firstname.lastname@example.org on 12/30/2004,
I was very disappointed in your "Facts Mailing" which in addition to the attached discrepancies left out some very relevant points. For example the Senior executives at Lucent drove the expenses up and revenues down through terrible management decisions. Some of these executives including Mr. McGinn profited immensely under their "golden parachute" to the tune of 20 plus million dollars as he left the mess he created.
I left Lucent with the understanding from Lucent information and Management that my medical insurance benefit would be reduced if I left the company after December 2000. I also received information that claimed that Lucent would cover 90% of the benefit premiums. The Benefits Center refused to send me written information on how my rising expenses were calculated.
AT&T/Lucent management informed me every year for thirty years that my benefits were worth a third of my salary and that both my family members and I would have benefits. This information was apparently a "social contract" since later Benefit statements contained questionable language concerning benefits longevity.
It is a fact that executive compensation-specifically yours-had a value of more than $40 million dollars in your first 2 years while the company lost $10 billion dollars in market value. It is also a fact that Forbes ranked your pay at 190th in 2004, while Lucent ranked 695th in revenues and 1816th in profits of the 2000 companies surveyed.
My medical expenses keep rising, my benefits are decreasing while executive compenstation keeps rising. Let's set the record straight!!
Sincerely, Bob Norton
Subject: Compensation doubling at retiree's expense
Date: Sun, 26 Dec 2004 14:50:31 +0000
After reading that your compensation would more than double from $6.6 million to $13.6 million, I was appalled that you would accept same at the expense of cutting retiree's benefits and the devalued stock. As an act of good faith, you should decline the increase until you have restored some of the retiree benefits.
----- Original Message -----
From: Reed Layman
Sent: Thursday, December 23, 2004 7:58 PM
CEO P. Russo,
Shame, shame, shame, on you and the Lucent Board for increasing your salary
by 50 percent. While Lucent's LRO reported that "Forbes reports that
Lucent's revenues rank 695 out of 2000 companies while on the basis of
profitability it ranks at 1816.
However, the pay for Lucent's CEO is ranked at 190. Compare this to Cisco's
CEO whose pay is ranked at 494 while Cisco's revenues are ranked at 89."
You took over Lucent when the stock price was over $5.25 per share. Today
the share price is $3.70 a 28 plus percent reduction. During your tenure
you have reduced employee health and death benefits. You have refused to
have the books audited by an outside auditor to determine the health of
employees pension. You need to take serious look at your performance and
give back your salary increase.
Cape Coral, FL
From: Russo, Patricia (Patricia) [mailto:email@example.com]
Sent: Monday, December 13, 2004 10:04 AM
To: 'Dick Kranzmann'
Subject: RE: Lucent and the LRO
I appreciate your balanced perspective. We are planning a meeting with the incoming President of the LRO as soon as we can get it scheduled. I expect that we will cover the areas of concern and question and we will make every effort to have an open constructive and positive dialogue. I believe we both have the interests of our retirees in mind.
----- Original Message -----
From: Russo, Patricia (Patricia)
Sent: 12/13/04 4:17:19 PM
Subject: RE: Lucent Retirement Org - reply to Pat Russo's letter
Don, thank you for your email. We are planning a meeting with the incoming new head of the LRO to address the issues that raised. It is my hope that we have a constructive and productive exchange.
I will ensure that, most likely after that session, we do make sure that we speak to the issues as articulated with specific responses, or reiterations of the answers we have already provided.
From: Don Schobert [mailto:firstname.lastname@example.org]
Sent: Monday, December 13, 2004 3:02 PM
Subject: FW: Lucent Retirement Org - reply to Pat Russo's letter
As a concerned Lucent retiree, I am forwarding you a set of issues being explored by the Lucent Retiree Organization (LRO). I would appreciate it if you could answer them point by point. If you feel they have already been addressed, please provide the previous answer.
Another possibility would be to meet with the LRO and air the issues in a better forum than mass mailings and email responses. There are probably mis-understandings on both sides that could be easily cleared in such a meeting.
I am looking forward to the Lucent side of these issues because Im sure that the reality is somewhere between the mass mailing from Lucent and the email response provided here by the LRO.
Thank you for your time and concern,
Don Schobert retired 4/1/01
I see that Lucent revenues rank 695 out of 2000 in the Forbes reports and Cisco ranks 89. Yet your pay ranks 190 and the Cisco CEO ranks 494. To adjust this imbalance, and show a sincere committment to the future success of Lucent, it would be a great if you took a voluntary cut in pay. Possibly others, like VP's and the Board of Directors would follow your lead.
That money would then go to the Lucent bottom line and improve earnings and MAYBE reduce the need to tap the retirees funds.
Dominic Gurrera (a retiree, 37 years service)
Message forwarded from "email@example.com" <firstname.lastname@example.org> on 12/13/2004,
07:27:41 PM: Dear Pat
Your letter and "fact" sheet as propaganda would have made Dr. Joseph Goerbels extremely proud!! It is also apparent that you are familiar with the big little book "How to Lie with Statistics". All is not lost as I am sure your letter will serve as a great recruiting tool for the LRO.
