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Jan., Feb.


Pre-1999 - Duke Energy Employee Advocate

News - March 2001

"If Patrick Henry thought that taxation without representation was bad, he
should see how bad it is with representation." - The Old Farmer's Almanac

NLRB Workers Picket Over Contract
Associated Press - By MICHAEL RUBINKAM - March 30, 2001

Employees of the federal agency that protects workers' bargaining rights claim the agency is itself negotiating in bad faith.

Hundreds of unionized employees of the National Labor Relations Board picketed outside NLRB offices around the country on Wednesday to protest the lack of progress in contract talks.

I find it absolutely ludicrous that the agency I work for and that is supposed to foster collective bargaining does not want to give its employees an honorable contract and working conditions that are modern and progressive,'' Bruce Hill, president of the NLRB Union, said from Peoria, Ill.

A federal mediator declared an impasse this month after contract talks between the NLRB and the union representing about 1,000 lawyers, field examiners and support staff broke down. Employees have been working under the terms of the old agreement, which expired more than a year ago.

The dispute involves flex time and work-at-home opportunities; the ability of union officers to conduct union business on work time; and a government proposal to allow NLRB offices to be in buildings with trace amounts of asbestos if no asbestos-free buildings are available.

In Minneapolis, workers filed a grievance after their office was moved to an building containing asbestos. The matter has not been resolved.

The NLRB issued a statement Wednesday defending its contract proposals as ``appropriate to ensure effective and efficient enforcement of the National Labor Relations Act, while recognizing the needs and contributions of its excellent professional and support staff employees.''

Since NLRB employees are not permitted to strike, they picketed before work and during lunch.

``Most of us are attorneys who could work elsewhere for a lot of money. One of the chief attractions is a family-friendly policy,'' said attorney Jennifer Spector, picketing outside the Philadelphia office.

Unions For Recording Stars
L. A. Times - By CHUCK PHILIPS - March 29, 2001

A showdown is brewing in the music business, pitting some of the world's biggest pop stars against the powerful conglomerates that employ them.

Dozens of major artists are mobilizing to take on the music establishment, demanding better contracts, beefed-up copyright protection and free-agency status. They may form a labor union to provide health-care and pension benefits and fight for new rules on ownership of creative material.

One Los Angeles-based artist coalition is preparing to lobby Congress on Tuesday to look into what some call the unconscionable business practices of the Big Five music companies.

Stars from virtually every genre of popular music, from rock to country, punk and soul, are stepping forward, including Don Henley, Merle Haggard, Tom Petty, Tom Waits, Sam Moore, Pearl Jam and Courtney Love. Should these artists prevail, their collective bargaining efforts would rewrite the economics of the music business in the same way unionizing actors and baseball players revolutionized the film and sports industries. And though it is stars leading this effort, the fundamental changes they are seeking could have a profound effect on every recording artist.

"It's nearly impossible to imagine a music business where recording artists have bargaining clout," said Michael Nathanson, a media analyst at Sanford C. Bernstein & Co. "It would cause the traditional economic model to collapse."

Singer-songwriter Henley, co-founder of the Recording Artists Coalition, which represents dozens of stars, including Eric Clapton, Joni Mitchell, Q-Tip and Peggy Lee, said: "Record companies have been screwing artists for ages. It's time we organize and fight back."

Although executives representing the five largest record companies declined to comment, privately they maintain that the economic structure of the industry makes sense and is fair to artists.

Still, Rep. John Conyers Jr., D-Mich., a ranking member of the House Judiciary Committee, said lawmakers are interested in examining artist rights issues. "The rights of artists in the contract and bargaining progress with respect to copyrights, health-care coverage and other issues is a discussion that is long overdue," Conyers said.

The Recording Artists Coalition is considering joining forces with Artists Against Piracy, a Los Angeles-based organization headed by singer-songwriter Noah Stone that represents 90 acts, such as Herbie Hancock, Shelby Lynne, Bon Jovi and the Dixie Chicks. Stone launched Artists Against Piracy to fight for digital copyright protection and is now expanding into other artist rights issues.

A third effort is being forged by Love. The rock singer and actress claims the labels deduct exorbitant fees for product breakage and promotional giveaways and pay reduced royalty rates for albums sold overseas and on record club sales.

A union for recording artists could force changes to accounting methods, said attorney John Branca, who represents such acts as TLC and Michael Jackson. "With strike leverage, artists could attain free agency."

Unions See Bush Moves as Payback for Backing Gore
New York Times - March 25, 2001

Labor unions fought their hardest last fall to defeat George W. Bush, and in his two months in office he has taken many actions that union officials view as retaliation.

In recent days, President Bush has signed legislation to repeal union- backed workplace safety rules and has intervened to stop a mechanics' strike at Northwest Airlines. He has issued an executive order ending the preference that unionized companies had in many federally financed building projects. And he has issued another order intended to make it harder for unions to use their members' dues for political activities.

Union officials view those moves as punishment for their backing Al Gore and as part of a broader strategy to weaken organized labor on national issues in general and in politics in particular.

