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Highlights—December 23, 2006
- Yahoo! IBM Pension message board post
by Janet Krueger. Full excerpt: AARP filed an Amicus brief with the Supreme Court today on our behalf supporting
our request for cert; it is available in the FILES area as: Cooper_AARP_SC_Amicus_Brief.pdf
- Yahoo! IBM Pension message
board post by Janet Krueger. Full excerpt: The Cooper legal team filed a reply to IBM's opposition brief with
the Supreme Court today. It is available in the FILES area as: Cooper_SC_Reply_to_IBM.pdf. Lots of good Christmas
reading for IBM's counsel! (-;
- Los Angeles Times: As
earnings sizzle, a chill for workers Firms and investors, not the rank and file, reap gains from globalization
and labor productivity. By Tom Petruno. Excerpts: American companies are about to wrap up their fourth straight
year of spectacular profit growth, which has filled corporate coffers with cash and kept the bull market alive
on Wall Street. Operating earnings of the blue-chip Standard & Poor's 500 companies have risen at double-digit percentage
rates for 18 straight quarters, an unprecedented streak.
But to many rank-and-file workers, the booming bottom line may only serve as a reminder of
what has been missing from their own paychecks.
Wages of average workers have just begun to improve in recent months after badly lagging behind
inflation for much of this decade. Amid the surge in corporate profit, many workers have faced terminated pension
plans, reduced healthcare benefits and rising outsourcing of jobs overseas.
The swelling earnings of business — and of many top executives — have become part
of the debate about widening U.S. income disparities. When they take control of Congress next month, Democratic
Party leaders will focus intently on those disparities, they say, and on trade agreements that some contend enrich
multinational firms while destroying American jobs. "I'm very passionate about this, and I'm going to be joined
by some people who are equally passionate," said Sen. Byron L. Dorgan (D-N.D.). "Some reinforcements are
Among the biggest U.S. firms, Bank of America Corp. earned $15.9 billion in the first nine
months of this year, up 23% from a year earlier. Technology giant IBM Corp. posted a 25% jump in profit in the
period, to nearly $6 billion. McDonald's Corp.'s results rose 15% to $2.3 billion. [...]
"Companies are saying, 'We can't afford anything' " when it comes to providing for
U.S. workers, said Larry Mishel, president of the liberal Economic Policy Institute in Washington. In the context
of soaring earnings, "that's not irony, it's hypocrisy," he said. [...]
What's striking to many experts is that labor's share of the economic pie has failed to grow
over the last decade even as American workers have become more productive. In essence, those productivity gains
have flowed to companies and their shareholders, not to the rank and file. "We've had nine years of great productivity
growth, and most workers see no gain for it," said Dean Baker, co-director of the liberal Center for Economic
and Policy Research in Washington. [...]
Stephen Roach, an economist at brokerage Morgan Stanley in New York, believes that the persistent
threat of outsourcing helps keep a lid on worker pay demands, particularly at the lower end of the income scale.
That also has been the view of some in Congress — Democrats and Republicans — who have railed against
trade agreements that they say encourage U.S. companies to move jobs overseas or to use outsourcing as a lever
against domestic workers. "All these companies say the same thing: 'We have to [move overseas] to compete,' " Dorgan
not about competing — it's about fattening their profits." [...]
Mishel, of the Economic Policy Institute, said that although companies are free to do as they
please with their profits, their decisions help determine the long-term viability of the U.S. economy. "If we
have high profits and it's not translating into domestic investment and higher wages," he said, "the system
- Yahoo! IBM Employee Issues message
board post by Kathi Cooper. Full excerpt: The reason so many spirit parties
have been cancelled is because IBM has to meet their year end bogey. Do you think they report the numbers as they
fall at year end? Nope. They report the numbers they have modeled. I bet they have also notified all accountants
to defer all available expenses.
- Yahoo! IBM Employee Issues message
board post by "alwaysontheroad4bigblue". Full excerpt: They have. Among the expenses that have been
put on hold are Thanks awards (typically $25 to $40 each), reimbursements for supplies (paper, ink, etc.), and any
travel expenses that are not paid by a client. I've heard no word, however, on whether "no cost" stock grants for
executives have been scaled back. :-)
- Yahoo! IBM Employee Issues message
board post by "ibmaccountant". Full excerpt: My friends tell me that according to BOND, no expenses
are allowed except for any expense that has to be paid that is directly contractually required by a revenue generating
Employee TEAs (travel expense accounts) are still being processed but won't be paid until
- The Register (United Kingdom): HP
wrestles IBM for top spot. Excerpts: HP has claimed it will be
the world's largest IT company by the end of this year, surpassing IBM on revenue. The switch in positions depends
on IBM - HP's financial year ended on October 31, and it announced revenues of $91.7bn. IBM's financial year doesn't
finish until the end of December; analysts suggest it could report less than $90bn.
- Los Angeles Times: Nest
egg to goose egg in no time. Brokers with rosy sales pitches lure unwary
401(k) holders. The results can be ruinous. By Jonathan Peterson. Excerpts: Like many of his co-workers, Bradley
Simon had put in decades at the Exxon Mobil refinery, building up a stout 401(k) retirement account and enviable
pension benefits. So he listened carefully to the investment broker's pitch that he should seize a head start on
the golden years. "He said, 'Why are you still working?' " Simon recalled. "He said, 'I can make
you more money staying at home.' "
At 54, Simon quit his job making ethylene and turned over more than $700,000 to David L. McFadden,
a broker for Omaha-based Securities America Inc. McFadden promised to keep the portfolio growing and told Simon that
he could safely withdraw $65,000 a year for living expenses.
Then the stock market tanked. Simon's savings dropped even more than the market, 65% over
- Bloomberg: You
Deserve a Gift -- Cut Grinchy 401(k) Costs. By John F. Wasik. Excerpts: Very few year-end financial actions are
as satisfying as cutting your 401(k) expenses. Trimming costs can boost your total return and put more money into
your plan. Yet the gnarly matter of discovering how much your retirement program is really costing you is a trying
process. Like the Dr. Seuss character the Grinch, the middlemen who are profiting from your retirement funds are
largely unseen. Fund managers and middlemen compensate themselves for their services from each fund in your plan
in the form of an annual "expense ratio." They may be overcharging you. [...]
