Quick Links:
Get involved!Press articles
Important Links
Insider trading
Lou's Contract
Total Compensation
Subscribe:
Add or delete IDChange ID
Contact site owner
Previous Highlights:
CurrentApril 21, 2007
April 14, 2007
April 7, 2007
March 31, 2007
March 24, 2007
March 17, 2007
March 10, 2007
March 3, 2007
February 24, 2007
February 17, 2007
February 10, 2007
February 3, 2007
January 27, 2007
January 20, 2007
January 13, 2007
January 6, 2007
December 30, 2006
December 23, 2006
December 16, 2006
December 9, 2006
December 2, 2006
November 25, 2006
November 18, 2006
November 11, 2006
November 4, 2006
October 28, 2006
October 21, 2006
October 14, 2006
October 7, 2006
September 30, 2006
September 23, 2006
September 16, 2006
September 9, 2006
September 2, 2006
August 26, 2006
August 19, 2006
August 12, 2006
August 5, 2006
July 29, 2006
July 22, 2006
July 15, 2006
July 8, 2006
July 1, 2006
June 24, 2006
June 17, 2006
June 10, 2006
June 3, 2006
May 27, 2006
May 20, 2006
May 13, 2006
May 6, 2006
2006 Stock Meeting
April 22, 2006
April 15, 2006
April 8, 2006
April 1, 2006
March 25, 2006
March 18, 2006
March 11, 2006
March 4, 2006
February 25, 2006
February 18, 2006
February 11, 2006
February 4, 2006
January 28, 2006
January 21, 2006
January 14, 2006
January 7, 2006
December 31, 2005
December 24, 2005
December 17, 2005
December 10, 2005
December 03, 2005
November 26, 2005
November 19, 2005
November 12, 2005
November 5, 2005
October 29, 2005
October 22, 2005
October 15, 2005
October 8, 2005
October 1, 2005
September 24, 2005
September 17, 2005
September 10, 2005
September 3, 2005
August 27, 2005
August 20, 2005
August 13, 2005
August 6, 2005
July 30, 2005
July 23, 2005
July 16, 2005
July 9, 2005
July 2, 2005
June 25, 2005
June 18, 2005
June 11, 2005
June 4, 2005
May 28, 2005
May 21, 2005
May 14, 2005
May 7, 2005
April 30, 2005
April 23, 2005
April 16, 2005
April 9, 2005
April 2, 2005
March 26, 2005
March 19, 2005
March 12, 2005
March 5, 2005
February 26, 2005
February 19, 2005
February 12, 2005
February 5, 2005
January 29, 2005
January 22, 2005
January 15, 2005
January 8, 2005
January 1, 2005
December 25, 2004
December 18, 2004
December 11, 2004
December 4, 2004
November 27, 2004
November 20, 2004
November 13, 2004
November 6, 2004
October 30, 2004
October 23, 2004
October 16, 2004
October 9, 2004
October 2, 2004
September 25, 2004
September 18, 2004
September 11, 2004
September 4, 2004
August 28, 2004
August 21, 2004
August 14, 2004
August 7, 2004
July 31, 2004
July 24, 2004
July 17, 2004
July 10, 2004
July 3, 2004
June 26, 2004
June 19, 2004
June 5, 2004
May 29, 2004
May 22, 2004
May 15, 2004
May 8, 2004
2004 Stock Meeting
April 24, 2004
April 10, 2004
April 3, 2004
March 27, 2004
March 20, 2004
March 13, 2004
March 6, 2004
February 28, 2004
February 21, 2004
February 14, 2004
February 7, 2004
February 1, 2004
January 18, 2004
December 27, 2003
December 20, 2003
December 13, 2003
December 6, 2003
November 29, 2003
November 22, 2003
November 15, 2003
November 8, 2003
November 1, 2003
October 25, 2003
October 18, 2003
October 11, 2003
October 4, 2003
September 27, 2003
September 20, 2003
September 13, 2003
September 6, 2003
August 30, 2003
August 23, 2003
August 16, 2003
August 9, 2003
Pension Lawsuit Win
July 26, 2003
July 19, 2003
July 12, 2003
July 5, 2003
June 28, 2003
June 21, 2003
June 14, 2003
June 7, 2003
May 31, 2003
May 24, 2003
May 17, 2003
May 10, 2003
2003 Stock Meeting
April 26, 2003
April 19, 2003
April 12, 2003
April 5, 2003
March 29, 2003
March 22, 2003
March 15, 2003
March 8, 2003
March 1, 2003
February 22, 2003
February 15, 2003
February 8, 2003
February 1, 2003
January 25, 2003
January 18, 2003
January 11, 2003
January 4, 2003
December 28, 2002
December 21, 2002
December 14, 2002
December 7, 2002
November 30, 2002
November 23, 2002
November 16, 2002
November 9, 2002
November 2, 2002
October 26, 2002
October 19, 2002
October 12, 2002
October 5, 2002
September 28, 2002
September 21, 2002
September 14, 2002
September 7, 2002
August 31, 2002
August 24, 2002
August 17, 2002
August 10, 2002
August 3, 2002
July 27, 2002
July 20, 2002
July 13, 2002
July 6, 2002
June 29, 2002
June 22, 2002
June 15, 2002
June 8, 2002
June 1, 2002
May 25, 2002
May 18, 2002
May 11, 2002
2002 Stock Meeting
April 27, 2002
April 20, 2002
April 13, 2002
April 6, 2002
March 30, 2002
March 23, 2002
March 16, 2002
March 9, 2002
March 2, 2002
February 23, 2002
February 16, 2002
February 9, 2002
February 2, 2002
January 26, 2002
January 19, 2002
January 12, 2002
January 5, 2002
December 29, 2001
December 22, 2001
December 15, 2001
December 8, 2001
December 1, 2001
November 24, 2001
November 17, 2001
November 10, 2001
November 3, 2001
October 27, 2001
October 20, 2001
October 13, 2001
October 6, 2001
September 29, 2001
September 22, 2001
September 15, 2001
September 8, 2001
September 1, 2001
August 25, 2001
August 18, 2001
August 11, 2001
August 4, 2001
July 28, 2001
July 21, 2001
July 14, 2001
July 7, 2001
June 30, 2001
June 23, 2001
June 16, 2001
June 9, 2001
June 2, 2001
May 26, 2001
May 19, 2001
May 12, 2001
May 5, 2001
2001 Stock Meeting
April 21, 2001
April 14, 2001
April 7, 2001
March 31, 2001
March 24, 2001
March 17, 2001
March 10, 2001
March 3, 2001
February 24, 2001
February 17, 2001
February 10, 2001
February 3, 2001
January 27, 2001
January 20, 2001
January 13, 2001
