Strategic CSR - Pensions

The article in the url below discusses one of the consequences in the U.S. of failing to provide citizens with access to universal healthcare (and preventative medicine, nutrition advice, healthy food, etc., etc.):

 

"Steady improvements in American life expectancy have stalled, and more Americans are dying at younger ages. But for companies straining under the burden of their pension obligations, the distressing trend could have a grim upside: If people don't end up living as long as they were projected to just a few years ago, their employers ultimately won't have to pay them as much in pension and other lifelong retirement benefits."

 

If this trend continues, corporations will be saved from the inept decision-making of executives over decades regarding company pension plans. Rather than having to correct those mistakes that have led to woefully under-funded plans with insufficient resources to pay commitments made, perhaps the amount of money they need to set aside will fall to match the lower life expectancies of plan participants:

 

"In 2015, the American death rate—the age-adjusted share of Americans dying—rose slightly for the first time since 1999. And over the last two years, at least 12 large companies, from Verizon to General Motors, have said recent slips in mortality improvement have led them to reduce their estimates for how much they could owe retirees by upward of a combined $9.7 billion, according to a Bloomberg analysis of company filings. 'Revised assumptions indicating a shortened longevity,' for instance, led Lockheed Martin to adjust its estimated retirement obligations downward by a total of about $1.6 billion for 2015 and 2016, it said in its most recent  annual report."

 

Note the reference to "shortened longevity," which is the polite way of saying our employees are dying earlier. I wonder if that has anything to do with the way they were treated during their working lives?

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

 

 

Americans Are Dying Younger, Saving Corporations Billions

By John Tozzi

August 8, 2017

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2017-08-08/americans-are-dying-younger-saving-corporations-billions

 

Strategic CSR - CEOs and ethics

Maybe someone can explain the story covered in the article in the url below to me in simple terms, because, on the face of it, it makes no sense:

“Lockheed Martin Corp. ousted its incoming chief executive, Christopher Kubasik, for having a ‘close personal relationship’ with a subordinate at the defense contractor. The company said Mr. Kubasik was asked to resign Friday after an investigation determined the ‘improper conduct’ violated Lockheed Martin's code of ethics. He will receive a $3.5 million separation payment.”

I understand that CEO tenure is decreasing and that, having worked their way to the top, CEOs need contractual safeguards in case they lose the position through some factor (more or less) beyond their control. But, how is it that when an individual breaks the firm’s ethics code through personal choice, conducting himself in a way that damages the firm’s reputation, and is forced to resign as a result (i.e., he is fired), he receives a payout of $3.5 million, even before he becomes CEO?

How is it that compensation committees on the Board are so weak and pathetic that they cannot just fire the person, without having to buy-off the threat of a lawsuit with $3.5 million, when they have every reason (and right) to fire the guy?

And we wonder why the Gallup Annual Honesty and Ethics poll, which rates “the honesty and ethics of workers in 21 different professions,” reveals that the public’s perception of business executives is not very high. From 1992 to 2010, the percentage of the U.S. public surveyed who rated business executives’ ethics as “high” or “very high” never rises above 25% and is trending downwards.

More importantly for Lockheed, I wonder what message its decision sends to employees about how seriously senior executives and directors take the firm’s ethics code.

Have a good weekend

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Lockheed Ousts New Chief

By Doug Cameron & Joann S. Lublin

November 10-11, 2012

The Wall Street Journal

Late Edition – Final

B1

http://online.wsj.com/article/SB10001424127887324894104578109344076574924.html

Strategic CSR - Diversity

The article in the first url below falls under the category of good intentions, but unintended consequences. The article reports on a recent announcement by the Obama administration to create minimum requirements (up to 7%) for the number of disabled workers as a percentage of overall employees of federal contractors. While not mandatory, those contractors who do not meet the requirements could have their contracts revoked:

The good intentions:

“The proposal could reshape hiring at roughly 200,000 companies that generate $700 billion a year in contracts with the federal government. They include defense contractor Lockheed Martin Corp., aircraft maker Boeing Co. and firms across the health-care, construction and information-technology industries.”

