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    Highlights—July 1 , 2006

  • Pulse of the Twin Cities: The Ungodly Pensions of CEOs. By Jim Hightower. Full excerpt: Corporate America is fast implementing a two-tiered retirement system: a platinum-level plan for the top executives – and a dirt level plan for all of you riff-raff below.
    There's even a term for the platinum pensions reserved for the corporate elite: "Top Hat" plans, they're called. But while the CEOs are feathering their own nests with multimillion-dollar annual pension payments, they're working double-time to destroy the retirement nest eggs of millions of their rank-and-file workers.
    Leading this pension-busting movement is the Business Roundtable, a lobbying front made up of the CEOs of America's 400 largest and richest corporations. The Roundtable wails that its members simply can no longer be expected to pay the middle-class pensions that they negotiated – supposedly in good faith – with workers. Roundtable members say that workers must "take responsibility" for their own retirement accounts, rather than expecting the corporation to come through for them.
    The Business Roundtable is also leading of another mangy effort to downsize the "golden years" of America's working class. It has been an enthusiastic backer of George W's push to privatize our Social Security program. The top honcho of the Roundtable has grandly declared that its members will spend what it takes" to switch Social Security to private pension accounts.
    The CEOs want everyone's retirement to be at the mercy of the market... except theirs, of course. Consider such Roundtable members as Home Depot, IBM, ExxonMobil, Pfizer, Coca-Cola, Prudential, and GE – the CEOs of these giants are to get corporate-guaranteed pension payments of more than $2 million a year.
    This is Jim Hightower saying... The attitude of these CEOs is summed up by Exxon Mobil. Its executive suite at corporate headquarters is known as the "God Pod." To keep track of the hypocrisy of these false gods – and to help bring them down to earth – go to http://www.paywatch.org.
    Editor's note: For a very enlightening article concerning how corporations are cutting employee pensions to pay for "top hat" pensions for executives, refer to the Wall Street Journal article by Ellen Schultz and Theo Francis in last week's highlights.
  • Newsweek, courtesy of MS-NBC: A Requiem for Pensions. I want to speak up for the value of corporate pension plans, which are slowly slipping away. The country hardly seems to care. By Jane Bryant Quinn. Excerpts: Younger workers would rather invest in 401(k)s (pensions carry a musty smell). At retirement, older workers often reject their plan's offer of a monthly income for life in favor of taking a lump sum to invest themselves. Hundreds of companies have closed or limited their plans in recent years, switching to 401(k)s instead. Most tech firms, among others, never offered them in the first place.
    That's too bad, because guaranteed lifetime incomes shouldn't be thrown away lightly. They can offer better returns than you'll ever get from your investments, and more personal security, too. [...]
    Ironically, part of the pension-funding problem no longer exists. Plans are coming back to a sounder footing, thanks to rising interest rates, massive corporate catch-up contributions to their plans, limitations on benefits and the recovery in the markets. The premiums that companies pay for PBGC insurance were raised earlier this year, so its deficit should shrink, too. "PBGC has enough assets to pay benefits for a couple of decades easily," says John Ehrhardt, a principal at Milliman, a consulting firm. A recent report by the Government Accountability Office put the odds at 90 percent that the PBGC could cover all failed plans at least until 2020. In short, the funding crisis may have been oversold.
    But fears that government would be on the hook for failed plans has "scared the heck out of everybody," says Congressman Earl Pomeroy, one of the few pension experts in the House. He favors reform at a slower pace to encourage willing companies to keep their plans going. But even if Congress lightens up on the funding burden, accounting changes expected next year will make the plans less attractive to their corporate sponsors. [...]
    When companies freeze plans, they usually sweeten workers' 401(k)s. But that probably won't make up for what you lost. The Employee Benefit Research Institute studied what would happen if pension plans were frozen or ended and workers depended on their 401(k) investments. In a typical plan, it might take an annual company contribution of 15 percent to make at least three quarters of the long-career workers whole, says EBRI's Jack VanDerhei. When the company pays less, as it usually does, you'd wind up with a lower retirement income or else would have to save substantially more yourself.
    In another study, the consulting firm Watson Wyatt found that the value of pensions grew substantially in the past five years. In a typical plan, the retirement benefit for someone 65 today might have grown 97 percent since 2000, and 244 percent for a 40-year-old (that counts both market changes and additions due to aging). And that's a frozen plan. A "live" one would have gained much more.
    Pension plans also earn more on their investments than a typical 401(k) due to better management and lower expenses. "We're moving from an efficient retirement system to a less efficient one," says Watson Wyatt's Kevin Wagner. It's a loss.
    But that's only if you're a working stiff. Top executives are not only keeping their pensions, their payoffs are leaping even as yours are being pared. Tough luck. Today, the money flows to the "deserving rich."