"A lot of his agenda is advancing the interests of business, and it's very clear that if you want an unfettered field for corporate interests then you have to weaken labor," said Denise Mitchell, the A.F.L.-C.I.O.'s communications director…

Labor leaders, point to a dozen Bush actions that they say will hurt unions and their members, including the president's support for opening the border to Mexican truckers. Unions are also upset about his suspension of a Clinton administration policy that barred the awarding of federal contracts to companies that violate wage and safety laws.

Union leaders are mapping plans to take the legislative offensive, hoping they can defeat Mr. Bush on raising the minimum wage and on passing a strong patients' bill of rights.

Labor leaders also vow to redouble efforts to elect a labor-friendly Congress in 2002. Some union leaders say that means restoring a Democratic majority in both houses; others say that means electing union-friendly Republicans who will team up with Democrats.

"We're in the process of putting together a massive mobilization for 2002," said Steven Rosenthal, the A.F.L.-C.I.O.'s political director. "If there's a lesson here, it's that if the labor movement is pushed to the wall, we will mobilize."

Union leaders say they have been stung on issues large and small. By far the biggest defeat since Inauguration Day was the repeal of ergonomics regulations intended to reduce by one-fourth the 1.8 million repetitive motion injuries that American workers suffer each year. President Clinton issued those rules in his final months in office, after organized labor had lobbied for them since 1990. Congressional Republicans led the drive for repeal, and Mr. Bush indicated early on that he would sign such legislation.

Union officials also voiced dismay about Mr. Bush's push for "paycheck protection" legislation, which would drain labor's campaign coffers. The legislation would require unions to get permission from individual members each year to use their dues for political activity.

The Senate voted down that proposal, 69 to 31, on Wednesday when it was submitted as an amendment to a bill that would ban soft money contributions to political parties. Many senators feared that passage of that amendment would doom the larger bill.

Another move that upset unions was Mr. Bush's executive order ending a labor-management partnership that sought to foster cooperation between federal workers and federal managers.

"It's as if several of these actions have been taken to insult the A.F.L.- C.I.O.," said Charles B. Craver, a labor expert at George Washington University.

The A.F.L.-C.I.O., a federation of 66 unions with 13 million members, did its best to elect Mr. Gore. Union volunteers — and voters — played a pivotal role in delivering swing states, including Pennsylvania, Michigan and Wisconsin, to the Democratic presidential ticket.

Some of the president's actions have upset some Republicans in the House who ran with labor endorsements last November. They voice fears that organized labor might grow so angry at the Republicans that unions might back their Democratic opponents in 2002.

Two weeks ago, 32 Republican House members wrote Mr. Bush to protest his executive order barring a type of agreement on federally financed building projects. In such agreements, unions promise not to strike, while unionized contractors are often given a preference in getting the work.

Representative Jack Quinn of New York, who heads a group of 30 union- friendly House Republicans, voiced disappointment with Mr. Bush's actions toward labor, but he said it was premature to conclude that Mr. Bush was antiunion. "If we continue down this road we've begun on, it would sure look like that's the picture," Mr. Quinn said. Labor leaders say that some administration actions, like the ergonomics repeal, will hurt many nonunion workers. For instance, few of the secretaries who get carpal tunnel syndrome, an ailment linked to typing and other repetitive motions, belong to unions…

Unions were especially angry about Mr. Bush's announcement two days before a strike deadline by mechanics at Northwest Airlines that he would prevent a walkout and appoint a presidential emergency board to examine the dispute. Union leaders said that making that announcement two days before the deadline reduced the mechanics' negotiating leverage.

At the time, Mr. Bush also said he would seek to block all airline strikes this year. Union leaders called that an unprecedented effort to weaken labor's hand, and many labor experts said his action undermined the longstanding federal presidential policy of promoting collective bargaining and staying out of labor disputes.

"In announcing ahead of time that you're going to use a presidential emergency board and then making it a general principle, that's a reversal of very carefully conceived policies," said John T. Dunlop of Harvard, who was secretary of labor under President Gerald R. Ford. "It does not seem to be well considered."

Employees at Chinese Newspaper Vote to Unionize
L. A. Times - By NANCY CLEELAND - March 24, 2001

Employees of Chinese Daily News in Monterey Park, one of the largest Asian daily newspapers in the United States, voted this week to unionize.

Organizers with the Communication Workers of America said the vote covering 152 workers is part of a trend by foreign-language media to join unions. The bargaining unit covers all employees, from reporters to printers. General Manager David Liu said the family-owned newspaper is challenging the 78-63 vote to the National Labor Relations Board because of alleged improprieties during the election. In the meantime, he said, management does not recognize the union and will not negotiate a contract.

Reporter Lynne Wang, a 13-year veteran of the Daily News, said employees called the union last fall after their wages were frozen and they were told to sign declarations that they were "at-will employees" who could be fired at any time. That ruptured an implied agreement of lifelong employment in exchange for loyalty from workers, she said.

"Asian culture is under the influence of Confucius philosophy, in which the workplace is like a family," she said. "That broke the understanding, and we realized in this country we need something more to protect us."

The organizing campaign lasted five months, held up by lengthy NLRB hearings on charges filed by the employer, which hired a consultant and law firm to fight the union.

