McDermott Removes Pensions from Comp Formula

February 25, 2002 - Construction firm McDermott International will change its executive compensaiton packages.

Amalgamated Bank, the shareholder that filed the resolution, noted that pension income is contributing to the bottom line of many large companies, thereby boosting executive pay that is based on earnings.

Amalgamated withdrew its resolution after the construction firm stated its intention to adopt the new policy.

Pension income is a number generated by accounting rules, which allow companies to count the difference between their estimated investment returns on pension assets and their pension liabilities as income.

McDermott reported a pretax loss of $10 million in 2000 – losses which were offset by the nearly $40 million gain from the pension plan.

According to Amalgamated Bank, their proposal, which takes effect in 2002, will reward executives based on their performance, and not punish them for things outside the scope of their performance.