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    Highlights—September 24, 2005

  • Yahoo! message board post by Kathi Cooper. Full excerpt: My name is Kathi Cooper and I am the Cooper in Cooper v. IBM. I am grateful that bipartisan pension legislation written by the Senate Committee on Health, Education, Labor and Pensions (HELP) preserves employees rights to pursue their hard-earned benefits in the courts in existing cases. For six years, I have fought for my company to honor its pension commitments to hundreds of thousands of IBM employees like me. Thank you for standing up for our retirement security.
    I am also confident that as the Senate merges the Defined Benefits Security Act of 2005 and the National Employee Savings and Trust Equity Guarantee (NESTEG) Act Republican and Democratic members of the Senate HELP Committee will keep working together for employees' rights to seek justice. A pension reform bill that recognizes how cash balance plans have harmed older workers is a fair compromise for helping the corporations by changing the law to legalize cash balance plans.
    Unfortunately, my case is not unique. In the late 1990s, IBM joined the rush to convert their reliable and solid defined benefit plan to a cash balance plan. Today more than 7 million employees across the country have cash balance plans. Many loyal employees have worked most of their lives for corporations that have taken away promised pension benefits when they are most needed at the end of their careers. Any meaningful pension reform should prevent employers from breaking promises to employees to manipulate earnings even though they knew the design like violated ERISA's age discrimination provisions.
    Sincerely, Kathi Cooper
    cc: Senator Richard Durbin of Illinois and Senator Barack Obama of Illinois
  • In a Yahoo! message board post, Janet Krueger responds to an "IBM apologist". (Ms. Krueger's comments are in a normal font. The "apologist's" comments are in italics).
    So ... given the fact that corporations can no longer afford to fully sponsor traditional pension plans
    WHY is that a given fact? Because the corporate lobbyists say so? It is a proven fact that it is more economical for companies to sponsor [and fund] traditional pension plans than 401K plans!!!
    The problem is that during the 90s, companies got used to contributing nothing to their pension plans, while continuing to promise pension benefits. When it became clear they could no longer continue those promises without contributing to the plans, they decided it was more economical to convert promised benefits downwards, through hybrids like cash balance plans, than resuming plan contributions.
    The next time you hear someone say a company 'can no longer afford' a traditional pension plan, ask why the executives of that same company are receiving higher executive pension promises than ever before, in addition to huge raises and even higher bonuses.
    This is NOT a question of affordability!!!
    Nor is it a question of whether traditional plans can be created and maintained with relatively low, and economical, contribution plans.
    It is purely a question of executive and corporate greed, paired with a question of whether Congress should force companies to honor their promises.
    And please don't tell me some cockamamie story that corporations should restore old-fashioned pensions and fully fund them.
    WHY is this a cockamamie story? Because the corporate lobbyists repeated the mantra so often that you believe them? That is a silly reason...
    The business model has changed. If you owned the company ... or if you were a major stockholder, you wouldn't feel any differently.
    Again, I don't buy your hypothesis. As a stockholder, I find it offensive that such a high share of profits is being siphoned into executive pockets. In most corporations, the contributions being made to the 'special' executive pension funds could easily support and fund traditional pension plans for the full base of employees!
    The bottom line fact is things ain't what they used to be.
    Again, who made you swallow this particular bottom line??? You've been fed a story, hook, line, and sinker, and you don't even seem to know it...
    Companies can't afford traditional pensions any more.
    Repeating it again still doesn't make it so...
    And I agree that the US taxpayer shouldn't have to shoulder the burden either.
    Congress has the ability to force corporations to live up to their obligations without handing a bill over to the US taxpayers. There is no one on this board advocating that our pensions be paid by US taxpayers. So WHY are you using this question to repeat the song and dance corporate lobbyists are feeding us???
    So what's the answer?
    1. Strengthen and enforce ERISA without taking the age discrimination rules out or watering them down.
    2. Strengthen the plan funding rules in ERISA.
    3. Add some teeth to the ERISA enforcement clauses allowing courts to charge corporate offenders with both damages and plaintiffs' legal fees.
