executive travel to one out-of-state trip a year; five trips overall.
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The board voted 7 to 2 this week to limit the travel after a two-hour debate. Last year, board members spent a total of $53,333 attending 43 financial conferences across the nation and in California, according to a report in the (Marin County) Independent Journal.

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Previously, the Marin County Employees Retirement Association board had an unlimited travel policy, but some board members in recent months expressed concern the policy was too open-ended.

“I like to see a balance, but education and training is necessary to do this job,” said Allen Haim , an alternate board member who served yesterday in the absence of board member Joseph Coffrini . “The amount of work and knowledge needed to sit in on decisions managing a $1 billion pension fund is formidable.”

Seconding that notion was board member Milbrey “Casey” Jones, who voted against the new policy because he said he did not support any travel restrictions. Jones asserted the $53,000 travel tab was an expense at the “low end” of spending compared with other counties.

“I think we need more (financial) education going forward, not less,” said Jones. “I hate seeing a cap placed on the board.”

The limitation does have its gray areas. For example, board members will be granted paid travel to statewide financial association “roundtable” and committee meetings. Other trips may also be allowed with a public vote of the board.

Questionable Conduct

Marin County may have taken its cue to limit pension board member travel after questionable expense have landed fellow pension fund executives in hot water. Earlier this month, Bruce Kallos, the executive director of the $1.1 billion Arlington (Virginia) County Employees’ Supplemental Retirement System, resigned after a county audit found questionable expenditures in his expense reports, including trips to the Bellagio Hotel and Casino in Las Vegas and other luxury resorts. All told, these alleged expenditures totaled an estimated $10,000 (SeeArlington County Pension Administrator Resigns).

Prior to the Arlington Country debacle,Herb Dyer, former executive director ofthe Ohio State Teachers Retirement System (STRS),resigned last August in the face of heavy criticism over spending of millions of dollars on travel, bonuses and artwork at the same time that assets plunged (See Dyer Steps Down From Ohio STRS Post ).

Administration August 11, 2004

Delta Unveils Non-Qual Options Program

November 8, 2004 (PLANSPONSOR.com) - The beleaguered Delta Air Lines announced on Monday that its business organization plan will include a non-qualified employee stock-option incentive program for approximately 57,000 workers.
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The company’s Web site  statement said the grant – which will exclude officers and directors – will be options to purchase a total of 63 million shares of common stock, subject to New York Stock Exchange (NYSE)   approval.

According to the company, the exercise price of the stock options would be equal to the closing price of the common stock on the NYSE on the date of the grant. The options would become exercisable in three equal installments on the first, second and third anniversaries of the grant date, and unexercised stock options would expire at the close of business on the sixth anniversary of the grant date, the company said.

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Monday’s announcement of the non-qual options program comes shortly after the company and its pilot union reached an agreement that will provide the company with $1 billion in annual cost savings.

The agreement   includes:

  • a 32.5% pay cut on December 1, 2004
  • benefit changes such as a 16%-reduction in vacation pay, increased cost sharing for active pilot and retiree medical benefits, the amendment of the defined benefit pension plan to stop service accrual as of December 31, 2004, and the establishment of a defined contribution pension plan as of January 1, 2005.

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