  • Reuters: Big U.S. companies shift from pensions. By Susan Cornwell. Excerpts: The biggest U.S. companies are continuing to move away from traditional pension plans, according to a new survey, and its authors said Congress should rewrite laws to help stop the trend. As of April, more than one in 10 of the Fortune 1000 companies -- 113 of them -- had frozen or terminated at least one pension plan, or had announced plans to do so, Watson Wyatt Worldwide said in its survey. That compared with 71 companies in 2004 and 45 the year before. [...]
    When pension plans are frozen, employees receive no new benefits from additional tenure or salary increases. When plans are terminated and assumed by insurers at the Pension Benefit Guaranty Corporation, participants receive reduced payouts.
    Many employers are moving to 401(k) savings plans for workers, but Watson Wyatt warned this might not be a good way to keep workers or ensure they have enough retirement savings. The number of companies that closed a plan to new hires or announced such an intention had risen to 49 as of April 2006, nearly double the number at the end of 2004. Schieber said those statistics are "particularly discouraging" as they indicate a trend for future generations of workers.
  • Yahoo! message board post by "riptoff". Full excerpt: "A companies reputation is built on proud employees who feel like their employer is family...not some jewish concentration camp where no one knows who's next in line for the gas chamber." For those on the outside, this is a perfect analogy of how beamers feel inside US plants today. I talked to a 5 year employee and walked him through his, new new pension online. Page 1 said it was a 5% increase, further in he learned that was pure bs and the company reduced his actual future pension by $212,000! His quote, "this place is a joke"!
  • Yahoo! message board post by "riptoff". Full excerpt: The annual shareholder’s meeting is a joke! Sam uses planted questioners and canned internet questions that he has already rehearsed his answer to. There's a slim chance he might occasionally get an unprepared for question such as last years 'is $10k per day enough for you to retire on, how much do you need'. Needless to say the then naked emperor promptly ended the parade of questions and the meeting. No one got to ask him why he sold 90% of his shares or how many communist slaves are working for him in red China.
  • New York Times: Income Inequality, and Its Cost. Full excerpt: INEQUALITY has always been part of the American economy, but the gap between the rich and the poor has recently been widening at an alarming rate. Today, more than 40 percent of total income is going to the wealthiest 10 percent, their biggest share of the nation's pie in at least 65 years. The social and political repercussions of this disparity have been widely debated, but what about the effects on the economy? [...]
    Unchecked inequality may also tend to create still more inequality. Edward L. Glaeser, a professor of economics at Harvard, argues that as the rich become richer and acquire greater political influence, they may support policies that make themselves even wealthier at the expense of others. In a paper published last July, he said, "If the rich can influence political outcomes through lobbying activities or membership in special interest groups, then more inequality could lead to less redistribution rather than more."
    In the United States, there is plenty of evidence that this has been occurring. Bush administration policies that have already reduced the estate tax and cut the top income and capital gains tax rates benefit the well-to-do. It seems hardly an accident that the gap between rich and poor has widened. [...]
    Professor Pressman relates those results to economic behavior in corporate America. "If a C.E.O.'s salary is going through the roof and workers are getting pay cuts, what will happen?" he said. "Workers can't outright reject the offer — they need to work — but they can reject it by working less hard and not caring about the quality of what they are producing. Then the whole efficiency of the firm is affected."
  • Citizens for Responsibility and Ethics in Washington: CREW Forces Dept. of Labor to Release Anti-Union Docs and Emails. Dept. Of Labor Marketing Anti-Union Propaganda to Employees. Excerpts: Today, Citizens for Responsibility and Ethics in Washington (CREW) released 108 pages of documents it received from the Department of Labor (DOL) in response to a CREW Freedom of Information Act (FOIA) lawsuit over records DOL has regarding contacts between DOL and conservative lobbyist and executive director of the anti-union group Center for Union Facts, Richard Berman. [...]
    "These documents make it clear that under the leadership of Secretary Chao, the Department of Labor has become anti-labor," said Melanie Sloan, executive director of CREW. "It is disgraceful that the very department designed to focus on improving the lives of American laborers is disseminating anti-union propaganda and developing relationships with anti-union organizations. American workers deserve better."
  • AFL-CIO: Anti-Union Group Has Close Ties to Bush’s Labor Department. Today, CREW posted 108 pages of documents it received from the Labor Department showing the department’s contacts with Richard Berman, founder and executive director of the Center and instigator of sleazy PR campaigns like the one he ran against Mothers Against Drunk Driving on behalf of the alcohol industry. Berman also is behind the Employment Policies Institute, which SourceWatch, a Project of the Center for Media & Democracy, describes as “a think tank financed by business” that runs websites opposed to increasing the minimum wage and living wages. [...]
