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    Highlights—October 21, 2006

  • Wall Street Journal: Study of Cancers at IBM Is Released. Professor's Report Finding Higher Worker Death Rates Had Been Blocked for Years. By William M. Bulkely. Excerpts: A long-suppressed study finding elevated rates of many cancers among workers at International Business Machines Corp. was published in Environmental Health, a peer-reviewed online scientific journal.
    IBM has fought for several years to prevent release of the study done by Richard Clapp, a Boston University professor of environmental health. The study analyzes data collected by IBM itself on the ages and causes of death of nearly 32,000 people who had worked at IBM and died between 1969 and 2001. IBM has maintained the analysis is "junk science" that misuses the data.
    Mr. Clapp got hold of the data, known as IBM's "Corporate Mortality File," as an expert witness who analyzed it for lawyers in California. They had sued IBM on behalf of a number of workers at a disk-drive plant in San Jose who got cancer. Although the plaintiffs settled after several lost their lawsuits, Mr. Clapp sought to publish his analysis. [...]
    Mr. Clapp said that earlier this year, IBM stopped attempting to block publication. The study, "Mortality among U.S. employees of a large computer manufacturing company," looked at death records of men and women who had worked for IBM for five years.
  • InformationWeek: Blogs, Web Sites Rile IBM Workers Over Layoffs Cutbacks target blade servers group, sources say. By Paul McDougall. Excerpts: Native IBM-ers are getting restless. A number of U.S. employees are complaining on blogs and other public forums that morale at the company is at a low point following a round of layoffs. "IBM went un-American and kicked you," says one poster on a site maintained by Alliance@IBM, an advocacy group for IBM workers.
    Earlier this month, IBM released a memo indicating that 400 workers at several of the company's locations in the United States will be laid off if they're unable to find new positions at the company within 30 days. Workers cut will receive one week's pay for every six months of service, the memo states.
    The memo didn't say if those jobs are going overseas, but many IBMers suspect that's the case given that the company said it will spend $6 billion over the next three years expanding its operations in India. Adding to the worker unrest were media reports last week that IBM is moving its procurement headquarters from New York to China. IBM disclosed that plan in May.
  • InformationWeek: IBM's Global Ambition Draws Fire From U.S. Workers. By Paul McDougall. Excerpts: Virtually all major U.S. corporations, not just tech vendors, are looking to Asia for both low-cost labor and millions of new customers. Business is now a global playing field, and companies that don't operate globally will be out of business. Heck, even some SMBs are using the Internet to establish a presence in other countries.
    But IBM's global employment strategy carries some big risks. It's an American company, and American workers are still its lifeblood. If enough talented U.S.-based IBMers feel there's no longer any job security with the company and begin looking elsewhere, IBM will be in big trouble. Manufacturing, research and development, and customer service would all surely suffer if IBM sees a mass exodus of its best and brightest.
    There are already numerous signs of worker unrest at IBM. Posters on an Internet board maintained by a group attempting to unionize IBM workers all sound increasingly pessimistic about their prospects at the company.
    Some are openly hostile. "How long until critical mass is reached and there are not enough employees left to fire in order to make sure there is enough money left to pay all those outrageous high level executives salaries?" asks one anonymous poster at Alliance@IBM.org, after the group recently disclosed an IBM plan to cut 400 U.S. jobs.
    Another poster, writing under the handle "Keep IBM in the USA," recommends this course of action for workers whose jobs are outsourced: "They said you have 30 days before you are laid off and you have to train an Indian in Bangalore? I'd give Sammy the middle finger salute and tell him to kiss my ass."
    Wonder if that made it into the corporate suggestion box.
  • New York Times, courtesy of the International Herald Tribune: IBM earnings rise 47%, lifted by acquisitions and software sales. By Jeremy W. Peters. Excerpts: International Business Machines has said that its third-quarter net income soared on robust software sales, a business helped by $4 billion in acquisitions this year. Earnings rose 47 percent, or $1.45 a share, to $2.22 billion over a year earlier, the company said Tuesday. Wall Street analysts had forecast profit of $1.35 a share, according to a survey by Thomson Financial. [...]
    Although revenue at IBM's global technology services business was up 2.7 percent to $12.02 billion, analysts noted that it was the second consecutive quarter of lackluster results in that area. As IBM has become less dependent on revenue from computer hardware and software over the years, technology services has become extremely important. It includes businesses like consulting and technology infrastructure development, and it brings in the biggest chunk of IBM's revenue by far.
  • New York Times: Corporate America’s Pay Pal. By Gretchen Morgenson. Excerpts: You may not know Frederic W. Cook, but if you are a shareholder or employee who has watched executive pay rocket in recent years, you are likely to be acquainted with his work. As the nation’s leading executive compensation consultant, Mr. Cook and his colleagues at Frederic W. Cook & Company are probably responsible for creating more wealth for executives over the last 20 years than any other pay advisers.
    He and his associates have advised on the $1.1 billion option grant that Computer Associates gave its top three executives in 1998 and the $83 million pension benefit amassed by Hank McKinnell, Pfizer’s recently ousted chief executive. And in 2000, court documents show, Mr. Cook’s firm provided advice to Tyco International’s compensation committee, which heaped a $95 million pay package on L. Dennis Kozlowski, its chief executive at the time.
    Mr. Cook also invented “reload stock options,” the financial equivalent of perpetual-motion machines, which helped bestow millions of lucrative shares on executives over more than a decade until an accounting change forced them into disfavor. This year, officials at the Business Roundtable, a corporate lobbying organization, hired Mr. Cook to counter critics of executive pay; his study tried to justify rapid increases in the packages. [...]
