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"A dispute over a change in the pension plan..."
Kansas City Star
Sabreliner workers strike at three Missouri plants
ST. LOUIS - A dispute over a change in the pension plan is among
issues prompting a strike involving 169 union workers at three
Missouri plants for the aircraft company Sabreliner Corp.
The walkout by members of Teamsters Local 600 at airplane
modification plants in Perryville, Ste. Genevieve and St. Mary was
in its fourth day Thursday. All three towns are in southeast
Sabreliner, based in St. Louis, maintains and upgrades airplanes,
mostly for business use.
Workers on Aug. 26 rejected the latest contract offer from the
company by a vote of 112-45. Striking workers include aircraft
technicians, maintenance mechanics, warehouse workers, wood and
sheet metal workers, painters and janitors…
"…big bosses always care much more for themselves than the
people who make them rich…"
Got pension? Better make other plans
By Jim Spencer
David Cox and Bob Kolb were too polite to answer my question
directly. I asked the two business professors if I was a fool for
including pension payments in my retirement plan.
They both told me that direct contribution pensions - where dollars
are set aside each pay period and usually transferred out of an
employer's control to professional pension managers - are better
than the defined-benefits pensions I'm depending on.
Defined-benefits pensions, Cox said, are based on estimates of
future investment returns and estimates of employees' future
That's why Kolb, an assistant dean at the University of Colorado at
Boulder's Leeds School of Business, always attaches the same value
to defined-benefits pensions when planning his own retirement:
Seems I'm shooting craps with my future. If you want to know the
stakes, see United Airlines retirees.
The courts recently let United cancel its defined-benefits pensions
to bail out of bankruptcy. The law gave the company's retirees no
United betrayed thousands of people who devoted decades of effort to
the company. If United didn't violate the law, it surely violated
those employees' trust.
For guys like me, guys still naive enough to believe that pension
plans constitute a company obligation, the warning was simple…
Cox believes employers have an ethical obligation to have
diversified pension investments in order to reduce risk.
A pension, Kolb added, "is a promise." Individual workers must
determine for themselves "the quality of that promise and the
ability to carry it out."
That means asking for specific information. One of the companies I'm
depending on has an overfunded pension plan. The other has a broadly
diversified investment portfolio. That's enough to make me believe
they are spread out enough to protect me. But I still have no
guarantee that I'll be able to collect.
After the collapse of Enron and WorldCom under the weight of
corporate fraud, the United pension fiasco shook up plenty of folks,
I talked to Kolb and Cox to test my growing cynicism that big bosses
always care much more for themselves than the people who make them
"PBGC caps payments at $45,613 a year"
Northwest pilots have the most to lose in bankruptcy
By Joshua Freed
Saturday, September 3, 2005
MINNEAPOLIS -- Northwest Airlines pilots have already taken one pay
cut. Now they're negotiating another because the alternative is
worse -- Northwest goes bankrupt and dumps its pensions on the
That alternative became more of a possibility Thursday when
Northwest Airlines Corp. warned that fuel prices and looming pension
payments could force it into bankruptcy.
Pilots will "do anything to avoid Chapter 11, because it's
guaranteed that the pensions are going to die," said Joseph
Schwieterman, a transportation expert and economics professor at
DePaul University who has closely followed the bankruptcy of United
Airlines, a unit of UAL Corp. "Pilots take it on the chin. Pilots
face a catastrophic loss in standard of living or income when
pension payment plans go bad."
Many other airline workers would see slight pension cuts or none at
all if the airline defaults, experts said. But pilots could lose
half of their pension or more.
Northwest pilots are trying to avoid the plight of their colleagues
at United Air Lines, which is trying to dump its pilots' pension on
the Pension Benefit Guaranty Corp., the federal agency that takes
over when employers default. But the PBGC caps payments at $45,613 a
year for plans canceled in 2005.
Pilot payments are further reduced because federal rules force them
to retire at 60, but the PBGC reduces payments to anyone who retires
"The pilots get creamed by this," said Harvey Katz of the law firm
of Brown Rudnick Berlack Israels LLP in New York. Katz represented
US Airways pilots when their pension was dumped on the PBGC in 2003.
Retired United pilots have not yet had their benefits cut, but they
will if the PBGC terminates the plan. A trial on the termination is
scheduled to start Sept. 21.
"Our retired pilots, the majority of them would lose anywhere
between 30 percent and 60 percent of the benefits they're currently
receiving," said Jack Carriglio, an attorney for retired United
pilots. The amount active pilots would lose isn't yet clear, but
Carriglio said he's sure it would be substantial…
"The company pension formula subtracts the $295 I get from the
CAN THEY DO THAT?
Pension offset OK for ousted union's plan
CARRIE MASON-DRAFFEN, is a columnist for Newsday, a Tribune Co.
newspaper Published September 4, 2005
Q. I was working my way toward qualifying for a union pension of
$775 per month plus health coverage. But in 1984, based on a
National Labor Relations Board ruling, my employer withdrew
recognition of the union, calling it "an inappropriate bargaining
unit," and refused to bargain with it anymore.
This left my union pension frozen at 16 years with a vested benefit
of only $295 per month at age 65 and minus the health coverage.
After declaring the union invalid, the company put me into its
pension plan, from which I hoped to collect $775, the amount I would
have gotten from my union pension. I also had to work five extra
years to get full credit for my years of service.
I am now collecting a pension, and there's an unfortunate detail.
The company pension formula subtracts the $295 I get from the union.
I believe the "prior union service" provision that offsets funds
from other sources was intended to cover employees who voluntarily
moved from the union into management, not those who had their union
status declared null and void.