    CREW sent the FOIA request after The Washington Post reported the Labor Department’s Office of Public Affairs publicized the Center and its website to employees of the department as “dedicated to providing information on labor unions and their expenditures.” The Union Facts website in fact is an amalgam of distortions. Because the Labor Department refused to comply with the FOIA request by CREW, the group in April sued the department, compelling it to provide the records. The documents include an e-mail indicating Labor Department public liaison aide Lynn Gibson (formerly with the Heritage Foundation) set up a meeting between Berman and department staff. In another, Gibson tells a Berman staffer she will send e-mails related to his organization to her “network.”
  • The Rockridge Institute: Bush Is Not Incompetent. By George Lakoff, Marc Ettlinger and Sam Ferguson.
  • Fortune: The real CEO pay problem. Voters are outraged. Big investors are demanding change. Even some CEOs admit there's a crisis. But rewards that defy all economic logic don't simply spring from greed. Corporate America's executive-compensation system is broken. An inside look. By Rik Kirkland. Excerpts: When FORTUNE set out to find leaders prepared to talk for the record, only a handful of the nearly two dozen prominent executives we contacted would do so. Two who did speak up, Home Depot's (Charts) Bob Nardelli and Pfizer's (Charts) Hank McKinnell, have taken some of the hardest pounding lately. Nardelli has been hammered for accepting a pay package valued at $250 million even though his company's stock has declined slightly under his stewardship (and also for running a buttoned-lip, race-the-clock annual meeting in May that's destined for the Boneheaded PR Hall of Fame).
    Still, the man was giving no ground when he met with FORTUNE in mid-June (though he did agree that the annual meeting was a mistake). "We have an enterprise here that stands tall among corporations in America," Nardelli said. "The last thing you want to do is withdraw into a fetal position on some of this stuff." He expressed gratitude for the "unwavering support" of his board and employees and deplored the fact that annual meetings have become "99% attack and antagonism." [...]
    In McKinnell's view, "an unholy alliance" of special interests - environmentalists, animal-rights activists, hedge funds - want to wrest decision-making control from boards and CEOs in pursuit of "their narrow interests," even though most shareholders "are pretty happy with the way companies today are being run." McKinnell also says a scrubbing of pay numbers that the Roundtable commissioned found that "a lot of those big ratios everyone points to are just not supported by the data. CEOs are still very well paid, but they're not that well paid." [...]
    Too many incentives are wrong - most do less than they should to align managers with the interests of long-term owners by setting high hurdles and insisting execs keep skin in the game. Too many companies continue to pay the top brass a king's ransom merely for doing decently - or for seriously screwing up. How bad are things? Here's one wise man's assessment: "About half of American industry has grossly unfair compensation systems where the top executives are paid too much," says Charlie Munger, Warren Buffett's partner at Berkshire Hathaway. Florida governor Jeb Bush - a pro-market conservative - is even more blunt. Out-of-control compensation, he believes, is "a threat to capitalism." [...]
    This simple truth: Despite its great strengths, this country is up against huge challenges. Faced with rising global competition, soaring benefit costs, and lousy demographics (too many retirees, too few new workers), large employers in every industry are walking away from or renegotiating the old postwar social contract over health benefits and pensions - just as most companies long ago stopped guaranteeing lifetime employment. [...]
    t's time for more walk and less talk. As Charlie Munger puts it, "The CEO has an absolute duty to be an exemplar for the civilization." Munger isn't the only leader with that old-fashioned view. At big-box retailer Best Buy (Charts), 33-year company veteran Brad Anderson decided he was making plenty when he became CEO in 2002. Because he also wanted to shake up the company's strategy, he decided to hand over his annual option grants to the frontline troops - which he's done for three years now and plans to continue doing until he steps down. Says Anderson: "I thought it would help internally to be indicative to my people that I was thinking about more than myself." [...]
    Warren Buffett has long believed, as he told FORTUNE, that "the only cure for better corporate governance is if the small number of very large institutional investors start acting like true owners and pressure managers and boards to do the same." In the models of how capitalism works in public companies with widely distributed ownership, directors stand at the pinnacle of power. While the CEO runs the company day to day, directors hire, supervise and, if needed, fire the CEO. That's the theory. In practice, for most of the postwar era, the CEO ran the show; directors were little more than boardroom decoration - "like the parsley on fish," as an ex-CEO of U.S. Steel (Charts) described them.
  • The Rise of American Plutocracy, by Jim Hightower: Still, the Powers That Be keep insisting that America is a "classless" society, and politicians of both parties keep pursuing economic policies that are based on the happy theory that a "rising tide lifts all boats." They don't like anyone pointing out that the boats of the privileged few are yachts, while most people are paddling along in leaky rowboats, and too many Americans don't even have a piece of driftwood to cling to.
    That aside, however, it's simply not true that America's prosperity is broadly shared. As the old saying goes, "Them that's got is them that gets"... and "them" keeps getting more and more. Forget poor people and the sinking middle class, let's look only at the top ten percent of money earners in our country.