January 6, 2001
December 30, 2000
December 23, 2000
December 16, 2000
December 9, 2000
December 2, 2000
November 24, 2000
November 17, 2000
November 10, 2000
November 4, 2000
October 28, 2000
October 21, 2000
October 14, 2000
October 7, 2000
September 30, 2000
September 23, 2000
September 16, 2000
September 9, 2000
September 2, 2000
August 26, 2000
August 19, 2000
August 12, 2000
July 29, 2000
July 22, 2000
July 15, 2000
July 1, 2000
June 24, 2000
June 17, 2000
June 10, 2000
June 3, 2000
May 27, 2000
May 20, 2000
May 13, 2000
May 6, 2000
April, 2000
 Join your fellow employees who are fighting for your benefits - Join the Alliance! Retirees, Vendors, Contractors, Temps, and Active Employees are all eligible to become members of the Alliance. |
Highlights—January 28, 2006
- Wall Street Journal: IBM
Is Target of Class Action Suit. Excerpts: International Business Machines Corp. was sued
in federal court for allegedly not paying overtime to tens of thousands of rank-and-file employees. The suit, filed
in U.S. District Court in San Francisco on behalf of three current and former workers, seeks class-action status
to represent computer installers and maintenance workers for IBM throughout the U.S. [...]
Lawyers said they are seeking millions of dollars in back pay for employees of the Armonk, N.Y., technology giant. They are also considering punitive damages. Employees allege they were forced to work more than 40 hours a week, and were called in on weekends without getting overtime pay.
- Law.com: Suit
Against IBM Shows That Tech Industry Is in Wage Lawyers' Sights. By Marie-Anne Hogarth,
The Recorder. Excerpts: Wage-and-hour lawyers seem to be turning up the heat on the computer industry. A lawsuit
filed Tuesday against computer giant IBM Corp. for allegedly not paying overtime to tens of thousands of rank-and-file
employees arrives on the heels of a series of suits making similar claims.
Filed in U.S. District Court for the Northern District of California, the suit has three current and former workers as named plaintiffs and seeks class action status on behalf of IBM computer installers and maintenance workers across the country.
- Personnel Today (United Kingdom): IBM in meeting over UK final salary pension scheme. Excerpts: BM is rumoured to be planning to close its final salary pension scheme to thousands of its UK workers. The IT giant has called a managers' meeting at a London hotel tomorrow, at which it is due to discuss changes to its pension arrangements. It declined to say what these changes would be ahead of the meeting, but the group is expected to announce plans to close its final salary scheme to existing members, according to the Evening Standard newspaper.
- BBC News: IBM holds off on pension decision. Computer giant IBM is continuing to hold talks with employees about changes to its UK pension scheme. Excerpt: The announcement comes amid speculation it is set to close its final salary pension scheme to existing members. IBM said it has not yet made a final decision and is still discussing any changes with staff. However, the group did say that the proposals it had outlined to staff so far did not include the "cessation of defined benefit plans".
- The Register (United Kingdom): IBM UK pensions in doubt. Excerpt: IBM managers are in meetings across the country to hear about changes to the company pension. Observers are speculating that the firm will announce the end of the UK's final salary pension, as it has already done in the US. A flock of major UK - and US - companies have pulled the plug on their traditional final salary schemes in recent years, blaming growing deficits on reduced stock market returns, a harsher regulatory and fiscal attitude from the government, and retired workers' refusal to die early. Strangely, none of them blames the extended "contributions holidays" many of them took during the long stock market bull run in the 90s.
- The Guardian (United Kingdom): Fears grow over closure of IBM final salary pensions. By Rupert Jones. Excerpts: Fears were growing last night that computer group IBM will today announce it is closing its final salary pension scheme to existing British workers. The US company, which employs about 20,000 people in Britain, has summoned all its managers to meetings today at which it will announce changes to its pension schemes. BM declined to say what these changes would be ahead of the meetings, but they come less than three weeks after the company said it would be shutting down its US scheme and was considering the future of its British scheme. Unions and workers fear it will announce a similar shutdown in Britain. Trade union Amicus said it had been "inundated" with calls from worried employees.
- National Retiree Legislative Network (NRLN): IBM
Retirees Gain Bernie Sanders Co-Sponsorship of HR1322. Excerpts: Congressman Bernie Sanders has introduced 1 bill (HR 1677) to protect workers pensions and
cosponsored another (HR1322) that would require companies like IBM to honor the commitments made to employees regarding
health and retirement benefits. We encourage you to send this to all the IBMers you know and ask them to contact
their Congressional representatives (in NC Dole and Burr) and ask them to support those bills. This is the only
way IBM can be forced to do what they promised.
