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    Highlights for week ending December 29, 2001
  • Congressman Bernie Sanders of Vermont has published a year-end 2001 editorial titled A Year of Contrasts: Courage, Sacrifice and …Corporate Greed. The entire editorial is worth reading but the following excerpts are those that mention IBM:

    "But wait, corporate self-dealing doesn't end there. Take, for example, Big Blue. As the holiday season approached, IBM announced a new round of job cuts. According to published news reports, the company has cut more than 5,000 jobs in the United States since July. Meanwhile, they are building two new micro-processing plants in China where workers are paid a fraction of what American workers receive. To IBM watchers, this latest act is par for the course."

    "Two years ago, despite record-breaking profits and a pension fund surplus of some $10 billion, IBM slashed pension and retirement health benefits for workers in 1999 and 2000 and curtailed salaries in 2001. Meanwhile, the CEO of IBM, Louis Gerstner, raked in $176 million in total compensation and stock options over the past 2 years. In addition, he has accumulated over $260 million in unexercised stock options from IBM during his tenure. While slashing the pension plans of IBM employees, he negotiated a retirement plan over $1.1 million a year for himself."

    Once again, no bad deed goes unrewarded. If the House Republican leadership gets its way IBM will receive $1.4 billion in corporate welfare this year.

  • Plan Sponsor: Total Benefits: Rethinking Retiree Health. Sponsors are examining lifetime caps, managed care, and higher copays. Excerpts: "Plan sponsors also are considering plan-design changes for retiree health care. Some are beginning to move to defined contribution health plans, Fronstin says, 'where they pre-fund an account over 10 or 15 years while a person is still working. Then, it is used by the employee to buy insurance when he or she retires'."

    "Cutting current retirees' benefits often brings bad publicity, Fronstin says. But, restricting active employees' future access to retiree health care generally has not raised much of a fuss, he says. 'It is easy for employers to do that, because most active workers are not focused on the fact that retiree health insurance might be a benefit,' he says, adding that previous EBRI research found that many active employees with the benefit did not know it. 'It is easy to cut the benefit when employees do not know that it exists. They are just not focused on that'."

  • Binghamton (N.Y.) Press and Sun letter to the editor: So much for patriotism. Excerpt: "That patriotic responsibility extended to the corporations who call the United States their home. Big business even advertised that Americans should keep spending their money. Ironically, many corporations began firing perfectly good employees so they could reap huge gains in their stock prices, while fully expecting a recovery by June 2002." (Note: The Binghamton Press and Sun archives only one week's worth of articles. If this link has expired, the text of the editorial letter may be read here.)

  • Wall Street Journal: Employers Seek to Change Way Pension Payouts Are Calculated. Excerpts: "Employer groups say that many corporate pension plans have suffered losses in the wake of Sept. 11. So how much money should companies put into their plans to guarantee that they will be sufficiently funded to cover future pension costs? Less then they do now, employer groups say. While that may sound odd, that would be the effect of special federal legislation that is being sought by large companies. What's more, employer groups also are hoping that Congress approves a change in the way companies calculate pension payouts, which would have the effect of cutting by tens of thousands of dollars the pension lump-sum payments that many workers take in lieu of a monthly pension." ... "Switching to the higher rate not only would allow companies to contribute less to pension funds, but also could have the little-noticed effect of reducing the lump-sum payments to many workers who get laid off, change jobs or retire." If link is broken, view Adobe Acrobat version [PDF--67 KB].

  • Miami Herald: The Perils of Pension Plans—In the past two decades, 401(k) retirement accounts have doubled. But after the collapse of Enron, employees are now realizing the risk involved with these plans. Excerpts: "In the last quarter-century, the nation has experienced a shift away from traditional pension plans, called 'defined benefits' or DB in the trade because they promise to pay specific amounts upon retirement. In 1979, 139,000 companies had DB plans. By 1998, that number had fallen by 60 percent -- to 56,000." ... "'Keep in mind that with defined contribution plans, all the risk is on the employee,' says Gary Pastorius, spokesman for the Pension Benefit Guarantee Corp., the federally created organization that since its founding in 1974 has taken over 3,000 pension plans. 'With defined benefit, there is no risk to the employee, and it's backed by federal insurance'."

  • Duke Energy Employee Advocate (DukeEmployees.com): Shareholder Activism Colored by Enron. Excerpts: "Pension funds, pressure groups and outspoken investors have been flooding the firms they own with proposals for change, in an annual test of U.S. corporate democracy likely to be colored this year by the collapse of Enron Corp." ... "Executive pay is likely to remain the top target for shareholder proposals. 'It's been a hot topic for a number of years. It's probably going to be the dominant issue this year,' McGurn said. "Targeting so-called 'vapor profits,' a Communication Workers of America union fund has filed a proposal with General Electric that executive pay be set without counting non-core income derived from company pension plans, said the IRRC." Editor's note: Executive pay stockholder proposals include:
  • Plan Sponsor: EEOC Takes on Allstate. Excerpts: "The suit, filed in the US District Court in Philadelphia, accuses the insurer of discriminating against its agents, following its decision to change the job status of 15,200 regular employees that make up its sales force to independent contractors—without retirement and healthcare benefits." ... "To continue employment at Allstate as contractors, agents were required to sign a waiver saying that they would not sue Allstate. All but 6,400 complied. The remainder, 90% of whom where older than 40, were dismissed and given the option of rejoining the group as contractors."

  • "i_be_mad_as_heck" succinctly spells out the retirement medical situation for IBM U.S. employees...

  • Financial Times: IBM is number three on the FT's "world's most respected companies." Enron, on the other hand, has slipped to the number 5 position in 2001 from the number 2 position in 2000 in FT's "world's most respected energy/chemical companies."
"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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