    A recent study of income gains between 1972 and 2000 shows that if you were in the 90th percentile of income, your wages and salaries increased by 34 percent during this span – about one percent a year. If you were in the 99th percentile, though, your income jumped by 87 percent. But it's at the 99.9th percentile that the real fun begins – this is the millionaire class, and their income gain was a joyous 181 percent. For true joy, however, go to the 99.99th percentile – these multimillionaires saw their incomes rise by 497 percent.
    This is Jim Hightower saying... Bear in mind that this was before George W, whose tax and other economic policies have sent a tidal wave of new riches into those tippy-top percentiles, further widening the gap. The tide is rising, but so is the inequality, dangerously separating the privileged few from the many... and endangering our democratic society.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Los Angeles Times: States Make Own Plans for Health Insurance. Without federal guidance, legislatures try different fixes for a national problem. By Elizabeth Mehren. Excerpts: Nearly 46 million people in America lack health insurance, according to the U.S. Census Bureau, and the cost to the country adds up to tens of billions of dollars. Directly or indirectly, the states pick up much of this tab. Uninsured individuals flood state-subsidized clinics and emergency rooms. States also bear the treatment costs for chronic illness among the uninsured. And a population that is not well cannot function to full capacity, hampering a state's productivity. [...]
    On the topic of health insurance, legislators are responding to clamor from voters who say they cannot afford the kind of regular medical maintenance it takes to stay well — and really cannot afford treatment if they get sick. State lawmakers know they keep their jobs by creating policy that people want and need, Tobler said. As large and small employers slash insurance benefits — sometimes eliminating coverage entirely — much of the states' efforts are directed at the working poor. Health insurance premiums have climbed so high that some people cannot afford coverage even when they are eligible, Tobler said. "The uninsured have always been there, but states now are moving ahead to cover them," she said.
  • USA Today: Growing health care costs threaten to consume retirees' savings. As Americans live longer and health care costs surge, underestimating the impact of medical costs could dash your plans for a comfortable retirement. Excerpts: Many Americans are already behind in saving for retirement — and medical care often doesn't even factor into their calculations. Longevity has its benefits, of course, especially for those fortunate enough to enjoy good health into old age. Yet even with coverage from Medicare, Fidelity Investments projects that a 65-year-old couple will need about $200,000 to cover 20 years of health costs. That doesn't even include the cost of over-the-counter drugs, dental services or long-term care.
    Retirees who leave their jobs before age 65, when Medicare kicks in, face even steeper expenses. They do, that is, unless they're among the lucky 30% of workers — most of whom hold government jobs — who still receive health benefits in retirement. [...]
    So, what will you need? If you retire before 65, you'll need health care coverage. Don't fall into the trap of thinking you can go without insurance, unless you're very wealthy. You should go without insurance "only if you can afford a serious illness, which could run $100,000 to $200,000," says Gary Claxton, who studies health care costs for the Kaiser Family Foundation, a non-partisan think tank. Just a few days in a hospital could set you back tens of thousands of dollars. Plus, because you're uninsured, you might have to pay full charges, rather than the negotiated discounts that insurers receive from hospitals and other providers. Drug costs, too, are something to ponder if you go without insurance. A diagnosis of cancer could mean you'd need drug therapy that could run into the thousands per month.
  • BenefitNews: IBM holistic approach encouraging healthy lifestyles. By Leah Carlson Shepherd. Excerpt: IBM has molded a healthier workforce by offering three types of incentives at $150 each to promote preventive care, exercise and nonsmoking lifestyles. The newest incentive, launched this year, encourages employees to complete an online health risk assessment and identify the preventive care visits and exams they need, such as a Pap smear or colonoscopy. About 63,000 of IBM's 140,000 workers have done so this year.
    Workers also receive an incentive for doing 30 minutes of exercise four days per week for 10 out of 12 weeks. They log their activities on an online fitness center, where they can set workout goals, interact with fitness professionals and receive Web-based coaching to examine the individual's motivators and impediments to exercise. About 64,000 earned the exercise reward last year. Lastly, IBM gives an incentive to nonsmokers, or smokers who participate in a tobacco cessation program. Roughly 110,000 workers earned that reward last year.
  • Delaware On-line, The News Journal, courtesy of Physicians for a National Health Program: Bring on National Health Insurance. By Vincent P. Maconi. Excerpts: When Gov. Minner nominated me to be Delaware’s secretary of Health and Social Services in January 2001, a few eyebrows were raised. I’m not a physician, nor had I spent any of my government career in health care. But if coming into the job without a lifetime of experience required me to climb a steep learning curve, it also allowed me to enter the field without preconceived notions.
    It quickly became clear to me that this nation needs universal health care. America’s health care system, despite the efforts of millions of dedicated health care professionals, is broken. Frankly, nothing but national health insurance makes sense.
    I might seem an odd official to be championing national health insurance, given that many of the times my name has appeared in this newspaper over the past few years, it has been to defend efforts to control costs of the state’s largest health care program, Medicaid. In fact, attempting to get my arms around state spending has given me an excellent vantage point from which to see the system’s problems — and the only logical solution. [...]