Loeper's experience confirmed what industry experts and, most recently, the U.S. Government
Accountability Office (GAO) have found: 401(k)-type plans are too expensive and middleman deals are buried in
the fine print of program documents. Out of the 47 million Americans in 401(k)s, "80 percent of plan participants
are not aware of how much they are paying in fees," a recent GAO report found.
I would suggest that even more than 38 million are in the dark as to how their retirement
plans are enriching brokers, agents, managers and administrators. An accepted practice called revenue-sharing
takes a slice of your mutual-fund expenses and passes it along to third parties, such as record keepers. Middlemen
get away with these arrangements because the U.S. Department of Labor -- the main watchdog over these plans -- doesn't
require or enforce full, transparent fee disclosure.
For example, in Loeper's company plan, he discovered that his 401(k) vendor was charging him
0.63 percent annually for his plan, expenses that were "effectively hidden"' That translated to $1,200 per year
per employee on a $200,000 balance. Angered by the cloaked charges, he searched for new vendors and found a third-party
administrator that could provide a better plan for as little as $25 a person.
- Washington Post: 'Lucky'
Stock Options Not Limited to Executives. Study Finds Board Members Profit, Too. By Terence O'Hara. Excerpts: Chief executives weren't the only ones enjoying near-guaranteed profits from stock
options in the past decade. Outside directors at hundreds of American companies also received option grants that
are likely to have been manipulated, a new study found.
According to the study, 9 percent of 29,000 option grants to outside directors from 1996 to
2005 were granted on a day when the company stock price was at a monthly low. The likelihood of such a concentration
of "lucky" grants is so low as to be statistically impossible, the study's authors said.
"It's like going to Vegas thousands of times and betting on red every time and winning
more than half the time," said Lucian Bebchuk, the Harvard University professor who co-authored the report, titled "Lucky
Directors," with Cornell University's Yaniv Grinstein and Urs Peyer, a professor at the French business school
Insead. "From a numerical standpoint, it can't be random. There has to be some manipulation of the outcome." [...]
The study is not the first to raise questions about a possible link between options backdating
practices and board governance practices. A study by the Corporate Library of 120 companies implicated in backdating
found a high incidence of interlocking directors, or directors who served on more than one company that backdated.
The study suggested that backdating practices may have spread from company to company through these interlocking director
- Wall Street Journal: Study
Cites Role Outside Directors Had With Options. By Steve Stecklow. Excerpts: A new academic study suggests that
many outside directors received manipulated stock-option grants, a finding that may help explain why the practice
of options backdating wasn't stopped by the boards of some companies. The statistical study, which names no individuals
or firms, estimates that 1,400 outside directors at 460 companies received questionable option grants, suggesting
the widespread practice extended well beyond the executive suite.
The study is notable because it suggests that outside, or independent, directors -- who are
supposed to play a special role safeguarding against cozy board relationships with management -- may have been co-opted
in options backdating by receiving manipulated grants themselves. The New York Stock Exchange requires that a majority
of board seats, and all compensation- and audit-committee members, be independent. The study doesn't address whether
directors were aware that their options were propitiously timed.
- Wall Street Journal: IBM
to Stop Option Grants To Independent Directors. Excerpt: International
Business Machines Corp. said it will discontinue a program that awards stock options to board members that are not
employed by the technology giant. Instead, IBM said it will double the annual retainer paid to directors from $100,000
to $200,000 effective Jan. 1. The company did not provide an explanation for the board compensation change, which
was disclosed in a filing with the Securities & Exchange Commission.
- Thinkandask.com: Human Resource Depts.
Force More Out Before Retirement Age. Excerpts: If you live in the United States, a culture which plays-up
diversity in the workforce, nearly one quarter of older professional workers are forced out of the job market by
corporate human resource departments.
With such a discriminatory environment the new economic game in the United States, Sun
Life Financial urges all workers older than 40-years-old to prepare for forced early retirement. Not only are many
older workers financially unprepared for retirement, but a recent survey by Sun Life Financial found 22 percent
of all retirees are forced into retirement several years before they had anticipated. As corporations, such as
IBM and other Fortune 100 companies, attempt to boost stock prices through mass layoffs the trend will affect more
professional workers in the coming decade.
The forced retirements have not only left retirees well short of their financial goals,
but 69 percent of respondents stated their overall retirement plans have been affected either a great deal or somewhat,
requiring them to reduce expenses and change their lifestyles to adjust to their new status. Moreover, 55 percent
of all respondents also say they were ineligible for Social Security benefits when they were forced to leave the
The average respondent planned on accumulating approximately $1 million in retirement savings,
but had accumulated only about half of that amount when they were forced to retire. The gap was most prevalent
with respondents under the age of 55, who expected to retire with an average of $1.4 million in savings but only
had $314,000 when forced into retirement.
- Law firm of McTeague, Higbee, Case, Cohen, Whitney & Toker, P.A.: IBM
Age Discrimination Lawyers - IBM Wrongful Termination Lawyers Representing Former Employees of IBM in a Nationwide
Age Discrimination Lawsuit. Excerpt: On October 7, 2003, 135 former IBM employees filed a collective action lawsuit
against IBM for violations of the Age Discrimination in Employment Act (ADEA). On August 31, 2006, those employees,
represented by McTeague Higbee Case, won a major victory when the 9th Circuit Court of Appeals (Syverson et al. v.
IBM) held that the waiver which most employees signed to receive severance pay was INEFFECTIVE and does not prevent
employees from suing IBM for age discrimination. Moreover, under federal law, employees who signed the waiver can
sue IBM and do NOT have to return the severance package/pay they received. [...]
