Owens Corning chief executive Glen Hiner has been among Toledo's best-paid executives. When he retires today, he will find little need to hunt for senior-citizen discounts and restaurant early-bird specials.
Under an employment contract negotiated when he arrived at the Toledo Fortune 500 firm from General Electric Co. in 1992, Mr. Hiner is to receive a lump-sum pension payment expected to top $8 million.
However, the actual amount could be higher.
The contract specifies that OC is to pay Mr. Hiner the equivalent of 60 percent of his annual salary and bonus yearly for life, minus payments he is expected to receive from federal Social Security and other pension plans.
Mr. Hiner and OC, which is in Chapter 11 bankruptcy protection, agreed to calculate the one-time payment based on life expectancy tables and his average annual pay during the highest-paid three years of his career.
That would seem to suggest an annual pension of $2.7 million based on average salary and bonuses of $4.5 million he received in 1999, 2000, and 2001.
However, an OC attorney said yesterday that the manufacturer of building products and Fiberglas is calculating the 67-year-old executive's pension on a much lower average annual salary.
Lawyer Jeff Wilke declined to give an exact figure but said the real figure is “millions” lower.
Mr. Hiner's contract states that the company is to count “wages, bonuses, and incentive compensation without limitation” in determining the figure.
But the company lawyer said OC's board has the discretion of excluding portions of his pay in determining his pension.
Mr. Wilke said it is routine for firms to specify portions of an executive's annual bonus, for example, to be “non-pensionable.”
Still, counting Mr. Hiner's salary and only 25 percent of his bonus, he would be entitled to the equivalent of about $980,000 in annual pension.
Typical interest and life expectancy figures for a man who like Mr. Hiner is approaching his 68th birthday, would then suggest a lump sum payment of $10.4 million, one pension expert told The Blade.
The formula used to calculate Mr. Hiner's pension isn't unusual for CEOs of large public companies, experts said.
“Sixty percent of average annual income is fairly typical, especially in cases where the person has many years of service” said a representative of the national benefits consulting firm Towers Perrin. He spoke on the condition he not be identified.
OC's filings with the U.S. Securities and Exchange Commission indicate that the formula is identical to one that would have been used to calculate Mr. Hiner's pension if he had stayed at GE.
OC spokesmen declined to say how much the firm will pay the man who joined the company as chairman and chief executive in 1992 after 35 years as a top official of GE.
Efforts to determine how much of his pension will be covered by GE were unsuccessful.
A spokesman for the firm in Fairfield, Conn., didn't return a call yesterday seeking information about the pension plan for senior executives. Mr. Hiner was vice president in charge of the firm's plastics unit when he left for Toledo.
A good portion of OC's payment to Mr. Hiner will come be a trust fund it established in 1992 at Wachovia Bank of North Carolina, N.A., according to his contract.
The company has contributed $8.3 million to the fund on his behalf, according to company filings with the SEC.
Mr. Hiner's contract specifies that he will receive whatever is in the fund, interest and investment gains included, even if it is more than what the company owes him upon retirement.
However, the investment income would be deducted from the company's pension obligation to the CEO, and the firm has paid Mr. Hiner's taxes owed from that income.
OC, which had 2001 sales of $4.8 billion, filed for Chapter 11 bankruptcy in October, 2000 to gain relief from billions of dollars in asbestos liability.