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- Janet Krueger reports:
The latest 10Q IBM has filed with the SEC (http://biz.yahoo.com/e/l/i/ibm.html)
has a telling statement about workforce reductions: Workforce reductions, which are the
ongoing reductions and rebalancing that occur each quarter were $79 million in first quarter
of 2003 versus $138 million in first quarter of 2002. They admit workforce reductions are
part of the plan! The reductions occur EACH QUARTER! The reductions are ONGOING! We knew this,
of course, but there it is in black and white.
- "rosiethemba" comments.
Excerpt: Yes, the plan averages everyone to be 7 year temps. Pretty ingenious, albeit sick.
An exec shared the 10% churn plan last year. Steve Mills, head of SWG, came to RTP and said
layoffs were to be monthly. Steve Mills said IBM "Planned to turn over the workforce
10% each year, (pause)...Forever." Then Steve said, "It is still possible to actually
have a "nice long term career with IBM, and then retire from them."...funny thing
is, his tone of voice, shifting feet, and body weight jostling suggested he "Just told
a joke with a punch line"..." laugh if you like." Steve's face gave permission
to giggle "if one finds dark humor funny." No one did.
- Reuters: Democrat
Says Pension Plan to Help Banks. Excerpts: But the bill, sponsored by Ohio Republican Rep.
John Boehner, would also allow companies to offer workers investment advice from firms that
may have conflicts of interest, as long as the conflicts are disclosed and the firms agree to
act in a worker's interest. In other words, the advice could come from the same company that
provides mutual funds for the 401(k) plan, so long as this fact is disclosed to employees. ...
Recalling a recent $1.4 billion Wall Street settlement over other conflicts of interest involving
analysts at investment banks, Rep. George Miller said now was not the time to allow "conflicted"
investment advice. "The main purpose of the Republican bill is to increase the market for
investment companies wanting to manage and advise 401 (k) plans, something that is prohibited
under law today," a statement from Miller's office said.
- Democrats Joint Economic Committee: Why
the Pension Preservation and Savings Expansion Act of 2003 Fails to Live Up to its Name [PDF--7
pages]. Excerpt: The Pension Preservation and Savings Expansion Act of 2003 makes
a number of costly changes to the current employer-sponsored pension system and individual retirement
saving arrangements that would provide significant benefits to those who least need help in
preparing for retirement, while doing little to meet the retirement income security needs of
most workers and retirees. In particular, the bill would accelerate to 2003 and make permanent
scheduled increases in 401(k) and IRA contribution limits, raise the income limits for tax deductible
and Roth IRA contributions, and raise the age at which workers must begin withdrawing assets
from retirement accounts. The bill would also change funding rules for defined benefit pension
plans, allowing sponsors to contribute less money to plans that are in many cases already dangerously
- New York Times: House
Approves Pension Rule Changes. Excerpt: The U.S. House of Representatives on Wednesday approved
changes in pension laws that sponsors said would provide workers advice on investing their retirement
assets, and give them more control over them. Critics poured scorn on the bill, saying it was
a sop to Wall Street firms penalized recently for conflicts of interest involving stock analysts
because it would allow similar conflicts in the management of retirement funds. ... The House
rejected a Democrat-sponsored amendment aimed at preventing abuses of executive compensation
and protecting older workers when companies convert traditional pension plans to "cash
balance" plans, which cut costs for employers.
- The defeated Democrat-sponsored amendment was summarized as follows on the Office
of the Clerk, U.S. House of Representatives Web site: An amendment in the nature of
a substitute that requires executive pensions to be subject to the same pension rules that
apply to other workers. Changes provisions that allow special executive pension plans to
escape taxation, to receive special protection against creditors, and to end-run pension
laws that require wide employee participation at the company. Requires that executive plans
be subject to the same uniform and fair vesting and contribution limits that apply to rank-and-file
employees. Requires companies changing from traditional pension plans to cash balance plans
to allow older workers the choice of remaining in the old plan or joining the new plan.
Requires executive compensation packages including pensions to be approved by the board
of directors. Gives employees greater protections when a company declares bankruptcy, and
denies executives preferential protection against creditors. Imposes an excise tax on executive
- Statement from U.S. Representative
Bernie Sanders (I-Vermont): The Republican pension bill is a complete disaster. If you think
what happened to the pensions of workers at Enron and WorldCom was a good thing, that it was
good to destroy the retirement savings of tens of thousands of workers while those at the very
top made out like bandits, you will love this bill. But, if you believe as I do, that more workers
in this country need a strong pension plan, instead of fewer workers; and if you believe that
those who do have good pension plans should not be robbed through cash balance pension schemes,
you will support the George Miller-Charlie Rangel Amendment. ... The White House policy on cash
balance pension plans is a direct assault on the retirement plans of millions of American workers.