"The pressure was quite intense," said organizer Stephanie Moore. "And because the whole concept of unions as we know them was completely new to people, it was easier to confuse them."

In the last five years, an increasing number of foreign-language newspapers and broadcast media have joined unions. In part, the increase reflects changing demographics. But organizers also said there are tremendous pay gaps between English media and those in other languages, regardless of their size or success.

Also, newspaper and broadcast unions joined the Communication Workers of America in the mid-'90s, bringing more resources to organizing drives. And the organizing victories to date have built their own momentum, said Paula Olson, a CWA staff representative who recently organized three Spanish-language television stations and a Korean radio station in California.

AT&T Sued for Discrimination - March 23, 2001

The Communications Workers of America and four former employees of AT&T filed a class action lawsuit against the AT&T Corporation and its pension plan management on behalf of an estimated 15,000 women seeking compensation for pregnancy-related leave before the Pregnancy Discrimination Act in April 1979.

"We are surprised that [this suit] was filed," says Burke Stinson, senior PR director for AT&T. "AT&T is generally considered a progressive company for women, pregnant or not, and our guidelines for handling pregnant workers are in full compliance with federal regulations."

One of the attorneys for the plaintiff, Blyth Mickelson, says that AT&T has been aware of these complaints for some time and should not be shocked by the legal action. Judith Kurtz, cooperating attorney for the Equal Rights Advocates, agrees, stating that the women filing the lawsuit claim to have approached AT&T management in the past on the issue. "Unfortunately, litigation seems to be the only way to get [AT&T] to change their methods," she says.

The Pregnancy Discrimination Act stated that women on disability leave due to pregnancy should be allowed credit toward their pension and retirement benefits for that time. In response to the Act, AT&T changed its policy, but women who took pregnancy leave before that date were not retroactively compensated, according to allegations.

"We're dealing with a whole array of ways that women were negatively impacted," says Mickelson, citing alleged incidences of pregnant women being forced out of work and unfairly treated due to their condition...

Citing a similar lawsuit against Pacific Bell in 1991, which ended with a USD20 million settlement, the plaintiffs in this case are not only seeking monetary compensation for the alleged lost pension funds, but also asking the court to declare AT&T's policies discriminatory and unlawful.

Mickelson says, "The discrimination that occurred before 1979 is now rearing its ugly head."

Boeing Holder Seeks Vote On Return To Old Pension
Dow Jones Newswires - March 23, 2001

A Boeing Co. shareholder is seeking shareholder approval for a return to the company's defined benefit pension plan from the current cash-balance plan, according to a definitive proxy statement filed Friday with the Securities and Exchange Commission.

The holder is also seeking to have Boeing's cash-balance plan offer a monthly annuity "at least equal" to that expected under the defined benefit plan or an equivalent lump sum payment.

The holder alleges Boeing's new cash-balance plan, implemented in 1999, unfairly hurts older workers with more years of service. The proposal claims the workers weren't given a choice about moving from the defined benefit plan to the cash-balance plan and adds that the legality of the cash balance plan has been challenged in courts, according to the filing…

As reported, a similar proposal made by an IBM Corp. (IBM) shareholder in 2000 received support from 28.4% of shareholders.

Boeing Shareholder Pension Proposal

First Union Settles Retirement Fund Suits for $26 Million
Associated Press - March 22, 2001

Two class-action lawsuits accusing First Union Corp. of mismanaging employees' retirement funds have been tentatively settled for $26 million, the company and lawyers for the employees said Thursday. U.S. District Judge Richard Williams gave preliminary approval to the settlement and scheduled a final hearing for June 13.

More than 150,000 former and current employees of the Charlotte, N.C.-based bank and the former Signet Banking Corp. are eligible to participate in the settlement, said plaintiffs' lawyer Michael Lieder.

First Union bought Richmond-based Signet in 1997. The lawsuits, filed under federal antitrust and anti-racketeering statutes, accused First Union of putting its profits ahead of its employees' best interests in managing their in-house 401(k) retirement plans. First Union employees sought $300 million and former Signet employees sought $150 million in damages. The First Union suit was settled for $16 million, the Signet case for $10 million.

``By settling we do not admit to any wrongdoing,'' said First Union spokeswoman Ginny Mackin. ``In fact, we believe we would have won in court.'' She noted that the company won on several preliminary issues before settling the case to end the costly litigation. Mackin said the company and its shareholders will not be harmed because First Union's insurance will cover the settlement. In their lawsuit, First Union employees said their employer engaged in ``self-dealing, pure and simple.''

The bank often charged employees full price for financial services while outside investors received waivers and discounts, the lawsuit said. The lawsuit also accused First Union of plowing the 401(k) investments into its own mutual funds to boost its funds' assets, hoping to make them more attractive to outside investors. ``Because many of the issues in these cases are groundbreaking and challenge practices common to the 401(k) plans of many financial services companies, the plaintiffs believe that the settlement represents an excellent result,'' the parties said in a joint news release. Along with compensating the employees, the settlement requires First Union to appoint an independent adviser to the committee that oversees its 401(k) plan.