In recent years, IBM has laid off thousands of employees in their 40s, 50s and 60s. At the
same time, IBM hired many young college graduates and retained a disproportionate number of young workers. The
lawsuit alleges that IBM's layoff/termination practices were discriminatory on the basis of age, and therefore
violate the ADEA (Age Discrimination in Employment Act). Statistical analysis has shown that older IBM workers
have been terminated in numbers disproportionate to the rate at which younger workers were let go. We brought the
lawsuit to seek justice for employees harmed by IBM's discriminatory practices. [...]
Contact an employment lawyer at Mc Teague, Higbee, Case, Cohen, Whitney & Toker, P.A.
to discuss your experience by completing our inquiry form or by calling 800-482-0958. Our attorneys are committed
to helping former employees of IBM fight this age discrimination.
- Law firm of Keller Rohrback L.L.P.: Cash
Balance Plans. Excerpt: Keller Rohrback L.L.P. is also
currently investigating several companies regarding their conversions from a defined benefit pension plan to a
cash balance formula. We believe this type of conversion is a discriminatory practice that is aimed at older, long-time
employees who have given up wages in exchange for a traditional defined benefit pension plan. If you would like
more information regarding our Cash Balance Plans investigation, please contact us. Corning Inc. Hewlett-Packard
Company. Pitney Bowes Inc. Safeway Inc. Washington Mutual Inc.
- WTVR-TV (Richmond, VA): Facing a Tight
Labor Market, Employers Dish Out the Perks. By Drew Armstrong.
Excerpts: When it's time reel in that potential hire, it's true that a cushy salary can be the dealmaker. But what
got them to send in their resume in the first place? As more companies are learning, reputation, company culture,
and the unique perks that come with it are playing a bigger and bigger role in recruitment.
So instead of just offering bigger salaries, companies are offering perks that may seem
more Fantasyland than 9-to-5. And they're more than just hiring incentives - these perks are often extensions of
company culture that bosses say give their organizations a leg up in recruitment and productivity.
Take Motek, a Beverly Hills, Calif.-based software firm, where all employees get an annual
$5,000 bonus to pay for their vacations. The only catch? Their trips have to last at least three weeks. Founder and
CEO Ann Price says that "the vacation is required, it's not a carrot on a stick." In her view, it's a necessary
break from work that lets employees recharge their batteries. It also sends the message to job applicants that Motek
takes care of its own. "We've never had to recruit anyone," Price says. "The problem is weeding out
all the people that beg us for a job."
For some companies, luring the best employees means building a benefits program for a generation
that has a very different idea of what "job" means. Silver Spring, Md.-based Discovery Communications is
a young company -- the average age of its employees is 31 -- and a salary isn't all they care about. "For that
whole next generation that's coming out, money is not a driver," says Pandit Wright, Discovery's vice president
of HR. "The driver is feeling like you can have a life."
- New York Times: Wall
St. Bonuses: So Much Money, Too Few Ferraris. By Jenny Anderson. Excerpts:
It’s a brisk Wednesday morning in the windy caverns of Wall Street and Sarah Clark’s toes are cold. Dressed
in a purple flight attendant outfit, Ms. Clark, a 26-year-old model, is trying to entice recent bonus recipients
at Goldman Sachs into using a charter plane service, handing out $1,000 discount coupons to people in front of the
investment bank’s Broad Street headquarters. “Where am I going?” asks one man, heading toward the
Goldman building. “It’s your own private jet,” says Ms. Clark with a smile. “You can go wherever
you like.” For Wall Street’s elite, the sky may well be the limit. [...]
In recent weeks, immense riches have been rained upon the top bankers and traders. After a
year of record profits, investment houses like Goldman Sachs, Lehman Brothers and Morgan Stanley are awarding bonuses
as high as $60 million. And a select group of hedge fund managers and private equity executives may be taking home
even more. That is serious money. And the serious luxury goods markets are feeling the impact.
Miller Motorcars, in Greenwich, Conn., is fielding more requests for the $250,000 Ferrari
599 GTB Fiorano than it can possibly fill. One real estate broker laments a dearth of listings for two clients
trying to spend $20 million on Manhattan properties. Financiers already comfortably settled in multimillion-dollar
apartments and town houses are buying $5 million apartments for their children. Vacation homes, usually bought
and sold in the spring, are now hot this winter, including ones in private resorts like the Yellowstone Club
in Montana near Yellowstone National Park. [...]
Last week, Michele Kleier, president of Gumley Haft Kleier, received a call from a hedge
fund manager in his late 30s. He had spent $6 million on an apartment two years ago and, with his bonus, wanted
to upgrade. His new price range? “Not more than $20 million.” [...]
Those young, single hedge fund managers are bringing holiday cheer to car dealerships as
well. This year, drama surrounds the very limited production of the Ferrari 599 GTB Fiorano, a car with 612
horsepower that can go from zero to 60 miles an hour in 3.6 seconds. “It is the most sought-after car ever
Richard Koppelman, president of Miller Motorcars. With a waiting list of 50, Mr. Koppelman expects to get only
The morning Goldman Sachs announced record fourth-quarter and 2006 earnings, Lloyd C. Blankfein,
chairman and chief executive, implored his employees — many whom would directly benefit from the bountiful
earnings — to avoid excess. “As stewards of the firm’s reputation, I ask each of you to remember
that our actions — inside and outside of the office — reflect on Goldman Sachs. Even a perception of
arrogance hurts all of us,” he said in a voice mail sent to the entire firm.
Back handing out vouchers in front of Goldman, Ms. Clark wondered why there weren’t
more people coming to work during the early hours. Then, at 7:30 a.m., a black Mercedes pulled up, depositing Mr.
Blankfein in front of Ms. Clark. The night before, he had been awarded a $53.4 million bonus. She offered him a voucher. “How
are you?” he said, smiling quickly but refusing the voucher. “I guess he didn’t want it,” she
- New York Times opinion: Helping
the Poor, the British Way. By Paul Krugman. Excerpts: Although Tony Blair has been President Bush’s obedient
manservant when it comes to Iraq, Mr. Blair’s domestic policies are nothing like Mr. Bush’s. Where Mr.