Hundreds of companies all across America have already reneged on the retirement promises they
made to their employees by switching to cash balance pension plans. If the White House proposal
is aloud to stand, it will give the green light to hundreds more -- resulting in financial disaster
for workers all across the country who will not be receiving the pensions they were promised.
- Bernie Sanders statement and
questions for the Secretary of the Treasury. Excerpts: Since you became Treasury Secretary,
how many meetings have you had with labor groups and senior citizen groups to get their views
on the proposed Treasury regulations on cash balance pension plans? Would you be willing to
meet with me and a group of labor unions and senior citizen advocates on this issue at a mutually
convenient time and location? Do you think it is fair for workers to have their pensions slashed
by as much as 50% under a cash balance pension conversion? Will you withdraw the proposed regulations
on cash balance plans and issue new ones that won’t harm older workers as 217 Members
of the House and Senate have urged you and the President to do? Will you support legislation
to require employers that convert to cash balance plans to give workers the choice to remain
in the traditional defined benefit pension plan that was promised to them when they first started
working for their companies, just like you did when you were the CEO of CSX?
- Wall Street Journal: Companies
Cope With Pension Woes,But Some May Drop Plans. Excerpts: A number of U.S. companies may
drop their defined-benefit pensions because plan liabilities are getting so large, according
to a new study. Nonetheless, many companies are either coping with the impact on cash flow of
big pension contributions, or don't think it's a problem.
- Wall Street Journal: 2002
Was Worst Year Ever For Corporate Pensions -Study. Excerpts: Last year was the worst ever
for corporate defined-benefit pensions, according to a study that reports on dramatic shifts
in the retirement plans. A group of 320 companies in the S&P 500 lost $106 billion in pension
assets, and responded by quadrupling their plan contributions to $41 billion from the $12 billion
they contributed in 2001. Overall, the 320 companies saw a $34 billion pension surplus dissolve
into a $177 billion deficit, according to the study. As a result, they are rethinking their
longtime investment strategies.
- Wall Street Journal: More
Companies Seek IRS Waiver To Defer Pension Payments. Excerpt: More companies are asking
the Internal Revenue Service for relief in coping with their eroded retirement plans. A growing
number are telling the IRS that making required contributions to their pension plans would represent
a business hardship. Companies are requesting that the agency let them delay contributions to
their defined-benefit plans, which have lost big sums at a time when they must put away more
to cover future benefits. They want the IRS to grant them waivers that give them the right to
put off contributions for a year, and then stretch them out over the next several years. The
waivers essentially relax a section of tax code governing pension funding standards.
- Wall Street Journal: Bush
Quietly Abandons Retirement-Savings Plan. Excerpt: President Bush is poised to win sweeping
changes in the U.S. tax system, but not the top-to-bottom rewrite of retirement-savings incentives
the White House was seeking. The president's proposal called for switching Americans from the
dizzying array of tax-advantaged plans to a simplified system consisting of two basic vehicles:
lifetime savings accounts and retirement savings accounts. But the plan was quietly abandoned
soon after its splashy release with the federal budget.
- Computerworld: Offshore
coding work raises security concerns. Excerpt: A recent study by Gartner Inc. predicts that
by 2004, more than 80% of U.S. companies will consider outsourcing critical IT services, including
software development, to countries such as India, Pakistan, Russia and China. But some users
said the trend needs to be given a sanity check in light of recent changes in the global security
environment. At last week's Techno-Security Conference here, users peppered a panel of corporate
security officers with questions about the wisdom of outsourcing software development to cheap
labor overseas, where there is little or no way to ascertain the security risk that workers
- Computerworld: Harvard
event showcases Russia as outsourcing site. Excerpts: Lower wages than in the U.S. and an
abundance of highly skilled computer programmers make Russia a good fit for companies aiming
to bolster research and development or lower development costs, according to representatives
from major Russian IT outsourcing firms. ... Luxoft, based in Moscow, runs offshore development
centers in Russia for a number of major U.S. corporations including IBM, Dell Computer Corp.
and The Boeing Co.
