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Duke - Page 1 - 2000
Congressman Sanders Is Right On TargetEmployee Advocate - DukeEmployees.com - February 24, 2000
The letter that Congressman Sanders and colleagues sent to the IRS can be found on the "Letters" page. It is the best, most thorough, most truthful, and most insightful treatise on the cash balance fiasco that we have ever read. Some people with dubious motives do not get any of it right. Some people get part of it right and part of it wrong. Some people uncover part of the truth but miss much of it. Congressman Sanders exposed it ALL! Congressmen are not expected to be experts on every subject. But, it is obvious that Congressman Sanders has put in the time and effort to become an expert on this important subject. In this one letter, he exposed all the misconceptions, half-truths, and outright lies for all to see. Every worker in America who has been subjected to cash balance abuse should read the letter. If the IRS will act upon the advice in the letter, the problem will be largely solved. If they do not, Congressman Sanders has legislation in the works that will solve it. All of us can help by letting our representatives know that we support his stand.
IBM Stockholders Resolution: CEO RetirementEmployee Advocate - DukeEmployees.com - February 20, 2000
The IBM employees won a tremendous victory when the Securities and Exchange Commission told IBM to allow the pension resolution vote. There is another resolution pending: the “CEO Retirement Package Resolution.” The IBM employees are rightfully disgusted with the antics of their senior management. While the IBM employees get drastic pension cuts, the CEO stands to get the equivalent of 100% of his salary! If you own any IBM stock, help the employees out by voting FOR both resolutions.
While Duke-Energy employees received drastic pension cuts, Rick Priory received over a third of a million dollars as a “supplemental bonus” to his initial cash balance.
Chainsaw RickEmployee Advocate - DukeEmployees.com - January 31, 2000
You have heard about "Chainsaw Al," who buys companies only to "slice and dice" them. These types "bone and juice" companies by pension raids, unwarranted layoffs, selling assets, etc. They then walk away from the company with huge amounts of cash. They have zero concern for what happens to the companies or employees after they have drained them.
The only difference here is that "Chainsaw Rick" rose up from within the Duke ranks. And, instead of selling asset, he is buying everything in sight and selling out the employees.
When the lightning outside of Dr. Frankenstein's castle hit the kite and surged through the electrodes in Rick's neck, he rose from the table, cranked his chainsaw and has not stopped slashing since! We cannot lay the blame on Rick Priory alone. He did not get where he is by not conforming to the board of director's wishes. He is, at best, a very willing coconspirator in well laid out scheme.
The cash-balance plan was plotted by his predecessor but, Rick Priory’s hands were all over it. Just as they were all over the health benefits changes. One employee, who was a member of that committee, gave this account of that fiasco. He said that each time the committee would come up with an idea that was good for the employees, Rick Priory would shoot it down, saying "That is not in the best interest of the company."
As long as everything went Rick Priory's way, he was happy. If anything did not go his way, he was upset. Rick Priory molded everything the way he wanted it before he assumed his present position. In the time since then, he has continued to slash benefits relentlessly. There is nothing that his hands have touched that is not worse for employees. Not one or two things, EVERYTHING is worse!
If he fooled you, do not feel bad; he fooled us too. We once saw him as an intelligent man who would one day make a good CEO for Duke. It was obvious that he was interested in the stock market. Evidently he was just "running for office" then. Now that he is "elected," all bets are off.
Years ago, Mr. Priory justified raising the medical limit to one million dollars for each employee. He said that it was the right thing to do because very few employees would ever need it, but that it would help those who did. He fooled us into thinking that he had a modicum of foresight and at least some interest in the employees' well being. What more could we ask for? We thought he understood that without the goodwill of the employees, he would have nothing lasting. The rest is history.
We find that he is not only interested in the stock market, he is totally obsessed by it! The one million dollars health care benefit still exists, but he has already started hacking at it. We now have a one million dollar health care limit when we are young. As we get older, and more likely to need it, it shrinks.
