http://online.wsj.com/article/SB10001424052748704201404574590513148980476.html
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Jacqueline D'Andrea last year lost more than 60% of the 401(k) savings she built over a decade as a Wal-Mart StoresInc. manager, she says. The 1.2 million employees in the retailer's401(k) retirement plan lost 18% as the market plunged, corporatefilings show.

Top executives at Wal-Mart didn't face such risks. Thanks to a guaranteed 6.6% return, Chief Executive Officer H. Lee Scott Jr.had gains of $2.3 million in a supplemental retirement-savings plan,bringing its total savings to $46.7 million. "We're proud of thebenefits we offer to our hourly associates" which include bonuses,401(k) and profit sharing contributions, and merchandise discounts,said a Wal-Mart spokesman, who confirmed the plans' figures.

One-quarter of top executives at major U.S. companies had gains intheir supplemental executive retirement-savings plans in 2008, even asemployees had sizable losses in the companies' retirement accounts,according to a Wall Street Journal analysis. The gains in executiveretirement accounts often stemmed from guaranteed fixed returns onexecutive-savings plans.

The disparity underscores a fact of life in America's corporate-payscene. It's not just bigger paychecks that have led to a growing wagegap—it's the different levels of risk that executives and rank-and-fileemployees face in their retirement plans. That difference rarely hasbeen more evident than the past year, when 50 million employees lost atotal of at least $1 trillion in their 401(k) plans, according to theCenter on Retirement Research at Boston College.

Though the stock market has rallied in 2009, most employees stillhave a long way to go to recoup their losses. The Standard & Poor's500-stock index is still down 29% from its October 2007 peak.

Companies say generally that compensation committees determine thereturns executives receive on their savings, and in some cases do so tooffset the risk executives face by receiving a chunk of their pay incompany shares. Nearly all of the executives with positive returns ontheir deferred-compensation plans worked at companies whose shareprices were down in 2008. Fixed returns are are among the perks thatcompanies say are needed to attract and retain executives to lead theircompanies during difficult times.

Comparing executive and employee retirement returns is possiblebecause, in 2007, companies were required to begin disclosing earningson their top officers' deferred-compensation plans. The Journalanalyzed filings of S&P 500 companies compiled by research firmCapital IQ for fiscal 2008. The latest fiscal year for the analysisended May 31, 2009. The Journal then extracted investment performanceof 401(k) plans at individual companies from their corporate filings.

The Internal Revenue Service limits the amount employees cancontribute to a 401(k) plan— $16,500 in 2009—so companies set upsupplemental plans to enable higher-paid employees to set aside moremoney for retirement.

These deferred-compensation plans generally provide notionalinvestment elections that mirror the returns on mutual funds availablein the employee 401(k) plan. Because of this, many managers andexecutives who participate in these supplemental plans also had largeinvestment losses in 2008. But top executives typically alsoparticipate in more elite deferred-compensation plans, which can faceless risk, largely thanks to guaranteed returns.

ComcastCorp., the cable operator, provides top executives with 12% interest ontheir supplemental savings. This provided Executive Vice PresidentStephen Burke with gains of $7.4 million in his deferred-compensationaccount, helping to boost his total retirement savings to $71 million,according to corporate filings.

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“ Thatis the problem with Big Business today: None of the top guys have ANYskin in the game and if all else fails, then government will bail youout. Great deal if you can get it, but bad deal for the stockholders aswell as the country overall. ”

—Kristina Tharris

Theretirement funds of more than 70,000 workers in the Comcast 401(k) planlost $649 million, a decline of 28%, filings show. Their averageaccount size by year end was $24,000. The company, which confirmed thecalculations, declined to comment.

In their deferred-compensation plans, some executives have access toinvestment options that aren't available to other employees. Forexample, top executives at Bank of New York Mellon Corp. could investtheir savings in a fixed-income fund that had a 6.6% return in 2008;thanks to electing this fund, Steven Elliott, senior vice chairman, hadearnings of $1.3 million on his account, according to filings.

The fixed-income fund isn't available in the bank's 401(k) plan. Theinvestments in the employees' retirement accounts fell 30%, filingsshow. A spokesman confirmed the information.

Top executives at CumminsInc. could choose among three options: the return on the S&P-500index, "the Lehman Bond Index, or 10 year Treasury Bill + 2%,"according to filings. The executives at the engine maker had a total of$1.4 million in gains on their accounts, suggesting that none of themelected the stock index, which plummeted last year.

By contrast, the employees of the Indiana-based engine maker lost29% on their 401(k) retirement accounts. A spokesman says the companydoesn't disclose which option the executives chose, but says: "Theseare more senior people who can be expected to make more conservativeinvestment choices than a 25-year-old in the 401(k)."

At companies that don't provide fixed guaranteed returns, executives often saw losses in their deferred-compensation savings.

For example, Intel Corp. says it doesn't provide guaranteed returnson its executive`s deferred compensation plans, but instead gives themthe same investment options as in the company's 401(k) plan.

In 2008, the four top Intel executives with deferred-compensationbalances lost a total of $5.6 million, or 35% of their account balancesat the beginning of the year. The company's 401(k) also lost 35% duringthe year, filings show. An Intel spokesman cites the company's"egalitarian'' culture. "We don't provide significant special perks,whether it's company limos, special parking spots, a company- ownedjet, country club memberships or even fancy corner offices. The same istrue of deferred compensation."

Some companies note that while fixed returns on executivedeferred-compensation plans protect them from losses, they also limittheir upside.

Executives at Illinois Tool WorksInc., a maker of fasteners and adhesives, received returns of 6.1% to8.4% in 2008, while investments in the employees' 401(k) lost 25%. Aspokeswoman says that so far this year, the average return ofemployees' 401(k) plans has been 23%, while the interest credited tothe executives' deferred-compensation plan is just 5.6%.

Based on those figures, the average employee's account at IllinoisTool Works would have declined 7.8% from the beginning of 2008; theexecutive accounts would have gained between 12% and 14.5% in that time.

With the S&P 500 down a third from its October 2007 peak, someemployees never will recover their losses. Ms. D'Andrea, the Wal-Martmanager, says her retirement kitty bounced back up to $8,000—about theaverage size of employee accounts in Wal-Mart's 401(k) plan—from a lowof $6,000 earlier this year.

But the 48-year-old Henderson, Nev., resident lost her job in Mayand cashed out her account. Now, she vows to never join a retirementplan again. "It's too risky," she says.

[This is why I say stocks and real estate are just as much gambling as lottery and casinos. In all cases you are putting your money at risk against outcomes you cannot control. The main difference is that the stock and house games wear suits and cost more to participate.] ~t*t