    Concerns about shareholder value, corporate governance and the economic and social impact of soaring C.E.O. pay has led to mounting criticism of compensation practices across the nation. Warren E. Buffett, in his annual report to Berkshire Hathaway shareholders this year, decried the role that consulting firms play in awarding lofty compensation packages that have little to do with how well a company performs. Mr. Buffett’s generic name for these accommodating firms is “Ratchet, Ratchet & Bingo.”
  • Benefits Insurance Magazine: Cash Balance Plans: Back on the Table. Excerpt: Cash balance plans were once the fastest growing type of pension plan design until several law suits alleged discrimination against older employees. Recent federal pension reform legislation and a court ruling involving IBM Corp.'s plan rebut those claims, affirming the legitimacy of these plans. Attend this Business Insurance Online Executive Forum(tm) to learn whether employers are likely to now adopt or continue these plans, hear the viewpoints of these expert panelists, and ask questions during this live event.
    Questions to be addressed:
    • Do cash balance plans have a brighter future in the wake of the Pension Protection Act and recent court ruling upholding IBM's plan?
    • Does it make sense for employers to set up new cash balance plans or continue existing plans in the wake of the new pension reform law?
    • What plan designs will work and which ones will not pass muster?
    • Is a hybrid plan approach, like cash balance, more attractive for employers and employees than a defined contribution plan only approach?
  • Seattle Times, courtesy of the Austin Statesman: Retire for 30 years? Get real. Many baby boomers will need to stay in the work force as long as possible. By William Dietrich. Excerpts: The problem some baby boomers have with impending retirement is the problem some people have with the afterlife: Hell looks like more fun. Who wants to sit on a cloud in a robe playing a harp for eternity when the bad people below get to run around naked? [...]
    Retire? Can't afford to. Don't want to. Don't need to. And the 76 million baby boomers, the first of whom hit 60 this year, expect medical science to keep them alive for a long time. At least that's what boomers are telling pollsters such as the AARP, which reports that up to 80 percent of those answering their surveys plan to continue working past normal retirement age.
    That may be boomer baloney. Fewer than one in five over 65 work for pay now, and they represent just 3 percent of the work force. Many employers are still slow to recognize them as prime timber, not dead wood. Poor health, other opportunities or plain old weariness may force a good chunk of that 80 percent to bail. Historically, about 40 percent of U.S. workers have stepped out of their jobs sooner than they expected, mostly because of health problems or layoffs.
  • New York Times: Congress’s Charity Cases. By Frances R. Hill. Excerpts: A report issued last week by the minority staff of the Senate Finance Committee details how the fallen lobbyist Jack Abramoff exploited tax-exempt organizations — both sham nonprofits and otherwise legitimate charities — to move money from clients he disdained to congressmen he hoped to influence. Why were charities Mr. Abramoff’s go-to vehicles as he sought to transfer funds covertly through Washington’s corridors of power? The primary attraction was their opacity: their ability to raise money in any amount, without limit, from any individual or entity anywhere in the world without disclosing the contributors to anyone.
    This makes good sense for honest charities helping people in need. But Mr. Abramoff took advantage of this situation to circumvent campaign finance laws and Congressional ethics rules and provide illicit benefits to powerful politicians. Though members of Congress are subject to strict rules regarding gifts, travel and entertainment, there have long been exceptions for “value received from charity” — ostensibly to permit officials to help charities raise money for worthy causes.
    So the tax-exempt treasuries of willing nonprofits like Americans for Tax Reform, run by the Republican strategist Grover Norquist, became conduits through which funds from lobbyists like Mr. Abramoff and other special interests were transferred to elected officials, their families and their aides in the form of lavish travel, expensive meals, golf outings and tickets to sports and entertainment events. The rules that govern charitable giving obscured the true source of these gifts, while at the same time affording lobbyists private access to the congressmen they were trying to influence.
  • Yahoo!'s IBM Retiree message board post by "chz_whiz". Full excerpt: Randy's note said they were trying to limit increases in Medical cost, and that vision costs are down in 2007. Vision went down $1 a month. Medical went up $103 a month. Randy, I suppose that, technically, your note was correct. Thanks.
  • Poughkeepsie Journal: Big Blue will not shift jobs Memo stated 400 would need to move. By Craig Wolf. Excerpt: IBM Corp has backed off an internal memo that said 400 employees would need to shift from the Poughkeepsie plant to the one in East Fishkill to meet a commitment linked to a $9 million state grant that dates to 1998. A copy of the Oct. 6 memo, bearing the name of a Poughkeepsie manager and addressed to managers of employees seated at Poughkeepsie, was obtained by the Poughkeepsie Journal. It was brought to the attention of Jeff Couture, a spokesman for IBM's Systems and Technology Group.
    The memo, from William K. Boyd, a manager of mainframe data collection, said, "IBM has a commitment to the State of New York to maintain the population level of IBM employees at the Hudson Valley Research Park in East Fishkill. In order to meet our commitment to the state, IBM will have to balance the levels of IBM resource within the Hudson Valley sites by transferring 400 employees from Poughkeepsie to Fishkill in the fourth quarter."
  • Herald-Sun (Australia): Workers asked to train replacements. By Nick Higginbottom. Excerpt: St George Bank has asked employees to train their Indian replacements, but insists they will not be forced to. Sixty staff members from the bank's Sydney operation were told last month they would lose their jobs within the first three months of next year.
    Their jobs have been outsourced to IBM's Indian operations, with the new workers currently being trained in the bank's head office at Kogarah in the city's south.
  • New York Times: Incentives for the Dead. By Paul Krugman. Excerpts: I don’t know about you, but I need a break from political scandals. So let’s talk about private-sector scandals instead — specifically, the growing scandal involving backdated stock options, which this week led to the resignation of William McGuire, the chief executive of UnitedHealth Group.
    To understand the issue, we need to go back to the original ideological justification for giant executive paychecks. In the 1960’s and 1970’s, C.E.O.’s of the largest firms were paid, on average, about 40 times as much as the average worker. But executives wanted more — and professors at business schools provided a theory that justified much higher pay.