PNM Resisting Union Efforts
Albuquerque Journal - By Rosalie Rayburn - March 20, 2001

PNM has hired an out-of-state consulting firm to oppose union efforts to organize gas workers. The cost of the anti-union campaign will eventually hit ratepayers, claims an official with the International Brotherhood of Electrical Workers.

Public Service Company of New Mexico is making workers "attend mandatory meetings (with) union-busting consultants all over the state — on company time," said local IBEW business manager Andy Palmer. The meetings are to persuade 370 gas workers not to vote to join the IBEW, Palmer said. They are being held in Farmington, Las Cruces, Roswell and Santa Fe, Palmer said.

"Our issue is that PNM is charging this back to the ratepayers," said Palmer.

"We bargain for health care (benefits) and better wages," he said. "They (PNM) like their employees to be paid less."

Ratepayers are not paying for any of these expenses, said PNM spokeswoman Julie McCabe. "It would have to be part of a rate case. The last rate case was in 1999, and this type of activity was not included," said McCabe.

PNM recognizes the employees' rights to seek outside representation but believes the utility has competitive wages and benefits, said McCabe.

"We feel it's our responsibility to our employees to provide facts, opinions and examples of what will happen to them under union representation," said McCabe.

The IBEW recently filed a petition with the National Labor Relations Board to hold an election April 4 to decide whether it can represent the gas workers in contract negotiations.

The gas workers include warehouse workers, janitors, pipeline welders and truck drivers.

In a similar election in 1999, the IBEW lost its bid to represent the gas workers by one vote.

PNM hired an out-of-state consulting firm because there are no local firms available, said McCabe. She added confidentiality agreements prohibited PNM from naming the firm it hired.

The meetings are mandatory and they are held during working hours in accordance with the National Labor Relations Act.

Everyone who attends the meetings is being paid, said McCabe.

For efficiency's sake, the meetings are at regional centers, and company transportation is used as much as possible, said McCabe.

PNM also purchased and distributed fliers from the Labor Relations Institute Inc., an Oklahoma firm that provides companies with "union-free communications products and services."

3M will offer new pension options
Pioneer Press - by KEVIN MALER - March 16, 2001

Workers can stick with current plan

3M Co. will unveil a major overhaul of its pension and retirement benefits in the next months, a move that aims to make the firm more attractive to today's mobile workers but will make it less lucrative for the next generation of 3Mers to work there until retirement. Workers who joined 3M after Jan. 1 are automatically enrolled in the new pension and retirement plan. All employees who joined before this year will have a choice: They can select the new package of benefits, including a ``pension-equity'' style plan that builds balances faster for younger workers, or stick with the traditional retirement benefit package they already have, according to a person familiar with the changes.

3M declined to discuss the changes, noting that internal publications for employees on the new benefits haven't been completed. The new offer was well in the works before 3M named its new chief executive, James McNerney, in December.

3M's choice of plans, however, also says the company doesn't want to stray too far from the formula that has worked in the past. Its new plan will still offer long-tenured employees a reason to stay.

Big changes in pension plans caused a storm of media attention a couple of years ago -- IBM's change was harshly criticized and got the attention of lawmakers -- but experts say most 3M employees probably will react favorably to these changes. That's because of the opt-out option available to eligible employees. And 3M is offering a more generous ``pension-equity'' plan rather than a ``cash-balance'' pension.

``I think they are doing the right thing,'' said Kien Liew, president of, a Plano, Texas-based firm that consults for corporate clients and offers Web-based calculators that let clients' employees compare various benefits plans. 3M employees ``should consider themselves lucky that they have a pension-equity as opposed to a cash balance (pension) because this is a better benefit.''

Employees should also feel fortunate that 3M is letting all employees eligible for the traditional pension choose it if they want, according to Liew. ``Maybe they learned from other companies and the mistakes they made,'' he said. Companies have been far more likely to switch to cash-balance plans than pension-equity plans.

Companies switching to cash-balance plans were criticized because some older workers who were forced to switch to cash-balance plans lost expected benefits. And in some cases, critics charged, companies aimed to save money by offering a less generous benefit under the new plan.

``It depends on how you do the definitions, but often it's cheaper from an employer's point of view'' to offer a cash-balance plan, Liew said. Also, ``the law doesn't require an employer to present all the information,'' so companies can make it difficult to figure out whether employees lose out or not.

John Edwards gets a thumbs-up
The Charlotte Observer - By ANNA GRIFFIN - March 9, 2001

He may run again in 2004, but consumer advocate and presidential spoiler Ralph Nader says he thinks U.S. Sen. John Edwards would make a good Democratic candidate for the White House.

Nader had good things to say about North Carolina's junior senator Wednesday during a quick Green Party promotional swing through UNCChapel Hill and Elon College. Last fall, Nader received 3percent of the vote - short of the 5 percent he'd set as a goal - as the Green Party's presidential nominee.

"It's a good idea," he said of talk that Edwards is eyeing a presidential run. "But you have to make sure that as he runs, the faster he runs, the less he changes. He shouldn't take any PAC money.

"And he is going to have to run against Al Gore. I have no doubt in my mind about that."

Kind words from Nader might not be exactly what Edwards is looking for these days, as he quietly considers a bid for president.

