Volume 18, No. 7

 

Benefit Plans Without Bounty: The S&P 500 in 2008:  Financial institutions - and investors in general - weren’t the only ones who bore the brunt of 2008’s market misery. Companies who had long ago locked themselves into generous benefit plan arrangements saw their balance sheets suffer as their once well-funded benefit plans withered, along with the fortunes of their retirees and employees.
Whether firms entered such employee benefit arrangements to find labor peace or just trying to remain competitive in the market for labor, many are saddled with more leverage than they ever wanted - and they’ll have to make strides in2009 in reducing that leverage through higher pension plan cash contributions. In this report, we look at the capital and cash flow effects of benefit plan funding, as well as the earnings quality effects.

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