Revenge of the Retirees

Ex-execs are battling their old bosses over benefits

When C. William Jones retired from Nynex in 1990, the company feted the debonair managing director with a toast-filled bash at "1095," its tony midtown Manhattan headquarters. The VIPs gave Jones a plaque commemorating his 30 years of service, a Minolta camera, and a flurry of old-boy handshakes. Like hundreds of others before him, they then sent Jones on his way, expecting him to do as any company lifer does: go quietly into the good life, whittling away his handicap at the club and logging some luxury travel with the wife.

Little did they know that Jones, 64, would be back--not as an executive has-been but as a leader in a rapidly growing movement: the revenge of the company man. Jones now heads the 90,000-member Association of BellTel Retirees. The group is one of many in a new, nationwide organizing effort made up of former white-collar managers and execs who are disgusted by corporate greed and outraged by pension and health-coverage takebacks. It would be one thing, they say, if the promised benefits were being slashed for the good of the company. Instead, they're watching CEOs bank hundred-million-dollar fortunes. "It's not unions out there saying this to executives," says Karen Friedman, director of policy strategies for the Pension Rights Center. "These are people who used to be them."

These revolutionaries in Izods are fast becoming a formidable force. Whereas a few years ago just a handful of agitators were on the scene, hogging the mike at annual meetings and firing off largely ignored letters to CEOs, today there are more than 2.5 million. They are flocking to retiree groups fighting IBM (IBM ), General Motors (GM ), Boeing (BA ), Western Union, U.S. West, Qwest (Q ), and Verizon (VZ ), among others. Armed with their well-honed managerial skills, they use flashy Web sites, lawsuits, proxy proposals, and political pressure to further their cause. So far they've been successful in backing a new bill before the Senate and House that would protect retiree medical coverage, the latest benefit that has fallen under the corporate scalpel.

Their chief target: the legions of large companies that stopped giving retirees their cost-of-living increases in the early 1990s--even as they used the ballooning pension surpluses to pump up profits. Jones points out that Nynex retirees haven't gotten a pension hike since 1991--even though the new parent company, Verizon, had $12 billion in excess pension funds in 2001 and pays $3 million a year in consulting fees to retired Co-CEO Charles R. Lee. "They are now starting to view retirees as a cost center," says Jones. "And they're cutting their losses." Verizon counters that its benefits stack up well against those of other companies.

In April, Jones's BellTel retirees came close to their biggest victory by winning 42.8% of the vote on their proxy proposal to bar Verizon from including pension earnings in its calculations for executive compensation. Verizon says the issue will likely be resolved through new accounting rules. Jones vows to be back on the ballot in 2003.

Plenty of other groups have also notched gains. This year, a retiree class action brought against Sears, Roebuck & Co. (S ) pressured the company into offering partial relief after it cut life-insurance benefits. And IBM (IBM ) workers continue to fight Big Blue over its new cash-balance pension plan, which offers many workers a substantially smaller payout than what they would have gotten under the old system. So far, the group, made up of current and former employees, says its efforts helped persuade IBM to exempt employees age 40 and above from being forced into the new plan. But they are still fighting for younger workers. "These people were promised a secure retirement," says former IBM engineer James Leas, a retiree organizer, "and now they're not getting it." IBM declined to comment.

Lately, the groups have been drawing blue-collar colleagues. Disgruntled Gen Xers--as well as boomer managers unable to retire--are also secretly joining, offering up valuable inside information about new cost-cutting schemes in the works. In this downturn, some of Corporate America's toughest critics are coming from within.

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By Michelle Conlin in New York

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