Top 100 CEOs' Retirement Savings: $4.9 Billion

That's 116 Million Nest Eggs for the Average American

Top 100 CEOs' Retirement Savings: $4.9 Billion
January 25, 2016

It is no surprise that CEO salaries are far larger than that of the average worker. According to Glassdoor, the multiplier for CEOs of major firms compared to their median worker salaries in 2014 was 204-to-1. Four CEOs had multipliers of greater than 1,000 times the median worker salary.

For that reason alone, it should be no surprise that CEOs have larger retirement savings than average Americans. According to a recent report co-authored by the Center for Effective Government and the Institute for Policy Studies, the largest 100 of these retirement accounts in 2014 are worth a collective $4.93 billion. That is the equivalent of the collective retirement account savings of 41% of the families in America, or approximately 116 million individuals.

Averaged across the top 100 CEOs, $4.93 billion would result in a $277,686 monthly retirement check. To put that in perspective, a check of that size is 15 times the amount of the median total 401(k) account balance of the average American at the beginning of 2014. Most workers would be happy with a retirement nest egg that equals one monthly retirement check from the top 100 CEOs.

Who tops the retirement nest egg list?

In 2014, that was David Novak of YUM Brands, the corporate home of PepsiCo and fast food establishments Taco Bell and KFC, among others. His retirement account totals $234 million.

You may be wondering: since annual contributions to retirement programs are limited, how do CEOs get such large nest eggs? At the CEO level, there is an alternative that is not available to the average American. With elective deferred compensation, a CEO is able to defer a portion of their compensation to be received upon retirement. The deferred amount grows tax-free until retirement or disbursement, just as 401(k) plans do.

That sounds exactly like a 401(k) — so what is the difference in CEO retirement plans (otherwise known as supplemental executive retirement plans, or SERPs)? There are two major differences:

  • No Limits – CEOs are not limited in the amount of money that they can defer, unlike the average American. The argument is that the limitations of typical 401(k) accounts are so far below executive compensation levels that CEOs would not be able to maintain their current lifestyles in retirement.

While true, that argument does not get a lot of sympathy from most people. CEOs have many different types of investments and assets that could be assigned towards retirement. The main point is to gain the same tax advantage as a 401(k) account — very significant given the amount of tax-deferred growth with a much larger balance. Most people would probably understand the need for a higher upper limit for CEOs, but find limitless deferment to be too much.

  • No Account Segregation – These accounts are not segregated in a separate account like the average worker's 401(k), meaning that they are at risk if the company does poorly and can benefit if the company does well. Theoretically, that keeps the CEOs interests the same as that of shareholders, and it probably does in practice as well — although deferred compensation tends to go along with CEOs who are terminated, and that usually happens well before anything catastrophic like bankruptcy occurs.

The report lists proposals to shift the retirement balance away from CEOs and toward average working Americans, such as placing limits on tax-deferred compensation and capping CEO retirement accounts at $3 million. For more details, the report is available here.

These proposals may never come to pass, but at least starting the conversation about shifting the balance of retirement compensation is a good start. Average Americans could certainly use a boost in their 401(k) accounts.

Let the free MoneyTips Retirement Planner help you calculate when you can retire without jeopardizing your lifestyle.

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Steffanie | 01.25.16 @ 20:01
I think CEO's should have a better income, but not sure they should make that much.
Sarah | 01.25.16 @ 20:02
Talking is good.... seeing the corresponding action would be better. Capped at 3million... that is still mind boggling.
Carla | 01.25.16 @ 20:02
Oh my goodness! These CEOs will be having a very comfy retirement. That is a lotta money!
Erin | 01.25.16 @ 20:02
I wonder what they will do with all of that money? I mean, how much can you possibly spend in one lifetime? And yet there are people who are working 2 and 3 jobs and can't make ends meet. Shameful.
Brittany | 01.25.16 @ 20:03
CEO's incomes tend to be so ridiculous at times. It makes it really hard to like , let alone trust the corporate world.
trish | 01.25.16 @ 20:04
Wow, I guess it all makes sense that they are at a high income level, therefore have different options then the "regular guy" but the numbers are astounding.
Kailie | 01.25.16 @ 20:04
It really doesn't surprise me that with how much most CEO's make that their retirement funds would be high as well, $3m is still a LOT of money.
Ambar | 01.25.16 @ 20:07
Oh God! That's really unfair. I understand that everyone needs to have certain economic safety after they retire, but this is just too much. It seems that they're taking advantage of the rules. In the meantime, millions of retired average workers don't have enough to eat. Again, really unfair.
Nancy | 01.25.16 @ 20:08
Those are some crazy figures. This country certainly has their priorities messed up.
Bobbie | 01.25.16 @ 20:11
Amazing how much money they can make. And it kills me when one drives a company into the ground and gets fired, then hired at another company because they are buddies with someone.
test | 01.25.16 @ 21:10
Your statistic is pretty misleading. This means that the 116 million Americans have $42.50 saved for retirement on average. CEO's don't need to save less, other people just need to save more.
$commenter.renderDisplayableName() | 11.30.20 @ 02:30