    Everybody — doctors, hospitals, insurance companies, government officials, and patients themselves — spends too much time administering or coping with the system and figuring out who will pay for a service — and not enough time figuring how to deliver service better or to more people. No one spends enough time figuring out how to make people healthier. [...]
    I could make the argument that the world’s wealthiest country should guarantee health care to all of its citizens. That’s the kind of society that I want to live in. But for those who aren’t moved by that aspiration, there’s every likelihood that a national health care system would not only pay for itself through a healthier populace, it would also cost less in dollars than what the nation pays for health care now. [...]
    The United States spends more money per capita than any other country, yet is less healthy. We’re paying the highest prices, but getting the lowest quality.
    Look at a health spending analysis by the Organization for Economic Cooperation and Development, comprised of 30 of the world’s leading industrialized nations. Examining the 2002 data, the OECD reported that the United States per capita health care spending of $5,267 was not only 53 percent higher than that of the second-highest country, Switzerland, it was almost two and a half times the average per capita health care expenditure of all the other developed nations.
    To put it another way, the United States is spending nearly 15 percent of its gross domestic product (the combined value of all goods and services produced by a nation) on health care. Only Switzerland and Germany also spend as much as 10 percent. [...]
    Let’s also examine two universally recognized measures of national health: life expectancy and infant mortality. A quick surf on the Internet reveals that, among those 30 OECD countries, the U.S. life expectancy of 76 years exceeds that of only seven: Mexico, South Korea, Turkey, and the former communist nations of Slovakia, Poland, Hungary and the Czech Republic. People everywhere from Iceland to Australia live longer than we do in America.
    Last November, ABC News reported that the United States ranks 28th in the world in infant mortality — not just far behind Sweden, France, Japan and Germany but behind Cuba too. The United States is on a par with Croatia and Lithuania. [...]
    In today’s global economy, American companies are at a competitive disadvantage when up against businesses in other nations whose out-of-pocket health costs are zero. It’s a mystery why General Motors and other automobile companies, with their well-publicized dilemmas regarding health care overhead, are not leading the call for national health care. Small businesses too are experiencing increased difficulty in locating affordable health insurance. [...]
    As Winston Churchill once said, “Count on Americans to do the right thing, after they’ve tried everything else.” It’s time to end the irrationality of this health care system and move to national health insurance.


New on the Alliance@IBM Site:
  • IBM Italy Unions challenge IBM on Corporate Responsibility [PDF].
  • From the Job Cuts Status & Comments page
    • Comment 6/28/06: An interesting contrast caught my attention the other day. When pressed on Kyoto, Bush's standard answer is that the US can't afford it because it would result in the loss of about 5 million American jobs. At the same time, his government seems dedicated to help corporations move millions of US jobs abroad and create a brave new vision of Third World hell all over the globe. We are witnessing the beginning of the "New World Order" as the old Bush proclaimed during the fall of the Berlin Wall.ook for sector leaders to lose jobs to SPL leaders. It's going to be a mess for a few months. -Machiavelli-
      Remember that a few months ago they tried to implement tough new labour laws in France? There was a general strike and the government backed out. Well why can't Americans stand up together like that? The answer is that the US media is brainwashing Americans. This whole ridiculous war on terror is a smoke screen, designed to give people something to think about while their savings are stolen. There is a war going on in America but it's not the one the mainstream media talks about. America is under attack by a dangerous group of international criminals who hijacked its government. The question is, will we defend ourselves or just lie down and accept defeat? -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 6/23/06: Hi, re this comment ('IBM used to manage the health insurance itself. Nowadays that has been farmed out. Seems pretty clear this was done to make the process more "hard edged" and less sympathetic to employees.'), I'm quite sympathetic, particularly if the person commenting is based in the US, where healthcare delivery isn't a national priority. Also, if the person commenting is having difficulty getting good healthcare, I hope they will pursue all available avenues. *However*, one might consider that it can be preferable if IBM ISN'T involved in the individual employee's - or the employee's family's -healthcare. Let's face it - IBM would not be inclined to provide high quality health care. It may be preferable to have a (relatively) neutral healthcare company involved... perhaps. -Anonymous-
    • Comment 6/27/06: Stock Price 76.50 today 6/27/06. Sam is sure worth all the money this company throws at him. Come on it's time to kick the bum out. He steals from us all as this great company dies -Anonymous-
    • Comment 6/28/06: Tuesday 6/27/06, a photographer was spotted taking pictures of buildings and grounds in and around the 500 complex in RTP. When approached, he stated he was with a local commercial realty firm. -Anonymous-
    • Comment 6/28/06: I joined the alliance today as a voting member and have asked other trusted members of my team to join as well. In addition to the vast corporate-wide take-aways we have been subjected to, my department in particular has been clearly targeted. The average age on my team is 48 years old. All have in excess of 20 years in IBM. I have a long history of being a successful sales professional as does my entire team.