Bush has sought to privatize the social safety net, Mr. Blair’s Labor government has defended and strengthened
it. Where Mr. Bush and his allies accuse anyone who mentions income distribution of “class warfare,” the
Blair government has made a major effort to reverse the surge in inequality and poverty that took place during the
And Britain’s poverty rate, if measured American-style — that is, in terms of
a fixed poverty line, not a moving target that rises as the nation grows richer — has been cut in half since
Labor came to power in 1997. [...]
But there’s no denying that the Blair government has done a lot for Britain’s
have-nots. Modern Britain isn’t paradise on earth, but the Blair government has ensured that substantially fewer
people are living in economic hell. Providing a strong social safety net requires a higher overall rate of taxation
than Americans are accustomed to, but Britain’s tax burden hasn’t undermined the economy’s growth.
What are the lessons to be learned from across the pond?
First, government truly can be a force for good. Decades of propaganda have conditioned many
Americans to assume that government is always incompetent — and the current administration has done its best
to turn that into a self-fulfilling prophecy. But the Blair years have shown that a government that seriously tries
to reduce poverty can achieve a lot.
Second, it really helps to have politicians who are serious about governing, rather than devoting
themselves entirely to amassing power and rewarding cronies.
While researching this article, I was startled by the sheer rationality of British policy
discussion, as compared with the cynical posturing that passes for policy discourse in George Bush’s America.
Instead of making grandiose promises that are quickly forgotten — like Mr. Bush’s promise of “bold
action” to confront poverty after Hurricane Katrina — British Labor politicians propose specific policies
with well-defined goals. And when actual results fall short of those goals, they face the facts rather than trying
to suppress them and sliming the critics.
The moral of my Christmas story is that fighting poverty isn’t easy, but it can be done.
Giving in to cynicism and accepting the persistence of widespread poverty even as the rich get ever richer is a choice
that our politicians have made. And we should be ashamed of that choice.
- New York Times opinion: Democrats
and the Deficit. By Paul Krugman. Excerpts: Since the 1990s were
an era of peace, prosperity and favorable demographics (the baby boomers were still in the work force, not collecting
Social Security and Medicare), it should have been a good time to put the federal budget in the black. And under
Mr. Rubin, the huge deficits of the Reagan-Bush years were transformed into an impressive surplus.
But the realities of American politics ensured that it was all for naught. The second President
Bush quickly squandered the surplus on tax cuts that heavily favored the wealthy, then plunged the budget deep into
deficit by cutting taxes on dividends and capital gains even as he took the country into a disastrous war. And you
can even argue that Mr. Rubin’s surplus was a bad thing, because it greased the rails for Mr. Bush’s irresponsibility.
As Brad DeLong, a Berkeley economist who served in the Clinton administration, recently wrote
on his influential blog: “Rubin and us spearcarriers moved heaven and earth to restore fiscal balance to the
American government in order to raise the rate of economic growth. But what we turned out to have done, in the
end, was to enable George W. Bush’s right-wing class war: his push for greater after-tax income inequality.” [...]
With the benefit of hindsight, it’s clear that conservatives who claimed to care about
deficits when Democrats were in power never meant it. Let’s not forget how Alan Greenspan, who posed as the
high priest of fiscal rectitude as long as Bill Clinton was in the White House, became an apologist for tax cuts — even
in the face of budget deficits — once a Republican took up residence.
- Motley Fool: The Crisis
in Our Future. By Brian Richards. Excerpts: With Social Security more unreliable with each passing year, and
with corporate pensions going away -- IBM, Verizon, and Lockheed Martin recently
froze all or some of their pensions in favor of 401(k) plans -- more Americans are charged with controlling their
own financial destiny.
The mixed bag. That's decidedly good news if (1) you know what you're doing, and (2) you have
some interest in doing it. You can pick your own equities, determine optimal asset allocation, and not have to
pay sometimes-exorbitant broker/planner fees. But it's decidedly bad news if (1) you don't know what you're doing
or (2) you have no interest in doing it.
- San Jose Mercury-News: HP
has hired, fired by the thousands. Employee "Churn" as Competitiveness
Tool. By Nicole C. Wong. Excerpts: What's 150,000 minus 45,000? In Hewlett-Packard's world, the answer is still roughly
Since 2002, HP has laid off 30 percent of its employees worldwide to cut costs and improve
operations. But sending all those employees away with pink slips or early retirement packages hasn't caused a plunge
in HP's global head count -- because the company continuously hired new workers while it escorted others out the door.
Hiring people while laying off others is called churn. And HP isn't the only aging Silicon
Valley vanguard that's using churn to survive the onslaught from technological innovation and global competition.
But the legendary computer company's use of churn to help fuel its financial turnaround illustrates how the strategy
has shattered the implicit employment contract that once bound America's companies with their workers. [...]
The global layoffs recently helped HP chisel away at an expensive workforce in the United
States and Western Europe, and funnel work to lower-paid employees in Asia, Eastern Europe and Latin America,
according to several HP executives in Europe. ``Some jobs are disappearing on-shore because the skills and the
quality exist elsewhere at a much cheaper cost,'' said Eric Grall, HP Services' vice president of global delivery
for Europe, the Middle East and Africa. [...]
Paul Oyer, an associate professor of economics at the Stanford's Graduate School of Business,
said IBM adopted this churn strategy in the 1980s. "They were downsizing the company dramatically, but they
were always hiring into new types of businesses," Oyer said. "They closed manufacturing units but at the same
time were increasing their software and consulting businesses."
|News and Opinion Concerning Health Savings Accounts, Medical Costs and
Health Care Reform
- Managed Healthcare Executive: Savings by design:
IBM's Dr. Martin Sepulveda saves millions with employee benefit design. Excerpts: When you're in the
innovation business, you take some risks and temper your expectations. When one of your innovations produces
$100 million in annual savings, you know you're doing something right.
For global tech giant IBM, innovations to save healthcare dollars among the 340,000 people
enrolled in its benefit plan fall squarely on the shoulders of Martin Sepulveda, MD, vice president of global
well-being services and health benefits. Dr. Sepulveda, an approachable, easy-going executive, doesn't seem the
type to brag about saving the self-insured corporation $100 million on its healthcare bill or about the fact that
employees never pay a dime in premiums, but deep down, he probably knows that other employers would love to know
- In a Yahoo! IBM Pension message board post, "ibmaccountant"
comments on the article about Dr. Sepulveda. Excerpts: Interesting how they try create an aura of uniqueness
and skill where none exists. Sepulveda, IMHO, hasn't done anything special. This article smells of a pre-announcement
for some "innovation practice".