    4. When companies like NWA declare bankruptcy, allow the employees, the retirees, and even the PBGC a place at the front of the line in the creditors' queue.
    Not one of those 4 options would cost the American tax payer a dime. But they sure would increase retirement security a lot more than legalizing cash balance plans! And in the process, it would lesson the number of corporate retirees who end up living on public assistance at the end of their lives...
  • In a Yahoo! message board post, Janet Krueger provides advice to an IBM employee considering a pre-retirement leave of absence. Full excerpt: Be very, very careful here... Don't base your decision on guesses and estimates. Write a letter to the IBM pension administrator with your questions. Make your questions as detailed as possible, and wait for answers in writing.
    Don't rely on verbal answers from the pension help desk; answers from Fidelity subcontractors have no more legal standing than answers from the IRS hotline. Send a letter to the pension administrator with the information you received and ask for written verification.
    Also, make sure you understand all the details about the LOA you are arranging. Will you be credited with service time for each day you are gone? Will you receive health benefits while you are gone? If IBM terminates your job for some reason while you are gone, or eliminates the department you were with when you left, or reorganizes your area out of existence, or sells your division to an outside company, will you be allowed to finish your LOA, or will you be terminated? Will the months/years you are not paid be averaged into your final average pay? Get the answers IN WRITING. These are NOT academic questions -- apparently IBM has 17 varieties of LOA/Bridge programs they can put a worker into, and many are NOT to the worker's advantage...
  • In a Yahoo! message board post, "bozemansmith" comments on his leave of absence and pension calculation experience with IBM. Full excerpt: I had a very similar situation this spring. IBM wanted me to leave 2 months prior to my 55th birthday (which was how I would qualify for early retirement, since I was at 28+ years of service). I took a "Pre-retirement Bridge LOA" for the two months. This bridge specifically states that the bridge period will count for service credit -- thus effectively letting me retire two months early. This is a very specific leave described in the USHR119 document which will allow you to bridge up to one year prior to retirement, but you have to retire -- no coming back. (This should eliminate the concerns about having your job disappear, etc.)
    You can download the latest version from the IBM HR website since you are still active. I qualified for FHA and all the rest as if I had worked to my early retirement date. I was nervous as hell about taking that thing and getting screwed somehow, so I read it a dozen times and asked all kind of questions and finally decided it was ok. It worked out for me.
    [Note that there was some loss here vs. working to my actual retirement date: the two months' salary (duh!), the 60 month calc used two months from 5 yrs ago instead of those two months of what would have been a higher salary, the lost 401K contribution and match, and some smaller (tiny) impact to the amount in my FHA, etc. But I also got to start on the rest of my life two months early too!]
    I too tried to get them to do the pension calculation for me including the bridge before I accepted it and they consistently said they could not. In fact they did not get me a final number until just this month when I got my first pension check, having left IBM in April and retiring in June.
    Note that any sort of calculation you try to do with a separation date BEFORE you qualify for early retirement, automatically disqualifies you for the early retirement subsidy and you see those 18% drops in payment! What I did was simply to expect the payment curve to be "smooth" in the vicinity of my retirement date, so I did a series of calcs first separating on my retirement date, then separating on the retirement date plus two months, then retirement date plus 4 months. I could then "back extrapolate" to estimate what I was "leaving on the table" by going two months early. The net is that the difference was pretty small -- maybe a half of a percent or so in the size of the monthly annuity. The pension calculation they actually did covered the last 60 months I was paid, since those were the highest months.
    While that half percent is not zero, to be sure; given the environment I was in at the time, locking up the leave and insulating myself from any more "churn and burn" going forward seemed attractive. YMMV.
    Good luck hanging in until you enter the magical window one year prior to your earliest retirement date, and know you can bridge out if required. (Assuming, of course, IBM doesn't change the rules before then....)
  • In a Yahoo! message board post, Janet Krueger responds to an IBM apologist. (Ms. Krueger's comments are in a normal font.) Full excerpt: I don't like executives making tons of money while I am losing out on a traditional pension either. But ... Show me through some type of objective evidence that there is a direct association between an increase in executive compensation and the disappearance of traditional pension plans. Then, I'll believe it.
