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Highlights—June 26, 2004
- Seattle Post-Intelligencer: IBM
cancer claims dismissed after deal. Excerpt: Dozens of
IBM Corp. workers and retirees who alleged that exposure to toxic chemicals caused them
to develop cancer had their cases dismissed after a settlement, the company announced Wednesday.
... In March, IBM settled a $100 million lawsuit by Candace Curtis, born with severe birth
defects allegedly caused by her mother's working conditions at an IBM plant in Fishkill,
N.Y. That case was settled just as jury selection was to start, and terms were not released.
IBM settled another $40 million birth defect lawsuit in 2001 by the parents of a deformed
son born blind and with severe respiratory abnormalities. The semiconductor industry and
thousands of Americans who have worked in chip plants have been watching the cases anxiously.
Although most microchip factories have dramatically improved safety in dust-free "clean
rooms," companies still operate fabs in several states and overseas.
- The Observer (United Kingdom): IBM
fights to suppress cancer probe. Computer giant
accused of persuading scientific journal to block academic investigation of illness
in employees. Excerpt: Scientists have voted to boycott an international journal after
its owners blocked publication of a paper claiming large numbers of IBM workers have
died prematurely of cancers and other diseases. The development is unprecedented and
has triggered a battle between the computer company and researchers. IBM says the paper
is flawed but denies putting pressure on the publishing group Elsevier to stop the paper's
- ePolitix.com (United Kingdom): Leaked
letter hints at retirement age change. Excerpt:
A leaked letter has revealed government plans to raise the retirement age to 70. Industry
secretary Patricia Hewitt hinted at a potential Cabinet row over the proposals to adapt
British law to meet EU equality directives and help stave off a looming pensions crisis.
- Wall Street Journal:
a Single Sentence By the IRS Paved the Way to Cash-Balance Plans, by Ellen Schultz.
(Originally published on December 28, 1999). Excerpt: In August 1991, the Internal Revenue
Service issued a long-awaited set of proposed pension regulations. In it was a single
sentence, not present in a draft copy just 11 days before, that seemed to protect companies
that were changing their pension plans to an ingenious new system. "I sleep
better at night" knowing
the sentence is there, said an attorney with benefits consultants William M. Mercer at
a conference for actuaries the following March. And so, apparently, did clients. In the
years since, hundreds of companies have converted their conventional pensions to "cash
balance plans," which
save them money by reducing the pensions accrued by older workers. Specifically, the
sentence said that the new kind of pension didn't violate age-discrimination laws. Employers
are sleeping less soundly these days. In 1999, as millions of older workers realized
exactly how cash-balance pensions work, they complained loudly enough that four federal
agencies and Congress began looking into whether the plans do, in fact, illegally discriminate.
Besides the IRS, the agencies are the Equal Employment Opportunity Commission, the Labor
Department and the General Accounting Office.
- TIC International Corporation Benefits News Brief, courtesy of Benefitslink.com: U.S.
Supreme Court Speaks Out on Suspension of Benefits Rules [PDF—4 pages].
Excerpt: In a landmark decision
resolving differences between the Fifth Circuit and Seventh Circuit Courts, the U.S.
Supreme Court decided that an amendment to a multiemployer pension
plan's suspension of benefits (SOB) rules for early retirees making
the rules more stringent than before was a violation of IRS Code
section 411(d)(6) which prohibits the reduction or elimination of
early retiree benefits.
- Mellon's Human Resources & Investor Solutions: Supreme
Court Backs Retirees' Benefit Cutback Claims [PDF—2
pages]. Excerpt: "The
court found that the retirees had justifiably relied on the terms of the plan at the
time they retired and the
subsequent amendment effectively reduced their benefits. This
decision reminds employers with suspension of benefit provisions (or
considering adding such provisions) to make sure that current
accrued benefits are not affected."
- Electronic Business Online: Electronic
Business' Highest Paid Executives 2003. Editor's note: Nick Donofrio and Sam Palmisano
are two of Highest Compensated
Electronic Business Executives of 2003 out of the Top 40.
IBMers, how large was your salary increase this year? How large was your bonus?
|N.M. Donofrio, 58 Senior Vice President IBM
Salary increase in 2003: 16%
Bonus 2003: $1,185,000
Bonus Increase 2003: 110%
Other Compensation: $37,465
Other Compensation Change 2003: -11%
Values of Stock Options exercised: $10,694,145
Total Increase 2003: $12,554,111
Total Change 2003: 985%
52 Chairman, President & CEO
Salary Increase in 2003: 8%
Bonus 2003: $5,400,000
Bonus Increase 2003: 20%
Other Compensation: $192,537
Other Compensation Change 2003: -8%
Value of Stock Options exercised: $0
Total Increase 2003: $7,142,537
Total Change 2003: 16%
- MSN Money: Study:
CEO Pay Rose 27% in 2003.