Charlie Roberts Installation Manager Retired (thank goodness) Northern California and Nevada Installation Area
Message from email@example.com on 12/11/2004
Ms. Russo As a member of LRO, I respectfully request that you honor the officers' request to meet and discuss our dwindling benefits. Having dedicated thirty-two years, the loss incurred with the devalued stock is penalty enough without the directors siphoning benefits. LRO is entitled to an audience in order to express our concerns and help improve Lucent's to its pre-crash position.
----- Original Message -----
From: "Russo, Patricia (Patricia)"
Sent: Wednesday, December 15, 2004 7:49 PM
Subject: FW: Comments from the field
I have read your email and feel a need to reply to the statements you
make. Notwithstanding the descrepencies you reference, the letter that
was sent out regarding pensions, health care and what you refer to as
management reporting are the facts. The same information is reflected in
our financial filings with the Securities and Exchange Commission, and
most recently in the 10K that was filed at the end of our 2004 fiscal
We take our financial management responsibilities very seriously, we
strictly adhere to GAAP (Generally Accepted Accounting Practices) in
compliance with what is required by companies listed on the New York Stock
Exchange. We report our financials accurately and in full compliance with
all accounting and reporting requirements.
I hope that helps.
Message forwarded from "Jim Kowal, LCPC" <firstname.lastname@example.org> on
Dear Ms. Russo,
I am a retired Technical Manager of Bell Laboratories (1999). I have
received your letter. I am deeply concerned and appalled at the
discrepancies between your organization and the LRO publications of the
"facts" concerning pensions, health care costs, and management reporting. I
encourage you and your organization to adopt a new sense of integrity to the
fiscal management of the company. Previous management have all but destroyed
the greatest research and development company in the world. Please initial a
commitment to reporting accuracy and remove those who have so weakened the
security of the retirees of Lucent. Jim Kowal, PhD
Message forwarded from WDalsing@aol.com on 12/11/2004, 05:24:44 PM:
Message forwarded from Dick & Fran <email@example.com> on 12/11/2004,
Pat, I'm a retired employee of 35 years and in saying that I have NEVER been
treated by the corporation like I have in the last 4 years. The stocks are
garbage stock, the stock options that were given are in the same category..
The health care benefits increased from ($15.07) a month in 2001 to
($600.) a month in 2005. However the corporation has seen fit to take care
of the Union universe. What a true reward for the management employee who
took all the crap while he or she worked and now we get another load after
we retire, thank you and you staff for you wonderful support, I wish I had
the power to replace the entire board and the CEO. And it has been said that
there isn't any money left, well obviously we gave away to much money for
downsizing and upper management bonuses for very sorry results. Reply if you
can explain you action. Ron
December 3, 2004
Dear Ms. Russo:
In reading your November 2004 letter to Management Retirees I saw nothing new being offered other than excuses for drastically cutting the health care benefits for many retirees and their dependents. I think it is outrages for you and the members of the Board to blame the retirees for Lucent not being competitive in the market place. This letter tried to explain away the facts and greed that Lucent is using to place these hardships on Lucent retirees!
I retired from Lucent on June 29, 1998, after 34 years of service, with a gross annual pension of $29,425.56 ($2,452.13/month). My contribution to the healthcare coverage for 2004 will total $3401.88 ($283.49/moth). With the recent changes implemented for 2005, my contribution to the healthcare coverage for next year will be $7,210.44 ($600.87/month), an increase of 120%! My contribution to the healthcare coverage will increase from 17% to 36% of my gross annual pension for these two years only.
When I retired I paid $0.00 for medical and dental. It doesn't take a rocket scientist to figure out that in 6 years my cost for medical has increased by 600%. My buying power has gone down 24% percent since I retired. I now pay more for health care then my house payment. This kind of loss is a great hardship on one whose income is now fixed.
This cost should have been spread over the entire network of retired employees instead of hitting just 20 percent of all retirees. This is discrimination to the ones whose base salary was greater then $65,000. It will cost me an extra $3,809 more then one who makes $64,999. I know your answer is, this was done by law and my answer is, the law is always on the employers side due to the lobbying for the benefit of big corporations
Eliminating the corporate healthcare subsidy for dependents of retirees who earned at least $65,000 at retirement is an outrage. This is a betrayal of those many loyal and hard-working employees.
We gave up dollars in our gross salary to pay for the benefits received and we believed once we retired there would be no worries because we were promised that Lucent would take care of us after we retired. I worked many years for AT&T and my peers who retired from AT&T are not having this problem.
You say that this had to be done so Lucent could stay competitive in the market place. Well the two biggest competitors for Lucent are Alcatel from France and Nortel from Canada and in both places the respective countries have health care coverage for all their citizens. This hasn't changed from previous years and Lucent was competitive in those years. I guess your present managers are not smart enough to price the labor and products like the ones that you are now taking away benefits to stay competitive. It is just another way to try and explain a misdeed by increasing and eliminating health care coverage for retirees.
You wonder why there is a need for the LRO. One would say you can not let a wolf guard the hen house. This is not the correct way to treat your former employees and their dependents!