I was proud to meet with over 200 IBM retirees and employees who expressed their concerns about letters they received from IBM informing them of cutbacks IBM was making to their health benefits. Specifically, one IBM retiree told me that on their monthly health care premiums were going to skyrocket from $116 per month to $410 per month. Others told me that they were facing significant increases in their health care premiums as well. Under current law, companies that offer health benefits to employees and retirees can cutback or even eliminate these benefits for whatever reason at anytime - a policy which I think is unacceptable. That is why I am a proud co-sponsor of H.R. 1322 to prohibit companies from reneging on the promises they made regarding earned health care benefits. Specifically, this bill, in most instances would prohibit companies from cutting back or eliminating retiree health benefits and to require companies to restore any health benefits they took away from retirees. This legislation currently has 95 co-sponsors.
- Philadelphia Inquirer: Firms
seek protection in cash-balance plans. Legal uncertainty and suits
over the hybrid pensions have spurred heavy lobbying. The AARP cites age bias. By By Jay Newton-Small, Bloomberg
News. Excerpts: International Business Machines Corp., Bank of America Corp. and AT&T Inc. are among companies
pressing Congress for protection from lawsuits over cash-balance retirement plans that are worth more than $450
billion. Fighting the companies is AARP, the nation's largest senior citizens' group, which says the type of pension
plan offered by the companies penalizes older workers. Both sides are trying to influence congressional negotiators
working on the final version of a measure overhauling the U.S. pension system.
With the outcome of the battle uncertain, the pressure on lawmakers is "high on the scale," says Rep. Tom Price (R., Ga.), of the Education and Workforce Committee, which has jurisdiction over pensions. The U.S. Chamber of Commerce says it has met with the staff of more than 100 members of Congress and plans a second round of meetings in February. [...]AARP officials respond that some companies with cash-balance plans are seeking legal cover for an illegal system. The companies "are just looking to rubber-stamp any of the practices that they've undertaken, even though some of them might violate the law and are age-discriminatory," said David Certner, the Washington-based group's director of federal affairs. [...]IBM has been in the forefront of the lobbying effort, and its stake in the fight is considerable. The company this month froze its plan and switched to 401(k)s. Randy MacDonald, IBM's senior vice president for human resources, cited "uncertainty and conflicting legislative and regulatory directions" for the move, which will save IBM as much as $3 billion over the next four years.A federal court ruled in 2003 that IBM's plan discriminated against older workers, siding with Kelli Cooper, a 26-year IBM employee, and 130,000 of her coworkers. Cooper argued that IBM's switch from a traditional pension to a hybrid plan took place as she would have been accruing her most lucrative years under the old plan, costing her $400,000 in retirement savings. The case is currently before the U.S. Court of Appeals for the Seventh Circuit. After that ruling, the U.S. Treasury Department suspended licensing of hybrid plans. More than 300 lawsuits have been filed against companies offering cash-balance plans, including one against AT&T by 30,000 employees.
- Janet Krueger comments. Full excerpt: Now, what we need every member of this board
to do is make a copy of the article he posted and send it to your representative and senators in Washington
with a short note saying you sure hope he/she is NOT in the pocket of corporate lobbyists and won't participate
in retroactively legalizing IBM's cash balance conversion, particularly since IBM has decided to freeze their
plan anyway...
If you want to add more to your note, the following points should also be made: 1) We want early retirement subsidies FULLY protected; 2) Companies whose pension funds are underfunded should not be required to make up the short fall by cutting promised benefits. Thanks in advance!
- Janet Krueger comments. Full excerpt: Now, what we need every member of this board
to do is make a copy of the article he posted and send it to your representative and senators in Washington
with a short note saying you sure hope he/she is NOT in the pocket of corporate lobbyists and won't participate
in retroactively legalizing IBM's cash balance conversion, particularly since IBM has decided to freeze their
plan anyway...
- InformationWeek: Sprint
Scraps Major IT Outsourcing Deal With IBM. Sprint is bringing back work
and employees it gave to IBM under a $400 million outsourcing pact and redoing its multibillion-dollar call-center
deal with the IT services firm. By Paul McDougall. Excerpts: Wireless and long distance service provider Sprint
Nextel Corp. is quietly pulling back much of the IT work it outsourced to IBM two years ago under a $400 million
deal and is also reviewing a multi-billion dollar customer service support contract it holds with the computer
services giant, InformationWeek has learned. [...]
Sprint also is rehiring a number of tech workers that were "rebadged" to IBM under a technology outsourcing deal signed in 2004, according to an IBM insider. "The Sprint workers who were sold to IBM two years ago and went through job cuts and offshoring are now going back to Sprint," says the source, who has knowledge of the discussions between Sprint and IBM. IT executives at Sprint Nextel may be looking to keep more of the company's technology work under its own roof and closer to home. IBM is moving more and more of the work it performs on behalf of outsourcing customers to low-cost countries like India and China. [...]As for the call-center contract, which is significantly larger than the IT services deal, the spokesman, also in an E-mail, said, "Sprint Nextel is in the final stages of amending existing agreements with IBM for support of Sprint Nextel's customer care services. Until the agreements are finalized, we have no additional details to share." An IBM spokesman would say only that IBM "looks forward to a continuing and growing relationship with Sprint Nextel."
- The Onion: More Companies Phasing Out Retirement
Option (satire). Excerpts: With pension funds
dwindling as retirees enjoy longer, more capable lives, many businesses have opted to freeze their workers' employment
status and keep them on the job through their sunset years. "Under the new approach, our employees gain the
advantage of lifelong job security," Hewlett-Packard CEO and president Mark Hurd said. "Even though our
workers will no longer be able to collect a pension, they will receive checks as long as they are able to be wheeled
into work and punch the clock."
Hewlett-Packard, Verizon, and IBM are just a few of the Fortune 500 companies that are phasing out the retirement option in favor of "indefinite-employment" plans, under which thousands of qualified workers will continue to earn yearly stipends in exchange for work. "To the list of outmoded and costly business practices such as health insurance, overtime pay, and lunch breaks, add age-based quitting," corporate management consultant Robert Hopgood said. "Post-retirement-age labor is great for companies, and it's a great way for seniors to stay active."