Rick Priory has gone full circle. He now offers employees something he thinks they will not need. When employees get to the point that they may need the benefit, he takes it away! Any intelligence that Mr. Priory has is used against the employees, not for them.
As for foresight, he is severely deficient. If he could have come in and ransacked our benefits, doubled stock price, and exercised his options he could have laughed all the way to the bank. He will not be a candidate for welfare assistance when he leaves anyway. But, the stock price may keep him from leaving with every nickel that he wanted. And, in the meantime, things may start crashing in around him.
Who will he be able to plead to for sympathy? He has erased any creditability he ever had with the employees. Maybe his Wall Street pals will have mercy on him. And, maybe not.
The State Of The Union AddressEmployee Advocate - DukeEmployees.com - January 29, 2000
In The State Of The Union Address on 1/27/00, President Clinton said, "And I propose to give a major new tax credit to any small business that will provide a meaningful pension to its workers. Those people ought to have retirement as well as the rest of us."
We are troubled by the "as well as the rest of us" part. Who is "us"? Is it presidents, congressmen, and senators? It is certainly NOT Duke-Energy employees! Granted, we USED to have a meaningful pension program. Now what do we have to do to get a meaningful retirement pension? Do we have to go to work for a small company?
Making the Transition a SuccessEmployee Advocate - DukeEmployees.com - January 26, 2000
Ernst & Young provided this cash-balance conversion advice:
"Q. Once an employer makes the decision to move to a cash balance plan, from your experience does it make sense to keep the defined benefit plan in place?
A. In my experience, many employers provide a choice between staying in the old defined benefit (db) plan and moving into the new cash balance plan to make the transition for employees smoother and more equitable.
Q. What are some reasons for offering choice?
A. From our experience when an employer offers choice, employees can opt for the plan configuration that best suits their needs. Employee feedback tells us that they feel respected by the employer as individuals, in control, and so take on the responsibility for their decision. In addition, there will be an increased likelihood that they will achieve better long-term personal financial planning results. We believe this will positively affect their on-the-job productivity.
Q. How does the company benefit from offering choice?
A. For Human Resources, offering employees an important choice regarding their financial futures helps to develop a more self-reliant and career-resilient workforce. It also helps the HR function become more strategic and value-added versus administrative and tactical. The company, and its shareholders, benefit because of the potential for significant cost reduction.
"In addition, the company takes on an enhanced leadership image as an 'employer of choice', one which respects and values employees. Finally, by providing choice, the company reduces the likelihood of successful litigation from an employee, disgruntled about the pension plan changes."
First class companies make the cash balance conversion equitable; employees do NOT lose money. Those companies who cannot bring themselves to make an equitable conversion can offer all employees a choice of plans. Cheap, money grubbing companies, who give their employees all the respect due a warm bucket of spit, do neither. Duke-Energy Corporation chose the latter. As long as Duke can grab the money, employee goodwill, productivity, and possible litigation are of no consequence. Duke has taken much credit for being "the employer of choice." But, when it might cost them a dime, it becomes just another discarded cliché, another failed "program of the month."
Rick Priory Gets $337,100Employee Advocate - DukeEmployees.com - January 25, 2000
Rick Priory cannot understand why employees do not love their cash-balance plans. He loves his. Of course, in 1998 he received $337,100.00 as a one-time SUPPLEMENTAL credit to his Executive Cash Balance Pension Plan! This was in ADDITION to his opening balance "derived from a variety of factors." We suppose this all balances out. Mr. Priory received a supplemental credit of over a third of a million dollars to his cash balance plan opening balance. While, employees lost up to 50 percent of their retirement plan's value in their opening balances!
Other executives also received "supplemental credits." They were probably not interested in going through the "wear away" period an not receiving any pension accruals for many years. It seems that the wear away period is just fine for "the troops," "the masses," "the mushrooms," the employees. Speak now or forever hold your piece. The EEOC phone number is at the top of the EEOC page.
