Feeling short-shrifted, they hope a constructive approach will help their cause

April 25, 2003

5 Min Read
Lucent Retirees Ask Questions

A group of retirees from Lucent Technologies Inc. (NYSE: LU) is taking on execs at their alma mater, asking questions about the company's policies. Whether they can change anything is open to question, but they are determined to make their voices heard.

In a call with Light Reading earlier this week, Ken Raschke, president of Lucent Retirees Organization (LRO), who headed a North Carolina telecom gear manufacturing plant for AT&T Network Systems before retiring in 1989, explained the charter of the recently formed group.

"When we started last year, it was a few loyal guys who'd had good careers at Lucent and were looking for ways to help," he says. He and the other founding members wanted to use their knowledge of Lucent, its customers, and the telecom industry in general to help the company weather the telecom downturn -- promoting Lucent's cause at standards groups, for instance.

But as Lucent started cutting benefits to former employees while maintaining top salaries for executives, things changed. Now, the group is looking not just to help Lucent's cause, but to change its policies to fairer ones.

A particular bone of contention for the LRO has been Lucent's cancellation this past February of a spousal death benefit for former employees. Limited to management employees who retired before 1998, the benefit extended one year's salary (at retirement date level) to the spouse of a deceased retiree.

Some might disparage objections to Lucent's cancellation of the death benefit. After all, these retirees already have better benefits than many present Lucent employees -- let alone employees who've had the misfortune to be laid off in the last two years.

But losing the death benefit, says LRO, is just one indication that Lucent could axe a range of other benefits in its struggle to lower expenses. As retirees age and feel more vulnerable, it's tough to ask them to worry about losing what they thought they'd worked hard to get.

Ask Joseph Conder. When he retired in 1985, he considered himself fortunate. After starting work at Southern Bell in 1947, he'd followed through a string of acquisitions and mergers to end up at AT&T Corp. (NYSE: T), from which his division eventually went to Lucent. At retirement, he got a pension and benefits that included free healthcare and subsidized toll calls, as well as the spousal death benefit.

Cancellation of the death benefit changed his view of the company. "Now, I think they'd take my pension if they could," Conder says.

Conder knows he's got better benefits than many younger employees, thanks in part to being grandfathered in on perks awarded as he migrated through the Bell System companies that wound up inside Lucent. But he says he was promised his death benefit for years, even as he opted to stick with his company through merger after merger. Since he wasn't a member of a union, he relied on the company's word. "After the divestiture of AT&T, I had letters and confirmation. They had the money allocated for my retirement," he says. And for Conder, part of that money was his death benefit.

Conder, it should be noted, isn't an LRO member, but contacted Light Reading on his own when the death benefit was pulled.

Other retirees feel betrayed by the company they helped build, say LRO officers. At their own expense, they started the Website and traveled to New Jersey this month to meet with Lucent CEO Patricia Russo, ex-CEO Henry Schacht, and several other execs.

Besides Raschke, LRO's founders include its vice president, Eli Shaff, who retired in 1996 from GTE's sales operation in Texas; treasurer Bob Janish, who retired in 1995 after holding a range of accounting positions, the last one at AT&T Network Systems; and secretary James P. Goodman, who retired from Lucent in 2000, after a number of sales posts. Goodman has subsequently been involved with a range of companies, including Aerie Networks Inc. and Optical Access Inc. (Nasdaq: OPXS).

Raschke feels the meeting went well. "We were supposed to meet from four to six," he says, "but didn't break up until after seven because Pat [Russo] had to get to another meeting." The Lucent execs told the LRO team they'd consider some of their suggestions, such as the possiblity of taking input from retirees in making financial decisions. But no promises were made. And Raschke acknowledges that the numbers the Lucent folk showed LRO weren't encouraging of further support for the retirees.

Lucent spokespeople answered the questions the LRO team brought to the meeting in detail, and the answers are published on LRO's site. Lucent spokeswoman Mary Lou Ambrus says the LRO/Lucent meeting has resulted in some "good dialogue." Nothing specific has emerged, though.

Raschke and the other LROers aren't stopping their campaign. They've joined the National Retiree Legislative Network (NRLN), which includes groups representing ex-workers from IBM Corp. (NYSE: IBM), Qwest Communications International Inc. (NYSE: Q), and Verizon Communications Inc. (NYSE: VZ), to name a few. The NRLN's Website states: "We can help anyone with a burning desire to keep predatory executives from running through your pension money or taking away promised healthcare benefits."

Raschke stops short of pointing fingers at Lucent execs. "It's a societal problem, not just a Lucent one. The real story is what's happening in America. Your kids and grandkids will suffer in retirement," he says. A two-class society, in which some get and others don't, is a regrettable legacy, he believes.

— Mary Jander, Senior Editor, Light Reading

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