- Computerworld: IT
workforce demand lowest in four years. Excerpt: IT workers looking for jobs in the U.S.
have nothing to cheer about in the latest workforce survey released by the Information Technology
Association of America (download PDF). Hiring projections for IT workers during the next year
are the lowest since 2000, and more than a tenth of IT companies are looking at moving IT jobs
to countries with cheaper labor. ... Asked about moving IT jobs outside of the U.S., 6% of all
firms said they already have, including 22% of IT companies with 1,000 or more employees. Fifteen
percent of IT firms say they will or might move IT jobs out of the U.S. in the next year. The
jobs most likely to be moved from the U.S. are programming/software engineering, followed by
network design and Web development, according to the ITAA survey.
- Rediff.com (India): IBM to expand
operations in Karnataka. Excerpts: IBM Inc, the $81-billion world's largest IT firm, will
be expanding its operations in Karnataka, including a Linux development centre at Hubli and
ramping up its existing facilities in Bangalore, where the headquarters of its Indian subsidiary
is located. IBM's expansion plans in the state emerged out of a meeting between IBM chairman
Samuel J Palmisano and Karnataka Chief Minister S M Krishna and senior government officials
in Bangalore on Monday. Though Palmisano declined to interact with the waiting newspersons,
Krishna told the media after the 30-minute meeting that IBM India had decided to expand its
Bangalore facility in the areas of software development, global services and research and development.
... Describing the significance of Palmisano's first visit to the sub-continent, McNesse said
IBM India was increasingly becoming important to the Big Blue's global operations as a development
centre with software and research labs, call centre and services. "India is emerging as
a huge market for IBM's operations. We value the domain expertise its talented engineers command.
To be in India is a win-win situation for us," McNesse claimed.
- Rdiff.com (India): Big Blue blueprint
seems to bet big on India. Excerpt: IBM, the world's largest infotech company, seems to
be betting big on India. The past few weeks have seen its top three global executives -- chairman
Samuel J Palmisano, president Steven Mills and head of technology and manufacturing Nicholas
M Donofrio -- on business visits to India. And now, it's the turn of Paul Horn, head of IBM
research, the hallowed research unit, to be here soon. IBM executives in India are tight-lipped
about the reasons behind these visits. But the buzz is that IBM is moving strategic operations
in the software business area, and looking at expanding its hardware and services operations
in India. An industry source said India offers a great destination for a company like IBM to
shift its significant software development and services work. Besides, with the consolidation
of Indian IT-enabled market, the company can look at moving substantial part of its BPO operations
also to India. "The visits of the senior executives of the company is likely to be a prelude
to major investment plans by the company," the source added.
- Economic Times (India): IBM
to merge Indian arms, to hire more staff. Excerpt: IT major IBM is merging its two Indian
arms — IBM Global Services India (IGSI) and IBM India. The merged entity will be called
IGSI. According to sources, as a result of the merger, the entire business of IMB India would
be transferred to IGSI and in consideration of the same IGSI would issue shares to the shareholders
of IBM India.
- Read the Washington Alliance of Technology Workers'
(WashTech) Web page about offshoring of high tech jobs.
- New York Times: New
Study Finds 60 Million Uninsured During a Year. Excerpt: The report said 57 million to 59
million people, "about a quarter of the nonelderly population," lacked insurance at
some time in 1998, the most recent year for which reliable comparative figures were available.
At the same time, the budget office said, government surveys suggest that the number of people
uninsured for the entire year was 21 million to 31 million, or 9 percent to 13 percent of nonelderly
- Washington Post: Kucinich's
'Medicare for All' Offers No Role for Private Insurers.
- Wall Street Journal: A
Retired Steelworker Struggles With a Health-Insurance Crisis. How the Ailing Industry Broke
Promises From the Past to Remain Afloat Today. Excerpt: Now 57 years old and in fragile health,
Mr. Kurilko faces an excruciating decision. Should he use up his savings to pay the monthly
$2,864 fee for health insurance himself? Should he buy a plan that is cheaper but provides less
coverage? Or should he go without coverage and hope that his weakened heart doesn't give out?
- Washington Post: Dean
Offers Plan for Near-Universal Health Care Access. Excerpt: Former Vermont governor Howard
Dean today unveiled a plan to provide near-universal access to health care coverage by targeting
federal assistance to those without insurance and penalizing large, profitable corporations
that fail to offer it, saying the United States "has fallen 50 years behind the social
standards of what we consider the civilized world." Dean, a medical doctor who has made
expanding health care coverage one of the pillars of his campaign for the Democratic presidential
nomination, said the proposal would provide as much or more coverage at less than half the cost
of the plan proposed by rival Rep. Richard A. Gephardt (D-Mo.).
