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    Highlights for week ending March 2, 2002
  • Wall Street Journal: IBM Is Resolute on Accounting Despite Concerns of Regulators. Excerpts: "Many companies simply cave in after the Securities and Exchange Commission questions their accounting methods. But International Business Machines Corp. has faced such questions and prefers to stick by its own interpretation."

    "An accounting treatment used by Big Blue to reduce its reported operating costs has previously been the subject of concern at the SEC. But so far -- despite special wording in an SEC accounting advisory intended to tighten the rules governing the practice -- IBM insists that it is operating within the letter of accepted industry practices and standing by the treatment it prefers, which recently cost the company dearly in the stock market."

    "In both 1999 and in the fourth quarter of 2001, IBM was criticized for using gains from selling assets to offset ordinary expenses, rather than listing the gains separately as nonoperating income or in some other category. IBM says that is consistent with its past practice and meets accounting guidelines. The SEC hasn't asked IBM to change its reports, according to people familiar with the matter."

    "But in late 1999, these people say, SEC accountants summoned IBM executives to Washington and asked them why Big Blue that year included $2.7 billion in gains from the sale of its Global Network business to AT&T Corp. as part of the 'sales, general and administrative,' or SG&A, expense category in its financial statements." If link is broken, view Adobe Acrobat version [PDF--57 KB].

  • Raleigh News & Observer: Companies cut back, retirees pay. Seniors must face growing health costs with shrinking help from former employers. Excerpts: "When Peter Bona retired from IBM's Research Triangle Park campus in 1985, he left with a sweet deal on retiree health benefits. IBM paid 80 percent of the former facilities repair technician's health insurance premium for two years. Then, when Bona turned 65 and had major medical insurance through the federal Medicare program, IBM offered him supplemental coverage to help pay for prescription drugs and other services not covered by Medicare, which covers the disabled and people 65 or older. The IBM plan also covered his wife, Annette. Best of all, it didn't cost them a penny. IBM paid the Bonas' entire premium."

    "In 1998, two-thirds of companies with 200 or more employees offered retiree health benefits, according to Kaiser. By 2001, a little more than a third of employers that size offered them. (Companies with fewer than 200 employees rarely offer health benefits to retirees; last year just 3 percent did.) The larger companies that do offer coverage have made it harder to qualify for them, and they are asking retirees to pay a larger share of the premium. Some companies have capped what they will pay, although retirees can generally continue the coverage at their own expense, as the Bonas are doing. 'On some level we've been incredibly naive and trusting to think that employers would never come to this,' said Robert Jackson, executive director of the state branch of AARP. 'A lot of us didn't realize how fragile these benefits are.'" If link is broken, view Adobe Acrobat version [PDF--116 KB].

  • Wall Street Journal: McDermott Alters Pay Formulas Following Shareholder Resolution. Excerpts: "In what appears to be a first, McDermott International Inc. agreed to determine compensation for senior executives without regard to any income generated by its pension plan." ... "Amalgamated Bank, which filed the resolution, noted that pension income is contributing to the bottom line of many large companies and, in turn, boosting executive pay that is based on earnings. 'Pension plans shouldn't be used to boost executive pay,' says Melissa Moye, chief economist at Amalgamated Bank, which manages the LongView Funds, which are used by various pension plans."

    Because executive compensation is increasingly based on earnings, some shareholder groups have argued that the pension income should be disregarded, as it doesn't represent corporate operations and performance. When executive pay is linked to pension income, "it provides companies with an incentive to manipulate assumptions in the pension plan, to boost income and manage earnings," says Amalgamated Bank's Ms. Moye. 'There's also a fairness issue,' she adds. 'We don't want improper incentives to limit benefits for workers and retirees.'" If link is broken, view Adobe Acrobat version [PDF--141 KB].

  • Wall Street Journal: Bush Appears to Be Giving Support To Shelters for Executive Pensions. Excerpt: "Despite criticism over how top Enron Corp. officials were able to protect their special executive pensions while other employees saw retirement savings devastated, tax consultants say the Bush administration has softened proposed new rules, which will allow top executives to continue sheltering billions of dollars in pension savings." If link is broken, view Adobe Acrobat version [PDF--66 KB].

  • Boston Globe: Pension Reform; Push for New Laws Puts Business On Defensive. Excerpts: "Business lobbyists are scrambling to head off a broad array of Enron-inspired legislation that would expand federal regulation of everything from corporate pension plans to accounting standards to stock options. The push for tighter federal laws has come as a rude shock to the corporate community, which had not expected to be fighting a rear guard battle under a Republican administration."

  • Wall Street Journal: Some CEOs Received Big Payouts As Companies They Led Faltered. Excerpt: "Plenty of companies have gotten into plenty of trouble lately. But their senior executives often keep raking in healthy amounts of compensation while employees and shareholders suffer. Here are five examples..."