Since he beat incumbent Lauch Faircloth to win a Senate seat in 1998, Edwards has tried to position himself as a thoughtful moderate. Nader and the Greens rest solidly to the left of the Democratic Party platform on most issues, and many Democrats blame Nader for taking needed votes away from Gore, and helping George W. Bush win the presidency. Nader was not on the ballot in North Carolina because the Greens did not get the necessary 51,324 signatures.

Edwards, a trial lawyer who didn't accept PAC money in his 1998 campaign, also wins points with Nader for his work on behalf of people in personal injury cases. Nader, who is contemplating another run with the Green Party in 2004, made his name as a consumer advocate against big business before entering politics.

"(Edwards) is not ashamed to stand up for the civil justice system, which is the pillar of our democracy, and allows wrongfully injured people to take their perpetrators to court and help make this society safer for all of us," Nader said.

Nader isn't a big fan of the state's Republican senator.

"The only thing I've found Jesse Helms to be good on are GATT and NAFTA," Nader said, referring to two international trade agreements. "He should be very good against corporate welfare. It's a conflict, though, between his conservative philosophy, which should be against corporate welfare, and his corporate expediency in Congress. That makes him support and condone it."

Retirees trump Qwest again
Rocky Mountain News - By Jeff Smith - March 7, 2001

US West pensioners will get vote on how execs' pay is figured

Qwest Communications International Inc. must allow stockholders to vote on a resolution that would prohibit the company from linking pension profits to executive pay, a U S West retirees group said Tuesday.

The resolution, according to the Association of U S West Retirees, would stop Qwest's board of directors from allegedly using "paper gains" from the $7 billion employee pension surplus to boost executive compensation.

It's the second time within a week the 45,000-member retirees group has claimed victory in its battle with Qwest to get executive compensation issues on the agenda at the annual stockholders meeting May 3 in Denver.

Qwest, which acquired U S West last summer, has declined to comment on the proxy issues, saying that the federal Securities and Exchange Commission might construe any comment to be an attempt to solicit votes.

Qwest spokesman Matt Barkett did say late Tuesday afternoon that "we disagree with (the retirees') characterization of the SEC decision."

Last week, the retirees group said it got the SEC to order Qwest to require shareholder approval of future executive severance agreements, or "golden parachutes." The SEC has not commented on the dispute.

The retirees group's counsel didn't immediately return a phone call from a reporter asking for a copy of the SEC order.

In its statement Tuesday, the retirees group said Qwest's earnings in recent years -- when the company still was U S West -- have averaged 11.3 percent higher than they otherwise would have because of pension credits.

"Qwest has a $7 billion surplus in its pension fund, none of which is used to improve the life of pensioners," stated Jim Norby, chairman of the retirees group. "Instead, it's been used to improve the performance of the company. . . . It's a theft from the retirees and the shareholders, used to line the pockets of executives."

But the statement didn't offer specific evidence that Qwest has linked those pension paper profits to executive compensation packages.

Ann Yerger, research director for the nonprofit Council of Institutional Investors in Washington, D.C., said it's rare that a shareholder proposal on executive compensation issues would pass.

"But that's not to say that these proposals aren't valuable," she said. "The fact of the matter is that our members have filed a number of proposals on executive compensation issues and many companies are responsive. They may make some changes to their pay proposals in response to a vote."

Many shareholder proposals also are withdrawn after negotiations or discussions with the company that end in compromise, she said.

Yerger said executive compensation continues to be a hot issue and such shareholder proposals are sometimes "used to encourage other types of changes."

The retirees group also has sharply criticized a stock-selling program by Qwest chief executive Joseph Nacchio.

In mid-February, Nacchio said he would sell what amounted to about $350,000 of stock a day over the next 28 months to extinguish 6.1 million options. On Friday, he suspended that daily program because of what Qwest said was market volatility.

"I would rather have seen him withdraw due to regret at having made such an obscene profit while many of his company's retirees struggle on $500 a month," Norby said.

Wanted: Strong work ethic
The Charlotte Observer - By LESLIE GROSS KLAFF - March 5, 2001

The workplace is increasingly high-tech, but Charlotte-area employers say workers today lack something very basic - a strong work ethic.

A Charlotte Chamber study of 333 employers showed that more than 60percent said low-skilled workers and recent high school graduates have a lower work ethic compared with 10 years ago. Almost 50percent of skilled workers and 30percent of professional workers have a weaker work ethic, the businesses reported.

Researchers and employers say the low unemployment rate - which makes for a job-seeker's market where employers struggle to fill openings - is hurting work ethic.

"Anytime you've got a tight labor market, you're having to deal with the worst of the group," said Tony Crumbley, the Chamber's vice president of research. "The (ones) who are left have problems."

The Chamber, working with UNCCharlotte's Urban Institute and Central Piedmont Community College, surveyed employers to learn which job skills they demand most critically.

The survey also showed that employers have a great need for skilled workers, such as office assistants and computer technicians, while many do not need low-skilled workers, such as laborers and dishwashers.

Employers today have formed a chorus on the work-ethic blues. They complain their employees don't dress appropriately, or get to work on time or follow directions, said Cheryl Roberts, director of economic development and planning at the Urban Institute.