    They argued that a chief executive who expects to receive the same salary if his company is highly profitable that he will receive if it just muddles along won’t be willing to take risks and make hard decisions. “Corporate America,” declared an influential 1990 article by Michael Jensen of the Harvard Business School and Kevin Murphy of the University of Southern California, “pays its most important leaders like bureaucrats. Is it any wonder then that so many C.E.O.’s act like bureaucrats?”
    The claim, then, was that executives had to be given more of a stake in their companies’ success. And so corporate boards began giving C.E.O.’s lots of stock options — the right to purchase a share of the company’s stocks at a fixed price, usually the market price on the day the option was issued. If the stock went up, these options would pay off; if the stock went down, they would lose their value. And so, the theory went, executives would have the incentive to do whatever it took to push the stock price up.
    In the 1990’s, executive stock options proliferated — and executive pay soared, rising to 367 times the average worker’s pay by the early years of this decade.
    But the truth was that in many — perhaps most — cases, executive pay still had little to do with performance. For one thing, the great bull market of the 1990’s meant that even companies that didn’t do especially well saw their stock prices rise.
  • Yahoo!'s IBM Retiree message board post by "ibmrumor": Annual Medical 2007 Enrollment Information. Full excerpt: The way I understand it is that IBM only contributes a maximum amount for the medical insurance. In my case I believe it is $7000. The cost of insurance has already exceeded this amount so any increase is passed directly on to me. So for example, if full amount goes from $10,000 to $10,450, my payment will go up by $450.
    Ok, lets see. I was paying $71 or $852 per year so I guess premium was $7852. Now I will be paying $114 or $1368 a year so premium must be $8368. That is about a 6.5% increase. So numbers seem about right although I really don't remember IBM telling me 36 years ago that they would cap their contribution to my medical insurance at $7,000.
    At least I don't have the dreaded FHA! By the way, the UHC-MAMSI-Optimum Choice is a plan for which IBM pays an actual premium. It is not an IBM self-insured plan.
  • Yahoo!"s IBM Retiree message board post by "tradewinds022002". Full excerpt: I thought that a figure which I saw on the website of Fidelity NetBenefit was in error but unfortunately it is not. In that case my medical coverage for our HMO has gone up 240%. When I called IBM, I was told to call my HMO to find out why they raised the premiums and when I called the HMO, I was told to call IBM. In another words, we are screwed,- again.
    How can any service, insurance or any product increase 240% in one year?? A few more years of this practice and we will face poverty. What a way to end a life cycle. Desperate George.
  • New York Times, courtesy of the International Herald Tribune: Global companies fight Chinese effort on aiding unions. By David Barboza. Excerpts: China is planning to adopt a new law that seeks to crack down on sweatshops and protect workers' rights by giving labor unions real power for the first time since Beijing introduced market forces in the 1980s. The move, which underscores the government's growing concern about the widening income gap and threats of social unrest, is setting off a battle with American and other foreign corporations that have lobbied against it by hinting that they may build fewer factories here. [...]
    Some of the world's big companies have expressed concern that the new rules would revive some aspects of socialism and borrow too heavily from labor laws in union-friendly countries like France and Germany. [...]
    "This is really two steps backward, after three steps forward," said Kenneth Tung, Asia-Pacific director of legal affairs at the Goodyear Tire & Rubber. in Hong Kong and a legal adviser to the American Chamber of Commerce here. The proposed law is being debated after Wal-Mart Stores, the world's biggest retailer, was forced to accept unions in its Chinese outlets. [...]
    The skirmish has pitted the American Chamber of Commerce - which represents corporations including Dell, Ford, General Electric, Microsoft and Nike - against labor activists and the All-China Federation of Trade Unions, the Communist Party's official union umbrella organization. Workers' advocates, however, say that the proposed rules - and more important, enforcement powers - are long overdue, and they accuse the American businesses of favoring a system that has led to widespread labor abuse. [...]
    On Friday, Global Labor Strategies, a group that support labor rights policies, is expected to release a report in Washington denouncing American corporations for opposing legislation that would give Chinese workers stronger rights. "You have big corporations opposing basically modest reforms," said Tim Costello, an official of the group and a longtime labor union advocate. "This flies in the face of the idea that globalization and corporations will raise standards around the world."
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • The Huffington Post: Pension or Penitentiary? By Barbara Ehrenreich. Excerpts: Talk about a cry for help: Timothy J. Bowers robbed a Columbus OH bank of $80, handed the money over to a security guard, and waited for the police to come and arrest him. In court on October 11, he pleaded guilty and told the judge that he would like a three-year sentence - just enough time to get him to the age of eligibility for Social Security benefits.
    The judge graciously obliged, demonstrating compassionate conservativism at its warm-hearted best.
    Bowers, almost 63 years old, is no wacko. He passed a court-ordered psychological exam and explained that he had not been able to find a new job since his old one ended when his employer's company closed in 2003. "At my age," he said, "The jobs available to me are minimum wage jobs," adding that "There is age discrimination out there."
    Bowers had hit another kind of "doughnut hole," like the one that plagues Medicare recipients: He was "too old" for the above-minimum wage workforce and too young for Social Security. Thanks to rampant age discrimination, "too old" can mean as young as 45, leaving a 20 year gap before Social Security kicks in.
  • USA Today: Consumer unease with U.S. health care grows. By Julie Appleby. Excerpts: The U.S. health care system — touted as providing the best medical care in the world — is becoming more precarious to most Americans, who are rattled by rising costs, questions about quality and fears about the future. "If you can afford it, it's the best health care system in the world, but, increasingly, people aren't able to afford it," says Clyde Bishop, a retired research scientist in Wilmington, Del. [...]