Can the company subtract this money?
A. Your company's action is probably legal, said Victoria Quesada, a
pension-rights attorney at Quesada & Moore LLP in West Hempstead,
N.Y. "Essentially, if the company is giving the employee credit for
all years of service with the union and the company," she said, "it
is perfectly legal for them to offset the benefit he is receiving
from the union."
But, she cautions, "He may wish to have an actuary check the
calculations and an attorney check the plan language to see if what
he is receiving is consistent with the plan design."
Pittsburgh Business Times
CEOs in the black
From the September 5, 2005 print edition
To paraphrase the composer and lyricist Ervin Drake, for most CEOs
of publicly held companies in Pittsburgh, 2004 was a very good year.
Led by a roaring turnaround at U.S. Steel Corp., many of the public
companies in Pittsburgh saw positive changes in their net income in
2004, and in turn, the CEOs of those companies saw big increases in
their compensation packages.
Among public companies in Pittsburgh that made money in 2004, the
average increase in salary and compensation for CEOs was 119
Skewing the numbers were people such as James O'Donnell, the CEO of
Warrendale-based American Eagle Outfitters Inc., who saw his
compensation jump from a little more than $1 million in 2003 to
nearly $14.9 million in 2004, an increase of 1,324 percent. The
retailer O'Donnell runs didn't do quite as well as he did as a
percentage, but it didn't do badly either. American Eagle's net
income increased by $164 million, or 274 percent, from $60 million
in 2003 to $224 million in 2004.
John Surma, U.S. Steel's CEO, saw his pay jump dramatically in 2004.
The former president and chief operating officer of the Downtown-
based manufacturer became CEO in October 2004, and his timing
couldn't have been better.
With U.S. Steel seeing net income of more than $1 billion, Surma saw
his pay jump from nearly $2.1 million in 2003 to nearly $10.9
million in 2004, an increase of some 412 percent.
Packages offered to Pittsburgh executives are similar to those given
their counterparts across the country, according to Mercer Human
Resources Consulting, which tracks trends in executive compensation
Bulger brother pension cases could set costly precedent
Tuesday, September 6, 2005 6:36 PM
(Boston - AP) — A pair of pension cases involving two of the
Bulger brothers — William and Jackie — is moving through the
courts with the potential to set precedent.
In one, William, the former president of the state Senate and the
University of Massachusetts, is seeking to have a university-paid
housing allowance and annuity payment included in the calculation of
his pension check.
They would boost it by 30,000 dollars annually and could trigger
larger retirement checks to fire chiefs, police officers and others
with municipal vehicles and clothing allowances, for example.
In another, Jackie, a former juvenile court clerk magistrate, is
seeking to preserve his 45,000 dollar annual pension after
temporarily losing it for lying during a criminal probe of a third
brother, fugitive mobster James "Whitey" Bulger.
A win could trigger reinstatement of pensions to other convicted
Insurance Premiums Not Influenced by Patient Lawsuits; Doctor
Malpractice Payouts to Victims Have Significantly Declined
Overall Number of Doctors, Including Specialists, Has Risen Much
Faster Than the Population
Sept. 7, 2005
SEATTLE – The number and value of medical malpractice payments
made to patients on behalf of Washington doctors have declined
significantly, according to an analysis of federal government
information released today by the national consumer group Public
Citizen. Jury verdicts have remained flat, and million-dollar
payments – another frequent target of critics – have fallen
significantly, not increased, in recent years, according to the
Meanwhile, the study found that the number of Washington state
doctors has increased well beyond the growth in population over the
past decade, and there has been even greater growth in board-
certified specialists, such as OB-GYNs, emergency room doctors and
"The specter being raised by the insurance industry and others
pushing Initiative 330 – that the legal system is forcing
increases in malpractice rates – is a ruse," said Joan
Claybrook, president of Public Citizen. "In reality, the
insurance industry is jacking up rates because of the normal
business cycle and because investment returns have been lower in
recent years. Nothing has occurred in the courtroom to justify the
rate increases. The best way to reduce malpractice lawsuits is to
Washington can do that by disciplining the small percentage of
repeat offender doctors who are responsible for a large percentage
of malpractice payouts."
The harm from medical errors is astounding and devastating to
families. Tens of thousands of Americans die or suffer major
injuries each year at the hands of medical negligence or error. A
landmark 1999 study by the Institute of Medicine estimated that
44,000 to 98,000 patients die each year following preventable
medical errors in hospitals. Based on population, Washington
state's share of this national death toll ranges from 930 to
2,070. Moreover, other research indicates these findings are
September 7, 2005
Internal Memos Show Oil Companies Intentionally Limited Refining
Capacity To Drive Up Gasoline Prices
Santa Monica, CA -- The Foundation for Taxpayer and Consumer Rights
(FTCR) today exposed internal oil company memos that show how the
industry intentionally reduced domestic refining capacity to drive
up profits. The exposure comes in the wake of Hurricane Katrina as
the oil industry blames environmental regulation for limiting number
of U.S. refineries…
FTCR is nonprofit, nonpartisan consumer group. For more information
"Money for the refunds came from settlements with Mirant, El Paso
Natural Gas, Duke Energy, Williams Energy and Dynegy."
CPUC Approves $50 Million Refund for SDG&E Customers
9/8/2005 4:37:20 PM
SAN DIEGO, Sept. 8, 2005, Sep 8, 2005 (PRIMEZONE via COMTEX) -- The
California Public Utilities Commission (CPUC) today approved a
request by San Diego Gas & Electric (SDG&E) to refund approximately
$50 million to its customers. The refunds, scheduled to begin in
Oct. 1, 2005 and continue to Sept. 30, 2006, come from settlements
negotiated earlier this year with companies involved in the
California energy crisis of 2000-2001.