Stock awards help drive the average corporate chieftain’s annual compensation to
$4.6 million, exceeding the previous year’s figure by $1 million. Excerpt: The rise
in pay “shows that calls for pay restraint are being ignored. The increase for S&P
500 CEOs in 2003, is nearly three times the rise seen for 2002, when total compensation
rose by only 11.48%,” the Corporate Library said.
- Vault's IBM
Business Consulting Services message board is a popular hangout for IBM BCS employees,
including many employees acquired from PwC. Some sample posts follow:
- In "Lot's
of good info in this forum" "Dose of reality" offers advice to a
person considering an entry level position as a consultant in IBM Global Services.
Full excerpt: Spend some time reading this forum - the longer threads are particularly
helpful - you will get a lot of different perspectives. To shortcut it for you:
Decent but definitely not top tier base compensation and benefits package – under
pressure due to profit challenges. Discount any expectation of incentive compensation – virtually
none granted last few years. Bureaucratic – definitely, though this impacts
middle management and up much more than entry level. Very restrictive and employee-unfriendly
travel policy. Many different service lines – can offer some flexibility in
your initial career path. There are some smart people, though a lot of them are
leaving now. Very high utilization targets (number of hours billed) with intense
management focus – implication
is that you will be coerced into accepting roles that may not be best for you – career-wise
or in terms of work-life balance/travel. Again, less of a consideration for entry
level staff, since you are just happy to be working and getting a paycheck – right?
Maybe some initial training to jump start your marketability to clients, but
after that training will be meager at best. As an entry level job, it might be
OK, but there are definitely better companies with which to launch a long term
career. If you have no other options, and can come in and get focused on developing
skills and marketability to transition out to something better in 2 or 3 years, then
it might make sense. If you do accept a job, be very careful not to get sucked into
a long slow death – you will know what I mean
after a few months on the inside.
- Forbes: When Fighting
HMOs, Shoot First. Excerpt: Are health maintenance organizations in the business
of practicing medicine? No, the Supreme Court says: They are in the business of denying
medicine. Yesterday, the court weighed in on one aspect of so-called patients' rights
laws and held that patients could not sue HMOs for the results of their refusal to
pay for certain doctor-approved remedies. The best they can do under the federal law
that governs such matters is sue under the insurance policy for reimbursement of the
cost of the benefits the HMOs denied. ... The decision in Aetna Health v. Davila came
in response to two cases first filed in Texas courts. In one, plaintiff said the HMO
forced him to take the drug Naprosyn for his arthritis, rather than the Vioxx his doctor
prescribed. The patient reacted badly in way that required extensive treatment and
hospitalization. The second suit involved a patient who underwent surgery. Although
her treating physician recommended an extended hospital stay, a Cigna discharge
nurse determined that she did not meet the plan's criteria for a continued hospital
stay. The result, she alleged, was a relapse and a return to the hospital. Then Governor
George Bush signed the patients' rights law. But since coming to Washington, Bush's
enthusiasm for the Texas law has waned and the Justice Department sided with the insurance
companies, units of Aetna and Cigna.
- The Daily Mis-Lead: Bush
Ignores Wage Crisis Hitting Middle Class. Excerpt: Over
the last month, the Bush administration has cited recent jobs numbers to claim that
average workers' paychecks are increasing. Vice President Cheney said, "real incomes
and wages are growing." But as new studies show, wages have actually decreased for
the average worker, even as corporate profits and CEO pay have exploded. According
to the Economic Policy Institute, while corporate profits have risen by more than 62%,
workers' take home pay has dropped by .6%. This follows an earlier report which shows
that industries currently adding jobs pay 21% less than industries that are slashing
jobs. ... The story, of course, is different for the president's wealthy campaign donors.
A recent study shows CEO pay exploded by 27% in just one year, all while the President
lavished more than $1 trillion in new tax breaks on the richest 1% of the population.
To put the contrast into dollars, the average worker takes home $517 a week and will
receive about $400 in tax breaks from President Bush. At the same time, the average
CEO takes home $155,769 a week and this year alone received well over $50,000 in new
tax breaks from Bush.
- New York Times commentary, by Bob Herbert: Cooking
Up a Crisis. Excerpt: If you hear
something enough times from people in authority, you tend to believe it. The tort reform
zealots — including doctors, insurance company executives and
legions of politicians across the country — have been hammering away at the idea
that crackpot jury awards and lawsuits from undeserving patients are driving up the
costs of health care and driving good doctors out of their profession. "Junk and
frivolous lawsuits" is the term of choice for President Bush, who
told an audience in Youngstown, Ohio, last month that "junk and frivolous lawsuits
discourage good docs from even practicing medicine in the first place." ...
