Despite promises, retiree sees benefit erosion from deal

Lucent Technologies' pending combination with French giant Alcatel will create a colossus of telecom, which should cheer shareholders on both sides of the Atlantic, according to Lucent Chief Executive Pat Russo.

Jim Fitzgerald doesn't buy a word of it.

The former president of IBEW Local 1470 in Kearny retired in 1989 after 35 years as a sheet-metal worker and lab technician for Western Electric and AT&T. Like many retirees covered by Lucent pension and health plans, Fitzgerald has watched his benefits steadily erode.

And he said he disputes the glowing expectations from Russo about her anticipated tenure as a Parisian CEO.

"They'll set her up over there in a nice little house with goats and cheese. Two years from now, they'll kick her out, give her about $25 million, bring in the Australian guy (Alcatel's No. 2 Mike Quigley), and 200,000 Americans will lose everything," said Fitzgerald, 69.

The Lucent Retirees Organization, which advocates on behalf of 235,000 retirees and their dependents, wants the U.S. government to ensure that Alcatel's takeover won't harm benefits further.

A news account in 2004 reported that Alcatel's U.S. subsidiary planned to phase out health benefits for thousands of its retirees in this country by this year.

Some Lucent retirees have seen their health premiums soar in re cent years. Death benefits were eliminated for spouses of management retirees, and dental coverage also was cut, according to the LRO.

"We're dealing with outside at torneys to see what our rights are. We're nervous," said LRO President Ken Raschke. "Best-case scenario, nothing happens. Worst case, our pensions could be at risk."

Raschke's group has blasted Lucent for giving Russo a pay package worth $8.25 million last year, while some retirees were forced to dig deep for medical coverage.

Russo said her stock options are closely tied to Lucent's performance. It is a competitive market, she said, and Lucent's board taps outside experts to determine pay packages that attract and "keep the talent we need."

Lucent's $34 billion pension plans are "well funded," added Russo in an interview this week.

"And we have every intention of continuing to manage those plans for the benefit of the pensioners. Okay?" she said. "And nothing changes. There's no change to that obligation, our management of that, as a result of that combina tion(with Alcatel)."

High health-care costs, on the other hand, are a national issue, Russo said.

"What we have been doing and will continue to do, is to try to find the right balance between caring for the needs of our retirees, with what's affordable and viable for our company to also be able to be competitive."

Fitzgerald said he has heard it all before.

"In 1989, (AT&T) made an offer to get people off the rolls. They guaranteed that if we got off the rolls by 1990, our pensions would never change," said the Toms River resident.

When Lucent was spun off from AT&T in 1996, Fitzgerald said, AT&T retirees were pressured to move their pensions to Lucent. "Our own people told us Lucent could not miss," he said.

Many of his retired friends switched their savings plans to Lu cent, and mocked Fitzgerald for selling Lucent shares at $70 each. Some of them lost $175,000 when the stock tanked, he said.

Fitzgerald and his wife pay $2,600 a year for their prescriptions. When he had a triple-bypass heart surgery last year, he paid substantial amounts for his drugs and surgery -- a first for him.

"Every contract, they change it. They constantly change it. Their out is they 'negotiated with the union.' It's probably true. The union doesn't have much clout. But you can't promise me something on Sunday and take it away on Monday."

Fitzgerald's father worked at Western Electric for 35 years and told his son to do the same. "There will always be telephones," was the father's advice.

"He'd be turning over in his grave if he saw what this company did to us. The phone company let us down," Fitzgerald said.

"Did you see the picture of Russo huddling with that French guy?" he said, referring to Alcatel CEO Serge Tchuruk. "The same people who wouldn't back us in Iraq? I wanted to puke. And these guys are going to protect our pension?"

"This company is the same as in 1983. Their top management stinks and this .. Russo is no different. She's going to sell us out in two years. She's going to get $25 million to $30 million and walk away like Bob Allen and (Mike) Armstrong did," said, citing former chief executives of AT&T.

Fitzgerald said two meetings with former Lucent CEO Rich McGinn are seared into his memory.

"He put his arm around me twice. By the end of the evening I thought I grew up with him. He could sell snake oil to snakes," Fitzgerald said.

A few things have changed, he said.

"It's a global economy now," Fitzgerald said. "But they're out to screw the American worker."