- Wall Street Journal: IMB Sells Hudson Valley Plant. Excerpt: Preferred Real Estate Investments Inc. is buying the International Business Machines Corp. plant that Big Blue is vacating in East Fishkill, N.Y., in the Hudson Valley. In 2003, IBM opened a 300-mm chip plant across the street from its previous location. That left its former corporate campus -- more than one million square feet of space in three office buildings and a plant -- available for purchase. Preferred, which has an option to build an additional 600,000 square feet, will pay $20 million for the campus and plans to invest $300 million to $400 million in the project.
- Poughkeepsie Journal: $20 million price tag makes sale one of biggest in area. By Irwin M. Goldberg. Excerpts: The sale of IBM's West Campus in East Fishkill is one of the largest commercial real estate transactions in the area, at $20 million for 160 acres. It is one of many sales of IBM property to occur since Big Blue downsized in the 1990s. The sale to Preferred Real Estate Investments means almost all the former IBM sites in Dutchess County are in the hands of private investors, said Tom Collins, a broker with Commercial Associates in Kingston, who has handled the sale of several IBM sites.
- Christian Science Monitor: Tension over pensions:
Can they be saved? By David R. Francis. Excerpts: But are today's
401(k) plans adequate to provide a decent supplemental retirement income for their beneficiaries? The question
is important. Already nearly 65 percent of employers with retirement plans have a 401(k) system as their primary
vehicle. But almost no plans are generous enough.
"Most people are going to arrive at retirement and not have adequate money," says Alicia Munnell, director, Center for Retirement Research at Boston College. "This is serious. None of us are good at doing our own retirement savings." [...]In addition to Social Security, workers should contribute 12 percent of their pay over their entire career to build an adequate 401(k) pension - one that replaces 75 percent of preretirement income, says Edward Wolff, an economist at New York University. Even the generous IBM plan falls well short of that percentage contribution.
- Wall Street Journal: Congress
Seeks to Rein In Special Executive Pensions. Proposal Would Push
Firms To Ensure Workers' Plans Get Adequate Funding First. By Michael Schroeder. Excerpts: Rankled by the rich
retirement payouts many troubled companies make to executives, Congress is moving to block such companies from
funding the lavish packages. [...]
"We've heard too many stories of top executives of bankrupt companies sticking workers with unfunded pensions while running off with millions of dollars of so-called nonqualified pension benefits," says Senate Finance Committee Chairman Charles Grassley, an Iowa Republican. [...]For decades, executives relied on the same pension plan as other company employees, so they had an incentive to make it generous. The shift toward a dual system started in 1994, when Congress passed a law intended to limit the cost to taxpayers of runaway executive pay. The law barred companies from taking a tax deduction on compensation in excess of $1 million a year for any current employee. The result: Companies began setting up supplemental pension plans that encouraged senior managers to defer compensation.Over time, the plans added generous benefits and covered a greater number of salaried employees. Now, more than 90% of the largest companies offer nonqualified deferred executive compensation plans, according to a new survey of the 1,000 largest companies by Clark Consulting, a Chicago benefits consulting firm. Most companies have expanded the programs to include all managers with annual salary and bonus exceeding $150,000, benefits experts say.Many members of Congress think the proliferation of supplemental executive retirement plans has contributed to the trend of companies freezing or terminating defined-benefit pension plans. They reason that if executives have their own rules for setting aside money, they have less incentive to maintain nest eggs for their employees.
- Yahoo! message board post by Linda Guyer. Full excerpt: If a car mechanic ripped someone off for $500 they'd
be screaming bloody murder. If your company rips you off - reneging on a promised benefit - to the tune of over
$100 thousand - everyone puts up with it. So your question is, why?
Reading the comments at the Alliance web site, people are indeed very angry at this change. There is no lack of anger. The problem is (1) fear of losing your job and (2) not trusting the politicians to do the right thing anyway. Let's face it why write to a jerk like Libous? He's in bed with the rich business owners and could not care less what happens to people. Same way in Washington DC. Write to Tom DeLay? Hah!This pension change affects the age group that would find it most difficult to leave right now and get another job. We've also seen our colleagues lose their jobs to other countries. We've also seen the "3" performers laid off and then the next round of "3's" have to be given to someone. We've seen the stories about how it can take 18 months or more to find another job, meanwhile your savings is depleted or a medical emergency can push you into bankruptcy.The biggest difference I would say between this pension change and the last is the economic environment. In 1999 we were at the peak of the dot com boom, any programmer with a smattering of html knowledge could get $100K by walking across the street. I remember this well as it was part of the reason I came out to publicly support the Alliance - I knew I could easily get another job. The affected age group for this change is acutely aware of their job prospects. They are cringing in fear and hoping to make it though this, albeit expecting to work at Target when kicked out by IBM, in order to make ends meet. If anyone dares say this is a great country, I'll have a few choice words for you.
- Yahoo! message board post by Linda Guyer. Full excerpt: One more point that I forgot to add. We used to expect the best of IBM executives. Now we expect the worst. So current behavior is right in line.
- Yahoo! message board post
by "madinpok". Full excerpt: For the pre-FHA (future health account) retirees,
there are two subsidy groups. The older group got $7,500/$3,500. That means $7,500 a year for pre-medicare years
and $3500 per year once they are on medicare. The second group gets $7,000/$3,000.
So, let's look at someone from this second group who retires at age 55. After 10 years, they would have received $70,000 x 10 or $70,000 in subsidies. Let's assume they live to age 85. That's 20 more years at $3,000 per year, or a total of $60,000 in additional subsidies for medical insurance during the medicare years. That's a grand total of $130,000 over their retirement lifetime.Contrast this to the roughly $35,000 that a FHA retiree will have in their account by age 55. If they choose to put just $7,000 a year towards medical insurance and pay the rest out of their own pocket, the money will last less than 6 years (including the interest earned during the post-55 years). By the time the money runs out, IBM would have put a total of about $48,000 into the FHA account (the $2,500 per year contributions for 10 years, plus interest for 21 years).Compare the $130,000 cost to IBM under the pre-FHA plan to the $48,000 cost for the FHA. In no way are they even close to being equal. Now you know why IBM changed to the FHA plan - it saves them about $82,000 per retiree.