  • Linda Guyer writes a letter to new IBM CEO Sam Palmisano on Lou Gerstner's last day as CEO. Excerpt: "Please treat employees as assets, rather than as expenses. I would like to see the Basic Beliefs, including 'Respect for the Individual', return as guiding principles for IBM. I believe that this is critical for IBM's success in the long run. Businesses can and do succeed without treating employees as commodities – take Southwest Airlines as an example. The IBM culture today is one of fear, self-preservation, and chaos. Dedication and pride of job well done for one's employer are gone. Please end the continuous cycles of firings. And please stop treating younger employees as more desirable than older, experienced employees."

  • The CPR group comments on new IBM CEO Sam Palmisano and their hopes for the future of IBM. Excerpt: "It is clear that Gerstner is an anachronistic aberration, a mistake. He and his kind are now moving quickly to the dustbins of irrelevant history. The impact of the Internet revolution is not enhanced commerce but the Darwinian creation of a new universal environment where only the clean and pure commercial entities will win the marketplace. This is the new business life form should strive for. The morally pure and open corporation."

  • CBS MarketWatch: Why buying dips won't work this time. "Falling shares of IBM, AOL Time Warner and other shaken behemoths are not worth chasing, says a stock and bond-options trader known for his work with volatile securities. IBM's shares, with a swollen market worth of $155 billion, are another looming disaster. The computer company's revenues are slipping each quarter, and investors are becoming wary of IBM's accounting practices. Landry figures the company's stock, as low as $95.76 three days ago, is setting up for another move lower."

  • Scott Burns: The Great 401(k) Mystery Carnival. Excerpt: "Step right up folks! Pay your penny and take your chances on guessing which of these corporate logos covers the fortune and which covers the booby prize. Guess the right company and you’ll be rich beyond your wildest dreams. Guess the wrong company and, well, you’ll need to find creative substitutes for money. That’s how we might turn our choice of employer and 401(k) plan into one of those games played at state fairs. In fact, we take our chances in 401(k) plans. The difference is that more than a penny is involved. Since many companies have capped or terminated their defined benefit pensions 401(k) plans are likely to be a primary source of retirement income for millions of workers."

  • Plan Sponsor: Retiree Group Targets Healthcare Gaps. Excerpt: "Those retirees lucky enough to have employer-sponsored health coverage have, in a growing number of cases, seen that benefit come under attack by both tough economic times and rising healthcare costs. However, the National Retiree Legislative Network (NRLN), a Washington-based coalition of nearly a dozen retiree organizations dedicated to protecting the pension plans and retirement benefits of their members, has outlined an aggressive legislative agenda for 2002, according to its organizers. And that agenda could present plan sponsors with yet another tough choice."

  • American Academy of Actuaries: Is America Unprepared for Retirement? New Survey Released on Retirement Risks. Excerpt: "The survey results indicated that Americans' sunny view of their own life expectancy and need for nursing home care may leave them unprepared for a secure retirement... Most people underestimated the life expectancy of an average 65-year-old person.... Because there is a lack of understanding of the risks faced in retirement, providing people with the knowledge and skills needed to cope with these risks should be a high priority."

  • U.S. Equal Employment Opportunity Commission: EEOC Issues Fiscal 2001 Enforcement Data. Excerpt: "The types of discrimination with the highest rate of increase in FY 2001, compared to the prior year, were allegations of discrimination based on age (one and one-half percentage point increase) and disability (one-half percentage point increase). All other types of charge filings either declined slightly (less than one-half percentage point) or remained level compared to FY 2000. 'The incidence rate of age and disability discrimination appears to be on the rise with the graying of America,' said EEOC Chair Cari M. Dominguez. 'Employers must be vigilant in preventing such characteristics from being factored into their employment decisions.'"

  • "lawn_mower_man1" talks about how things might be different in terms of employee benefits for IBMers if we had a union, using the CWA contract at Verizon as an example.

  • Business Week: How to Make the Enron Gang Pay. Execs who ruin companies need to suffer at least as much as the employees whose hopes and retirement funds they pillaged. Excerpt: "If the names of the alleged schemers at Enron and Global Crossing ended in a vowel, the pack of them might be cooling their heels in federal detention centers awaiting trial and trying to make bail so steep even Bill Gates couldn't post it. All the while, a posse of prosecutors would be compiling a list of racketeering charges longer than a line of limos at a Mafia wedding. Of course, there are two reasons that's not going to happen. The first is that these are preppie MBAs with Porsche bank accounts and hired lawyers whose hourly rate could feed a family of four for a month. The second is that their hides have likely been saved by the high-tech executives of Silicon Valley and their Washington lackeys, er, lobbyists."
"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
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.