231 Pinetuck Lane Winston-Salem, NC 27104 Phone: 336-765-9765
November 18, 2005
Ronald A. Williams, Member
Board of Directors
Lucent Technologies, Inc.
Dear Mr. Williams:
As you may know, senior representatives of Lucent Technologies and the Lucent Retirees Organization (LRO) met again last August to discuss items of concern. During that meeting Lucent reiterated its request that the LRO send an announcement to its members in support of Lucent’s continued “take our word for it” claim that the Lucent Retirement Income Plan [LRIP] is adequately funded and secure.
Unfortunately, despite the LRO’s repeated requests, Lucent senior executives have refused to allow a meeting of independent LRO experts with members of the firm currently auditing the Pension Fund. We see this as very important in part because we understand that the same firm audits the Pension funds as well as Lucent’s corporate books. At best, doubt is created regarding that firm’s objectivity; at worst, a conflict of interests may be both present and influential. Lucent executives have also refused to provide the LRO with any non-public information details even while it asks us to affirm to LRO membership that Pension Trust Funds are actuarially sound. An exception was offered if proprietary information non-disclosures were signed to prevent the use of anything additional that might be learned. To sign those forms or to state to its membership that the Pension Trust Funds are sound, absent verification of the data, would be to act irresponsibly toward LRO membership. Thus, while it wants to honor Lucent’s request, the LRO’s only alternative has been to respond to Lucent management that it cannot reassure its membership of the actuarial soundness of the Pension Trust Funds for reasons stated herein.
In the course of investigating Lucent’s claims, questions have been raised regarding the Life Insurance trusts, the termination of Pension Plan benefits, and certain asset transfers from the pension trusts. Despite the LRO’s best efforts, Lucent has been less than forthcoming on these matters. We are forced to conclude that issues such as these can only be settled judicially, legislatively or in public forums which we still prefer not to have to do.
November 18, 2005
Much more awareness is being created among pensioners, stockholders and Wall Street that for many years Lucent has relied on reported surpluses in the pension trust funds to bolster its reported earnings. And, of course, much consideration should be given to the recent actions of the Financial Accounting Standards Board (FASB) to reconsider accounting for pensions and other postretirement benefits. Their objective is overdue to improve transparency and usefulness for investors, creditors, employees, retirees and other users of financial information.
As a Lucent Board Member and Director, your vigilance in exercising your fiduciary responsibilities to all shareholders is both lawfully required and ethically and morally essential. We’re sure you know how important it is for Directors to monitor management activities. Consequently, we feel an obligation now to bring the related matters addressed herein to your attention given their importance and the stalemated circumstances surrounding relevant discussions with senior management.
We urge your understanding that the LRO is not a “band of dissidents” but rather an organization comprised of thousands of professionals who held significantly responsible positions in every area within the corporation’s universe. Its membership is comprised of persons who served Western Electric, Bell Laboratories, AT&T and Lucent for many decades and are among the best and the brightest. Many are shareholders. All have strong feelings and emotional ties to a company that has a highly respected history, and who want to make sure that that respect continues well into the future.
We urge your consideration and investigation of the points brought forth in this letter and look forward to receiving your response, comments and commitments.
Lucent Retirees Organization
K. Raschke, President
Letter Also To:
Individual Members of the Lucent Technologies, Inc.
Board of Directors