    Even with such efforts, most economists predict that health care spending will continue to grow faster than the economy — and far faster than wages. Already, the average yearly cost of the most popular type of insurance plan offered by employers hit $11,765 this year, with the average employee paying $3,226 of that total, a Kaiser Family Foundation study shows. Average premiums have risen 87% since 2000, while workers' earnings have risen 20%.
  • American Public Media's Marketplace: A model for universal health care? About 46 million Americans don't have health insurance. Some states have stopped waiting on the federal government and put universal health care measures on their ballots. Leading the way: Massachusetts. Helen Palmer reports. Photo: Massachusetts Governor Mitt Romney launches the state's new program to cover the uninsured, Commonwealth Care.
  • The Denver Business Journal: High coverage costs drive some outside the law. By Amy Fletcher. Excerpts: And many are choosing to deal with the higher prices in traditional ways -- increasing costs for workers and their families. High-deductible plans coupled with a health savings account also continue to grow in popularity. "It's pretty much the same thing; it's having their employees pay more," said Denver insurance broker Bill Lindsay. But not too much more, he added.
    "Most of the employers we are talking to who are dealing with a tight labor market ... are reluctant to increase the employee premium very much," Lindsay said. "So we are seeing more increases on the dependent side." [...]
    The owner of one Denver shipping company, for example, said he has forgone group coverage for his employees for several years, instead finding it cheaper to pay for workers to buy plans individually. Reimbursing workers who buy coverage individually violates Colorado insurance law, but it's cheaper and so not uncommon, insurance experts say. "Legally you are not supposed to do that," said Englewood insurance broker Steve Roper. But "a lot of people do it that way."
  • Wall Street Journal: McGuire Faces Pressure to Leave At UnitedHealth. Investigation Finds Evidence Options Were Backdated; Board Plans to Meet Sunday. By James Bandler and Charles Forelle. Excerpts: William McGuire, chairman and chief executive of UnitedHealth Group Inc., faces mounting boardroom pressure to leave the giant health insurer after an internal probe found evidence that stock options were improperly backdated to benefit insiders, people familiar with the matter said. [...]
    UnitedHealth, one of the nation's largest health insurers with a market value of $66 billion, is among the most prominent of the more than 100 companies caught up in the stock-options scandal. Dr. McGuire has been among the highest-paid executives in U.S. corporate history, amassing an enormous, options-based fortune over his 15 years running UnitedHealth. At the end of 2005, his unexercised cache of options was valued at $1.78 billion, far and away the largest sum held by any U.S. executive, according to Standard & Poor's ExecuComp. [...]
    By many measures, Dr. McGuire holds a place among the most successful corporate executives of the modern era. UnitedHealth shares have risen about 50-fold during his tenure. The massive grants of stock options, meanwhile, have yielded him hundreds of millions of dollars in profit, the cornerstone of a large fortune. He hasn't been the only beneficiary; No. 2 on the Standard & Poor's ExecuComp list of executives with the greatest value in options was Stephen Hemsley, Dr. McGuire's top lieutenant at UnitedHealth, who had a fortune of somewhat less than half of Dr. McGuire's stake. Dr. McGuire benefited handsomely from the munificence of the UnitedHealth board's compensation committee, which -- in addition to the options -- granted him generous salaries and bonuses and a hefty retirement deal. "We're so lucky to have Bill," Ms. Mundinger, a longtime compensation-committee member, told the Journal earlier this year. Of his rising pay, she said: "He needs to be compensated appropriately so that his business model has believability in the market."
  • Associated Press, courtesy of the San Jose Mercury-News: UnitedHealth to pay departing CEO $5.1M. By Joshua Freed. Excerpts: After being forced to step down over the company's compensation practices, UnitedHealth chief executive William McGuire will retire on $5.1 million a year, according to the calculations of a watchdog group. [...]
    McGuire has stock options that were worth $1.78 billion as of the end of 2005. Their current value is not known. Investors have sold off UnitedHealth shares since questions about options backdating arose in March. Then, on Sunday, UnitedHealth said McGuire would re-price his options to the highest point in the year they were granted to remove any possibility that he got a favorable price. [...]
    McGuire's base salary was $2.3 million a year but he cleared more than $100 million in years that he cashed in stock options. Paul Hodgson, who researches compensation at The Corporate Library, said there are far too many elements of guaranteed pay in McGuire's contract, including guaranteed annual base salary raises, guaranteed pension benefits, and guaranteed severance. His rising base salary triggers a rising bonus and a rising pension, Hodgson said. "A board that agreed to this type of compensation was already compromised before stock option backdating became an issue," he said.
  • BusinessWeek: The Ties UnitedHealth Failed to Disclose. For years, the health insurer didn’t tell investors about personal and financial links between its former CEO and the "independent" director in charge of compensation. By Jane Sasseen. Excerpts: In its 1999 proxy statement, UnitedHealth Group made sure investors knew of a few small relationships between its directors and the company. While reassuring shareholders that all the directors on its compensation committee were independent of management, it pointed out that the insurer paid immaterial amounts for insurance policies bought from the company headed by one director, while the law firm of Walter Mondale, another board member, was also the company's corporate counsel.
    Following the New York Stock Exchange's 2004 imposition of stricter standards for director independence, UnitedHealth had eliminated even those minor ties by the time the 2005 proxy was filed. This time, it told investors that all the members of its comp committee met the NYSE's independence test, and that no relationships or ties existed between directors and the company.
    How nice of them to share. Of course, what the proxy neglected to mention were significant personal and financial ties between ousted CEO William McGuire, and William Spears, a New York investment adviser and long-time head of UnitedHealth's compensation committee.
  • New York Times: A Lesson From Europe on Health Care. By David Leonhardt. Shortly before he moved to Greece last year, an American named John Econopouly received the unpleasant news that he needed a hernia operation. He had the surgery done in Northern California, and it didn’t go so well.