Under the refund plan, a typical small-business customer who uses
1,500 kilowatt-hours (kWh) a month will see savings of approximately
$6.89 a month on the monthly bill. A large commercial/industrial
customer who uses 200,000 kWh will see a monthly bill reduced by
approximately $918. Typical residential customers will see a monthly
reduction of 14 cents; residential customers whose rates have been
frozen if their usage is below 130 percent of baseline will not see
a rate reduction.
"SDG&E filed the first complaint with the federal government in
2000, saying that the prices charged for energy were not
reasonable," said William L. Reed, senior vice president, regulatory
and strategic planning for SDG&E. "We're pleased that our continuing
efforts have made this refund possible."
Electricity prices more than tripled during the energy crisis of
2000-2001, and San Diegans were the first to feel the brunt of
increased electricity costs. Several investigations at the state and
federal level have led to a series of refunds to California
Money for the refunds came from settlements with Mirant, El Paso
Natural Gas, Duke Energy, Williams Energy and Dynegy. Thus far,
SDG&E customers have received credits totaling $119 million from
energy-crisis refunds. SDG&E is a regulated public utility that
provides safe and reliable energy service to 3.3 million consumers
1.3 million electric meters and more than 800,000 natural gas meters
in San Diego and southern Orange counties. The utility's area spans
4,100 square miles. Exceptional customer service is a priority of
SDG&E as it seeks to enhance the region's quality of life.
SDG&E is a regulated subsidiary of Sempra Energy (SRE). Sempra
Energy, based in San Diego, is a Fortune 500 energy services holding
company. To learn more, go to www.sdge.com.
SOURCE: San Diego Gas & Electric
"What this bill does is say, we're going to override the Cooper-IBM
Bill lets govt agency negotiate pension payments
By Susan Cornwell
WASHINGTON, Sept 8 - The federal agency that insures private
pensions would be able to cut deals with individual companies
granting more time to pay pension liabilities under a bill approved
by a Senate panel on Thursday.
The negotiation provision, part of a pension overhaul bill, is aimed
at keeping companies from terminating their pension plans in
bankruptcy court as has happened with UAL Corp.'s United Airlines,
said an aide to Massachusetts Democrat Sen. Edward Kennedy, a co-
sponsor of the bill.
The measure also attempts to eliminate the legal limbo around "cash
balance" plans, a portable type of pension. These plans have faced
legal uncertainty since a federal court ruled in 2003 against the
plan of IBM, saying it discriminated against older workers.
The pension bill, the third such measure to be offered in Congress
this year, was approved on a vote of 18-2 by the Senate Health,
Education, Labor and Pensions Committee.
Like the other bills, it seeks to fix underfunding of corporate
pensions and avoid a taxpayer bailout of the agency that insures
them, the Pension Benefit Guaranty Corp. (PBGC).
The newest measure is a bipartisan compromise between the
committee's chairman, Sen. Mike Enzi, a Wyoming Republican, and
Kennedy, the panel's ranking Democrat. But it drew criticism from
the Bush administration, which said in a letter to senators that the
net result was to weaken current law.
Enzi said he will move quickly to merge the bill with the version
approved by the Senate Finance Committee so one bill can move to the
floor. The U.S. House of Representatives also has a pension bill.
Flight attendants, pilots and other workers complained bitterly as
United used bankruptcy court to terminate its pension plans and hand
them over to the PBGC. The agency insures the plans, but only up to
The Enzi-Kennedy bill would seek to avoid these terminations "by
giving PBGC the ability to work out payment programs for troubled
pension plans," said a bill summary provided by the committee's
"This program will prevent pension failures and the incredible
suffering they cause for workers and retirees," Kennedy said of the
provision. At the same time, he said, it would help protect the
solvency of the pension system.
Under current law, the PBGC is not authorized to work out
alternative pension funding plans with companies, a PBGC spokesman
said. Companies are supposed to stick to pension funding rules that
are written by Congress.
Those companies wanting major exceptions from the pension funding
rules must ask Congress for them under current law, as the airlines
have done recently. The bill would give the PBGC the flexibility to
negotiate these changes instead.
The bill also includes a break for airlines struggling now, giving
them 14 years to stretch out their pension contributions.
Other companies would have 10 years to fully fund their pension
plans. The Enzi-Kennedy bill also would raise the insurance premiums
companies pay to the PBGC.
Iowa Democrat Sen. Tom Harkin, who voted against the measure, said
it would undermine the rights of older U.S. workers by retroactively
legalizing some cash balance plans while setting standards for them
"What this bill does is say, we're going to override the Cooper-IBM
case," Harkin said. He will seek to amend the bill on the Senate
floor to add protections for older workers.
"Progress Energy and Duke Energy are conducting cost-benefit
The News & Observer
$2 billion riding on nuclear initiative
N.C. utilities vie for reactor subsidy
By JOHN MURAWSKI
Progress Energy stands to get as much as $2 billion from the federal
government if the company builds a nuclear power plant.
But timing is everything.
The money -- a combination of tax credits over eight years and risk
insurance payouts -- was put in the energy bill Congress passed last
month to encourage utilities to resume building nuclear plants. The
first utilities to do so will get the most generous incentives.