First of all, a lot of the savings were done by increasing the onus of paying on the retirees.
Another hidden cost to the employee is the transient nature of the provider relationship. Long term treatment
success due to relationship building and knowledge of the patient over time is clearly taken away in exchange
for short term corporate gain. Lastly, they clearly state in the article that they aren't anymore interested in
the employee's family, they are just another expense for the employee. The employee is valued if only as a production
tool, ready to be discarded when its value even shows the slightest decrease in productivity.
Interesting to see that execs are focused on the benefits, not the money. That tells you
- The execs know that the money offered to employees, much like the cash balance and 401(k) story, is less than
what is needed to deliver the proper minimum benefit.
- When you are underpaid, your focus is on survival,
so you will be more amenable to take chances with your life for a few more sheckles. As you reach
for some money to make ends meet, they make more money by cutting the benefits even more.
- Workforce Management: Report
Shows Employers Shifting Health Costs to Retirees. By Jeremy Smerd. Presented this
year with the option of shifting retirees to a Medicare-sponsored drug program, employers chose to keep
prescription benefits in 2006, and they say they will do the same in 2007. Excerpts: Concerns that the
Medicare prescription drug benefit would lead employers to drop drug coverage for retirees this year
have not materialized. Instead, employers have opted to increase the share retirees pay for their health
care costs, according to a new report. With more of the burden of health care falling on individuals,
the cost of retiring is escalating, according to a report released Wednesday, December 13, by the Kaiser
Family Foundation and Hewitt Associates. [...]
Employers looking to save on retiree health care costs are opting to require retirees
to pay more for their health care. In 2006, 74 percent of employers increased the premiums that retirees
under 65 must pay and 58 percent of employers raised premiums for Medicaid-eligible retirees. In 2007,
80 percent of the 302 large employers surveyed in the report plan to increase the amount individual retirees
pay toward health care premiums. [...]
The overall increase in cost and the slow erosion of health benefits for retirees who
are not eligible for Medicare will likely encourage older workers to stay in the workforce longer, or retire but
find a part-time job in order to maintain health benefits. “We are reappraising what retirement means,” Neuman
says, “and work will be a larger component of it than it has been in the past.”
- Physicians for a National Health Program: Would
Europe's health-care-for-all model work here? Cover everyone and use Medicare as a model. Excerpts: Compared
to other advanced nations, the United States spends far more on health care but achieves only mediocre results.
Though the World Health Organization has ranked us first in spending, we are ranked 37th in performance—well
behind Canada and all Western European nations. What do these countries know that we don’t? Universal
coverage is public policy in the rest of the industrialized world, but it is not in the United States. We
leave nearly 47 million without any insurance at all. Even the insured are finding that increasingly inadequate
private insurance policies are leaving them exposed to insurmountable costs.
Although unheard-of in other nations, illness and medical bills contribute to half of
personal bankruptcies here, and 75 percent of those with medical debt had coverage when they got sick.
How do other nations insure everyone, protect their personal assets from medical debt
and do it at a much lower cost than that of the United States? Although no two nations have identical
programs, none has adopted the disorganized, wasteful, fragmented insurance payment system that we have
in America. [...]
This egalitarian social insurance model of other nations contrasts sharply with the market
model of private plans that we have here. Private insurance companies erect massive bureaucracies for
the purpose of fighting claims, issuing denials and screening out the sick from coverage. Their principal
product is an excess of administrative services with its resulting headaches. Doctors, hospitals and
businesses must react by employing armies of administrators to deal with this massive private bureaucracy.
Health-care administration consumes a mind-boggling 31 percent of our health spending.
Some $350 billion of this waste could be recovered and is enough to extend good coverage to all Americans. Americans
are already paying for national health insurance — we just aren’t getting it. Two-thirds of our health-care
system already is funded through the tax system.
- Associated Press, courtesy of the New York Times: Pfizer’s Ex-Chief to Get Full
Retirement Package. Excerpts: The former chief executive of Pfizer, Hank McKinnell, who was forced into
early retirement in part because of investor anger about his rich retirement benefits, will get every penny
of it and perhaps more, a new regulatory filing shows.
Mr. McKinnell’s package, which the company disclosed in a filing with the Securities
and Exchange Commission yesterday, amounts to more than $180 million. It includes an estimated $82.3 million in
pension benefits, $77.9 million in deferred compensation, and cash and stock exceeding $20.7 million.
The total value could grow to almost $200 million if Mr. McKinnell gets a $18.3 million
stock award, but that is contingent on the future performance of the company’s stock.
- Plan Sponsor: USW Retirees
Seek to Enforce Medical Benefit Promise. Excerpts: United Steelworkers (USW) retirees and their union
have filed a class action lawsuit against Continental Tire North America, Inc. (CTNA) to force it to uphold
its obligations to thousands of retirees, spouses, and surviving spouses to provide lifetime retiree medical
benefits. According to a USW press release, the retirees allege CTNA breached agreements promising lifetime
insurance coverage by announcing that effective on various dates in 2007 it will shift a large part of the
cost of retiree medical coverage from the company to retirees and surviving spouses. The lawsuit alleges
the breach is in violation of the Labor Management Relations Act (LMRA) and the Employee Retirement Income
Security Act (ERISA).
| New on the Alliance@IBM
- From the Job Cuts Status & Comments
- Comments 12/15/06: GTSA (old ITS) will be getting significant cuts in services sales teams for 1Q07.