- In a Yahoo! message board
post, "madinpok" responds to this question from another poster: I
am currently employed at IBM and am 44. My question related to this topic is, How much more expensive are the
retiree medical premiums as compared to the employee premiums under the IBM Medical Plan? A rough number for
apples to apples plans would be very instructive. Is it 2X, 3X,??? Knowing the current state of affairs would
help me in rough planning for the future. Thanks.
"madinpok's" full answer: For 2006, retirees under the FHA plan pay about $14,000 per year for the IBM Low Deductible PPO and dental plans for coverage of the employee and spouse. This plan is similar to the IBM PPO plan for active employees, which costs about $1350 per year (including dental) for the employee's contribution. IBM says it pays about 85% of the cost of employee medical coverage, which suggests the total cost for an employee is around $9000. But as a retiree, you are in a different insurance group that reflects the higher medical expenses of the older population.
- Yahoo! message board post by Kathi Cooper. Full excerpt: I am 55 and retired in 2005. My medical and dental is $625 a month, just for me only. I was paying $22 a month prior to retirement so that is about 28 times more than active employees. You and I are on the same medical plan, FHA, assuming you didn't just join IBM recently. If you stay with IBM for another 11 years, you too can look forward to being ripped of just like the rest of us. (sarcasm off)
- Yahoo! message board post
by Janet Krueger. Excerpts: You're close, but you're not there yet.
The retiree contribution is a CEILING not a commitment. Numbers from IBM's annual report show that there goal is
not to spend average of $3000 or more on each retiree, but to make a profit off each retiree. The instant they
can no longer do that, they will stop providing any retirement medical at all.
The FHA, on the surface, looks like real money, but there is no trust to support it and it can, and will, disappear at any time. Neither group will end up with anything, so they will be in the same bucket as all the people IBM laid off in the last ten years who weren't eligible. [...]P.S. You might be wondering how the older style of retiree medical became a profit center, even when many retirees still use more medical care than they pay for. It is because of the rebates IBM now gets from the federal government as a result of the Medicare prescription drug bill; IBM gets a refund of their program costs, even though those same costs are being charge out to the retirees!
- Yahoo! message board post by Kathi Cooper. Full excerpt: I work at Wal-Mart for the medical insurance. It costs me $43 a month for essentially the same coverage that IBM charges me $650 a month in script from the Future Hell Account. I joined Wal-Mart with the intention of not spending down my FHA till my later years. I have since changed my strategy and will spend down my FHA first. I have no faith in IBM. As far as Wal-Mart, their second largest store plan is opening up in my neck of the woods and I'm going into their accounting department. I'll see how that seat fits for a while before I decide what I want to do next. I know first hand who works at Wal-Mart. I'd say about 90% are desperate for life basics. There are VERY few of us that have the luxury of walking away.
- Yahoo!
finance board post by "riptoff". Excerpts: A huge chunk of IBM's earnings are based on pension
fund 'imaginary growth' based on a leveling process from prior boom years. They have also spent nearly $70 billion
buying back company stock, without which it might well be in the $20-40 range. Lou sold everything that wasn't
nailed down along with his $0.5 to $1 billion in options, (and got a very small bonus for letting his soul go
with it as it wasn't really worth much when he got there).
Sam is in position now to ride the golden cow with millions in options and $4 million per year minimum in retirement. Of course he can also start selling the tech division along with the PC slice (chips, mainframes, mid, unix) and then they can just become a giant temp agency for I.T. Kind of a Manpower for I.T. only with a giant management staff to support.There is, of course, the $48 Billion in the pension fund they plan on taking a major slice of somewhere down the road, probably about the time the majority of former workers are in bankruptcy and on welfare and the US has entered the second great depression. (Let them eat cake might well be Sam's future motto; hope it doesn't turn put the same for him) When IBM did the great pension robbery in July of 1999 the stock hit an all time intra-day high of around $139 shortly after. From that point on it was a long mostly stair step decline all the way down to the mid 50's. Anyone know what it was when little louie arrived? The overall equity in the company changed little during "short rib's" tenure though he was a master of stock manipulation.Let's see if sammie's pension thievery will have a similar effect. From an executive viewpoint it seems there's no better way to give your employees incentive than robbing them! I guess that training under the midget thief finally rubbed off on the new thief.
- Reuters: Pension worry piles
pressure on American consumers. By Alister Bull. Excerpts: Pension
concerns may be the last straw for free-spending U.S. households that have been a mainstay of the economy since
the 2001 recession, particularly with wages refusing to budge, costly health care and a cooling housing market. "There
is no question that these are trends that are going to add to people's anxiety and the process has already started," said
David Rosenberg, chief North American economist at Merrill Lynch in New York. [...]
"Things are not looking good for retirees with the collapse of the defined benefit plans. It was the piece of the puzzle that was keeping retirees afloat," he said. "In 20 years, the only people with these plans will be government employees."
- San Jose Mercury News, courtesy of the Austin American-Statesman: Clearing
the air on CEO pay. Excerpts: Unlike with most rank-and-file employees and even many senior executives, the pay
packages given to top executives are pretty complicated affairs. In addition to salary, bonuses and equity, there
are complex pension plans and post-retirement packages, severance agreements and special deals for completing mergers
or meeting certain targets. There are perks such as use of corporate jets for personal travel or home-security
services, and plans that allow execs to defer part of their pay, only to receive a bigger — and sometimes a much, much
bigger — payday later. Sorting out some of the formulas behind deferred compensation plans can require a lawyer,
an accountant and an actuary.
