Here's a summary on how its done:

Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon. Companies disclose little about any of this.

But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America's pensions. Among the findings:

* Boosted by surging pay and rich formulas, executive pension obligations exceed $1 billion at some companies. Besides GM, they include General Electric Co. (a $3.5 billion liability); AT&T Inc. ($1.8 billion); Exxon Mobil Corp. and International Business Machines Corp. (about $1.3 billion each); and Bank of America Corp. and Pfizer Inc. (about $1.1 billion apiece).

* Benefits for executives now account for a significant share of pension obligations in the U.S., an average of 8% at the companies above. Sometimes a company's obligation for a single executive's pension approaches $100 million.

* These liabilities are largely hidden, because corporations don't distinguish them from overall pension obligations in their federal financial filings.

* As a result, the savings that companies make by curtailing pensions for regular retirees -- which have totaled billions of dollars in recent years -- can mask a rising cost of benefits for executives.

* Executive pensions, even when they won't be paid till years from now, drag down earnings today. And they do so in a way that's disproportionate to their size, because they aren't funded with dedicated assets.

Indeed, it is already the case that the pensions of regular workers at many, if not most, companies, are dropping--while pensions for executives are on a very steep rise:

By curtailing pensions for regular workers, large companies have reduced pension obligations to them by billions of dollars in recent years. So pension obligations to regular workers are stable or shrinking at many companies while those for executives rise. At BellSouth, for example, the obligations for pensions for ordinary workers have edged down 3% since 2000. The liability for pensions for executives is up 89% over the same period.

Just when you thought the greed and outrageous behavior of corporate America could get no worse, the leaders of companies have sunk to a new low: they are using workers' pension money to fund CEO pensions. No this is not a joke.

The evidence is laid out this week in The Wall Street Journal by reporters Ellen Schultz and Theo Francis. These two reporters have done an excellent job covering pension issues: more than two years ago, they clearly laid out the evidence that it was CEO pensions, not workers' pensions, that were causing headaches for corporate balance sheets. Today, they tell us:

At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives' retirement benefits and pay.

In recent years, companies from Intel Corp. to CenturyTel Inc. collectively have moved hundreds of millions of dollars of obligations for executive benefits into rank-and-file pension plans. This lets companies capture tax breaks intended for pensions of regular workers and use them to pay for executives' supplemental benefits and compensation.

The practice has drawn scant notice. A close examination by The Wall Street Journal shows how it works and reveals that the maneuver, besides being a dubious use of tax law, risks harming regular workers. It can drain assets from pension plans and make them more likely to fail. Now, with the current bear market in stocks weakening many pension plans, this practice could put more in jeopardy.

How they pull this off is a scam that is a bit convoluted so let's follow the reporters here:
 

The background: Federal law encourages employers to offer pensions by giving companies a tax deduction when they contribute cash to a pension plan, and by letting the money in the plan grow tax free. Executives, like anyone else, can participate in these plans.

But their benefits can't be disproportionately large. IRS rules say pension plans must not "discriminate in favor of highly compensated employees." If a company wants to give its executives larger pensions -- as most do -- it must provide "supplemental" executive pensions, which don't carry any tax advantages.

The trick is to find a way to move some of the obligations for supplemental pensions into the plan that qualifies for tax breaks. Benefits consultants market sophisticated techniques to help companies do just that, without running afoul of IRS rules against favoring the highly paid.

Ah, and ever clever, the companies, looking for a way to fleece workers and the taxpayer (because contributions to pension plans are tax-deductible), found a way, as the example of Intel, the computer chip maker, shows:

In 2005, the chip maker moved more than $200 million of its deferred-comp IOUs into its pension plan. Then it contributed at least $187 million of cash to the plan.

Now, when the executives get ready to collect their deferred salaries, Intel won't have to pay them out of cash; the pension plan will pay them.

Normally, companies can deduct the cost of deferred comp only when they actually pay it, often many years after the obligation is incurred. But Intel's contribution to the pension plan was deductible immediately. Its tax saving: $65 million in the first year. In other words, taxpayers helped finance Intel's executive compensation.

Meanwhile, the move is enabling Intel to book as much as an extra $136 million of profit over the 10 years that began in 2005. That reflects the investment return Intel assumes on the $187 million.

....The result, though, is that a majority of the tax-advantaged assets in Intel's pension plan are dedicated not to providing pensions for the rank and file but to paying deferred compensation of the company's most highly paid employees, roughly 4% of the work force.
 

So, not only are CEOs now going to be paid out of the regular company pension plan, you, the taxpayer, get to fund it! Isn't America great? And, of course, the pension plan's assets now benefit the highly-paid top dogs, not the workers. Nice.
 

Now, you have to be careful when you try to create this sham: the IRS requires that pension plans not discriminate between lower-paid and higher-paid workers. But, presto, the corporate pension consultants conjur up the right answers:

So how can companies boost regular pension benefits for select executives while still passing the IRS's nondiscrimination tests? Benefits consultants help them figure out how.

To prove they don't discriminate, companies are supposed to compare what low-paid and high-paid employees receive from the pension plan. They don't have to compare actual individuals; they can compare ratios of the benefits received by groups of highly paid vs. groups of lower-paid employees.

Such a measure creates the potential for gerrymandering -- carefully moving employees about, in various theoretical groupings, to achieve a desired outcome.

Another technique: Count Social Security as part of the pension. This effectively raises low-paid employees' overall retirement benefits by a greater percentage than it raises those of the highly paid -- enabling companies to then increase the pensions of higher-paid people.
 

Some of the ways companies hide what they are doing for highly-paid executives is laughable and morally reprehensible:
 

Royal & SunAlliance, an insurer, sold a division and laid off its 228 employees in 1999. Just before doing so, it amended the division's pension plan to award larger benefits to eight departing officers and directors. One human-resources executive got an additional $5,270 a month for life.

But to do this and still pass the IRS's nondiscrimination tests, the company needed to give tiny pension increases to 100 lower-level workers, said the company's benefits consultant, PricewaterhouseCoopers. One got an increase of $1.92 a month.

Joseph Gromala, a middle manager who stood to get $8.87 more a month at age 65, wrote to the company seeking details about higher sums other people were receiving. A lawyer wrote back saying the company didn't have to show him the relevant pension-plan amendment.

There is a broader context here. Over the past couple of decades, companies have frozen pension plans, terminated others and converted real pension plans--that is, defined contribution plans that deliver a fixed benefit to a retiree no matter what the gambler morons in the stock market are doing--into 401(k)s. 

The Bureau of Labor Statistics estimates that only 21 percent of workers in the private sector have defined-benefit pensions. In 2005, only 55 percent of full-time and part-time private sector workers worked at firms that sponsored a retirement plan.  Of those, only 45 percent participated in an employer-sponsored plan. This compares with a 60 percent employer sponsorship rate and 50 percent employee participation rate in 2000.

No problem for the CEO, though:

CenturyTel, for instance, in 2005 moved its IOU for the supplemental pensions of 18 top employees into its regular pension plan. Chief Executive Glen Post's benefits in the regular pension plan jumped to $110,000 a year from $12,000. A spokesman for the Monroe, La., company, which made more such transfers in 2006, was frank about its motive: to take advantage of tax breaks by paying executive benefits out of a tax-advantaged pension plan.

So, this is just another way that CEOs are ripping off their workers and the taxpayers.

The workers' pensions--their money that they agreed to forego in each paycheck so they would have a decent living down the road during retirement is generating cash for corporations, while the executives' pensions is truly the drag on a company.

It seems that our elected representatives in Congress have to stop this robbery. And they can do so in two ways:

1. Force companies to tell the truth about pension obligations.

2. Change the bankruptcy laws. We are sick of reading about companies that have used bankruptcy laws to terminate pensions--yet they continue to give executives hundreds of millions of dollars even at companies in financial distress. We should push for changes that essentially impose a proportional hit on executives to whatever hit workers take. It should not be a one-to-one hit but a ratio that significantly scales back executive pensions in comparison to the rank-and-file worker.