When Bill Spencer, 65, retired from Hawker Beechcraft in 2009, he received a watch inscribed with the words “Beechcrafter forever.”
That sentiment, Spencer said, “is tattooed on my soul.”
As regional sales director for Canada, Spencer spent nearly two decades with the company and its predecessor, selling everything from King Air turboprops to Hawker 4000 business jets.
Spencer sold a lot of airplanes.
He loved his job.
While there, he turned down job offers from Gulfstream and Cessna Aircraft.
One reason was an additional pension benefit the company offered called an “excess pension plan,” or deferred compensation package.
It was billed as deferred income, Spencer said, and it was in addition to the company’s defined pension plan.
The benefit was a way for the company to help keep “the top guys on board,” Spencer said, including its sales force and middle and upper management.
Today, Spencer, a decorated Vietnam veteran, has health problems.
He was diagnosed with cancer in 2007.
His wife, his college sweetheart, is disabled and requires expensive medicine and treatments.
The extra pension check of more than $2,000 a month has helped cover medical expenses that insurance doesn’t pay for.
So Spencer was devastated in May when he and a group of about 50 or 60 other retirees who have been receiving the benefit got a sobering letter.
The letter notified them that the company was discontinuing their payments as part of Hawker Beechcraft’s Chapter 11 bankruptcy, filed May 3.
“Due to this filing and the application of federal bankruptcy law, we are not permitted to continue payments under the Excess Pension Plan during the bankruptcy cases,” the letter read.
The plan has not been terminated, and no final decision has been made, it said.
The group has hired a lawyer, who is getting it on a list of unsecured creditors in the bankruptcy. But they are way down on the list, Spencer said.
That turn of events poses a lot of problems, Spencer said.
“This really is a kick in the gut,” Spencer said. “It will end life as we know it. It just destroys everything.”
Spencer said he and his wife, Karen, will be forced to sell their home outside Chicago and move to a smaller, less-expensive house.
They also will have to move to a state that has lower taxes to lower their monthly expenses.
“We thought this is where we would finish out our years,” Spencer said.
Deferred compensation plans, often dubbed “top hat” plans for executives or highly compensated employees can be at risk in a bankruptcy, said Bob Keach, past president of the American Bankruptcy Institute.
“The assets can become assets of the bankruptcy estate and be used to pay creditors,” Keach said.
Sometimes, he said, depending on how the plan is arranged and administered, there are ways to retain some of the money for employees.
But, Keach said, “the money is definitely at risk.”
More upsetting than the pensions, Spencer said, is a potential sale of the company to a Chinese company.
“I can’t believe we’re selling one of our American industries to the Chinese,” Spencer said. “That is even more upsetting to me. When you think of Beechcraft, you think of red, white and blue because of our involvement in building military aircraft.”
A spokeswoman at the Hawker Beechcraft declined comment on the pension situation.
On Monday, Hawker Beechcraft announced that it reached an exclusivity agreement with Superior Aviation Beijing to explore a sale of the company, except for the defense business, for $1.8 billion in cash.
The exclusivity agreement must be approved by the court.
In the bankruptcy, Hawker Beechcraft has also warned it may terminate its three defined benefit pension plans for hourly and salaried employees.
The company’s three plans are 56 percent funded, with $769 million in assets to cover $1.4 billion in anticipated obligations.
Should the plans be terminated, they would be taken over by the Pension Benefit Guaranty Corp., a federal agency that pays the benefits, but with caps, when an employer is no longer able to pay.
It’s too soon to say what will occur. It’s up to the court to decide whether the agency needs to step in take over the company’s pension.
In its proposal, Superior has said that it won’t take on any liability associated with the pension funds.
“I feel betrayed,” Spencer said of the developments.
He took early retirement in 2009 after the company added his name to a list in a workforce reduction.
“I had a choice of reduction in force or retirement,” Spencer said.
Spencer learned to fly in the service and served in the combat infantry. He said he still carries the remnants of a North Vietnamese bullet behind his right inner ear.
After coming home, he earned a bachelor of science degree at the University of Iowa. He then spent time at Oscar Mayer, Johnson & Johnson and FlightSafety before moving to Wichita to run Learjet’s product support business.
Joining Beech, he said, “was the best thing that ever happened to me. It is the best of all the aviation manufacturers to work for. It has the best people; the customers to me are the most loyal, and you never have to apologize for the product.”
The year after he retired, the Canadian Business Aviation Association awarded Spencer its annual merit award for his contributions to Canadian aviation.
Today, given his age and health, it will be hard to find a job, Spencer said.
“Nobody’s going to hire me,” he said. “It’s not because my mind isn’t sharp. They look at me and say, ‘This guy is going to be 66 this year, and he’s got health problems. Gee, we don’t want to touch him.’ Even though now I’m under Medicare, and they wouldn’t have to suffer that expense.”
Discontinuing the additional retirement benefits to those who earned them may be legal, Spencer said.
“But is it ethical and is it moral?” he said. “This is just a very sad state of affairs. While my situation has really gotten critical, I think of all the other good people out there that are going through the same thing. There’s got to be people worse off than me.”