PATRICIA F. RUSSO, CHAIRMAN & CEO DECEMBER 2, 2004
LUCENT TECHNOLOGIES, INCORPORATED
600 MOUNTAIN AVENUE
MURRAY HILL, NJ 07974
RE: NOVEMBER MGMT RETIREE LETTER
DEAR MS. RUSSO:
I READ WITH SOME INTEREST, THE ABOVE REFERENCED LETTER AND
YOURS, THE CORPORATE LAWYERS AND YOUR PUBLIC RELATIONS “SPIN”
WILL UNDOUBTEDLY GO SOME DISTANCE IN PLACATING SOME RETIREES’
YOU HAVE MADE SOMEWHAT OF A CASE WHY RETIREES SHOULD SACRIFICE.
WHAT IS MISSING IS WHAT SACRIFICES YOU AND YOUR TOP EXECUTIVES ARE
MAKING IN ORDER TO REGAIN RETIREE TRUST.
LAWRENCE D. BUYNAK
COLUMBUS WORKS RETIREE
November 30, 2004
Dear Ms. Russo:
As a Lucent shareholder, I am happy to see that Lucent's financial position has improved, and I give you and the other executives, especially Frank D'Amelio, the credit for engineering this turnaround. However, as a Lucent retiree, I am chagrined to learn that the corporate books are being balanced on the backs of Lucent's retirees.
In reading your November 2004 letter to Management Retirees I saw nothing new being offered other than a litany of recycled excuses for drastically cutting the health benefits for many retirees and their dependents. It is particularly distressing when one holds up your letter and the attached Q&A against the tables that show executive bonuses (cash & stock option awards) in Lucent's recent proxy statements (and, soon, in the one for 2004) and the recent news report of a Federal tax refund of well over $800M.
I retired from Lucent on May 12, 2000, after 20 years of service, with a gross annual pension of $19,943.40 ($1,661.95/month). My contribution to the healthcare coverage for 2004 will total $3401.88 ($283.49/moth). With the recent changes implemented for 2005, my contribution to the healthcare coverage for next year will be $7,210.44 ($600.87/month), an increase of 120%! To put this in a different perspective, my contribution to the healthcare coverage is going from 17% to 36% of my gross annual pension. This has forced me to take early payment of my Social Security benefits, thereby causing a "hit" in excess of 20% from the full amount I would have received had I waited to my "full retirement age" to collect this benefit.
Eliminating the corporate healthcare subsidy for dependents of retirees on or after March 1, 1990, who earned at least $65,000 at retirement, is an outrage and a betrayal of those many loyal and hard-working employees whose families often were deprived of their companionship due to the extra hours they had worked whenever that was needed, including job-related travel. Would it not have been more equitable to base the formula for eliminating the corporate subsidy for retiree dependents on the retiree's annual pension rather than his or her salary at retirement? Surely, a retiree with a gross annual pension of, say, $65,000, is better able to absorb this cut than one who earned $65,000 at retirement.
This is not the right way to treat your former employees and their dependents!
J. G.[full name withheld on request]
I read the letter and enclosed pamphlet you recently sent to all Management Retirees. I was somewhat chagrined, to say the least, at what I will humbly call your less than candid discussion regarding your compensation.
I looked at the Forbes list of top paid CEOs for 2004 and found that you were indeed ranked 190. It was telling however that in it's published list of top 2000 companies, Lucent ranked 695th. In looking at profit generated Lucent ranked 1816th out of 2000..
In contrast, the top company listed in the Technology hardware & equipment category, IBM, ranked 16th overall, the CEO was ranked 125th for compensation.
The second ranked company in that category, Hewlett-Packard, ranked 43 overall, paid it's CEO the 245th ranked compensation.
Cisco, a company I believe we can agree is a direct competitor with Lucent is ranked 89th overall, but compensates it's CEO at the 494th rank. Perhaps by your argument, if they had paid them more, they would not have taken so much of our business in the 90s.
And so on.
Now, you may have some very reasonable explanation for this phenomena, but I don't think for a moment you can make the argument , as you and other Lucent executives have been making for years, that more pay equals more talent.
I find it ironic that the only company listed which had a more out of whack ratio between compensation and overall rank was Sun Microsystems. Probably indicates that they learned the mantra well while training at Bell Labs.
Another thing that I find ironic, almost all of the foreign companies in this category, many of them ranked above Lucent overall, don't even have executive salaries in the top 500.
I also read that your golden ( although certainly we could find something more precious to call it, gold is old hat these days isn't it?) parachute will certainly keep you from having to worry about losing your health care, even if you are fired much less laid off.
Now, I am not so naive to expect to change the world with this email. The greatest thing I could hope for is that you make some effort to be somewhat more discerning in your comments when you address the management employees. You know we still get to drive by the multi-billion dollar boondoggle at Indian Hill and NSC to remind us of the decisions our management(highly paid talent) has made with respect to the solemnity of their duty to their employees and stockholders.
Finally, I have attached below some reading that may interest you and may help you understand why in light of the above, I find it difficult to trust Lucent management with my future, even if it is only my health care future. I have taken the liberty to highlight some of the more salient parts.