      Just before Christmas 2005, we were informed that we were to be taken off of a commissioned sales plan effective 1/1/06. Two weeks notice that our financial and personal lives would be totally disrupted, with no time to even plan for this substantial pay cut. This had an impact of a minimum 35% pay cut for about 50 dedicated, long term employees across the US.
      Our Canadian counterparts were exempted from this due to country laws, so they are protected for a one year period only. My second line manager stated that this action was taken "to fund IBM high growth areas". We were assured for a 6 month period prior to this action that this would not occur as we were aware of a move to a new organization (ISC). My first line manager told us on a conference call only 3 days before this announcement that we were indeed going to stay on a plan when the organizational move occurred. We were clearly deceived.
      The management team did not want to disrupt our 4th quarter sales, so hid this from us (that is our assumption). We were told that ALL sales professionals that do not have DAILY client contact were going to suffer the same fate. To date this has not occurred. Only one other team has been affected that anyone I know is aware of, Financial Offering Leaders (FOLs) in integrated accounts. We firmly believe that this action targeted my team due to our age and proximity to retirement. As Bill Clinton said “They did it because they could”.
      Since then, our job function has not really changed. We are expected to engage in and win deals, do forecast conference calls and all the other activities that are sales related, including having wins and revenue responsibility. Additionally, the workload has increased dramatically now that some of the team (selected by the management team) were assisted in moving to other commissionable jobs. These were higher bands (10s) or our slightly younger team mates.
      The rest of us have been sabotaged by management by having job offers pulled at the last minute so some of us are being held captive in this organization. We know for a fact that high level executives black listed us because of the mass exodus. Today I got fed up and took the first step in making a difference by joining AllianceIBM.org. Thank you. -Anonymous-
  • From the Pension Comments page
    • Comments 06/25/06: My new new new pension, now after 25 years shows a $50k cut on top of the prior 40-50% cut from the earlier promised pensions. The new pension page opens to a screen showing a gain in pension, that’s clearly to fool the sheeple that actually still trust ibm, unbelievable that there are people that stupid yet there are herds of them.
      The real losses are in the dirty details a few pages in. I asked a 5 year employee to tell me what he lost. He said he gained 5% questioningly as I’d already told him what I’d lost, he was still on page one, the one with the blatant lies! Well I said, go in a few pages where it tells you the dollar difference in your PPA pension and what they won’t be contributing. He said, ohhhhh, I’m minus $212,000!!!!!!!!
      Followed by, this place is really becoming a joke and some head shaking in disbelief! Of course the softening positive number is based on ibm’s future promises to add to the 401k and nonexistent raise and bonus statistics they pulled right out of the ‘how to fool gullible sheeplike employees handbook’! IBM promises are lies of course, maybe a song should be written along those lines...
    • Comments 06/26/06: Does anyone believe the IBM Executives would "sign up" for a retirement reduction that they are FORCING on the work force. Write the President, Senators and Congressmen.... Also the Security and Exchange Commission. Robbers, Liars and Cheaters are controlling this Company. SOMETHING must be done. -Support the Union....!!!-
    • Comments 06/27/06: Saw where Gates’ charity is now the world’s largest at $70+ billion dollars and all I could think was, “that’s less than our management looted from our pension fund in one year.”-Anonymous-
    • Comments 06/27/06: Since IBM is strongly suggesting that older employees leave prior to January 2008 with the new Retirement Comparison Model; why couldn't IBM offer an incentive via a buy-out like GM did for their employees. GM offered buy-outs of $ 70K to $ 140K and had 35,000 older workers take it, that is projected to save the company $8 billion annually by the end of 2006. GM stock rose just from the expectation of this.This offers older workers some needed dollars that would help get them over the "shock" of the strongly suggested time to leave prior to 2008. This should provide at least a little better feeling, since most of these people were around doing "whatever it takes" to keep the company profitable in the lean 70's and 80's. -Anonymous-
    • Comments 06/29/06: I've seen on w3.ibm.com that IBM used the term "401(K) Pension Plan". Nothing is further from the truth! A 401(k) is not a PENSION plan: it is not protected by the same laws under ERSIA (Employee Retirement Income Security Act). DON'T fall for the 401(k) Plus plan as being a replacement pension plan. It is not! Shame on IBM for calling the 01/01/2008 401(k) plus plan a pension plan! -sby_willie-
  • From the IBM employees on employee raises page:
    • Comment 6/22/06: The way it works in this company is to work a little (get rated no less than 2) and suck up to your PDM or manager (when they don't change every six months), then you get a raise. I got 3% this year (after not getting anything for the past 3 years) which is less than the 3.1% inflation rate predicted by the government for this year and much less than the real inflation rate which is probably around 5% these days. Palmisano disgusts me, he should go. Since he is CEO, revenues have been down year over year, there is no more growth. The only way IBM gets by is by selling businesses and offshoring work. This is a free fall...-Anonymous-
    • Comment 6/23/06: 0% raise for me because I got my first ever "3" performance rating not following a promotion! I'm doing the same job I've been doing for the last 5 years or more, but the level of my "skills" are not up to others in my band level now. Hmmm....it wouldn't be because I'm in the old pension plan coming up on 33 years of service would it? -Anonymous-
    • Comment 6/25/06: 39 years in the field and no raise except the cost of living raise from 3 years ago in the last six years. I didn't know IBM stood for Indians Brazilians and Managers. I thought it stood for Income Below Minimum. -Seenenough-
    • Comment 6/26/06: The good news: I did receive a whopping 3% raise. The bad news: It won't cover the increased cost of gas to get to work. There needs to be a shareholder resolution tying the executives total compensation (not just salary) increase to the average percent for the rest of the company! Location: Boulder, with IBM for 9.5 years. -Can't win Blues-
    • Comment 6/27/06: 4 months 18 days to go to make my 30. Age 51. I am out of here.IBM has been screwing me on benefits and raises since Akers took over. With the cost of living going up annually, I can no longer tolerate making less every year. I will just leave with the minute pension and hopefully find an employer that gives a damn about it's employee's. Good Luck to any who stay on, I feel for you. I suggest that you support the Alliance, because no one else is looking out for you! -Anonymous-
    • Comment 6/27/06: It is a sad and unfortunate thing. Having been with the Company for well over 25 years I find that those of us who helped this company/bigblue/ibm survive it's most difficult time (late '80's early '90's) are the one's getting the shabby treatment. For year's ibm touted the 'Total Compensation Package'. Now I find that that package is reserved for the Executives. Lou did wonderfully well and Sam is well on his way to a Golden Retirement. The Salary Plan does not provide for a decent raise, Quota's change up to and past the end of the measurement period. I do think that my decisions regarding this company, during the hard times, would have been different had I a clue to what would happen with my salary and benefits. I would have changed companies. Too late for that now. I'll get my 30, punch out, and take my pitiful pension. I now know: It's not what's Right, It's not what's Fair, It's not even what's Legal. It's what they can GET AWAY WITH. This will continue until we grow a backbone and make it stop. -IBMPSR-
    • Comment 6/28/06: Unless we unite against the problem they will continue to roll over us. Here is the reality: CEO pay-to-minimum wage ratio soars. Today's average CEO earns more before lunch in one day than the average minimum wage worker earns all year, with a compensation ratio of 821-to-1. CEO pay continues to climb, while the federal minimum wage has remained unchanged since 1997. Today's Snapshot, by Economic Policy Institute President Lawrence Mishel, previews data to be presented as part of the forthcoming The State of Working America, 2006/07. Source of material: http://www.epinet.org/ We need to break the boardroom hold on getting paid for lack of performance. They problem is they control the board members -AnonymousUSA-

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. Some sample posts follow:
  • "All the right moves?" by "phooey69". Excerpts: I'm not a M+A expert (it's definitely above my pay grade). However, to my amateur mind, it would seem that many of the right conditions for a breakup are present:
    • Lack of investment. Revenues that are not taken by upper level executives are spent on stock buybacks.
    • Nothing really revolutionary as of late in either products or services. Although IBM Research has come out with some cool stuff, how much of it has become shipping product or deliverable service?
    • Rampant cost-cutting. This needs no explanation...every IBM employee has seen it.
    • Labor structure. For better or worse, IBM is dramatically transforming its labor structure into the "on-demand" model. Much of it is just getting rid of high costs (pension, medical, high salaries, etc.) However, it seems that the "grand plan" is to get rid of employees, and replace them with vendors, contractors, temps (supplementals), and third-world labor. In other words, people without long-term commitments.
    • Corporate structure. It's already divided up into different divisions depending on service or product line. Is there enough crossover activity to justify keeping everything together?
    • Overall value of the whole and its parts. It is uncertain that being "tied to IBM" is a great thing for a division. Could each division do better on their own as a spinoff? They wouldn't benefit from other IBM divisions, but they wouldn't have to pay their revenues to the corporate pot either.
    To use an analogy from real estate...if you have a property that you want to grow in value, then you take care of it and improve it. You make sure things aren't broken, and you invest in making the property more functional or aesthetic.
    But IBM does not appear to be going that way. On the contrary, it would seem that the executives are acting more like "disinterested landlords". The primary concerns are to keep costs and commitments low. Take as much income as possible from the property, in the form of asset sales and ongoing business revenue, but don't do too much to increase the property value.