Right now, Raleigh-based Progress Energy and Charlotte-based Duke
Power are among those front-runners. Both have said they would apply
for a reactor license from the Nuclear Regulatory Commission within
two years and then decide whether to build the reactor.
But they face strong competition. Nearly a dozen utilities
nationwide are deciding whether to restart their nuclear programs.
The tax credits, which form the bulk of the incentive program, would
be limited to as few as four reactors, and possibly no more than
six, depending on the reactor size. The insurance payout is
restricted to six reactors. It's presumed that after the initial
reactors are built, incentives won't be necessary to sustain a
"The government wants to get these plants built," said Edward
Tirello Jr., senior power strategist at Berenson & Co., a New York
investment banking firm.
A utility could claim up to $1.5 billion in tax credits over eight
years and collect $500 million in risk insurance coverage for
construction delays beyond its control. That $1.5 billion roughly
matches Duke Energy's income in 2004; Progress Energy's income last
year was about half that.
The aid is the Bush administration's response to the nuclear
industry's lobbying to help jump-start the country's nuclear program
after a quarter-century lull.
Building a reactor is seen as a huge financial undertaking with
potential costly delays. The incentives could amount to half the
cost of financing and constructing a reactor, according to the
Nuclear Energy Institute, the industry trade group that lobbied for
Critics describe the incentive package, which exceeds $8 billion, as
corporate welfare for Fortune 500 corporations.
"This industry will not build if the taxpayer does not take all the
risk," said Michele Boyd, legislative director of Public Citizen's
energy program in Washington. "It [nuclear power] cannot survive
without those kinds of subsidies."
But some in the nuclear sector wonder whether the incentives are
enough to stimulate a nuclear revival. The tax credits don't start
until the reactor is built, which could take at least 10 years, and
the insurance provisions are conditioned on unpredictable economic
Progress Energy officials say that while they welcome the
incentives, the prospect of financial aid is not driving their
"If we did not have the incentives, we would consider putting a
nuclear plant in," said Joe Donahue, Progress Energy's vice
president for nuclear engineering and services. "We'll decide
whether we go forward with a new nuclear plant without the benefits
of the incentive package. The benefits -- we'll call it gravy --
help with risk mitigation."
Commissioning a nuclear plant is a technological and financial
endeavor that hasn't been accomplished in this country since a
partial meltdown at the Three Mile Island plant in Pennsylvania
paralyzed the nuclear industry in 1979. In this climate, nuclear
advocates say, failure is not an option.
"If one or two of the plants end up not making it, or if there's a
default on the loan, I don't think there'll be any others," said
John Kane, the Nuclear Energy Institute's senior vice president for
Utilities aren't the only beneficiaries of the incentives. The
federal government also is promising to back loans made to build
nuclear plants so that utilities can borrow at low interest rates.
The direct beneficiaries would be the Wall Street investors and
institutional lenders who would recover from the federal government
up to 80 percent of the value of loans that fall into default.
The loan guarantees apply not just to nuclear power but to wind
power and other sources of non-polluting energy as well.
In 2003, the Congressional Budget Office predicted that a nuclear
plant would cost $2.5 billion and that the risk of defaulting on a
loan was "well above 50 percent." Those figures are disputed by the
Federal agencies are still writing the rules that explain the
conditions under which utilities will qualify for the incentives.
But in general, the provisions include:
* $2 billion in risk insurance divided among six utilities. The
first two utilities would qualify for 100 percent coverage up to
$500 million each. The next four would be covered for half their
costs, up to $250 million each.
* Tax credits based on generation. A plant generating 1,000
megawatts could qualify for up to $1 billion over eight years; a
plant putting out 1,500 megawatts could qualify for up to $1.5
billion over eight years. Progress and Duke are considering reactors
ranging from 1,017 to 1,600 megawatts in maximum capacity.
The credits are not guaranteed. They are limited to the first 6,000
megawatts of nuclear power produced, and could be restricted to as
few as four companies with plants running at 1,500 megawatts.
The tax credits were originally adopted by Congress in 1992 for wind
power and other alternative energy sources.
Progress Energy and Duke Energy are conducting cost-benefit analyses
to price out new reactors. Industry estimates range from $1.2
billion to $3 billion for the cost of a new plant, depending on
reactor size and other factors. That doesn't include interest
payments, banking fees or other related costs.
"Nobody's going to get a free plant out of this," Kane said. "This
is a jump-start program. It is intended to get the first handful of
plants built. After that, the incentive will stop."
The Tribune Chronicle
WorldCom official to lose home and pension
NEW YORK - The WorldCom fraud case could finally draw to a close
with a deal forcing the company's former finance chief to forfeit
his 10-bedroom Florida mansion and his retirement account to settle
with investors who lost billions.
A hearing was scheduled for Friday afternoon to consider finalizing
a deal that would leave Scott Sullivan almost penniless for his role
in the $11 billion fraud at WorldCom, a company now being run by
Warren native Michael Capellas. U.S. District Judge Denise Cote gave
initial approval to the settlement in July, two weeks before
Sullivan was sentenced to five years in prison.
The judge on Friday also was expected to review preliminary
settlements with former WorldCom controller David Myers and
accounting director Buford Yates the final defendants in a class-
action suit that has netted more than $6 billion for investors.
The investor lawsuit claimed WorldCom executives and board members,
its auditing firm and major investment banks that underwrote
WorldCom securities should have stopped or at least detected the
Sullivan's deal would require him to sell the Boca Raton mansion -
an ornate Mediterranean-style lakefront home with 10 bedrooms and
seven fireplaces - and turn over the proceeds to WorldCom investors.