David Jacobson, president of Austin Tarp Co. and Austin Canvas Co. in Charlotte, which make truck tarps, concurs. For many workers, just knowing other jobs are readily available is enough to make them less hardworking. Workers are less loyal to one company today, he said, and that lack of commitment carries over to their attitude.

"I think the economy is too good," Jacobson said. "I think that people don't revere their jobs and therefore they don't care about busting their butts for an employer. The young ones, they don't think about the future because they grew up in a strong economy."

Ignore retirees at your own risk
Montreal Gazette - By SHEILA McGOVERN - March 5, 2001

They are a huge group. Each year they grow larger. And if you've been in business for many years, your retirees might even outnumber your staff.

But how much do you know about them? Do you keep in touch? Or did they cease to exist in corporeal form the day they left the building, becoming, instead, a series of numbers associated with your pension plan?

A recent report by William M. Mercer, an international firm of consultants specializing in human-resource issues, suggests employers who ignore their retirees might regret their neglect.

"Various groups of retirees have recently launched class-action suits against former employers on matters ranging from pension-surplus ownership to benefit entitlement," writes Annie Massey, a communications consultant with Mercer.

Internet Will Help

Today's retirees aren't exactly retiring. They are aware of their benefits and are likely to speak up if they don't think they're being treated fairly.

And the trend could easily intensify. The leading edge of the baby boom has reached 55 and is heading for retirement. So, "a highly educated, demanding, activist, and savvy cohort of retirees is about to be born," Massey said.

Don't think of your retirees as peaceful, silver-haired grandparents out weeding their gardens.

"Instead, get ready for a 56-year-old engineer who retires with a Pentium 3, a fondness for spreadsheets and plenty of time to spare," Massey said.

The Internet will make it easier for retirees to keep in touch with one another and form lobby groups.

And many retirees today own stock in the companies they worked for, she said, "expect them to be aware of pension issues and provincial health-care downloading and be prepared to answer their questions at the next annual general meeting."

No Stampede

Massey, in a telephone interview, said there is no stampede toward improving relations with retirees. But Mercer has been approached by some large companies anxious to reconnect, often because the former employer wishes to change health-care benefits.

And this is a case where relationships really matter.

If you have had no relationship with retirees, then one day - out of the blue - they receive a letter from the president announcing that changes in benefits are being considered, you can expect concern, anger, maybe even fear.

They might interpret changes as meaning reductions, and fear that the company is about to renege on promises made to them during all those faithful years of service.

An employer could soon face a lawsuit or, as was the case with one U.S. retailer, find their retirees picketing their premises and telling customers how the company betrayed a bunch of senior citizens.

If, however, an employer has maintained contact with its retirees, keeping them abreast of the company's health, advising them of developments within their benefit packages and changes in government legislation, the idea of changing the plan won't come as a shock.

Massey said the company could also include representatives of retirees in discussions on how to change plans.

Of course, avoiding lawsuits isn't the only reason for maintaining contact with retirees.

In some cases, you might want to bring retirees back as mentors or consultants, she said. And its always better to have your retirees thinking highly of you "because the corollary would be to have them badmouthing you," Massey said.

There are various ways to maintain contact with retirees, she said. There's the traditional newsletter. It involves cost and time, she said, but it's probably cheaper than a lawsuit.

Companies could ensure retirees receive a copy of their annual report and a copy of the company's annual pension report.

Mercer conducted focus groups across the country and found the one thing retirees want most is information. They want to know about health care and pensions, and they don't want to be the last to know about changes at the company.

Sweatshop Mentality Infects Corporate US
South China Morning Post - March 4, 2001

Welcome to the dark side of the United States economic boom.

With White-Collar Sweatshop, business and financial writer Jill Andresky Fraser has delivered a disturbing view of the work environment of administrative and professional employees in the country's large corporations during the 1980s and 1990s.

Although the term "sweatshop" may appear counter-intuitive, given the general view that the US is hip-deep in prosperity, Ms Fraser's research justifies that description.

She spent five years researching the book, exploring the human resource policies and practices of key companies and talking with hundreds of white-collar workers. What emerged was a grim picture of stressed-out people caught up in situations bearing a strong resemblance to that of the mythical Sisyphus, condemned to Hades and given the task of perpetually rolling a heavy stone uphill only to see it roll back down again and again.

Fraser identifies the primary frustrations of white-collar workers today: continually expanding workdays, fear of layoffs, the increasing use of temporary workers and a steady dilution of employee benefits.

For most white-collar workers, the 40-hour working week has become a fiction. Because of advanced communications technology, workers are never free of the office, even when they leave at their scheduled times. They make and receive business calls or perform work on their computers while commuting.

Their jobs even follow them home, where they make calls and work on their computers to keep from falling behind in their work.

But, like Sisyphus, they never catch up. Many find themselves having to work 60 hours or more a week to keep their jobs, qualify for a meagre pay increase, have any chance of promotion and avoid being laid off.