A Busy ManEmployee Advocate - DukeEmployees.com - January 18, 2000
In addition to Ron Gebhardtsbauer's activities mentioned in "The Plot Thickens," below, he has been busy in other places. He offered testimony at "Hybrid Pension Plan Coverage: Retirement Into the 21st Century," chaired by Senator Jeffords on September 21, 1999. His testimony mixed a lot sales hype and distortions in with the truth.
Gebhardtsbauer: "There are many reasons why employers are converting to cash balance plans. Although costs, at least in the short-term, are sometimes lower after switching to a cash balance plan, cost savings may not necessarily be a primary motive for the switch. Employers often cite more important reasons for switching. These include adapting to a changing work force, updating their benefits package to be more competitive, making benefits more understandable and predictable to employees and reallocating money to other benefit or compensation programs."
Truth: The above statement makes it clear that he is a company mouth piece. Yes, "employers often cite more important reasons for switching." These reasons are all attempts to distract you from the "Great Pension Theft of the 1990's." "Making benefits more understandable," that's the biggest laugh of all! "Reallocating money" is a big item; reallocating money out of employees pockets and to the bottom line.
Gebhardtsbauer: "Each year, the plan credits the employee's hypothetical account..."
Truth: "Hypothetical account" is an important term. Hypothetical = supposed, conjectural, postulated, imaginary, conditional, speculative, theoretical, and indefinite. It does not exist! At least not for ten years or so. Many people will retire before it ever exists. They will have worked for years for no retirement accruals!
Gebhardtsbauer: "They (accruals) are much larger than the accruals of the traditional DB plan for young employees, but are much smaller for older employees."
Truth: Can you say "age discrimination"?
Gebhardtsbauer: "Cash balance plans are easier to understand and give larger accruals than traditional plans to younger employees (which helps in hiring and retaining them)..."
Truth: "Easier to Understand"? These plans were designed to be incomprehensible to employees and hide what was taken from them (per the actuaries selling the plans)! The "larger accruals" to younger employees amounts to pennies. "Helps in hiring", young new hires want money up front and stock options NOT cash balance plans. "And retaining", if the only way to come out with a cash balance plan is to job hop, how will they retain anyone?
Gebhardtsbauer: "Many long service employees will get lower future accruals."
Truth: Just say it: AGE DISCRIMINATION!
Gebhardtsbauer: "The rules for cash balance plans are not clear yet, which discourages employers from establishing these plans."
Truth: What? He keeps saying that the cash balance pension plans are so easy to understand, and now says that they have no clear rules! Great! Just make them up as you go!
Gebhardtsbauer: "It also showed the average benefit reduction for an older employee (70% to 85% of one-year's wages) was much larger than the benefit increase for a younger employee (10% to 40% of one year's wages)."
Truth: Well, that's just dandy. Younger employees gain a little; older employees lose a lot. But, almost everyone loses in the end, except Duke Energy.
Gebhardtsbauer: "Pension changes can be confusing to employees, some of whom may not realize that their future accruals may be decreased."
Truth: All along he has said that cash balance pension plans are great and easy to understand. Now, he says that they are confusing and hide losses from employees. That's only because that's what they were designed to do! Watch out for this guy. He is sure to have his fingers in a lot more pies.
The Plot ThickensEmployee Advocate - DukeEmployees.com - January 17, 2000
In the "Wall Street Journal" article "How A Single Sentence By The IRS Paved The Way To Cash-Balance Plans," a lot of damaging information was revealed. The sentence was an attempt to circumvent age discrimination laws as applied to cash balance plans. Here is one of the damaging quotes: “‘I sleep better at night’ knowing the sentence is there, said an attorney with benefits consultants William M. Mercer at a conference for actuaries the following March.” Indeed! This attorney, who works for a firm selling cash balance plans, sleeps better at night knowing the sentence is there. Evidently this attorney knew that most cash balance plans violate age discrimination laws. And, this knowledge weighed so heavily on his mind, that it kept him awake at night!