PBC results early in January, cuts in February and involuntary departures in March. Sales numbers look
pretty bleak except that execs will say they had a good quarter because they padded the numbers as they
passed them down. The are cutting base salary to 82% to bolster cash flow at employee's expense -Anonymous-
- Comments 12/18/06: SWG - DB2 division reorg to be announced tues. or wed. Good luck everyone.
oh and merry xmas of course! Great timing as usual IBM! -Anonymous-
- Comments 12/18/06: Are you ready for the LEAN process? This is the name IBM uses for
layoffs going forward. They have been very colorful with the terms used for layoffs haven't they? If
anybody noticed, all of management uses the same terms when describing LEAN. "EMBRACE IT" It
basically means they will make all accounts lean by sending the work to India. Hey IBM, I got something
here you can embrace ! Do they actually think if they tell us this is a good thing for us that we will
eventually believe it? -Anonymous-
- Comments 12/21/06: IBM eBusiness Hosting Service call centers, namely eBusiness Customer
Care in RTP and eBusiness Call Management Center in Markham (Canada) will be outsourced to India beginning
January 2007, eliminating about 26 jobs and retaining 4 jobs (2 1st line managers and 2 team leads).
IBM hired twice the amount of staff to replace the two previous teams. Management spent 4 months in planning
and notified staff 2 weeks before the transition date. -Anonymous-
- Comments 12/22/06: One day I walked by a bulletin board in the main hallway of my building
(2nd floor 3600 Steeles) and at the top it has a logo with a red heart which reads "IBM Cares".
I've always been tempted to take a black marker, color in the heart part, then write beside it "if
IBM cares then they wouldn't have shipped my job to India!!". -Anonymous-
- From the General Visitor's Comment
- Comment 12/16/06: In reference to the OT lawsuit, I called the the lawyers number about 6 months
back. They called me and gave me an hour long interview and the lady said she was going to send me
a form to fill out in reference, but I never got it. That's why I called after I heard we won the suit
and they did have me on the list but there's was no need to fill out a form yet cause they will be
sending it out in January or February, so you may still be able to get in on it. Call the number 415-956-1000
x3393 on Monday and see if you can. It doesn't hurt and it should be a significant sum figuring we
should have been getting 10-20 hours a week since they forced us to go exempt which was 2003 for me.
I thought it strange back then that they just made us exempt and we kept our same jobs which for me
was router support. When first going exempt I got a 5% raise then none for 3 years after that so I
never did recoop the loss of overtime. -Anonymous-
- Comment 12/18/06: The IBM vs Rosenburg exempt O/T lawsuit settlement will not include IBM
position codes 5305 and 5344 according to the contact number on the case I called. So for those who are/were
Sr. I/T Specialists you are not eligible for any money under the settlement agreement. I wonder why these folks
are not in the class? -Anonymous-
- Comment 12/19/06: I was a Network Professional, when they made me exempt to an Advisory
IT specialist without OT in 2001. I am included in the OT lawsuit so I think it was what level you
were when they took away your overtime and not what you are after OT was gone. -Anonymous-
- Comment 12/19/06: I spoke with one of the attorney's staff regarding the OT law suite.
Was told that it will cover Oct 2003 through present. Was also told that the $65M would be pro rated
according to a convoluted formula (overtime worked, service level, etc). Point is that we shouldn't
expect a strict correlation to the number of overtime hours worked at time and a half. Was also told
to expect a package in the mail around the Feb time frame and that checks would probably go out sometime
around Oct 2007. Good luck everyone. -John-
- Comment 12/20/06: I understand Randy MacDonald, our senior vice-president for HR is
building a large vacation home in the Catskill Mountain ski area. Did you know he had IBM GTS employees,
on IBM time and expense, completely wire his getaway place? Not a bad perk! I wonder if the stockholders
- Comment 12/20/06: To the previous poster about RMac. Stockholders and employees will
feel outrageous and upset if this is true. I would suggest that you verify the story again. If this
is true, please post back the result. I'm pretty sure there are plenty of people on this board will
report to the BOD and the shareholder meeting. I'll personally do it. This type of power abusing does
not belong to anywhere, not to mention a public company like IBM. -Anonymous-
- Comment 12/20/06: All I hear is whine and complain. At work as well as on this website.
Here is a news flash people. Joining the union can not hurt you. If you don't want to pay dues, you
can still sign up so your potential vote can be counted. Why in the world SSR's have not all signed
up is beyond me. They can not send SSR jobs to INDIA. SSR's are hands on in the CUSTOMERS SITE. As
they whittle us away and infringe on us more and more for less and less I ask WHY? Does anyone think
for a second that management cares enough to improve our lot in life without being FORCED to? As long
as we accept the feces they dish out they will keep dishing it. Saying But I need this job is dumb.
The only way to insure employment is with a contract. Otherwise you are an employee at will. They can
release you anytime for any reason. Which they do. And all people do is whine about it. I guess Management
wasn't the only ones that went though spine removal. -EXODUS 2007-
- Comment 12/21/06: Well that old chestnut, the Business Conduct Guidelines, is making
its way to in boxes. Does anyone believe executives pay any more than lip service to this document?
I would read this every year but last year, I just skimmed it for changes. This year I ask...why bother?
You just sign it to keep your job, not because its meaningful anymore. -Anonymous-
- Comment 12/22/06: That old chestnut! Kind words, indeed. In 2003, I signed the BCG.
In it, was a place for employees to send messages when they wanted to report breaches of the BCG and
other issues that needed legal's attention, since you aren't allowed to report them to anyone outside
until a cover-up is in place.... Well, I found a problem. I reported it to the ID and some janitor
in 590 picked it up and I never got any acknowledgement that the message had been received, much less
acted upon. The document is just a legal cover-up to protect errant management from legal inquiries
by whistle blowers. I didn't sign it in 2004 or 2005 and no one came to me and threatened me, because
they know I now have the goods on them. -Anonymous-
- From the Pension
- Comment 12/22/06: I joined IBM in 98 because it was the company (out of 3 offers) that had the
best pension and medical plan. Now I am in a quandary because that's not the case any more. In fact
- the retirement plan has changed two times since I joined IBM. First, I lost 50% percent of my benefits
when they went to the cash plan. Now I will lose another 1 to 2 percent of my income that they were
putting into the cash plan. Any way you look at it - any time IBM makes a change to retirement they
are skimming thousands of dollars from every employee. Plus, I may be paranoid but 401k is pretty
risky in my opinion. What if the stock market crashed? What if the value of the dollar plummets?