    After spending less than a day in the hospital as an outpatient, Mr. Econopouly went to a friend’s house to sleep off the surgery and found that his wound had reopened. “I woke up in a pool of blood and didn’t know what to do,” he remembered. “Basically, I didn’t feel cared for.” For this, he paid more than $2,000 over and above the thousands of dollars that his insurance policy paid.
    A few months later, once he had moved to Greece, he found out that he needed a separate operation for another hernia, giving him a chance, unwanted as it may have been, to do his own little comparative study of American and European medicine.
    The Greek hospital was much dirtier than the one in California, he said, and he was put in a room with a handful of other patients. The stench was brutal. When Mr. Econopouly, a 41-year-old computer programmer for Wall Street, asked for more privacy and said he would be happy to pay extra, the staff laughed at him.
    But the care itself was another story. It seemed much more thorough than it had been in the United States. He spent the day before the operation undergoing tests, including one that discovered a heart murmur, and the day after the operation in the hospital being observed. Although he didn’t have Greek health insurance, his final bill was only $700. [...]
    In Greece, the government and individuals combine to spend about $2,300 per capita on health care each year, and the average life expectancy is 79 years. Canada, where the hospitals are probably cleaner, spends about $3,300, and people live to about 80. Here in the United States, we spend more than $6,000, yet life expectancy is just below 78.
  • The Philadelphia Inquirer, courtesy of Blue Cross/Blue Shield Health Issues: Wages lag insurance increases: Report finds health-care premiums in Pa. and nationwide rose far faster than paychecks in the last six years. By Jane M. Von Bergen. Excerpts: In Pennsylvania, average annual premiums for family health coverage have risen from $6,721 in 2000 to $11,801 this year, an increase of $5,080. Median wages in that time rose from $24,834 to $28,145, an increase of $3,311, according to the report.
  • WebMD: More Americans Seeking Surgery Abroad. High Costs in U.S. Is Driving Some Patients to Seek Treatment in India and Elsewhere. By Rick Ansorge. Excerpts: Dismayed by high surgical costs in the U.S., increasing numbers of American patients are packing their bags to have necessary surgery performed in countries such as India, Thailand, and Singapore. "This is not what is sometimes snootily referred to as 'medical tourism,' in which people go abroad for elective plastic surgery," says Mark D. Smith, MD, MBA, president and chief executive officer of the California HealthCare Foundation in Oakland.
    Today's "medical refugees," the term Smith uses in an article published in the Oct. 19 issue of The New England Journal of Medicine, are going to foreign countries for lifesaving procedures such as coronary bypass surgery and heart valve replacement, and also life-enhancing procedures such as hip and knee replacement knee replacement. "People are desperate," Smith tells WebMD. "This illustrates the growing unaffordability of the U.S. health care system, even to people who are by no means indigent."
New on the Alliance@IBM Site:
  • Alliance@IBM Press Release: Excessive Cancer Deaths Found Among IBM Manufacturing Employees. Excerpt: Earl Mongeon, Alliance@IBM Vice President and a manufacturing worker at the IBM Burlington Vermont site, said “This study confirms to those of us working in IBM manufacturing processes that the rumors and talk about high levels of cancers and other health problems from working with toxic substances wasn’t just idle shop floor talk.”
    The Alliance@IBM, the advocate group for IBM employees, is calling on IBM and Local, State and Federal officials to take the following actions in response to this study:
    • Health surveillance of all who worked at IBM by the company and appropriate Health agencies.
    • Increase the use of non-toxic substances in all processes and reduce the use of harmful substances.
    • Employee exposure levels of toxic substances within IBM facilities be reduced significantly.
    • States and municipalities with computer manufacturing plants to compile cancer maps of areas around the facilities and areas where employees are likely to reside. Results to be made public.
    • The setting up of a fund to help alleviate the medical costs of affected IBM employees and their families.
  • Communications Workers of America (CWA): CWA, Indian Worker Organizations Release Landmark Report on Conditions for Call Center Workers in India and U.S.
  • From the Job Cuts Status & Comments page
    • Comments 10/13/06: How long until critical mass is reached and there are not enough employees left to fire in order to make sure there is enough money left to pay all those outrageous high level executives salaries? Downsize a few of these long knockers and don't backfill them could be an excellent solution to the problem of staying competitive. It doesn't take rocket science to hire and fire. -Anonymous-
    • Comments 10/15/06: How can Palmisano and Donofrio complain about the lack of engineers graduating in this country with a straight face? They are sh*t canning IBM engineers. Why would anyone want to go into engineering when they see what IBM does to an engineer? Save IBM and the engineering profession and sh*t can these two A$$holes. -Get rid of these A$$holes-
    • Comments 10/18/06: Isn't it just great, the Q3 results and glowing notes from Execs about them yet somehow we need to lay people off "as a last resort to contain costs"? Definitely agree with the poster's comments about the comments made regarding lack of engineers graduating/available in the US. Who would want to be an engineer/computer scientist when so many of these jobs are being outsourced? And how can execs complain there aren't enough engineers here when they are the ones shipping the jobs to other countries? -actioned-in-Austin-
    • Comments 10/18/06: I agree with the poster about IBM mistreating engineers. I worked hard to get my engineering degree and IBM treated me like a piece of shit when I was laid off. I know that Palmisano and Donofrio both complain about the lack of engineers graduating in the US. I would never want my kids to through what IBM did to me. My kids will never study engineering after they saw what IBM did to their Dad. Screw IBM. Palmisano and Donofrio will meet again in Hell. -Anonymous-
    • Comments 10/19/06: Resourcing actions have started in IBM Canada in GBS. People are being identified and walked out the door this week. I don't know if this action is company wide but I do know that anyone under the Chris Alford organization is at risk. No opportunity to go to another area of the company. -Canadian Employee-
    • Comments 10/19/06: I absolutely agree with those people who pointed out the ridiculousness of Palmisano and Donofrio lamenting the lack of US engineering and computer science graduates. Who in their right mind would enter a field where the odds are GREATLY in favor of their job being off-shored?