    During discovery, the Cooper legal team found a 1994 IBM BoD presentation showing that the amount of money saved with the 1995 plan change could be directly used to fund an executive SERP (Supplemental Executive Retirement Plan). The logic presented was that IBM executives were 'underpaid' but that the BoD could not justify increasing their compensation so drastically with a direct hit to the bottom line, so they needed to 'cut' employee benefits somewhere else...
    I'm sorry I don't have a copy of the presentation to post, but if you go back and look at the 1995 annual report, you'll see that IBM spent the same amount on the newly established SERP as they saved with the pension plan changes that were implemented that year. You can also find that IBM did not offer their executives a SERP before then.
    The fact is that the executives that you mention were being well compensated long before this issue arose.
    Didn't you just complain about people emoting without facts??? Not only are you guilty of that here, the facts you are quoting don't exist. Until the 1990s, the difference in pay between IBM executives and IBM employees was relatively minor -- IBM made a big deal about the dual ladder that allowed the top technical people to get the same pay and benefits as the top executives... That concept, just like the IBM basic beliefs, was tossed out the window.
    No one ever "promised" me a pension, or any benefit for that matter.
    Clearly, then, you're not an IBMer but a contractor without benefits! I'm not going to bother echoing or refuting the rest of your executive-worshipful speech, as it is clear you are not here to listen or debate...
  • In a Yahoo! message board post, "retired_in_89" responds to the same apologist. ("retired_in_89's" comment is in a normal font). Excerpt: No one ever "promised" me a pension, or any benefit for that matter. There was no contract.
    Perhaps YOU weren't promised a decent pension WITH COLAs, but for over 37 years I WAS! Did I have a contract? Hell no! Why not? Because Watson's word was as good as gold! Was I a fool for trusting him? In retrospect--yes. Would I do it again? Yes, if I ever find a leader of his caliber again.
    As much as it is my loss because GREED has become the only driving force behind corporate America my age will limit my future pain. But YOU, sir, are doomed to spend many more years in a purgatory of your own choosing because you have the lack of respect for the sufferings of IBM workers and retirees, along with the gall, to defend the nefarious activities of today's robber barons.
  • World Socialist Web Site: Northwest and Delta executives to make millions from bankruptcies. By Jerry Isaacs. Excerpts: Over the last several years the top corporate executives at Northwest and Delta airlines negotiated retirement packages guaranteeing them millions in the event the companies declared bankruptcy and defaulted on their pension payments to employees. Both companies filed for Chapter 11 bankruptcy protection last Wednesday, in large measure to escape their pension obligations and seek the bankruptcy court’s backing for sweeping cuts in airline workers’ jobs, wages and benefits.
    Since 2000, Delta has lost $10 billion, slashed 23,000 jobs and cut pay for pilots, managers and other employees. Three years ago the company spent more than $44 million setting up trusts to protect executives’ pension benefits from creditors in case of bankruptcy, saying the perk was needed to retain executives in hard times. Because transferring money to bankruptcy-proof trusts typically triggers big tax bills for the executives, Delta inflated the amounts to compensate for the extra taxes.
    Retiring CEO Leo Mullin, who was paid $13 million in compensation in 2001, was given 22 years of instant seniority—although he worked for Delta for only five-and-half years—boosting his retirement package to $16 million. While incoming CEO Gerald Grinstein took a ceremonial pay reduction to bolster the company’s demands for sweeping employee wage and pension cuts, behind the scenes other executives were cashing in on the benefits of their golden parachutes.
  • CNET News: IBM looks to ensnare more graduates. Excerpt: IBM plans to launch a new online job-matching tool on Friday designed to pair recent college graduates with jobs at IBM and its partners. Students who've passed an IBM Professional Certification test will be able to post their resumes to the Web-based system, where they will be made available to thousands of potential employers, the company said. The program is an effort to address the fact that fewer students are entering the computer science field, creating a "gap between skilled IT professionals and the increased number of technology jobs," the company said.