- Washington Post: Feeling
Uninsured About Future. Forum in Fairfax Examines Looming 'Health Care Crisis' Excerpt:
"We don't know what it will take for people to comprehend the magnitude of the health care
crisis," said Christina Stevens, director of Fairfax's Community Health Care Network, which
oversees the county's clinics. "It's almost like the whole system will implode." To
bring light to the issue, Stevens helped organize a panel of medical professionals, health policymakers
and government officials to discuss the future of health care locally and nationally. About
200 people gathered at the Fairfax County Government Center this week as speakers outlined the
situation and the cost to society. Because the uninsured cannot easily pay for doctor visits
and other treatment, many put it off, said Jane H. Woods, Virginia's secretary of health and
human resources and a panelist at Monday night's forum. If their conditions worsen, they usually
end up at the hospital with more serious problems. This, in turn, has helped stretch the average
wait in local emergency rooms to five hours, said Patricia Schmehl, senior director of women's
and emergency services at Inova Fairfax Hospital.
- San Jose Mercury News: Kerry
Touts $80 Billion Health Care Plan. Excerpt: "A quarter of the money America spends
on health care goes to non-medical costs - basically the time spent paying bills and handling
paperwork," Kerry said. "No other industry is so inefficient." Kerry pointed
out that while banks have reduced the costs of individual transactions to as little as a penny
per transaction, "a single transaction in health care can cost as much as $12 to $25 -
and not a penny of that goes to care," he said.
- Philadelphia Inquirer editorial, courtesy of the Billings Gazette: Democracy
is dead at most corporate annual meetings. Excerpts: Indeed, during the 100-minute meeting,
there appeared to be only one decision that was not a foregone conclusion. When a shareholder
complained that the directions to the meeting at the First Union Center did not consider the
needs of subway riders, Roberts made a quick executive decision. "We will make that correction
in the future," he declared. There was nothing unusual in the Comcast meeting -- at almost
all annual meetings management gets everything it wants. ... Publicly held corporations are
supposed to be democracies. They are owned by the shareholders, who elect directors to hire
and fire managers. The annual meeting has all the trappings of democracy -- reports to shareholders,
discussion, voting. But the democracy is just an illusion. Typically, the director candidates
run unchallenged, since only the directors have the power to decide who gets on the ballot.
- The Segal Group: Tough
Executive Pay Choices for 2003 [PDF]. Excerpts: Clearly, 2003 is shaping up as another year
of tough executive compensation choices for management teams and boards. Three years of down
markets have done nothing to improve company overhang issues or employee motivation. The realization
of a future expense for stock options further complicates the situation.
- Associated Press: Executive
Pensions Mysterious to Many. Excerpts: We know the salaries of the top executives. We know
how much their annual bonuses are. We know how many stock options they have. But we don't know
everything that goes into their compensation. Not even close. We don't know all about their
pensions. They're huge and getting bigger all the time. "Executives are using preferential
retirement plans to gain surreptitious pay," said Brandon Reuse, a research analyst for
the AFL-CIO, which is lobbying for compensation reform. ... But executives often complain that
federally imposed caps curb the amount of their annual pensions at $160,000. Given their hefty
paychecks, they think they should get more. That's led many companies to set up special retirement
programs just to service top officers, which some critics say is yet another back-door way to
line executives' pockets.
- Business Week: Executive
Pay: Labor Strikes Back. Recent union-led proxy victories could curb corner-office excesses.
Excerpts: Delta Air Lines pilot Michael H. Messmore was incensed at the $28 million golden parachute
handed to former Delta Chief Executive Ronald W. Allen when he resigned in 1997. To stop such
excesses, Messmore, with the backing of the Air Line Pilots Assn., submitted a proxy resolution
in 2000 demanding shareholder approval of such deals. The initiative was rejected three years
in a row. But at Delta's annual meeting on Apr. 25, widespread shareholder anger over revelations
of bankruptcy-proof retirement packages for current executives put Messmore's resolution over
the top, with a 54% majority. Another pilot-sponsored proposal calling for the cost of stock
options to be deducted from earnings racked up a 60% majority. "Executive compensation
is out of whack," says Messmore.