Lay-offs are more frequent in corporate America because of the growing number of mergers and the view that companies must become leaner and meaner to compete in today's global marketplace. That means that employees who are laid off are seldom replaced. Their responsibilities are merely added to those of the remaining staff, or contingency workers, for whom the company does not have to provide full-time employee benefits, are brought in to help. Temporary employees can be seen as a threat to full-time employees. They are usually younger and can be paid less than veteran staffers if added to the staff. Workers in their 40s become expendable because of their pay levels.

Many white-collar workers complained about stagnant pay, diluted and changing health insurance and the abandonment of pension plans that offer real hope for secure retirement in favour of employee investment plans with unfavourable vesting requirements.

Those trends, the product of bottom-line, short-term thinking by corporate leaders, cause employee disloyalty and counter-productive conflict among workers that could work to the detriment of the companies, Fraser writes. She cites several firms that have come to realise that danger and are moving away from harsh, bottom-line management policies.

She says that those companies are recognising that overworked, underpaid, frightened and stressed employees do not perform as well as those who get enough rest and enjoy time with their families.

This book should be on the reading list of every chief executive.

U.S. Accuses Top Cendant Executives of Fraud
New York Times - By FLOYD NORRIS - March 1, 2001

Walter A. Forbes, who built a small company into the huge Cendant Corporation, was an active participant in a fraud that resulted in the company's reporting more than $500 million in phony profits, the government charged yesterday.

Mr. Forbes, the former chairman of Cendant, and E. Kirk Shelton, the former vice chairman, were indicted on fraud charges by a federal grand jury in Newark yesterday. At the same time, the Securities and Exchange Commission filed a civil fraud case against the two men.

The charges, which both denied, contend that the fraud went on for more than a decade, with company officials systematically altering financial statements to increase profits to impress investors. The charges against the two men appear to be largely based on the testimony of three other officials of the company who pleaded guilty to similar charges last year.

"Some call this kind of manipulation `earnings management,' " said Robert J. Cleary, the United States attorney in Newark. "Investors who watched helplessly as their share values plunged call it fraud."

Mr. Forbes and Mr. Shelton built CUC International, which began as a membership organization offering consumer products and travel services, into a large company that took over numerous other companies, culminating in a 1997 merger with HFS Inc. to form Cendant. The merged company controlled brands like Avis rental cars, Days Inn motels, Century 21 real estate and the Jackson Hewitt tax-preparation service.

"Soon after the Cendant merger," the S.E.C. said in its complaint, which was also filed in Newark, "Forbes and Shelton explicitly congratulated each other on being masterful `financial engineers' " who had assured their continued success "by duping HFS into a merger with CUC." The S.E.C. did not say where it had obtained that information.

At the time of the merger, Mr. Forbes was chairman and chief executive of CUC and Mr. Shelton was president and chief operating officer.

Mr. Forbes issued a statement yesterday through his lawyer, Brendan V. Sullivan, saying, "I am totally innocent of the charges brought against me and will fight them in court." Mr. Shelton's lawyers issued a statement denying the accusations and saying, "When all the evidence emerges, Mr. Shelton's innocence will be clear."

The indictment of the two top executives reflects an increasing willingness of prosecutors to bring criminal charges in cases where they conclude that investors were defrauded by a deliberate falsification of books. Garth H. Drabinsky, the former chief executive of Livent, a theater production company, was indicted in 1999, and Albert J. Bergonzi and Jay P. Gilbertson, former co-presidents of HBO & Company, a medical software concern, were indicted in September. Mr. Drabinsky is fighting extradition from Canada, and the case of the two HBO & Company executives has not come to trial.

Richard Walker, the director of enforcement for the S.E.C., said: "The results of our cases show that financial fraud is not confined to very small and obscure companies, but is increasingly prevalent in large companies traded on major stock markets as well. Last year, we brought more enforcement actions involving financial fraud and reporting abuses than ever before, and our inventory of such cases remains large." He said 19 chief executives faced S.E.C. civil cases in 2000.

The S.E.C. is now known to be investigating accusations of fraud or improper financial reporting at such major companies as Waste Management, Lucent Technologies and Xerox.

The securities agency said the accounting fraud at Cendant was the largest ever prosecuted, and it put investor losses at $19 billion.

Mr. Forbes, 58, of New Canaan, Conn., became chief executive of Comp-U-Card International, as CUC was then known, in 1976. He cultivated a reputation as a visionary who foresaw the possibility of consumers shopping by computer decades before wide use of the Internet made that possible. Mr. Shelton, 46, of Darien, Conn., joined the company in 1981 and became president in 1991.

But even as the company grew rapidly, the government contends that it was fraud, not operating results, that produced much of the profit.

Cosmo Corigliano, formerly CUC's chief financial officer; Anne Pember, formerly CUC's controller; and Casper Sabatino, a CUC accountant, pleaded guilty to fraud charges last June but have not been sentenced. They admitted to participating in the filing of fraudulent financial statements for many years and said that senior officials had directed the fraud. Mr. Corigliano said fraud had been going on at CUC since he joined it in 1983, the year the company went public.