  • Yahoo! message board post by "drbeaker2". Excerpt: As with a flock of sheep, there has occasionally been a black sheep in the IBM management family - the few higher level managers in IBM who cared about their workers. But of course, no good deed goes unpunished.
    Around 1996 or so, there was the head of what was then called Santa Teresa Lab, who didn't want to participate in the 5th (or so) round of layoffs, during a greatly improved economy, with tight product deadlines for products making a lot of money. He said the layoffs were not necessary and would be harmful. Needless to say, he was gone very quickly. I'd put his initials here but anyone at Santa Teresa at the time knows who I mean. I'd appreciate any more details or corrections to the story. (His replacements had no problems continuing the layoffs.)
    And sometime after 1996, there was the head of research and development at the San Jose plant site (disk drives, etc.) A big product announcement had to be delayed a few months until the product was ready. Apparently Big Lou called this manager and told him to fire the lead technical people as punishment. The manager said something to the effect that he couldn't do that because there wouldn't have been any product at all without that handful of people. So Lou fired him right then over the phone. Again, name and initials are not required. Anyone at the San Jose plant site in the late 1990's should know that story. And again, I'd appreciate additions and corrections to this story without using names, etc.
    But the fact that these stories are legendary and remembered so many years later just shows how few such stories there have been. Most IBM middle and higher level managers toe the company line, but occasionally one or two act like real men until they themselves are removed and replaced.
  • New York Times: Bring Back Warren Harding. By Frank Rich. Excerpts: THERE are no coincidences. On Monday, as L. Dennis Kozlowski was slapped with 8 to 25 years in jail for looting Tyco International of some $150 million, the feds were making their first arrest of a high-ranking member of the Bush administration. The official was David Safavian, the chief of White House federal procurement policy who once worked for Jack Abramoff, the sleazy Republican lobbyist whose disreputable client list, in another noncoincidence, included Tyco. While it's an accident of timing that Mr. Safavian was collared at his suburban Virginia home just as Mr. Kozlowski was sent to the slammer in New York, the two events could not better bracket a corrupt era worthy of the Gilded Age.
    Ours will be remembered as the Enron era. Enron itself is a distant memory - much like all that circa 2000 talk of a smoothly efficient C.E.O. presidency led by a Harvard M.B.A. and a former chief executive of Halliburton. But even as American business has since been purged by prosecutions and reforms, the mutant Enron version of the C.E.O. culture still rules in Washington: uninhibited cronyism, cooked books, special-favors networks, the banishment of whistle-blowers and accountability. More than ideology, this ethos has sabotaged even the best of American intentions, whether in Iraq or New Orleans. Unchecked, it promises greater disasters to come.
  • InformationWeek: IBM, Amid Layoffs, Scours Globe For IT Talent. Excerpts: Even as IBM completes plans to lay off 14,500 workers, Big Blue is continuing to scout for new IT talent and hiring professionals around the world. Though the company is long past the tough times of the early 1990s, it nevertheless remains in the midst of what former employee relations director Harry Newman characterized in a 2003 Webcast to IBM executives as "unprecedented transition." Newman and the company's other human resource executives foresaw that globalization would be one of the most important factors in the restructuring of the world's largest information technology company through 2006. Big Blue's employment peaked around 1985, when it had about 405,000 workers who were acclimated to a long tradition of lifetime employment. In 1992, the company suffered a $4.97 billion loss, the largest annual corporate loss in U.S. history to that time. By 1994, the workforce had shrunk to 219,207. [...]
    Less than 50 percent of current employees have been with the company more than five years, according to Alliance@IBM, a chapter of the Communications Workers of America. [...]
    While opportunities for IT professionals in Europe are scarce, IBM announced plans last month to double the number of employees in Brazil to 8,000 by the end of next year. The company also plans to add about 14,000 programmers in India, where it currently employs nearly 40,000 workers, according to Communications Workers of America. IBM also appears to be focused on emerging markets in Russia, China, Brazil and India -- areas where the economy is expanding and labor is inexpensive. Overall revenue was at $96 billion in 2004, with 75 percent revenue growth in Russia. In India, revenue rose by 45 percent. In China, it shot up by 25 percent, and, in Brazil, revenue grew by 15 percent. [...]