New York state Comptroller Alan Hevesi, the lead plaintiff in the
investor suit, has said investors will get about $5 million from the
home after broker fees and outstanding liens are settled.
Sullivan also would be required to liquidate his WorldCom retirement
fund and turn over that money as well, about $200,000.
Myers and Yates have so little money left that lawyers for the
plaintiffs did not seek any from them. Both received one year and
one day in prison after pleading guilty to criminal fraud charges
and agreeing to help prosecutors in their case against former
WorldCom CEO Bernard Ebbers, who has been sentenced to 25 years in
In his own settlement with investors, Ebbers agreed to sell his
mansion in Mississippi and various business holdings and turn over
the proceeds, a total that could approach $40 million.
WorldCom, which went bankrupt in 2002, has emerged under the name
MCI Inc. and now operates out of Ashburn, Virginia. Verizon
Communications Inc. has agreed to buy MCI for $8.5 billion in a deal
expected to close by early 2006.
"I injected morphine into those patients..."
Mail on Sunday
We had to kill our patients
by C AROLINE GRAHAM and JO KNOWSLEY
11th September 2005
New Orleans: Doctors forced to 'play God'
Doctors working in hurricane-ravaged New Orleans killed critically
ill patients rather than leaving them to die in agony as they
evacuated hospitals, The Mail on Sunday can reveal.
With gangs of rapists and looters rampaging through wards in the
flooded city, senior doctors took the harrowing decision to give
massive overdoses of morphine to those they believed could not make
it out alive.
In an extraordinary interview with The Mail on Sunday, one New
Orleans doctor told how she 'prayed for God to have mercy on her
soul' after she ignored every tenet of medical ethics and ended the
lives of patients she had earlier fought to save.
Her heart-rending account has been corroborated by a hospital
orderly and by local government officials. One emergency official,
William 'Forest' McQueen, said: "Those who had no chance of making
it were given a lot of morphine and lain down in a dark place to
Euthanasia is illegal in Louisiana, and The Mail on Sunday is
protecting the identities of the medical staff concerned to prevent
them being made scapegoats for the events of last week.
Their families believe their confessions are an indictment of the
appalling failure of American authorities to help those in desperate
need after Hurricane Katrina flooded the city, claiming thousands of
lives and making 500,000 homeless.
'These people were going to die anyway'
The doctor said: "I didn't know if I was doing the right thing. But
I did not have time. I had to make snap decisions, under the most
appalling circumstances, and I did what I thought was right.
"I injected morphine into those patients who were dying and in
agony. If the first dose was not enough, I gave a double dose. And
at night I prayed to God to have mercy on my soul."
The doctor, who finally fled her hospital late last week in fear of
being murdered by the armed looters, said: "This was not murder,
this was compassion. They would have been dead within hours, if not
days. We did not put people down. What we did was give comfort to
"I had cancer patients who were in agony. In some cases the drugs
may have speeded up the death process.
"We divided patients into three categories: those who were
traumatised but medically fit enough to survive, those who needed
urgent care, and the dying.
"People would find it impossible to understand the situation. I had
to make life-or-death decisions in a split second.
"It came down to giving people the basic human right to die with
"There were patients with Do Not Resuscitate signs. Under normal
circumstances, some could have lasted several days. But when the
power went out, we had nothing.
"Some of the very sick became distressed. We tried to make them as
comfortable as possible.
"The pharmacy was under lockdown because gangs of armed looters were
roaming around looking for their fix. You have to understand these
people were going to die anyway."
Mr McQueen, a utility manager for the town of Abita Springs, half an
hour north of New Orleans, told relatives that patients had
been 'put down', saying: "They injected them, but nurses stayed with
them until they died."
Mr McQueen has been working closely with emergency teams and
added: "They had to make unbearable decisions."
Public Opinion Watch: Workers Are Unhappy Campers
Commentary: And It's Not Just Workers: It's a Nation of
By Ruy Teixeira
September 2, 2005
Article created by the Center for American Progress.
Hart Research recently conducted a nationwide poll of workers for
the AFL-CIO which has just been released. The poll indicates that,
despite upbeat talk coming out of the administration, American
workers are quite unhappy with the economy and the general direction
of the country.
Here are the key findings from the poll:
1. In four different areas, workers think the country is off on the
wrong track: health care (68 percent wrong track/24 percent right
direction); retirement security (65/24); the war in Iraq (56/34);
and the quality and availability of jobs (49/42).
2. Looking ahead five years, 43 percent say they are "more
hopeful and confident" than "worried and concerned" (54
percent) about achieving their financial goals. That contrasts with
60 percent confident/34 percent worried in July 2001 and a peak of
70/25 in June 1999.
3. More than half of workers (53 percent) say their income is
falling behind the cost of living, compared to 35 percent who say
it's staying even and 11 percent who believe their income is
rising faster than the cost of living. That 53 percent figure is
highest Hart Research has found on this question, going back to 1996.
4. Just 40 percent say they are very or somewhat confident they will
be able to retire with financial security, compared to 59 percent
who are just somewhat or not that confident.
5. Workers overwhelmingly believe (69 percent) that the jobs being
created today in the U.S. economy are "mainly lower-paying jobs
without benefits" rather than "mainly good-paying full-time
jobs that provide benefits" (17 percent). Moreover, by 63/31,
they believe that even with a college degree it's difficult to
find good jobs and financial security in today's economy, rather
than that given a college degree and hard work, a good job and
financial security will follow.
5. [Yes, they used "5" twice] From a list of six problems
facing working people, workers are most likely to select the cost of
health care and jobs going overseas, followed by rising gas prices.