Some execs also get health plans, consulting contracts and offices they can enjoy long after the employment ends. After retirement, GE's Jack Welch got a New York apartment, country club memberships and a bodyguard, but shareholders didn't find out about them in financial filings. Rather, the perks came to light in Welch's messy divorce dispute. [...]The new SEC rules will shed more light into what makes up an executive's total pay package. Some shareholder groups believe that better disclosure will pressure boards to curb ever-rising pay packages. Here are some figures about recent surges in executive pay: In 1990 the average large U.S. company paid its CEO about 100 times what its average worker earned. In 2004, that multiple had risen to more than 400, according to United for a Fair Economy and the Institute for Policy Studies. From 2001 to 2003, top executive compensation amounted to 9.8 percent of the companies' profits — almost double the 5 percent of 1993-1995, according to a Harvard-Cornell study.
- CFO.com: Executive Pensions: Special No Longer? ''The question of a double standard is very important and resonates with people in the middle class,'' says a member of the Senate Finance Committee. By Stephen Taub. Excerpt: "The question of a double standard is very important and resonates with people in the middle class," said Senate Finance Committee member Ron Wyden (D-Oreg.), according to the paper. Wyden criticized Glenn Tilton, chief executive officer of United Airlines parent UAL Corp., for arranging $4 million in benefits for himself while the airline's employees were taking pay cuts, the paper noted.
- New York Times: When
Your Pension Is Frozen... By Mary Williams Walsh. Excerpts: Assessing the
impact on workers means making many assumptions about human, corporate and financial behavior. Still, some general
patterns exist, as demonstrated by the Employee Benefit Research Institute, a nonpartisan group in Washington, which
ran some numbers for The New York Times. The institute plugged various assumptions into a computer that provided
a model for the way benefits grow over time.
Outcomes varied widely. But over all, the institute found that nearly anytime a traditional pension plan was frozen and replaced with a typical 401(k) plan, some group of workers would lose part of the benefits they were expecting -- and sometimes a big part. They tended to be workers in late middle age who have been with the company for a long time. Women fared somewhat worse than men, because pension plans subsidize their longer lifespans and 401(k) plans generally don't. [...]At a company with a relatively generous pension plan, people as young as 30 could lose benefits from a freeze, according to Jack VanDerhei, a fellow of the research institute who did the modeling. But at a company with a more modest pension plan, people as old as 42 could actually benefit if their pension is replaced by a 401(k) -- and if they use the new plan skillfully.
- Yahoo! message board post by Kathi Cooper. Full excerpt: Some (relatively) good news... The UAW (Ford's union) has a contract with Ford and Ford will pay all union members one year of salary AFTER the plants shut down. The UAW did this to discourage Ford from outsourcing. Apparently Ford is now willing to pay the price to go overseas. At least 25% of Ford's employees are going to walk with a year of salary because the Union fought for it. IBM needs a recognized union. A lot of the suffering would be alleviated if everyone would join The Alliance.
- American Chronicle: AFL-CIO's
Sweeney: National Press Club Remarks on Slaughter of the Good American Job. Excerpts: But we’re facing a question of even greater magnitude that is being ignored by leaders of one
party and avoided by leaders of the other. And that question is: “What are we going to do about the destruction
of good jobs in our country -- the jobs that for the past half century helped us create the largest middle class,
the most dynamic economy and the strongest democracy in the history of the world?” [...]
A cover headline from The Economist warned: “Danger Time for America.” A headline from the Associated Press: “Tough Times Ahead for Middle Class Worker; Manufacturing Jobs Vanishing From Our Shores.” From the New York Times: “IBM Freezes Its Pension Plans.” From the Wall Street Journal: “Growth in Medical Cost Slows As Firms Shift Tab to Workers.” [...]The senseless slaughter of the good American job has been going on for the past 25 years. It’s at the core of a corporate-driven strategy to compete in the global marketplace by degrading work and workers, rather than competing through ingenuity -- competing through privatization, deregulation and de-unionization rather than by innovation. Since 1985, the global labor force has effectively doubled, with the entrance of 1.4 billion new workers from China, India and the former Soviet Union. And in the absence of new rules to prevent it, corporations have pitted the new workers against American workers in a merciless race to the bottom.
- Benefits Blog: More Lessons On "What A Retirement Plan Is Not". Excerpt: A surprisingly high percentage of Americans think that the most practical way for them to accumulate several hundred thousand dollars is to win the lottery. When asked about the most practical way for them personally to accumulate several hundred thousand dollars, over half (55%) said "save something each month for many years." Yet, more than one-fifth (21%) said "win the lottery," and among the least affluent and those over 55 years of age, these percentages were much higher -- 38% and 31% respectively. When asked about very important wealth-building strategies for all Americans, 16% said "win the lottery." Those without high school degrees were much more likely to select this option than were those with college degrees -- 30% vs. 8%.
- The Arizona Republic: Collapse
is 7-12 years away; health care talks can't wait. By Bradford Kirkman-Liff.
Excerpts: The employer-sponsored health insurance system in the United States is unraveling. It was created during
World War II as a temporary measure to provide needed coverage to workers and their families in defense factories.
The defeat of the Truman administration's proposals for national health insurance in the postwar period resulted
in the rapid expansion of employer-sponsored benefits.
The significant gaps in coverage for the elderly and the poor were partly addressed by Medicare and Medicaid in 1965, but even in the 1970s, the flaws in the employer-sponsored system were recognized. Neither the reform proposal by the Nixon administration in the early 1970s and that of the Clinton administration in the early 1990s progressed very far. [...]I would suggest that we should not start with arguing about national health insurance vs. free markets, managed care vs. consumer-directed health plans, non-profit care vs. corporate care. Rather, the discussion should start with values. What values can we agree upon that should direct and shape our American health system for the next 70 years?
