Anheiser Busch Memo Announces Benefit Changes

June 30, 2008 ( - Anheuser-Busch Cos Inc. plans to change the formula used to calculate lump sum pension benefits and raise employees' share of health care benefit expenses in an effort to cut costs.

Reuters reports that it obtained a memo addressed to salaried workers of the brewer that said: “We have considered a number of (the changes) for some time, although we have accelerated our actions to reflect what is happening in the marketplace.” The memo said employee health care cost sharing will increase in 2009 to about 25% from 21%, depending on the plan.

Lump-sum pension benefit calculations for salaried employees will change to a method using interest rates tied to corporate bonds as of 2009, instead of using the 30-year US Treasury bond rates for the months of August and September. The change is expected to reduce individual lump sum payouts by about 5% to 6% in 2009 and about 15% by 2012, the memo said, according to Reuters.

The memo said that even with the cuts, the company’s benefits were “above the 75th percentile of our corporate peers”.

Anheuser-Busch has been fighting a takeover by Belgian rival InBev NV. On Thursday the brewer rejected a $65-a-share, or $46.3 billion, offer from InBev NV, and on Friday it laid out the plan to cut $1 billion in costs to convince investors the InBev offer was too low, the news report said.

In addition to the benefit changes, the plan includes cutting 10% to 15% of its 8,600 salaried workforce through early retirement and attrition, speeding up price hikes to cope with rising commodity costs, and setting earnings forecasts that exceed Wall Street’s expectations.