    The strategy is drawing some criticism from union organizers. "It's clear that IBM is systematically eliminated good paying, skilled technical jobs in the United States in order to expand its operations in India," said Lee Conrad, national coordinator for Alliance@IBM. A recently released survey by the Society for Information Management showed that one-third of IT staff positions will be outsourced by 2008, and a growing number of reports state that IT workers are jittery about the job market.

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. The following are a few sample posts:
  • "Salary ranges" by "Dose of reality". Excerpts: Rough market equivalents for BCS bands:
    • Band 6 – Sanitation engineer trainee
    • Band 7 – Street level drug dealer (assuming they don’t get caught and can work an entire year)
    • Band 8 – Tenured, underworked, undermotivated, burned out public school teacher
    • Band 9 – Entry level pharmaceutical sales rep
    • Band 10 – Exotic dancer at Scores working 3 nights a week + moonlighting
    Oh, so you wanted actual figures - OK Salary levels and approximate breakdown or realistic ranges would be as follows:
    • Band 6: 47k - 75k
    • Band 7: 60k - 95k
    • Band 8: 78k - 112k
    • Band 9: 95k - 135k
    • Band 10: 120k - 165k
    There are outliers - the actual mandated ranges overlap somewhat more than this to accommodate them. Most staff are clustered below the midpoint, and new hires are consistently brought in at the 25th percentile or below. Now this information will not help you negotiate a higher pay rate at IBM. We will offer you the minimum and tell you that it is the best we can do.
    It never ceases to amaze me how many people are concerned about pay bands when applying for a job. The only thing you should be thinking about is how much you are worth – not how much IBM is willing to pay. And BTW, whatever salary you come in at will be virtually flat for the duration of your career here – real raises and promotions are rare. You better get a wage that you can live with for as long as you decide to stay here!
  • "forgot bonus ranges" by "CONsulting_2_long". Full excerpt: Dose, loved the position descriptions, very funny But, you forgot the wealth building opportunities afforded to IBM employees through the bonus and options programs. Perhaps a word about those as well?
  • "To complete the picture" by "Dose of reality". Full excerpt: We have a very generous bonus TARGET program - probably the highest bonus TARGETS in the industry for rank and file. How does 12 - 20% sound to you? And you really don't have to do anything to get the bonus. Oh, there is one thing you have to do - pray for a miracle. That's because the bonus is contingent on IBM making its incredibly inflated profit TARGETS, and that hasn't happened since Jimmy Carter was president.
    It's a huge scam - making staff believe that their performance will be rewarded, and then at the end of the year saying - "Thank you for your incredible contribution - (utilization of 120%, several multimillion dollar sales deals, proposal work, practice development, foregone vacation time), but we missed our TARGETS at an IBM level, so it is all for naught. EHH! – Thank you for playing”
    As far as options go, there are two very favorable options programs:
    • Options Program 1 (Good but not ideal) – Get out while you still have your career and mental health intact.
    • Options Program 2 (Best) – Avoid coming to work here at all costs!
    Now the casual reader is probably thinking – “This is just some ranting from some poor slob who couldn’t make it in the venerable halls of Big Blue”. Well I have news for you – the halls of IBM are littered with the disillusioned saps like you who used to think that way, and I am doing quite nicely, thank you. Don’t take my word for it – come on in, see for yourself, and waste a few of your precious formative career years!

New on the Alliance@IBM Site:
  • Binghamton Press & Sun-Bulletin: Data: More heart defects in Endicott spill zone Neighborhood's babies have double normal rate. By Tom Wilber. Excerpts: A thick purple scar separates Deron Every's tiny ribs where surgeons repaired his malformed heart days after he was born on Nov. 3, 2003. it's a mark of a medical miracle -- and a distressing fact. Babies born in a polluted neighborhood on the south side of Endicott have an alarming rate of heart defects: The state Department of Health documented at least 15 cases over a 17-year period ending in 2000 in a neighborhood of about 2,600 people -- more than double the norm. And, there are more. [...]