      I have two college age children, and I thank my lucky stars that, while they both like science, neither one has the slightest interest in computer science or electrical engineering.
      Heck, even RADIOLOGISTS (M.D.s!!!) are seeing their work off-shored -- ship a digital X-ray to India for some (supposedly!) U.S.-trained Indian radiologist to read and report on. And I've read that robotic surgery is becoming more prevalent for certain types of surgery. How long till the surgical robots are controlled not by a surgeon in the operating room, but by some Indian surgeon in Calcutta, operating remotely via the Internet? - I. B. Emmer-
    • Comments 10/19/06: The IBM parents I talk to do not want their kids to study EE or Computer Science. Those kids are the top in their class and all are going to study other degrees. My daughter included... geological engineering. She has watched me stressed over and over about layoffs. Parents want their kids to have jobs that are "required" to stay in the US. -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 10/15/06: Hey Sammy, I may not make the kind of money you make but I have learned something from you and I'm taking full advantage of what you've taught me. Lie, Cheat and Steal is what you've taught me. I've got over thirty years in with IBM, the first fifteen were good, the last fifteen have sucked, since lying, cheating and stealing from the workforce that made IBM great took place. Yes, bottomline, that's what this company has done to us. But, now, I'm putting into practice what you taught me. I sit on my butt, tell my manager I have enough or too much to do and I'm cheating and stealing a portion of what IBM has stolen from me. I'm planning on doing this until you figure this out. I hope everyone with over thirty years are doing this. It's our way of showing you, you've done good in your education of IBM'ers. note-before IBM CHEATED me, I would have never stooped so low, but since I see the exec's do it. Screw IBM. Sammy, you see, I can do just like you. ha, ha. -Anonymous-
    • Comment 10/18/06: So far, I only have a letter that says the following: (Quoting the third paragraph) "Overall costs continue to increase, and many of you will see higher price tags for IBM medical benefits in 2007. In addition Medicare premiums are expected to go up in 2007 -- with a sliding scale premium schedule for higher-earning Medicare participants--because cost for outpatient hospital and physician services continue to rise. Your contributions for retiree dental coverage will not increase next year, and those for vision care will actually decrease slightly.
      Ironically, when I was younger and therefore healthier, the plan was free but I never needed it. I went for years and years without a sick day off. Now that I need it the price continues to go up, and it eats more and more deeply into my reduced income. -Retiree-
    • Comment 10/18/06: Folks. Now we are truly screwed. Better then expected earnings. Stocks jumped into the 90's. If it continues to climb Sammy will be the darling of investors. He will get huge bonus and pay raise, we will get squat. The only chance we have to force fair treatment, such as few or no home interruptions , fair pay raises and benefits and a say in our own destiny is to unionize NOW. Live Better Work Union. Not just a slogan but a way for quality of life. -EXODUS2007-
    • Comment 10/18/06: I have officially been away from IBM one year and decided to spend my evening reflecting on what a year away has been like and what I had missed. The day that I walked out the door year I felt relieved. I wasn't expecting to feel quite that good! The next day I was a little lost, but didn't miss the dreaded feeling of having to power up and see what emergency was waiting for me! I took a month off, polished up my resume to not look IBMish, and off I went to start my next life.
      I found that IBM is not the only company out there and you will too. When you leave, thank them for all the knowledge that you are taking with you and the great friendships you made while you were there. Shut the door and never look backwards. I hope you will also feel like the day you left college and the whole world is your playground again! Thanks for letting me share my 1st anniversary with you as an xIBMer/human being. The other thing you will find -- xIBMers immediately bond and are quite a tight fraternity. Best of Luck to you all. -Left 'n Loving It!-
    • Comment 10/19/06: RE: 47% GROWTH IN PROFIT ---- Take a close look at the numbers. If you take out the one time paper tax, last year, of over $500-Million on the repatriated money and interest earned on that money, the growth was under 8 percent. IBM should be a good SELL until the end of the year, as it will get to claim all the engagements that slipped out of 3Q2006 into 4Q2006 plus all the new engagements. In 2007 the current massive drop in signings will show it effects. Also, the effects of DUMPED USA employees and the new taxes that will be employed by India and China to protect their workers will be felt by IBM and its share-holders.