The unintended consequences:

“Companies have flooded the department with complaints that the rule amounts to a first-ever government quota for hiring disabled workers that would expose them to a thicket of legal pitfalls. Some employers say there might not be enough qualified disabled workers in their fields to meet that target and that they may have to fire nondisabled workers to achieve the ratio. Others say that existing federal law actually prohibits them from asking whether a job applicant is disabled, potentially forcing firms to violate one law in order to comply with another.”

The directive is particularly confusing, given that:

“The scope of what would constitute a disability also isn't clear since the Labor Department's proposal doesn't include a specific list. The Americans with Disabilities Act, updated in 2008, says that workers are disabled if they have a physical or mental impairment that substantially limits one or more of their major life activities. Lawyers who represent employers say that could include hundreds of possibilities from blindness to deafness to the less apparent such as asthma or mental illness.”

The issue of hiring discrimination against the disabled is very real and firms should be incentivized to ensure equal opportunity applies to all who want to work. It is not clear, however, that a hard and fast number will achieve the stated goals. As the article in the second url below notes, this is particularly true if the federal government itself is unable to meet the standards it is imposing on for-profit firms:

“… as HR Policy, an association of chief human-resource officers, notes, the federal government itself has only 5% disabled on its payrolls—and the Labor Department's percentage of disabled employees has decreased every year since President Obama took office, despite a sharp increase in the number of department employees.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

U.S. Pushes Target for Hiring the Disabled

By Melanie Trottman

February 29, 2012

The Wall Street Journal

Late Edition – Final

B1

http://online.wsj.com/article/SB10001424052970204520204577251303726662194.html

The Wrong Way to Help the Disabled

By James Bovard

April 9, 2012

The Wall Street Journal

Late Edition – Final

A15

http://online.wsj.com/article/SB10001424052702304692804577281840611106300.html

Strategic CSR - FCPA

The article in the url link below maps out the history behind the 1977 Foreign Corrupt Practices Act (Issues: Corruption and Bribery, p218), which, I didn’t realize, emerged as part of the fallout from the Watergate scandal and the fall of the Nixon Presidency:

“It is often forgotten that the Watergate scandal of the 1970s was not only about the misdeeds of the Nixon Administration. Investigations by the Senate and the Watergate Special Prosecutor forced companies such as 3M, American Airlines and Goodyear Tire & Rubber to admit that they or their executives had made illegal contributions to the infamous Committee to Re-Elect the President. Subsequent inquiries into illegal payments of all kinds led to revelations that companies such as Lockheed, Northrop and Gulf Oil had engaged in widespread foreign bribery. Under pressure from the SEC, more than 150 publicly traded companies admitted that they had been involved in questionable overseas payments or outright bribes to obtain contracts from foreign governments. … Congress responded to the revelations by enacting the FCPA in late 1977. For the first time, bribery of foreign government officials was a criminal offense under U.S. law, with fines up to $1 million and prison sentences of up to five years.”

In outlining how subsequent US Administrations dealt with implementing and enforcing the FCPA, the article argues that, rather than a deterrent, the legislation merely pushed bribery underground, a move that was aided by the unwillingness of successive US Administrations to ensure its adequate enforcement:

“Any illusion that commercial bribery was a rarity was dispelled in 2005, when former Federal Reserve Chairman Paul Volcker released the final results of the investigation he had been asked to conduct of the Oil-for-Food Program. Volcker’s group found that more than half of the 4,500 companies participating in the program … had paid illegal surcharges and kickbacks to the government of Saddam Hussein. Among those companies were Siemens, DaimlerChrysler and the French bank BNP Paribas.”

This has all changed in recent years, with the current Administration both pursuing investigations against US firms, as well as against foreign-based firms with a significant US presence. The author concludes, however, that the recent increase in investigations merely reflects the fact that corporate bribery continues unabated. In addition, the social stigma associate with such behavior has diminished markedly:

“Whereas the bribery revelations of the 1970s elicited a public outcry, the recent cases have generated little comment in the United States. Companies like Chevron pay their fine and go right on using their ad campaigns to present themselves as paragons of virtue.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The New Business Watergate: Prosecution of International Corporate Bribery is on the Rise
by Philip Mattera
December 18th, 2007
http://www.corpwatch.org/article.php?id=14859