Some of these actuarial firms put the hard sell on companies by telling how much money they could grab from their pension plans and hide it from employees. Greedy CEO’s swallowed the line. Remember the name of the firm that this attorney worked for, William M. Mercer? What Actuarial firm was involved in IBM's cash balance conversion? You got it, William M. Mercer. Well, that’s interesting. Do you know the actuarial firm that handled Duke Energy Corporation’s cash balance conversion? Right again, William M. Mercer.
Remember the guy who helped Senator Grams come up with the cash balance plan proposal, Ron Gebhardtsbauer? And, who did he once work for? Yes, he worked for William M. Mercer. The proposal sounded really good. Except there was a “time bomb” hidden in it. That proposal, left unchallenged, would have led to a law that exempted cash balance plans from age discrimination laws! At this point, we do not know if Senator Grams was in on it, or an innocent victim. In any event, it is clear that the foxes are guarding the hen house.
Do you sometimes get the feeling that the game is rigged? Persons tried to put the “fix” into IRS regulations. But, that did not quite cut it. The questionable sentence only made the preamble of a PROPOSED regulation. The record shows that the firm William M. Mercer had an interest in the IRS regulation, was involved in IBM’s cash balance conversion, and involved in Duke Energy’s cash balance conversion. Since the IRS sentence is not likely to stand up, an old William M. Mercer man tries to put the “fix” into law.
This scam has been run before. Insurance companies were able to get Congress to exempt them from fiduciary laws regarding pension funds. This was a bold move to try in an election year. Evidently some people are getting desperate. This story is far from over. This is only the tip of the iceberg!
Most employees can find other things to do than research pending legislation and current pension laws. The good news is that everyone does not have to. But, it would behoove everyone to write their congressmen and senators before this rotten mess does more damage. Silence is consent.
IBM Workers Fight BackEmployee Advocate - DukeEmployees.com - January 17, 2000
Representative Bernard Sanders published this on 1/17/00. Bernard Sanders is one of the great members of congress who is constantly fighting for us. Some of us wish that we could trade in our "do nothing" representatives for him! This was written about IBM. But, we are in the same boat with the IBM employees. And, without the work of the IBM employees, everyone else would have been lost.
“All across this country, American workers are deeply concerned about the status of their pension plans. That concern is well founded. Since 1985, despite large profits and growing surpluses in their pension funds, twenty percent of Fortune 500 companies and over 300 companies in all have slashed the retirement benefits that they promised their employees.” An important point: ”despite large profits and growing surpluses in their pension funds.”
“Six months ago, the phone in my office began ringing with calls from employees at IBM-the largest employer in the state of Vermont. The company had just announced that it was converting its traditional defined benefit plan to a "cash balance" plan. The result was that approximately 65,000 long-term IBM employees were going to see the pensions that had been promised to them slashed by 30 to 50 percent. In August, I held a town meeting to discuss the issue. In a state where IBM employees were seen as conservative members of the middle-class, and as people who never criticized their employer, I wondered how many of them would show up. As soon as my car pulled into the parking lot where the meeting was being held, I got my answer: The parking lot was full, and the auditorium was overflowing with more than 700 people.
To put it mildly, these workers were outraged. Many had worked for the company for most of their adult lives, and now they had been betrayed. With profits at an all time high, and with an $8.2 billion surplus in their pension fund, IBM CEO Lou Gerstner (who had negotiated a $1.1 million dollar a year pension plan for himself as well as over $400 million in stock options) had decided to change the rules. Paul Pinka, a senior lab specialist, told the meeting, ‘The problem is greed. Corporate profits have become more important than honor and integrity.’
