News Release        Lucent Retiree Organization

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Lucent Retirees Condemn Company’s Elimination of Dependents’ Health Care Benefits; Call Action A Flagrant Demonstration Of Corporate Greed


NEW YORK – The Lucent Retiree Organization (LRO) today condemned Lucent Technologies’ plan to eliminate health care benefits for dependents of more retirees, calling the action another flagrant demonstration of corporate greed by executives who have no moral compass.

In a mailing to retirees, Lucent said, effective January 1, 2005, it will no longer subsidize the cost of medical coverage for dependents of management retirees who retired on or after March 1, 1990, and whose annual base salary at retirement was at least $65,000.

Lucent’s current action coupled with similar cutbacks a year ago effectively eliminates coverage for dependents of 20 percent of the company’s management retirees.

“Lucent executives are once again showing a total disregard for the commitments the company made to retirees and their dependents, said Ken Raschke, LRO president. “Their lack of compassion for retirees and their dependents while simultaneously defending their own excessive and unwarranted compensation is absurd!”

He noted that Lucent Chairman and CEO Patricia Russo’s compensation is at an all-time high while the company’s profits are at record lows.

While Lucent cuts back on health care benefits and increases the cost to retirees, Raschke noted that the compensations for top Lucent executives are at record highs.  He cited a May 6, 2004 Forbes article that carried the headline: “Lucent Throws Pay Party.”

            Raschke pointed to the article’s first two sentences: “Lucent Technologies may be a shadow of its former self, but there is one place where this company still puts world-class numbers on the board, and that’s executive compensation.  In two years since becoming chief executive, Patricia Russo has received compensation worth more than $44 million, according to Equilar, a San Mateo, Calif. firm that tracks executive compensation.”

            “Russo, her top executives and the Lucent Board members obviously don’t have a moral compass.” Raschke said.  “How can they justify breaking promises to retirees and their dependents while extravagantly rewarding themselves for running a company whose share price has dropped by more than 40 percent--$5.87 to $3.29--since Russo took over in January 2002?”

Raschke pointed out that Lucent executives refused in May to meet with LRO leaders to discuss how the LRO might be of help to Lucent and to answer face-to-face the many health care concerns of its retirees who helped the company succeed in the past.

Raschke asked, “When will our nation’s political leaders take steps to prevent  what Lucent and other companies are doing to diminish the quality of life of those who can least afford to pay more out of fixed pensions to maintain their health care insurance?”

Raschke, a 1989 Lucent retiree who once headed the company’s factory in Winston-Salem, NC, said he believes that the new cuts in benefits coupled with reductions announced a year ago represent a deliberate effort by Lucent executives to drive retirees out of the company’s health care plans in order to increase profits and bolster their own compensation and bonuses.

Raschke commented that Lucent had been fined  $25 million dollars by the SEC in May for “failure to cooperate” in its investigation of the company, and that LRO members and he believe that “if we could see Lucent’s books, I think we would find retirees are having to pay that cost in reduced benefits, too.”

            Raschke said the LRO will continue its efforts to get the President and members of Congress to enact legislation to prevent companies from eroding or eliminating health care benefits and protect pension trust funds from being raided for corporate interests. 

            "Now Lucent is supporting legislation that would extend the ability of corporations to raid pension fund surpluses to pay for what little health care expense they must pay,” Raschke said.  “Congress should not extend until 2013 a 1999 law scheduled to expire at the end of 2005 that allows companies to remove these funds from pension trusts. Instead, companies should give pension cost-of-living adjustments with these surplus funds so retirees can pay their health care bills.” 

Raschke noted that the last COLA increase for Lucent retirees was five years ago during which time the cost of living is up about 12 percent based on COLA increases that have been provided by Social Security.

“Lucent had a practice of deferring employees’ full compensation over their working years to pay for our retirement benefits and now they are taking those benefits away,” Raschke said.

In the letter to retirees Pamela O. Kimmet, Lucent’s Senior Vice President for Human Resources, stated that retirees who pay a monthly contribution for  Point-of-Service (POS) or Traditional Indemnity health care plans will pay the “same or slightly lower” premium in 2005.  However, retirees who are participants in the dental plan offered by Lucent will make higher monthly payments in 2005.


About the LRO

The Lucent Retirees Organization was chartered in January 2003 in the state of New York.  The LRO embodies the interests of 235,000 retirees and dependents.  Membership in the LRO is composed of individuals under the Lucent pension plan, including all Lucent and Bell Labs retirees, and those who retired when the company was known as Western Electric and/or AT&T Network Systems, plus subsidiaries such as Teletype and Sandia.  The LRO is a member of the National Retiree Legislative Network and allied with retiree associations from other major corporations. 



For More Information Contact:

Ken Raschke                                        Ed Beltram

LRO President                                      LRO Communications Director

Phone: 336-765-9765                             Phone: 719-687-6157

Email:                Email: