LA Times business columnist and blogger Michael Hiltzik found it a bit "ghoulish" that the Orange County Register has asked staffers if it can buy insurance policies on their lives, direct any proceeds to the pension fund, and get the corporation a tax deduction out of the deal. The Register wouldn't comment to Hiltzik before his post went up, but owner Aaron Kushner put out a memo to staff that lambasted Hiltzik's take and got a bit sanctimonious about arguing the piece would not meet Register standards. Romensko has the memo. Now Hiltzik has posted a second blog entry calling Kushner on his spin and flagging what he left out. Sample:
We didn't say that life insurance was ghoulish, nor are those who sell it or buy it. We suggested that the practice of insuring the lives of rank-and-file employees for corporate purposes -- in this case to fund its pension plan -- was "ghoulish." Kushner is welcome to cavil at the term, but he must know that the practice is controversial and has often been abused. That's why special rules for such plans were enacted by Congress in 2006. Among them is the requirement that the employees be notified and their permission sought in advance, as Freedom has done....
The use of these insurance plans to fund various corporate purposes is, as Kushner says and as we already reported, not uncommon. For the rest, he's being a bit disingenuous.
To begin with, while the company itself is not the direct beneficiary of the insurance proceeds (the pension plan is), Freedom certainly receives a benefit from the policies -- to the extent they fund the pension plan, that's an obligation Freedom doesn't have to meet from other corporate resources. By law, adequate funding of the pension plan is a corporate obligation. The premiums of such policies are generally tax-deductible, and the proceeds are tax-exempt.
The takeaway: I don't care a whit about the insurance policies. What I've learned is that Kushner has a thin skin, and his tendency to spin is becoming a bigger part of his public profile.
Noted: The Register updated the profile picture and cover photo on the Facebook page for the upcoming Los Angeles Register. No more Spiro Agnew!