Just last January the nonpartisan Congressional Budget Office said this about the link between
high malpractice premiums and the availability of physicians in various specialties:
The General Accounting Office "investigated the situations in five states with
reported access problems and found mixed evidence. On the one hand, G.A.O. confirmed
instances of reduced access to emergency surgery and newborn delivery, albeit `in
scattered, often rural, areas where providers identified other long-standing factors
that affect the availability of services.' On the other hand, it found that many reported
reductions in supply by health care providers could not be substantiated or `did not
widely affect access to health care.' " That hardly sounds like a crisis. Moreover,
in several states specifically characterized by the A.M.A. as in "crisis," the
evidence is rolling in that malpractice claims and awards are not appreciably increasing,
and in some instances are declining.
|Coverage on H1-B and L1 Visa and Off-Shoring
- Computerworld: Gartner:
Backlash against offshoring to vanish by 2006.
But it's likely to build in the short term amid concerns about job losses. Excerpt:
The backlash against offshoring will deepen over the next few months, but it
will be consigned to the wastebasket of history by the end of 2005, according
to Craig Baty, an analyst at Gartner Inc. "Global sourcing [of IT services] is
an irreversible megatrend, although its true impact is yet to be felt," Baty
said during the third Regional Infocomm Conference here. "By 2006, we will see
a reliable global sourcing market." The current backlash against IT offshoring
in countries such as the U.S. and Australia is misguided, according to Baty. That
backlash is largely driven by concerns that offshoring causes IT job loss, and "the
idea that jobs will be lost through offshoring is the most emotional topic of outsourcing," he
said. "But it is in fact an insignificant issue that will go away."
- Fort Wayne Journal Gazette: IBM
moving 60 local jobs overseas. Excerpt: The Journal
Gazette reported in June 1997 that 350 Lincoln employees would be offered jobs
by IBM Global Services when the information technology work was transitioned.
Some employees were to remain at Lincoln to guide the process and keep the technology
upgrades coordinated with the company’s business objectives. Fleener said he
be sure how many of the 60 IBM Global Services workers losing their jobs are
former Lincoln employees. After the outsourcing contract was signed, IBM became the
employer and took responsibility for all personnel issues with the employees.
- IndUS Business Journal: Experts
argue outsourcing could hurt employee benefit plans.
Excerpt: The loss of jobs may not be the only impact of offshore outsourcing
on the U.S. workforce. It could also hurt the employee benefits of U.S. workers,
according to Stephen W. Skonieczny, a partner in the employee benefits and
executive compensation group of law firm Dechert LLP. Because offshore outsourcing
usually causes a decrease in a company's U.S. workforce, there will be any
accompanying decrease in employee benefit costs for the company as U.S. law
does not require benefit plan coverage for foreign employees, said Skonieczny. "For
example, employees sponsoring insured health plans might see an increase in
per-employee premiums for their remaining U.S. employees due to smaller and perhaps
older U.S. employee populations," said Skonieczny. The smaller employee pool
may also have an impact on some of the qualified retirement benefit plans for the
employees. While the employer will save on costs related to sharing of profits with
its employees, the remaining U.S. employees may see a decrease in retirement compensation.
That happens because the retirement benefits are calculated with the average compensation
of the all the employees, said Skonieczny.
- Jim Hightower: How Do
You Say "Offshoring"? Excerpt: Excellent news, Americans!
U.S. Corporations say that they are no longer "offshoring" our middle-class
jobs. It seems that they have grown afraid of the rising public anger at this
self-serving fattening of their already ample bottom lines at the expense of
working families. They fear that there will be a political backlash from workers,
customers, congress – and
plain ol' American patriots. Does this mean that greedheaded CEOs are no longer
shipping our manufacturing, professional, and high-tech jobs to India, Pakistan,
Russia, and other low-wage centers? Of course not. It simply means they no
longer say the word "offshoring." Instead,
the doublespeak artists of corporate PR departments have coined new euphemisms.
Rather than offshoring, they now call it "remote global sourcing," or "right-shoring" to
disguise the perfidy. A new report finds that offshoring (by whatever name)
is not only continuing unabated, but accelerating rapidly and expanding into
new fields. If you're an architect, if you do legal work or tax preparation, if
you're an editor or radiologist – say
bye-bye to your professional position, for CEOs are putting these and many
more on a virtual boat overseas, with about 80 percent of them going to India,
where they can get the work done for a third or less than they pay to us Americans.
- Computerworld: H-1B
increase faces stiff resistance.