The lowest ranked item was work schedules interfering with family
6. Half or more of workers worried very often or somewhat often
about the following problems: the price of gasoline (80 percent,
including 62 percent very worried), the rising cost of health care
(68), prices rising faster than your income (64), American companies
moving jobs to other countries (60), too many jobs lacking health
insurance and retirement benefits (52) and not being able to afford
health care (50).
7. The poll asked workers to rate employers on different aspects of
handling their workers. Employers were rated poorly in quite a few
important areas: providing regular cost-of-living raises to
employees (70 percent falling somewhat or very far short); sharing
profits with employees when the company does well (67); providing
adequate and secure retirement benefits (65); showing concern for
employees, not just the bottom line (65); being loyal to long-term
employees (64); providing permanent jobs that offer good benefits
and job security (62); paying a fair share of employees' health
care costs (57); and adopting policies that help working parents
8. Workers overwhelmingly oppose Bush's proposals for changing
Social Security (58/28). That compares to a 42/42 split last January
(among non-retired voters).
9. On the health care system, 68 percent of workers say they are
dissatisfied with the system, compared to just 30 percent who are
satisfied. That's even less satisfied than workers were back in
early 1994, before the defeat of the Clinton health plan. And 72
percent now say they favor a government guarantee of health
insurance for every American. That's even more favorable than
workers were back in 1999, the last time Hart Research asked this
question. Finally, by 63/27, workers believe it's wrong for large
companies not to provide health care coverage for their employees
because that drives up everyone else's costs, rather than
"companies cannot afford to provide health care coverage to
employees, because they have to keep costs down to remain
competitive in a global economy."
10. In terms of solutions, workers express a great deal of interest
in the following steps that Congress and the president might take to
address workers' problems: strengthening employees' rights to
their pay/retirement benefits when a company declares bankruptcy (86
percent say this should be a top or high priority); providing
incentives for companies to keep jobs in America (85); preventing
American companies from leaving the country to avoid paying taxes
(74); establishing a national health care system (73); giving
regular employees the retirement plan breaks received by management
(73); eliminating tax breaks for very high CEO compensation (72);
strengthening laws requiring equal pay for women (70); eliminating
CEO golden parachutes (68); requiring employers to provide basic
health insurance and pay most of the premiums (67); raising the
minimum wage to $7.25 (65); expanding support for child care and
after-school programs (65); and making it harder to replace full-
time jobs with part-time jobs with lower wages/benefits (65).
Quite a list. Presumably, Bush, Bill Frist and Dennis Hastert are
taking careful notes.
11. How about joining a union? This poll did not cover the issue,
but an earlier Hart Research poll did. In a February poll, also for
the AFL-CIO, they found the following:
The February survey includes a long-term trend question developed by
the Gallup organization that asks whether respondents approve or
disapprove of unions. Two-thirds (64%) of Americans voice approval
of unions and just 21% disapprove (results among workers are
identical to those among the general public). This is among the
highest approval ratings and is the lowest disapproval score for
unions since 1965.
As with general support for unions, interest in union representation
on the job has increased in recent years. Among all non-managerial
workers, 53% now say that they definitely or probably would vote in
favor of union representation in their workplace, with 38% who would
vote no. By comparison, in 2003, we find an even division in the
vote on union representation: 47% vote yes and 47% vote no. This
result and a similar response in a 2002 AFL-CIO survey (50% yes)
mark a very substantial improvement over the previous decade. In
both 1993 and 1996, the "yes" vote stood at just 39% among
nonunion workers, while a majority indicated that they would vote
no. From 1997 to 2001, support rose slightly to about 43% yes, but
opposition still stood above 50%. Now support for union
representation equals or exceeds opposition—a substantial change
from sentiment in the early 1990s.
It's worth noting that the Hart findings diverge dramatically
from a June Zogby poll, conducted for the militantly anti-union
Public Service Research Foundation. That poll found workers saying
they would vote against unions 56-35. This seems hard to square with
the Hart result of 53-38 for unions. Even if we assume that Zogby
also included managers in their survey, which might be true (it's
hard to tell for sure from looking at their report), the analogous
figure for all non-union workers from Hart would still be 49-43 for
Curiouser and curiouser. It seems highly unlikely that the differing
survey dates could possibly make that much difference. Perhaps
question wording can account for the difference. So far, however,
Zogby has not released the exact question wording, so we can't
Until he does, I'd be inclined to trust the Hart result, which is
based on a solid question with some history behind it.
Gallup itself asked some questions about unions in August (though
not a question about whether workers would vote to join unions).
They didn't find as high an approval score for unions (58
percent), but did find, for the first time since they started asking
the question in 1999, a plurality (38/30) saying they wanted unions
to have more, rather than less, influence in the country. They also
found, however, a spike in the perception that unions will be weaker
in the future than they are today (up to 53 percent from 41 percent
in 2004). Just 19 percent thought unions will be stronger in the
future. No doubt this perception that unions are more an institution
of the past than of the future is among the several problems that
unions currently face in turning interest in union representation
into actual union members.
And It's Not Just Workers: It's a Nation of Unhappy Campers
It's not just workers who seem unhappy these days. The whole
country seems to be in a pretty surly mood. Here's the lead to
the Washington Post story on their latest poll:
"Rising gas prices and ongoing bloodshed in Iraq continue to take
their toll on President Bush, whose standing with the public has
sunk to an all-time low, according to the latest Washington Post-ABC
The survey found Bush's job approval rating at 45 percent, down
seven points since January and the lowest ever recorded for the
president in Post-ABC surveys. Fifty-three percent disapproved of
the job Bush is doing."