      The problem with stretching the truth on numbers, to the extent IBM has, is the rubber band will SNAP ! When the SEC exposes its investigation into IBM STOCK GRANTS and pseudo OPTIONS, it will be like the sound of an ALKA SELTZER hitting the water: KERR-PLUNK....FIZZ............... -NO-KY-
    • Comment 10/20/06: Just checked out my health care benefits for 2007. Mine went up over 13%. I'm under 40 and family of four. A bit scary looking long term. -Anonymous-
    • Comment 10/21/06: Health care cost. Industry expects claim health care will rise 7.8 % in 2007. My cost went up 20%. It looks like IBM corp.'s medical care cost will be the same as 2006 or less. We employees are most likely picking up ALL the additional cost for 2007. A cost savings for Sam and more money from our pockets. -Anonymous-
  • Pension Comments page
    • Comment 10/19/06: Once again enrollment for medical benefits starts. I was shocked and appalled at the increase this year by IBM. In 2007 my insurance premium goes up by 260% at this rate, within 2 years, my entire pension check will go to pay the 'free' lifetime medical IBM promised us 30 years ago. Calling IBM for an explanation at the astronomical increase does no good, any suggestions? -Anonymous-
  • IBM employees on employee raises
    • Comment 10/13/06: I am topped in at band 8 due to the new pay structure in SWG. So after a 1 rating last year I receive a 1.4% raise, and will not get another raise unless band 8 is adjusted. But if I fight to make band 9, then I will be competing with others with more time in band, and will look like an underperformer. I guess there is no way to win, unless you are Sam... -Anonymous-
    • Comment 10/15/06: Interesting... in a meeting, the whole area was told to expect a 2 on the performance evaluation this year (80%). Said there would be few evaluated at 1 or 2+ (10%) and that the rating is not related to the amount of raise a person will receive. Continued to say that people who were rated a 2+ last year will be mostly rated a 2 this year. Instructed them to not feel bad about the lowering of rating, because everyone will receive lower rating. Anyone else heard this type of information? Mgt in my area is fairly direct and forward with information. -Anonymous-
    • Comment 10/18/06: Hey guys, Looks like Sammy can give himself another huge raise now. IBM's earnings are up 47%. How much of this was gained by breaking the backs and spirits of hard working employees? I guess this explains why we all have to suck it up and take a 2 next time around on our PBC (this seems to be happening more and more). We have to let Sam take his share first. -Anonymous-

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. A sample post follows:
  • "MBA new hire seeking advice" by "whocaresidun". Full excerpt: I am a top tier MBA hire with five years of other non consulting industry experience. I don't have SAP experience nor am I interested in software implementation. I am also not interested in doing project management. Because I am not technical, most of the projects involved documentation of "as is" or "to be" business process. Before I joined I was hoping to do something more challenging like high level analysis. Apparently, I was wrong. So now instead of blaming anybody I would like to get the most out of my time here at IBM. This is where I would like some advice. What specific things should I learn? What would make me more marketable in the future? I am by nature an introvert and it's not easy for me to do networking as well as some other folks. I really want to find a mentor but I do not know how to meet one. So here I am posting for advice. Thank you.
  • "Yours is a common scenario" by "Dose of reality". Full excerpt: Your plight seems to be the rule and not the exception for our experienced hire process. You were "sold a bill of goods", as you were recruited under the assumption that we do consulting, only to find out that we do application implementation/integration work. You were only hired to be window dressing - a token "business process" person that we put on proposal rosters to make prospective clients think that we drive our projects with operational expertise.
    Then, since we ultimately end up slamming the software in without any "high level analysis", or focus on improving operations, you just get pushed off into doing mundane, but necessary, documentation work. Unfortunately, there are very few practices in IBM that approach the market in any other way. Our business model is based on high cheap labor content from India, and I can tell you it is difficult to work any other way, given the business metrics we have to manage to. It is by design, thanks to finance and HR.
    I know you don’t want to hear this, but your best course of action would be a total change of venue – outside of IBM. It is infinitely easier to develop skills consistent with your career goals outside of IBM. The fact that you are here now should in no way limit your career options. No matter where you migrate to within IBM, you will always end up fighting against the basic business model. Think much more broadly about what your next steps might be. Strategic decisions like this should not be made with a tactical mindset.
    If you wanted to work in investment banking, would you stay in the back office of a retail bank looking to develop your skills?! If you wanted to get on a CFO track, would you work in an IT department?! If you wanted to be a fashion model, would you work in a fitness center? Put your top-tier MBA mind and skills to this decision process, and you will see that I am right. Career decisions are like real estate purchases – the keys are location, location and location. The only thing holding you to IBM is your own inertia. So what is your background?
  • "GBS experience" by "jspama". Full excerpt: Employment with GBS was the absolute worst experience of my life. Staring with high expectations, the reality of working for such a diabolical organization led me to develop panic attacks and an overall general anxiety disorder. After 9 months, for the sake of my health, I quit. I've never had "mental health" problems EVER until I joined this company. I feel raped. The biggest untold story is the number of employees on anti-depressants and anti-anxiety drugs. For all future GBS candidates, re-consider if the "new" IBM is really for you. There is nothing special about this company. Sadly, IBM is not the company it once was.
  • "Correction" by "ancientblueconsultant". Full excerpt: (I) hear from some of my friends that Research is hard at work to create a Orwellian living environment (aka as hell for most normal people) for the piglets. One past CEO once was heard to say: "If I could just meld their heads to the CRT and keyboard then I wouldn't have to deal with their private lives." Keep that in mind in the virtual world. It's one run by people for who your best interests are irrelevant.
  • "The new marketing campaign" by "Dose of reality". Full excerpt: Here's the never-to-be-revealed ending to that ridiculous ad campaign that we have been showing. You know - the one with all the well-dressed audiences waiting in anticipation for the company representatives to pull the red satin cloth off of the display on stage? What is actually underneath the cloth is a sculpture depicting a large group of eager twenty-somethings marching and morphing into depressed zombies. Kind of like those old evolution posters that started with Australopithecus and ended up at homo sapiens....only this time in reverse. That is the new IBM, and if you are smart you won't get in line to devolve!
  • "I get good feeback from folks" by "KewlSimba". Full excerpt: Folks, I had a few folks at senior management level who joined recently and have nothing but good words. This board seems to reek of acidity.
  • "My reactions weren't as extreme" by "civilliberty". Full excerpt: But I can certainly relate to the content of your post. It was my absolute worst experience ever also - and I have many years experience. Diabolical is a very apt word for describing the self-serving nature of the management hierarchy. In one way IBM is a good experience. If you were to start your own business you'd know how not to run a company and how not to treat your employees - and you'd probably end up being successful.
  • "Not Surprising - here's some scenarios" by "ancientblueconsultant". Full excerpt: here are many reasons why you might be getting either accurate or inaccurate information. First of all, when I was a Band D, it was the kiss of death to say anything negative to any subordinate. If these folks are not true family or trusted friend, you might be getting filtered data. Remember, at levels above Band 10 there are no friends, just competition ready to find reasons for you to be taken out politically.