On top of that we can't count on social security.
So we are screwed if you ask me. What I want to know is this: if IBM doesn't have to
keep its promise to pay me a full pension that they promised me when I was hired, then why am I obligated to
pay back my education/master's degree money if I leave the company? Can't I change my mind too? Corporations
can change their minds when it financially suits them, but the lowly employee would be sued. -Anonymous-
- IBM employees on employee
- Comment 12/17/06: Salary = 98.5K; Band Level = 8; Job Title = Sr Consultant; Years
Service = 3; Hours/Week = 50-55; Your Gender = female; Div Name = gbs; Location = NYC; Message = Just
wondering if I'm in the low end or high end for my band? Came in as an experienced hire 3 years ago
(15yr industry specialist). Also, does anyone know the range for a Band 9? -Anonymous-
- Comment 12/19/06: Salary = 72k; Band Level = 8; Job Title = IT Specialist; Years
Service = 6; Hours/Week = 40; Your Gender = Male; Div Name = IGS; Location = RTP; Message = Pay is
OK - but not keeping up with market/inflation -Anonymous-
- Comment 12/21/06: Salary = 112,000 in 2005; Band Level = 8; Job Title = Advisory software
engineer; Years Service = 39; Hours/Week = 40; Your Gender = male; Div Name = SSD; Location = Tucson;
Message = I retired early in 2006. It was the best thing I ever did. I miss the people that I worked
with, but I now sleep through the night, and I never worry about IBM any more. -Anonymous-
|Vault Message Board Posts
- "Are we
going to be consultants again?" by "barely_a_consultant". Full excerpt: I really
don't believe it of course, but if you see the IBM advertising on innovation and recent w3 posts on what
by ibm standards are ludicrously small consulting wins around innovation, you would think big blue has
finally realised it mustn't let the world forget that it has business consultants as well, and not just the
largest standing army of tech and ERP implementers in the world.
And in last year's annual report, there is a line about SCM and S&C being the growth practices for the year
Consultants reading this board, is that enough to start dreaming on? I need a reality
check on this one. Not on the old stuff about people policies and stifling bureaucracy, but on future intent.
Is ibm serious about consulting again? Has it finally realised that even if it spent a small fraction of its
5 Bn R&D spend on innovative
business thinking, it could sweep many a client CXO off her feet? And please, those of you who are
not ibm'ers any more, don't rush in with your posts about how that can never be. You guys left, so let those
who are still around now do the talking.
ask the $64 question" by "wonderaboutibm". Full excerpt: And I wish I could give
you the silver-bullet answer, but...
Your post is in some ways a great encapsulation of many, many discussions on this board.
I rephrase your question this way: is there a future for functional business consulting -- operational and strategic
-- at IBM? I am afraid the answer is: probably not.
We have some significant organizational roadblocks to overcome if we are to be a glittering
success in business consulting:
- We have to beat our history and our inertia. IBM has always been a technology company (actually, more of a
financial engine) than a business partner to its customers. Management interest in business processes waxes
and wanes. It hit its apex with the purchase of PwCC -- IBM tried to buy its way into customer business savvy.
Management interest in consulting has been waning recently, what with the basic failure of the PwCC merger to
deliver what IBM wanted from it, and seemingly more profitable opportunities in software and systems. We are
on a real downswing in the attractiveness of services to the IBM management.
- We have to feed the fat baby.
This is not going to happen by seeding small consulting engagements, even exciting ones. Despite
what anyone says, the money will not flow from small and medium size businesses; the volume just
is not there. We need to hit on the big fat boys, with big-money technical projects. Period.
Look at how we look at SOA. We dream of enterprise rearchitectures, not really new ways
of doing business.
we have to feed the fat baby, but..." by "barely_a_consultant". Full excerpt: I guess
what i am asking is, has somebody realised that besides buying food from the nearest grocery store, you can also
plant seeds today in the form of consulting relationships and watch some of them grow into plants and bear fruit
to feed the fat baby? And the reasons I am asking are:
- It may have taken a age, but maybe somebody at HO has finally got it? That there is a different way of running
this business which offers longer term protection against the Indian companies and actually tries to
beat Accenture at its own game? How long can anyone ignore the obvious?
- Why else have we gone to
town with 'Innovation' - a very far cry from On Demand, if you look at the message closely. With On
Demand we were telling the client - what you need is basically the same as what everyone else needs
- buy it on tap from us, don't risk investment in your own infrastructure. And now with innovation,
we are saying - hey you are unique - come to us and we will tell you how to turn your unique ideas into business
success, and by the way, you gotta invest in the infrastructure needed for all that innovation!
I personally see it as an incredible, and somehow comical turnaround. But - and here is
the nub - while you could talk On Demand in purely financial (cost, risk), and vaguely technical terms
(autonomic, resilient)- which as you say, are wired into the dna of big blue - you cannot really talk innovation
to clients without discussing people, products, processes and markets (or can you? ... where IBM is concerned
I cant be too sure. After all, this is the company that took a tech architecture concept called components, regigged
and renamed these as 'business components' and told clients it was a great new way of doing strategy!)
* That's why this post, wonderabout. What do you see at a distance? Another mirage? Or
an oasis, finally?
of things to come?" by "wonderaboutibm". Full excerpt: Your questions are perceptive,
rational, and even charmingly naive (and I do mean that in a complimentary sense.) But you are asking for the
big picture, and I am not bright enough to see that. No one really is.
There are a few pointers for us, though. Concerning your question about growing business
for consulting, that is what all tech businesses should be doing, but that mindset suffers in the quarter-by-quarter
mania we suffer though, like too many other corporations. Our senior management has a five-year window (to retirement,)
but the options don't flow too well without the relentless devotion to quarterly results. Since our revenue is
not growing that quickly, our margins are improving via stringent and almost irrational cost cutting. Projects
needing longer-term focus are not getting what they need.
Then, too, as I said in the previous post, we are not really oriented toward business
consulting in the first place.