And here's the lead to Gallup's story on Bush's approval
rating in their latest poll:
"A new Gallup Poll reflects further erosion in President George
W. Bush's job approval rating, continuing the slow but steady
decline evident throughout the year so far. The poll -- conducted
Aug. 22-25 -- puts Bush's job approval rating at 40% and his
disapproval rating at 56%. Both are the most negative ratings of the
Bush administration. Bush's previous low point in approval was 44%
(July 25-28, 2005) and his previous high point in disapproval was
53% (June 24-26, 2005)."
But that's not all! Check out the lead to Gallup's story
about the economic opinion data in their latest poll:
"As oil prices soar past $70 a barrel in response to the
potential damage created by Hurricane Katrina, there are widespread
predictions of another surge in gas prices at the pump, and a
slowdown in the U.S. economy. While the coming "soft-patch" in the
economy will most likely be attributed to Katrina, the reality is
that consumers' expectations for the economy were already tumbling
in response to increasing gas prices prior to the storm hitting
southern Louisiana on Monday (Aug. 30).
In a new Gallup Poll (Aug. 22-25), taken about a week before Katrina
hit the Gulf Coast, two in three consumers say the economy is
getting worse while only 28% say it is getting better. This suggests
that the modest declines reported by both the University of Michigan
on Friday (Aug. 26) and the Conference Board on Monday (Aug. 30)
were significantly out-of-date even as they were announced. Of
course, Katrina, and the storm's aftermath, are likely to
significantly exacerbate consumers' already plummeting expectations.
In this latest poll, 63% of consumers say current economic
conditions in the country as a whole are "getting worse." This is
the highest level of negative economic expectations recorded by
Gallup since just before the beginning of the war in Iraq (March 3-
5, 2003) when the percentage of consumers saying economic conditions
were getting worse reached 67%."
It could be a mighty difficult autumn for the Bush administration.
Treating workers justly pays off
Monday, September 5, 2005
WASHINGTON (CNN) -- Abraham Lincoln, the first and greatest
Republican president, and the man who held this nation together
during its bloodiest and darkest hours, would not be tough enough to
survive in 2005 on Wall Street.
It was Lincoln who said: "Labor is prior to, and independent of,
capital. Capital is the fruit of labor and could not exist if labor
had not first existed. Labor is the superior of capital and deserves
much the higher consideration."
Lincoln's values are 24-karat heresy to the contemporary "Street."
Take the case of Costco, the membership wholesale company, that in
retailing is a tiny David to the Goliath of Wal-Mart.
Costco pays its full-time workers an average of more than $16 an
hour, while also picking up 92 percent of the cost of employees'
Wal-Mart pays its employees $9.69 an hour and 34 percent of workers'
health-care costs. Fewer than half of Wal-Mart's employees qualify
for the company health-care plan, but 82 percent of Costco workers
But as Stanley Holmes and Wendy Zellner of that notoriously
socialistic publication, "Business Week," discovered, Costco's
employee turnover is one-half that of Wal-Mart and employees at
Costco outsell their Wal-Mart counterparts by $279 per square foot.
Good hearted and tough minded are not mutually exclusive in labor-
management relations. That's the judgment of Costco CEO Jim Senegal,
who has stated: "We pay much better than Wal-Mart. That's not
altruism. That's good business."
But not in the cold-eyed analysis of Wall Street, which after a
quarter when Costco posted a 25 percent gain in profit rated
Costco's stock 4 percent lower.
Deutsche Bank analyst Bill Dreher explained the investment sector's
reasoning to Holmes and Zellner: "At Costco, it's better to be an
employee or a customer than a shareholder." The Market is not buying
any of that Honest Abe ethic about "labor (being) the superior of
capital and deserv(ing) much the higher consideration."
American Rights at Work, a labor policy and advocacy group, has just
published a study that salutes Costco and eight other successful
partnerships between employers and their employees' labor unions
that are working well in the global economy (one out of six Costco
employees belongs to a union -- no Wal- Mart worker does).
Employers were recognized for collaborating with workers to increase
productivity and profits, for their contributions to the larger
community, and for providing worker-friendly benefits, paying fair
wages, and promoting worker health and safety.
Cingular Wireless Corp., the Harley-Davidson Co., Kaiser Permanente
and Catholic Healthcare West are among the employers saluted by the
chair of American Rights at Work, former Rep. David Bonior, D-
Michigan, for initiating "constructive and considerate compensation
policies that work for their bottom lines, their employees and their
The race to the bottom in wages and employee benefits may not be any
smarter than it is humane. Respected University of Pennsylvania
labor-management professor Peter Cappelli made that point in
analyzing U.S. airlines on PBS's "NewsHour With Jim
Lehrer": "Southwest Airlines, which is seen as the low-cost carrier,
now has the highest-paid pilots in the industry. Delta, which is the
carrier probably in the most trouble, is largely non-union. US
Airways, which is a carrier that's almost completely unionized now,
has the lowest cost structure in the industry. Try to make sense of
Here's one possible explanation: Flying Southwest is a positive,
pleasant experience -- made so by airline employees who are
competent, upbeat and helpful. Might it be the way they are treated
Contradicting the dog-eat-dog Darwinism favored by the economic
buccaneers, treating employees justly and humanely turns out to be
good business indeed.
Futurists once promised an age of leisure but it looks like we'll be
working into old age
Technology would give us endless free time, but mandatory retirement
is rapidly being phased out
Monday, September 05, 2005
On this Labour Day weekend, it's worth pondering this spacey
prediction from the Futurist, the respected journal with a penchant
for Utopian visions of what's to come.