    I'd also be very suspicious of anyone saying there's nothing but good, in any case. Too rosy a picture is always suspicious, but that's just me and I don't know your demeanor or political skills.
    Here's a way to statistically search for "the big overall picture". Although I've been retired for a while, and I won't comment on the content, you may want to check the corporate Global Pulse surveys if they are still visible to the average non-management employee on the intranet. They had some very interesting findings regarding how upper management viewed the real upper management, processes, etc. The survey results may give you a clue or at least a hint as to the veracity and accuracy of your folks' words. Don't forget these are internal documents tilted to the most positive view possible, so reality might really be a little worse than what is gleaned from the analysis
    The other possibility is that the management you refer to is not in IGS or is new management coming in from an acquisition. They'd never see any problems in places like SWG (who are building their own services group to compete with GBS) or in the case of a newly bought executive, they'd be foolish to say anything negative. Check to see how the Blue Pig compares with peer companies in these surveys.
    Won't comment on your acidity comment, since I don't like to denigrate others who obviously we must all respect and listen, whether you/we agree with them or not.
  • "Small pockets of goodness" by "426_227". Full excerpt: There are pockets of goodness in IBM. Typically it's a good manager, or just a good project, that shield you from the ERP implementations that Dose references. I have been on 3 good projects in 5+ years (my current project lasting for more than 3 years with several promotions). It reads as though this is the exception to the rule. It might be geography, or I'm just naive.
    I'm getting my MBA part-time now. I know others who have left IBM to get MBA's from top 10 schools. I'll be frank, almost all were woman (and several were racial minority females). And let's be honest, that's a HUGE plus in the MBA applicant world, the numbers bear this out.
    I don't think IBM on your resume will hurt your MBA chances, but I think you can do better. If you luck into a pocket of goodness with IBM, it could work greatly; but you are rolling the dice on that one.
    Do you know what you want to do post-IBM? Do you think you could get some industry experience in that realm? From what I've read on Vault, it doesn't really sound like any of the major consulting companies are that great (some less worse than others). If you know folks doing consulting (especially if they have a few years experience) I'd try following them for 3-4 years and having them shield you from BS.
    If you are looking for a top 10 MBA program, I think you'll NEED to do better than IBM. If you are a white male (again, the numbers bear this out, I'm not a disgruntled person) then you'll HAVE to do better than IBM. I've spent good time at Wharton recently and almost all the white guys I met there had 4+ years of really solid SOLID experience. The amount of people I met who started successful businesses, or started and managed multi-multi-million dollar investment funds was amazing.
    You can make of IBM what you want, I think, in the long-run. If you are willing to only invest 3-5 years in IBM, to bust your rear end, and handle some of the politics, then it could work for you. But if you can do better...
  • "The acid truth" by "Dose of reality". Full excerpt: There is a certain band level for which most of the negative factors that are mentioned on this board have no impact. I know - I live it.
    Ask massah, or the overseer at Tara how things are and you will get the same rosy picture. They know deep down that they are screwing those below them in the pyramid, but they can always find a way to spin it in the favor of the plantation. It is a fundamental requirement of those that are power-hungry to have no conscience. In other words, your sample is biased.
    Acid - yes that is an apt description of the function of this board, though I prefer the broader term reagent, which comes in two forms. The more common types are the acids, like hydrochloric acid. They are intended to produce a chemical reaction, generally to cleanse or destroy an undesirable component. Then you have the reagents that are used in chemical analysis. Those have to be absolutely pure to produce an accurate analysis. I would say that accurate analysis and cleansing is a very appropriate description of what we do. Thanks - I do appreciate the compliment.
    So what kind of "good words" are you hearing about IBM anyway? Or does your term "feedback" refer to your getting paid for this?

Modern-Day Robber Baron Corner
Today's highly compensated executives face many difficulties, including figuring out how they can possibly spend all of the rich rewards they've earned on the backs of ordinary workers. Take a look at the insider trading of many of our IBM executives—spending the cash from all that stock "acquired at $0 per share" must be a real challenge! Or, imagine the difficulty IBM CEO Sam Palmisano will face spending his $10,000 a day pension when he retires!
As a way of helping out our beleaguered, modern-day robber barons we will periodically feature "spending opportunities" that the "upper crust" of our society may want to take advantage of!
  • New York Times: For the Super-Rich, It’s Time to Upgrade the Old Jumbo Jet. By Joe Sharkey. Excerpts: The tremendously rich are different not only from you and me but also from the merely rich. For one thing, some of them have really nice airplanes. This is not about the presumed titans of the private jet universe like the mighty Gulfstream G5’s or Global Expresses, whose occupants can leap continents and oceans at high speed and in plush comfort, without all the inconveniences of commercial airports, airline schedules and, well, strangers.
    This is about big, long-haul airliners that are converted to private jets and can carry not only pampered passengers and their entourages, but also, in some cases, their Rolls Royces and racehorses. These are specially equipped, privately owned jumbo jets — the kind that normally carry as many 300 to 400 passengers — but reconfigured with interiors designed for the enjoyment of, at most, a couple of dozen.
    And in a market in which many owners progressively upgrade — starting out, for example, with a Boeing 737 and eventually moving up — the next big thing is the Boeing 787 Dreamliner, which lists for about $150 million and up. [...]
    “There are around 39 Boeing 747’s with interiors configured for V.I.P. use in the world, and many 757’s and 767’s, an MD-11, and two 777’s,” said Aaga Duenhaupt, a manager for Lufthansa Technik, based in Hamburg, a subsidiary of Deutsche Lufthansa that designs and builds the interiors for new and used (or “pre-owned,” as they like to say in both the luxury car and luxury jet markets) airliners for individual or corporate use.

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