  • "Agreed but" by "CandorSense". Full excerpt: It seems so obvious that we are screwing the pooch. Particularly in services where the asset is the people. You don't have to be genius to realize you have to invest in your people and we are not only NOT investing, we are pissing off good people who leave and we are left with dreck. I think, it would be obvious to any dummy, that this is one sure way to kill a services business. Now why could they want to do that? I don't see how anyone gains. Maybe a few gain in the really very short term but not even on an annual basis would you gain.
  • "But it IS a short-term gain" by "wonderaboutibm". Full excerpt: Granted that starving the services business is exactly what is going on, and granted that this will not succeed as a strategy in the long term. But you miss the essential point, which I think Dose has covered in great detail in other posts.
    Either the senior management is brilliant or very very dense. Brilliant if all they care about is their short-term gain, in which case when the game of musical chairs is over, they will have collected all their chits. The services unit may wither on the vine, but the sun will shine until the stock investors catch on that we have music and we have chairs. Very very dense if mgmt really believes they can substitute, on an expedited basis, offshore resources for a decaying "western" services infrastructure. Even if this were a viable strategy (and it certainly ain't) it would take years, and there would be hell to pay in the meantime.
  • "Lots of density" by "phooey69". Full excerpt: Based on my experiences in SO, I'd say there is plenty of dense management. Now, SO is not the same business as BCS, so the mileage may vary. But in SO, there are huge disconnects between "management" and "labor". On the "management" side, there are process flowcharts, written requirements, etc. They are all generated by IT architects, project managers, etc. and are approved in lengthy review processes. On the "labor" side, you have people who are charged with delivering on those flowcharts and requirements.
    So where is the disconnect?
    As far as "management" is concerned, the CORE VALUE of IBM's service offerings lies in those process flowcharts and written requirements. There are endless calls to treat that material as "Intellectual Capital", even to the point of writing patent applications (surprise, surprise). On the other side, the "labor" is just that...labor. It is perceived by many managers (at all levels) that ANYBODY can play the role of labor.
    It's a classic story, to be pretty honest. It's horribly misguided thinking, but that's really how it's playing out! Put this idea together with cost savings, a cost-challenged environment, and an environment of fear, and you can see where it all leads.
  • "That sort of fits my experience" by "civilliberty". Full excerpt: Management seemed to have the idea that technical skills are transportable. There is an element of truth to that. I suspect that the reason they are so big on documentation is to support that capability in the erroneous belief that anyone can be slotted into and out of technical roles. This pattern of thought seems to pervade their attitudes towards non-sales oriented staff.
  • "IBM actually needs a facelift..." by "helluva808". Full excerpt: And I can tell you this from personal experience. Many top notch performers are leaving IBM for better, higher-paying jobs elsewhere because they are starting to realize that "IBM does not listen to its employees, but rather, its accountants." IBM is still quick to hire and quick to fire, and you have to remember, at IBM, all employees are deemed expendable, even if you're the best of the best. Because why pay a top notch performer 80-90k/yr when you can hire a college hire for 40-50k/yr. As long as IBM stock continues to drop (as I'm still waiting for it to hit at least $100 again) and it continues to neglect its employees true wants and needs, that's a tough question to answer.
  • "You and I are both riding the new trend at IBM" by "helluva808". Full excerpt: IBM claims to pay its employees above the median salary range, but after careful and accurate research, you'll find out that it's completely false. I've been a PBC1 performer for the past several years and my manager has recognized that I am one of the most underpaid Band 8 employees in our practice.
    But of course they want me to stay because I'm a top notch performer. Well, money talks nowadays and the talented IBMers are starting to realize it. IBM eats guys like me unless we tell them to stick it. I've been afraid to take a bite or even look at other opportunities, but when you have to think about yourself and your family, that takes priority. I, too, left for a rival competitor recently who offered me at least 40% from what I was making at IBM, and I finally get paid for overtime.
    IBM is a great company to work for, the only problem they have is...IBM only listens to its accountants, not its real employees...so we're all virtually expendable. I might as well do what I'm doing now, but at another company for a much sweeter pay, agreed? Good luck to you.
  • "Ding-dong...school's in..." by "deep_eye". Full excerpt: What do I expect out of a job?
    • Don't lie to me, consistently, continuously and without the slightest regard for my talents, abilities or career aspirations with your organization (no Scooter, everyone does NOT do this, but IBM is incredibly good at it).
    • Don't create a bonus and raise structure that is so rigged and patently fraudulent that Minnesota Fats couldn't get a break.
    • There are stupid people everywhere, but IBM has created a sanctuary that preserves and hatches them in droves. In fact, and I have seen this more often than not, the less talented you are intellectually, the better you will likely do.
    • 1960 - IBM looks good on your resume 2006 - Is not 1966 - IBM is just another sadly faded, well past its glory, also-ran. Stop listening to your Pop-Pop, the 60's are long gone, nice while they were here, not relevant any more.
    No, sorry - need a new tune pal - it's really not like this everywhere. This line is getting very old. Class dismissed...

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