According to the indictment, CUC executives maintained what they called a "cheat sheet" that "listed amounts the conspirators could add to CUC's reported earnings for the year by means of various fraudulent entries." Each quarter, the government charged, they would use the sheet to adjust quarterly earnings to meet Wall Street expectations, and then each year they would make additional adjustments to make the fraud less clear to auditors.

The Cendant matter has already become one of the most expensive in history. The company has settled shareholder suits for $2.8 billion, and the former auditors for CUC, Ernst & Young, have agreed to pay $335 million. Cendant's current management is pursuing civil litigation against the auditors, contending that they knew of the fraud and covered it up, accusations the auditors deny. Ernst & Young has retained David Boies as its lawyer in the civil case.

With charges now filed against the entire top management of CUC from before the merger, a question now is whether Ernst & Young will face government charges. Neither the S.E.C. nor the United States attorney's office would comment on that. A spokesman for Ernst & Young said it was cooperating with the investigation.

The charges covered by the indictment said the "cheat sheet" was maintained by Mr. Corigliano and did not cite other documents linking Mr. Forbes and Mr. Shelton to fraud. The S.E.C. charges said Mr. Shelton regularly reviewed and authorized fraudulent changes to the books, while Mr. Forbes did so less frequently and sometimes acted through Mr. Shelton.

There has been speculation that prosecutors might offer Mr. Shelton a deal to testify against Mr. Forbes, but Mr. Shelton's lawyers, Stephen E. Kaufman and Martin J. Auerbach, showed no indication yesterday that they were interested in such a deal. They said Mr. Shelton "worked with an unflinching commitment to honesty and the truth during his 17 years" at the company and "did not participate in the fraud that occurred."

The indictments against Mr. Forbes and Mr. Shelton of one count of conspiracy and one count of wire fraud carry maximum penalties of 10 years in prison and fines of $500,000.

The potential civil liability is great. Both men made large amounts of money selling CUC stock when share prices were high, and the S.E.C. asked that they be ordered to "provide a complete accounting of and to disgorge the unjust enrichment realized," plus interest. The commission said that Mr. Forbes sold 1.2 million shares, and Mr. Shelton nearly 600,000 shares, from January 1995 through April 1998, when the fraud was exposed.

The government contends that the fraud began by 1985, however, with Mr. Forbes involved from the beginning, and that Mr. Shelton joined it no later than 1991. So sales of stock before 1995 could also be included in assessing the men's profits.

The large potential liability appears to be what is holding up a settlement by Mr. Corigliano and Ms. Pember of charges filed by the S.E.C. against them. Both sold substantial quantities of stock during the period in which they have admitted helping to prepare false financial reports.

CUC gained a big Wall Street following in the years when it seemed to be growing rapidly. The company went public in 1983 at $1.21 a share, adjusted for subsequent splits. After the merger with HFS that created Cendant, the stock price rose to a high of $41.69 on April 6, 1998, shortly before the fraud was discovered. Mr. Forbes, Mr. Shelton and seven others resigned on July 28 that year.

SEC Orders Qwest to Allow Shareholder Vote on Golden Parachutes
Association of U S West Retirees - March 1, 2001

The Securities and Exchange Commission has ordered Qwest Communications to allow shareholders to vote on a resolution that, if passed, would require shareholder approval of all future or renewed executive severance agreements.

The resolution, submitted by stockholders who are members of the Association of U S West Retirees (AUSWR), targets Qwest's so-called "golden parachute" or "golden goodbye" provisions. AUSWR contends that such agreements are among the most costly, wasteful and anti-shareholder forms of executive compensation, particularly in light of its membership struggling on pensions that have seen only one cost-of-living increase in the past ten years. The resolution will be voted on at the Qwest annual meeting on May 3 in Denver.

"Such excessive payouts, particularly in light of our pensioners' plight, is totally without reason," said Nelson Phelps, executive director of AUSWR. "We strongly urge shareholders to vote for this resolution at this spring's Qwest shareholders meeting." (Qwest and U S West merged operations last year.)

Qwest sought to omit the stockholder proposal from its annual proxy statement, claiming the retirees were meddling in "ordinary business" decisions properly left to managerial discretion. The SEC disagreed.

The blocking attempt by the company coincides with the recently announced plans of Qwest CEO Joe Nacchio to sell 11,500 shares of stock options daily for the next 28 months. Based on the price of Qwest stock at the time of the company is announcement on Feb. 16, Nacchio would earn a pre-tax profit of $363,400 each market day, or $192.8 million in selling 6.1 million shares. (According to Qwest, Nacchio also owns an additional 14 million stock options and 471,000 Qwest shares not included in the daily sales program.)

"We find this totally audacious, given that some of our pensioners draw only $500 a month and can't pay their heating bills," said Phelps. "While the pension fund they built now has a $7 billion-plus surplus, these people have received only one cost-of-living increase in the past ten years. Mr. Nacchio will make more in a day than many of our pensioners could draw in 60 years of retirement, simply by selling stock options; that he will do this daily through the middle of 2003, potentially amassing nearly a fifth of a billion dollars, is beyond comprehension."

The Association of U S West Retirees (AUSWR) represents more than 45,000 retired employees and their spouses of the former U S West and affiliate Bell telephone companies.

Association of U S West Retirees:

News - February 2001