- New York Times: Prognosis
Is Mixed for Health Savings. By Milt Freudenhein. Excerpts: President
Bush has made "consumer-directed" health savings plans a cornerstone of his policy for addressing runaway
medical costs, and he plans to push them again in the State of the Union address next week. But so far there is
little evidence that the approach is helping many consumers come to grips with the high price of health care. [...]
As the plans were conceived, people using their own money could be expected to spend less on health care, switching to lower-cost drugs, for example, and adopting healthier lifestyles. Employers were promised savings as they shifted responsibility to workers for thousands of dollars in costs. Uninsured employees of small companies and self-employed people would be able to set aside pretax dollars for low-cost, limited coverage. But for those who criticized the idea of health savings plans from the start, the early results simply confirm their gloomier forecasts. The critics say this approach is increasing many people's out-of-pocket expenses and warn that it will make them less likely to seek routine preventive care that might stave off bigger problems down the road.Pat Schoeni, executive director of the National Coalition on Health Care, a group seeking better, more affordable medical care, said, "The savings accounts are not designed to help people pay for health care; they are designed to help employers unload their health care costs."
- New York Times: Health
Savings Accounts Attract Wall St. By Eric Dash. Excerpts: When it comes to
medical benefits, millions of Americans already have a health insurer. Soon, many will also have a debit card and
a bank tied to their medical plan. Banks, credit unions and money management firms are now quietly positioning
themselves to become central players in the business of health care, offering 401(k)-type accounts to cover future
medical expenses. [...]
Banks and others are drawn by the promise of lucrative fees they can generate by offering consumers mutual funds and other investment vehicles as their account balances grow. Most also charge $50 to $75 to set up a health savings account, and they collect perhaps $40 or more each year in maintenance charges and service fees. Not since the creation of the individual retirement account in the mid-1970's has such a potentially huge mountain of money landed in the lap of the financial services industry."Billions of dollars that used to be written in the form of checks with insurance companies' names on them would instead go to credit unions, banks, and long-term investment houses," said Dan Perrin, the publisher of H.S.A. Insider and executive director of the H.S.A. Coalition, a lobbying group backed by 70 small-business and medical industry groups as well as the American Bankers Association. "You know America: you see a financial opportunity and it sets off a gold rush." [...]Banking lobbyists have met with White House officials at least three times over the last year to discuss the rules governing health savings vehicles. But until recently, most have been shy about their interest in such plans. Now, they have established a lobbying group, the H.S.A. Council, and are spending millions of dollars to roll the plans out.
- "fhawontcutit" comments. Excerpt: Well, well, well. Health savings accounts attract Wall Street. Well, gee,
imagine that. Another reason to go read "The
Great 401(k) Hoax" as they try to shift toward defined
contribution medical.
HSA -- aka Health Segregation Accounts. They will segregate the rich from the poor, the young from the old. The younger, healthier ones will migrate towards HSA's and the people who really need insurance will be left in a pool of less healthy people. It's diabolical and inhumane.
- "fhawontcutit" comments. Excerpt: Well, well, well. Health savings accounts attract Wall Street. Well, gee,
imagine that. Another reason to go read "The
Great 401(k) Hoax" as they try to shift toward defined
contribution medical.
- New York Times: Health
Care Confidential. By Paul Krugman. Excerpts: American health care is desperately
in need of reform. But what form should change take? Are there any useful examples we can turn to for guidance?
Well, I know about a health care system that has been highly successful in containing costs, yet provides excellent
care. And the story of this system's success provides a helpful corrective to anti-government ideology. For the
government doesn't just pay the bills in this system — it runs the hospitals and clinics.
No, I'm not talking about some faraway country. The system in question is our very own Veterans Health Administration, whose success story is one of the best-kept secrets in the American policy debate. [...]Last year customer satisfaction with the veterans' health system, as measured by an annual survey conducted by the National Quality Research Center, exceeded that for private health care for the sixth year in a row. This high level of quality (which is also verified by objective measures of performance) was achieved without big budget increases. In fact, the veterans' system has managed to avoid much of the huge cost surge that has plagued the rest of U.S. medicine.How does the V.H.A. do it? The secret of its success is the fact that it's a universal, integrated system. Because it covers all veterans, the system doesn't need to employ legions of administrative staff to check patients' coverage and demand payment from their insurance companies. Because it's integrated, providing all forms of medical care, it has been able to take the lead in electronic record-keeping and other innovations that reduce costs, ensure effective treatment and help prevent medical errors. [...]...pundits and policy makers don't talk about the veterans' system because they can't handle the cognitive dissonance. (One prominent commentator started yelling at me when I tried to describe the system's successes in a private conversation.) For the lesson of the V.H.A.'s success story — that a government agency can deliver better care at lower cost than the private sector — runs completely counter to the pro-privatization, anti-government conventional wisdom that dominates today's Washington.The dissonance between the dominant ideology and the realities of health care is one reason the Medicare drug legislation looks as if someone went down a checklist of things the veterans' system does right, and in each case did the opposite. For example, the V.H.A. avoids dealing with insurance companies; the drug bill shoehorns insurance companies into the program, even though they serve no real function. The V.H.A. bargains effectively on drug prices; the drug bill forbids Medicare from doing the same.
- The Standard (China): IBM deal hurts Lenovo profits. Excerpt: Lenovo Group, Asia's largest personal computer manufacturer, has blamed a lack of competitive products in the business it acquired from IBM last year for worse-than-expected results in the three months to December, when profit margins and market share outside the mainland fell sharply.
- New York Times: When
You Fly in First Class, It's Easy to Forget the Dots. By Ben Stein. Excerpts:
This step meant that UAL could drastically cut workers' pay — and it did. Pensions were simply jettisoned and
made the burden of the federal government's Pension Benefit Guaranty Corporation, which meant cuts of close to two-thirds
in some pilots' pension payments. And, of course, the bankruptcy simply eliminated all of that equity in UAL that
the employees had bought with their hard-earned savings. Thus, in a series of evil events, management of UAL basically
ruined the lives of the employee-owners, if that is not putting too fine a point on it, by taking away their savings,
incomes and pensions. (I am indebted to my pal, Phil DeMuth, for much of this research.)