I've got news for you: I believe in innovation as much as I believe in motherhood and
apple pie. What kind of insipid nonsense is all this bs about innovation? It's marketing -- let's all
go to conferences at expensive hotels for great meals, good times, and some paper doll cutting and flapping of
the breeze. Meanwhile, the true innovators are storming the gates, like the Bolsheviks with their Molotov cocktails.
And that leads to my last 'profound' observation: the real future of consulting is in
the small newer firms. Our best chance is to buy out some of their ideas before they, too, get too big for their
think so..." by "Bobbruno". Excerpts: I've asked this very question several times, and honestly,
I don't believe in that anymore. As others have pointed, IBM is too focused on finance, sales and quarters.
In this company, real innovation, when it's not acquired (deep pockets can buy a lot),
is kept within very controlled lab environments - the rest of the company (and that includes us) is expected
to get the pre-packaged products from the shelves (and CBM is one of those things, in case you think I'm talking
about SW or HW here) and deliver them to clients with as little hassle as possible.
That has a lot to do with what IBM believes is the "right" way of doing things
- standardize and resell to exhaustion (preferably with a good margin). There is an inherent belief
that individuals are either incompetent or untrustworthy, and should be kept in a tight leash. Even though
you're told that the company fosters innovation, that managers should fight against inertia and bureaucracy,
the fact is that doing that will keep you off your short-term targets. Therefore, you won't get promotions or
recognition, and the person who'll get to the actual influence positions is the one who accepted mediocrity and
played by the rules. Sand, but it's not news - just a very good example of a "Peter principle" variation.
the consequence is that people at the top have no real desire or knowledge of real innovation.
This is not an environment where consultants thrive - it may be a good environment for
ERP implementers and architects/programmers who follow the rules, but not consultants, who are supposed
to think for themselves and innovate at each opportunity they get - I've been to courses where people
tried to convince me that innovation is about reusing existing assets - give me a break!
there is no detail" by "wonderaboutibm". Full excerpt: As a grim amusement, I read through
the third quarter scorecards from our illustrious senior management.
As I expected, GR had virtually NO numerical detail on anything, aside from a vague reference
to 40% increase in profit. She did manage to say we had missed targets, including commitments to the
The scorecards have a frame on the right side for graphs, charts, etc., but in GR's page,
this is blank.
The kicker, though, is that other scorecards are much more detailed and specific, and
in some of them, the right frame is downright loaded with high-level, but significant, statistical information
that really does map out reality vs. target. But no such thing for GBS -- either the comparisons are
too painful to show, or basic performance information is being kept from employees.
me this" by "no_longer_blue_or_bitter". Full excerpt: When was the last quarter that IBM told
its employees that the targets were met or exceeded and that paychecks would be fatter because of it?
soon..." by "IGS_Consultant". Full excerpt: Despite cuts to employee raises, bonuses, reimbursement
for broadband, cell phones, and telephones, highly restrictive travel policies, IBM still has not managed to
save its way to higher earnings. Therefore, according to this highly-secretive memo, these further cost saving
measures will be implemented early in 2007:
Sick Days: We will no longer accept a doctor's statement as proof of sickness. If you
are able to go to the doctor, you are able to come to work.
Personal Days: Each employee will receive 104 personal days a year. They are called Saturday
Toilet Use: Entirely too much time is being spent in the toilet. There is now a strict
three-minute time limit in the stalls. At the end of three minutes, an alarm will sound, the toilet paper
roll will retract, the stall door will open, and a picture will be taken. After your second offense,
your picture will be posted on the company bulletin board under the "Chronic Offenders" category. Anyone
caught smiling in the picture will be sanctioned under the company's mental health policy.
Lunch Break: Skinny people get 30 minutes for lunch, as they need to eat more, so that
they can look healthy. Normal size people get 15 minutes for lunch to get a balanced meal to maintain
their average figure. Heavier people get 5 minutes for lunch, because that's all the time needed to drink
Finally, Thank your for your loyalty to our company. We are here to provide a positive
employment experience. Therefore, all questions, comments, concerns, complaints, frustrations, irritations,
aggravations, insinuations, allegations, accusations, contemplations, consternations and input should
be directed elsewhere.
- "More" by "Frank_Reality".
Full excerpt: Also in 2007... Employees will have to provide their own laptops and computing supplies.
The company will no longer furnish one to their employees. Ditto for pagers and cell phones.
Employees will be billed for their utility use (lights, power, water, heating/cooling,
network and space) when on IBM property.
Employees will be required to rent their parking spaces at the company lot.
Employees will have to provide their own bathroom paper products. Likewise, office supplies
will no longer be stocked on location, employees will have to purchase their own.
Future Spirit events will be potluck meals. Cost of outings will be charged to the employee
and deducted from their pay. Treatment for food poisoning will not be cover by the IBM medical plans.
IBM will start charging 10% of the employee ECCC contributions as a "franchise fee" to
recover the company's costs.
These are in jest, of course. But I do worry about giving those in power any ideas.
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
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
- Wall Street Journal: Santa's
'Gifting' Helpers. How the Well-to-Do Turn Over Holiday Shopping to the
Experts; The $37,000 Gem-Studded Pen. By Stephanie Kang. Excerpts: To some people, hunting for the perfect
gift is more of a hassle than a holiday. Some of the wealthiest consumers across the country turn to
consultants to find ultra-exclusive, money-is-no-object gifts from around the world. Often, like Donum
in Hollywood, these consultants are regional operations; sometimes they're part of large luxury-goods
Requesting Donum's services are movie studios, independent production companies, talent
agencies, Fortune 500 executives, and corporate law firms throughout Southern California. Budgets can start at
$1,000 for a single shopper's list to several hundred thousand dollars for a company buying for its entire work
force. Gifts run from under $100 for candles or frames, but can quickly skyrocket to $12,000 for a Sooloos digital
music system or $37,000 for a diamond-and-emerald-encrusted pen from Italian company Omas. Donum makes its money
just like a department store, by charging about twice the wholesale price of an item. Engraving, wrapping and
delivery cost extra.