    Deron's old neighborhood, where scientists documented the high rates of heart defects, is tainted by a subterranean plume of chemical vapors leaching from the former IBM Corp. campus on North Street. Near the time of Deron's birth, after testing showed vapors were wafting into basements to the south, IBM had begun installing systems to divert the fumes from more than 430 properties.
  • Binghamton Press & Sun-Bulletin: EIT ordered to reinstate fired union organizer. Company considering appeal. By Jeff Platsky. Excerpts: The National Labor Relations Board is telling Endicott Interconnect Technologies Inc. to reinstate Rick White to his former position or equivalent, and make him whole for nearly three years of salary and benefits lost since the company fired him.
    In a 2-to-1 ruling, the board affirmed a ruling by an administrative judge in favor of the engineering technician who was discharged after making what EI claimed were disparaging comments about the company in two public forums. The commission ruled that White's public comments about the company were protected in his capacity as a union organizer, and the company could not use his opinions as basis for firing him. White had transferred to Endicott Interconnect after 28½ years with IBM. [...]
    Meanwhile, White is awaiting word on the company's next move. He has been working part-time for the Alliance@IBM, the union movement, since early 2004 after winning his battle with Endicott Interconnect to collect unemployment benefits after his termination.
    The company dismissed White in December 2003 for "insubordination," claiming his statements questioning management's decision to lay off 200 people shortly after taking over the company from IBM Corp. undermined the new company's credibility. White, an active member of an organization attempting organize both IBM and Endicott Interconnect, said the statements were made to present the union's side of the argument against management's action.
  • Alliance@IBM: Attention IBM employees: IBM is blocking e-mail to and from the Alliance@IBM e-mail address endicottalliance@stny.rr.com from inside the company. Please send your job cut information and other correspondence from your home e-mail. You can also contact us the following ways: Phone 607 658 9285 or Fax 607 658 9283.
  • IBM Pension Lawsuit FAQ about Cooper v IBM, Updated 6-21-05. Excerpt: Below is a list of frequently asked questions about the class action lawsuit against IBM's 1995 and 1999 pension plans. The answers are my personal opinions, have not been verified with either IBM or plaintiffs’ counsel, and should not be construed as legal advice. On July 31, 2003, a federal district court judge ruled in favor of the employees in this case. IBM will appeal portions of the ruling. On September 28, 2004, IBM and the legal team on Cooper v IBM announced that an agreement had been negotiated that settles some of the claims and set the amount of damages that IBM will pay to the class if IBM's appeal of the district court's age discrimination rulings is unsuccessful. Click on any question to jump to the answer. Or scroll down and read them all.
  • Job Cuts Status & Comments Page. Excerpts: Job cuts are coming. Information needed: What is Your location? How many job cuts at your location? What locations are cutting jobs? Name of Division and Business Unit? Some sample posts follow:
    • Comment 09/23/05: After reading through the comments, this financial analyst’s two cents worth. Moving jobs offshore to low cost/high risk regions should be of great concern to shareholders. Offshoring on this scale only makes sense if there is an offsetting increase in dividends, which is not evident for IBM. This strategy is a bit like your broker moving your investment from AAA bonds to junk bonds (at the same return) because it saves on commissions. Who would do that with their personal money? These offshore personnel, IP and business “assets” are in countries under different laws, that have weak IP (intellectual property) protection histories, past monetary issues, civil unrest ... where a change in government, act of terror or similar could easily cause a significant, if not 100% loss of those assets and business functions. IBM has history there, this strategy bit IBM in South Africa during apartheid when they had to fire-sale their local company. Not the kind of hidden time bomb one wants in a long term investment. Perhaps you can appeal this practice to your Board and do everyone a service. -Anonymous-
    • Comment 09/23/05: Saw where Sony (whose biggest single market is the US)is laying off 10k people. No big company I can think of who sells primarily in the US is doing well. Looks like all this globalization and offshoring isn't good for anyone except executives who use "cost reduction" as an excuse for their poor performance. (Even then, cost reduction is far short of success in a global market.) -Anonymous-

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