All right, you might say. What else could management have done amid high fuel costs and a deregulated, supercompetitive market? That's "creative destruction," and it's good for the economy, some of my fellow Republicans and admirers of the free market might say. But what about the rules of law and common decency? Because, you see, there is a bit more to the story.Now UAL has been reorganized. It is preparing to emerge from bankruptcy. It will soon have a stock offering. This offering is expected to raise very roughly $6 billion. It is presumably worth that because UAL now has such low labor costs that it may actually make a profit of some size. (I'll believe it when I see it.)Here comes the good part: management has asked the bankruptcy court to let it have — free — roughly 15 percent of the stock in the new company, or about $900 million. Mr. Tilton, the chief executive, who plays the Orson Welles character in this drama, would get about $90 million personally for his hard work shepherding UAL through bankruptcy (for which he was already paid multiple millions of dollars).
- Yahoo! message board
post by "ibm_r_crooks". Excerpts: DogBreath, your example seems fairly typical.
Raises have been zero. Bonus plans have been cut. Performance expectations have been raised. Medical insurance
has gone up. Now more of your retirement is being stolen. It looks to be the same all over IBM.
But if you really want to get depressed go to the Bureau of Labor Statistics and see what inflation has done to your purchasing power over the same time period. You didn't say where you live, but in the Northeast you'd have needed to increase your income 16% over the same period to maintain your standard of living. You can find tables for any region of the country at that web site.I make a great contribution. I know that, and even my appraisals show that. Like you though the pay envelope has not reflected that in a very long time.
- I LOVE the work I do at IBM.
- I HATE going to work for IBM.
I hate the thought that my labor and innovation is going to line the pockets of a bunch of crooks. I hate the thought that I am working for a heartless corporation with no soul headed by a bunch of immoral thieves. It is amazing how well I'm able to perform given my attitude about IBM. It makes me wonder what I would accomplish working with an organization that I trusted and respected and reciprocated. Is there such a thing left in the USA? If you don't work for yourself, I think not. - Yahoo! finance board post by "hobiecoop". Full excerpt: Productivity at Zero? They beat us to death around here. My entire team worked 80 hours this week and then we still worked ALL weekend. WHY? Cause our management team over sells/over promises to their customers and then turns around and gets the bull-whip out to use on us to try and make their promises come true. If someone around here would start talking about the REAL cost of doing business, then things would be done with better quality and possibly get done on time. As it is, the quality of our work output stinks and we are months behind the project plan deliverable dates. Go figure.
- Chicago Tribune: Will your nest egg be enough? As pension plans fall, workers worry, Congress promises help. By William Neikirk. Excerpts: Margo Bryerton, a 56-year-old grandmother from Fayetteville, N.Y., had planned a trip to Ireland this summer to trace her family roots. That was before her employer, Verizon Communications Inc., froze her pension. That unexpected decision caused Bryerton, a 17-year Verizon employee, to reassess whether she and her retired husband would have enough money to live the comfortable life she had hoped to enjoy in retirement. Though she earns $80,000 a year, she concluded her pension would be roughly half of what she had been expecting. The trip has been canceled, she said, and other spending may have to be trimmed.
- Washington Post: Make
'em Provide Pensions. By Albert B. Crenshaw. Excerpts: The joining of the
parade by a growing number of companies that appear solid and profitable and that do not argue that the future
of the firm is at stake suggests that a tipping point has been reached. This comes as Congress winds up two more
years of dithering about how to "save" the private system. Perhaps it is time to change the terms of the
debate -- something that will happen only if the nation's workers insist on it and do so at the ballot box.
Until now, much of the debate over what to do about pensions has taken as a first principle that the system is voluntary. If you accept that, then it follows that doing too much tightening will simply cause companies to drop their plans. That principle needs reexamining.
- IBM Yahoo! message board post by "Mike". Full excerpt: In the last five years IBM stock has lost around 40%. Why are the major long term stock holders not asking tough questions to our board? With our execs getting their shares at 20-30 some dollars a clip and selling at market they have no real reason to worry about anything other than tanking the company. Messing with the benefits to add a few billion here and there to the bottom line has not impressed the wall street blokes. Outsourcing has not exactly driven the market up either. Perhaps, the BOD needs to think about growing the company to make money instead of cutting the bottom off. Feel free to enlighten me on the street. I do chemistry for a living. Still working on making gold from coal. It it about as stable an idea as my retirement plan.
- IBM Yahoo! message
board post by Janet Krueger. Full excerpt: COBRA, Consolidated Omnibus Budget
Reconciliation Act, is a federal law that forces employers to offer their ex-employees health insurance for up
to 18 months at no more than 2% above cost.
It is important because if you have even a 1 day lapse in health insurance coverage, all health insurance companies forever after are allowed to deny benefits for any long term illness or health problem that might have started before the lapse in coverage. This can be extremely expensive if you end up with cancer, diabetes, a heart condition, or any other long term problem. If you had a spouse and dependents on your IBM policy, the lapse creates a similar exposure for them.More information is available at: http://www.dol.gov/dol/topic/health-plans/cobra.htm.Of course, for a self-insured company like IBM, it is a bit difficult to identify what their actual cost is, so the price you get charged may feel a bit like a rip-off. But the long term cost of a coverage lapse could be MUCH higher...If you already have another job lined up that offers health insurance benefits, you may be able to get covered under their policy right away -- just pay attention to the dates and make sure there isn't a gap between the day their coverage starts and the day IBM's coverage ends.
| Vault Message Board Posts
Vault's IBM Business Consulting
Services message board is a popular hangout for IBM BCS employees, including many employees acquired
from PwC.
|
New
on the Alliance@IBM Site:
|