The jobless rate for computer scientists and systems analysts in the U.S. hit
6.7% in Q1. Excerpt: The political attack against offshoring isn't letting up.
Bills that could affect offshore IT work have been introduced in 37 states,
and efforts to increase the federal H-1B visa cap aren't making headway. Indeed,
Phil Bond, undersecretary for technology at the U.S. Department of Commerce, this
week said H-1B supporters will need to make a strong case for an increase, particularly
in light of the record levels of unemployment that engineers are facing.
- CNET News: IBM,
Indian firm strengthen ties. Excerpt: The company's extended partnership
with IBM in effect signals the emerging strength of TCS and other Indian technology
services companies. TCS boasted revenue of about $1.3 billion for the year
ended March 31, up from about $1.1 billion the year before. It has some 30,000
employees worldwide. The 35-year-old company, part of a broader Indian business
conglomerate, recently filed for an initial public stock offering in India.
A study released this week by researcher Gartner found that India-based vendors of
IT services saw their revenue grow 29 percent in 2003 compared with 2002. That rise
far exceeded the 4 percent growth among U.S.-based vendors. Still, the Indian companies
accounted for just 1.4 percent of the total worldwide IT services market of $569 billion,
Gartner said. More than 90 percent of revenues at India-based vendors came from customers
outside India, Gartner said. TCS and other India tech companies such as Infosys
Technologies and Wipro Technologies depend partly on lower labor costs in India to
win over customers in the United States.
- Charlotte Observer: The
Rush Overseas | There Go Our Computer Jobs | Billions in salaries could flee
Carolinas. Excerpt: An Observer analysis
estimates that 124,000 white-collar jobs in N.C. and S.C. could vanish by
2015 because of outsourcing abroad The Carolinas, which have hemorrhaged
textile jobs, could be facing even more costly losses as white-collar jobs
move to India and other low-wage nations. From 2000 through 2015, the Carolinas
could lose 124,000 jobs, and more than $5 billion in wages, according to an Observer
analysis of the most detailed offshoring job-loss estimate. That's almost as many
jobs as were lost in the states' textile industry in the past decade. And the office
jobs at risk often pay more, so their loss would be a tougher blow to the Carolinas
on the Alliance@IBM Site:
- A message to IBM India employees
from your colleagues in the USA. Excerpt: The
press and the big IT companies will tell you that American workers hate Indians.
They say that Americans are angry with Indians for "taking our jobs." THIS
IS NOT TRUE. We know that, as IBM employees, there is much more that brings
us together than drives us apart. IBM employees all over the world have similar
desires: we all want a good job and to provide for our families. We all want to be
treated fairly and to have a secure retirement at the end of a successful career.
IBM employees in other countries (especially in Europe) are already unionized and
enjoy better treatment than Americans. For example, they have more vacation time,
more of a say in their daily lives at work, and do not face constant fear of losing
their job. They are protected by trade unions which interface with IBM management
to make sure that employees are well treated. For links to the websites of IBM employee
unions from Europe, Australia and Japan,
please visit www.allianceibm.org/unions.
- Poughkeepsie Journal: IBM
labor group sees growth, challenges.
Organizers say interest increasing. Excerpt: Some say it's a union; some
say it's not. Whatever it is or isn't, the labor movement that popped up five
years ago among workers at IBM Corp. is still there. IBM's downsizing of
its U.S. pension plan lit a fuse of frustration among many of the company's
American employees, who totaled about 145,000 at the time, after years of
massive job eliminations and benefits cuts. One consequence was that red
T-shirts began appearing in the halls of Big Blue. The shirts touted the
Communications Workers of America. It was an unlikely sight, given IBMers
had never gone for the communications workers' union nor any other union
to represent them in collective bargaining. They still haven't done that,
but the alliance hasn't quit. Nor has it limited itself to that classic model
of the bargaining unit. ''We are, even without a union contract, a voice
for IBM employees inside the company,'' said Lee Conrad, a national organizer
for the Alliance@IBM. ... The
alliance has found other things to do while it tries to build its ranks.
It publishes "Thinktwice!",
a newsletter with a name that is a takeoff on founder Thomas Watson's motto,
It backs stockholder resolutions at IBM's annual meetings. One, by Donald Parry
of Florida, called for excluding accounting gains in the pension funds
from executive compensation. It got 37.5 percent of the votes, the alliance
said. Another consequence of that move by IBM to shift to a cash-balance pension
in the summer of 1999 was a federal lawsuit against IBM by workers -- who have
prevailed so far. Plaintiffs proposed a formula for how IBM should pay the thousands
of workers affected. The sum of $6 billion was provided by IBM as an interpretation
of the plaintiffs' remedy.