The rank and file rebellion was erupting not just in Vermont, but throughout the country. In Texas, when Gerstner was visiting the state with Governor Bush, IBM employees flew a banner behind a plane that said, "Hey Lou. Thou shalt not steal." Utilizing such tools as the Internet, they began an effective communications effort which told the company in no uncertain terms that they were not going to sit back and allow their retirement security to be destroyed. Most importantly, for the first time in many of their lives, IBM workers were now talking union. One week after the Town Meeting 500 Vermont IBM workers came out to a union informational meeting sponsored by the International Brotherhood of Electrical Workers and the Communication Workers of America. As one worker said, "If a union is what it takes to stop Louis Gerstner from taking all our benefits and rights away, I'm all for a union." Similar meetings were taking place at other IBM plant locations as the CWA announced a national IBM union organizing drive.
Sensing the widespread discontent of his employees, the gains that union organizers were making, and a growing momentum in Congress to address the pension issue, Gerstner suddenly changed his mind on September 17 and made a major concession that more than doubled the number of IBM employees who were able to retain their original pension benefits-from 30,000 to 65,000. While this was a major victory, IBM workers are still not satisfied. Under the new agreement some long-term employees are still going to lose retirement benefits and all have suffered cuts in their retirement health benefits.
Pension protection legislation that I introduced in the House with Congressman Maurice Hinchey now has a surprising 79 co-sponsors. Paul Wellstone introduced the identical legislation in the Senate. This comprehensive legislation would, in addition to requiring companies to provide strong disclosure, guarantee all employees a choice when companies convert their pension plans. In recent months we've seen the IRS place a de facto moratorium on approving the plans of corporations that want to convert to a cash balance system, and the EEOC begin an investigation as to whether the cash balance concept is illegal under federal age-discrimination law.
Most importantly, perhaps, the workers at IBM have now learned a lesson understood by millions of other Americans. If you want justice on the job, nobody is going to give it to you. You have to fight for it.” And, what did the gentleman say? “If you want justice on the job, nobody is going to give it to you. You have to fight for it."
Welcome to 2000Employee Advocate - DukeEmployees.com - January 1, 2000
It is technically not a new millennium, but it is definitely a new year. So, HAPPY NEW YEAR. Will 2000 be the year that Duke Energy employees turn around the fifteen years of benefit losses? Even to the most casual observer, it should be obvious that our benefits no longer increase year by year. In fact, they decrease year by year. And, the last few years they have decreased exponentially! Some employees fight for new benefits. For us, we will have to fight to keep each benefit that we already have! There are no non-combatants. Those who do not fight will be annihilated financially.
Never mind reading "the writing on the wall." There are neon signs on the wall! We cannot dismiss fifteen years of losses as a fluke. It has been a cold, diabolical, well orchestrated plunder of our benefits. Anyone who does not see this is in an extremely severe case of denial. And some people are! It is human nature not to want to accept the painful. However, we must accept it before we can correct it.
About fifteen years ago, Duke announced that we were gong to experience a new paradigm. Later Duke's senior management said that employees were not "entitled" to anything. This was the same time that they were preparing "golden parachutes" for themselves. If the company were ever bought out, the employees would be entitled to nothing and senior management would be entitled to walk away with a bag of gold. Is the year 2000 the time to introduce Duke to a new paradigm? A paradigm where the employees can no longer be taken for granted. A paradigm where senior management is no longer entitled to everything and the employees entitled to nothing.
Duke Energy Corporation exists because the employees allow it to exist. Duke's senior management exist because the employees allow them to exist. All of Duke's senior management could be replaced tomorrow, with only a minor inconvenience. Bean counters are a dime a dozen. Twenty thousand employees could NOT be replaced tomorrow - without catastrophic results. For one thing, seven nuclear reactors would be shut down, that may or may not ever be back on-line.
2000 is a nice, fat, round number that could mark the turn of the tide in favor of the employees. And, it will be - IF, the employees want it!