Very soon, it postulates, we will all have a chance to take family
vacations to the moon. Visit the Mare Tranquillitatis! Use low
gravity to fly like birds in lunar domes! And then rocket back to
Earth on Monday morning. All this by 2020.
This would no doubt beat the family pilgrimage to Disneyland. But
there's a question those Phds and fabulists at the Futurist still
need to answer for the average salaryman: Just how do you go about
getting that much time off work? Will they take credit cards? And,
incidentally, whatever happened to that paperless office you were
promising back here on Earth?
Let's face it, when it comes to predicting how we earn our daily
bread, futurologists have been mightily disappointing, often
Not only is there no sign of the paperless office (judging by the
pulp and paper industry's soaring sales our fetish continues
unabated) but we're also still waiting for that even headier
promise -- near endless leisure time. Baby boomers and GenXers have
long heard that fantasy technological liberation, best captured by
that 21st-century cartoon family, The Jetsons. (Theme song: "They're
the Jetsons! . . . Machines do the working, machines do run, if they
need anything they push a button and it's done." )
Well, we're not quite there yet.
"How could the futurologists be so wrong?" wondered Charles McGrath
in a recent issue of the The New York Times Magazine. "George
Jeston, we should recall -- the person many of us cartoon-watchers
assumed we would someday become -- worked a three-hour day, standard
in the interplanetary era. Back in 1970, Alvin Toffler predicted
that by 2000 we would have so much free time that we wouldn't know
how to spend it."
Here's a dose of our real-time reality.
Most of us are so chained to work we don't even dare take the time
off we've earned. Canadian workers, on average allowed 21 days off
vacation a year, leave about three days apiece "on the table," finds
the latest "international vacation survey" from Expedia, the
Internet travel service. That works out to about 43 million unused
vacation days, worth about $6.1 billion to employers. This,
incidentally, puts Canadians in a dead heat per capita with our
Calvinistic neighbours, the Americans, who leave behind the same
three vacation days per work each year, though they only get an
average of 12 days vacation.
There is undeniably something North American about this propensity
for vacation-wasting. Europeans don't let time slip away so easily.
The average French worker, the world's vacation champ with 39 days
off annually, leaves only one day unused. Germans also make sure
they leave behind only a single day on the vacation calendar. While
British workers, who get 23 days off, leave behind the least of
anyone -- only four hours of vacation time goes unused by the
Why are we on this continent so obsessed with work these days? A big
part of it may be fear. Labour laws here make it easier for North
American companies to shed workers than it is in Europe.
Globalization, and the prospect of those who work for $20 a week,
not an hour, are the new dread of the middle class. And in this age
of downsizing, when it is increasingly difficult to glide from one
well-paying job to another, people worry that if they leave their
cubicle empty too long the boss might realize they're dispensable.
"Many employees say it is pressure or fear that keeps them from
using all their vacation, or their workload," concluded John
Rossheim, reporting on the findings of another poll commissioned by
the job-finding agency Monster.com. "Some 11 per cent of respondents
to the Monster polls said pressure from the boss prevented them from
using their full vacations; nine per cent said they feared being
What's more, losing a job is more worrisome a prospect than ever for
the average Canadian worker.
It's simply getting harder to make ends meet and losing a steady
paycheque, or having wages cut, could be a financial disaster.
The Vanier Institute of the Family, which has been studying
pressures on ordinary Canadian families for 40 years, finds that
Canadians savings rates have plummeted to record lows. And most are
sinking further into the red every year. The average household debt
now exceeds $66,000. Two out of every three families, according to
the latest survey, spend between $1,100 to $2,300 more a year than
"Ten years ago, people had savings, as much as $2,500 a year per
family," says Alan Mirabelli, the institute's executive
director. "Now it's close to zero or in many families it is below
zero. An upward movement in interest card or mortgage rates, or an
unforeseen emergency, and there's no buffer.
"So you bet the stress level is high."
You don't have to be a futurologist to figure out what this rising
debt load translates into for most: yes, working even more and
longer. If the downward trend in savings continues, economists
predict people will be forced to delay or even give up altogether on
the possibility of early retirement.
Signs that working into old age is becoming an accepted future are
now unmistakable. Mandatory retirement, once a fact of working life,
is rapidly being phased out in North America.
True, this is partially because many want to work past 65. But it's
also due to looming labour shortages that are suddenly making older
workers more attractive.
And governments have their own reason for wanting people to work
longer. Without an older work force, projections suggest there just
may not be enough taxpayers out there to pay for aging baby boomers
benefits. Many in the United States expect that sometime in the next
decade Social Security benefits won't be available to anyone under
So what's the good news for workers on this holiday weekend invented
to celebrate their labour? It may be this one prediction from
Vancouver's Laurier Institute: It's going to get a lot easier in the
future to find work.
"... the number of younger workers entering the workforce will be
smaller than the number of baby boomers who will eventually retire,"
predicts the institute.
"Because the workforce in 2010 will contain relatively fewer younger
people, there will be less competition for jobs."
It may not be as leisurely an existence as The Jetsons once
promised. Then again, perhaps we shouldn't complain -- we probably
can't afford that much free time.
Using a "cost of leisure calculator," created by the insurance firm
Allstate, you can now go on the Internet to predict the future cost
of green fees for a 35-year-old who wants to stop working at 55 and
just play golf: $354,000 US.
"…cutting 1,006 corporate and utility company jobs…"
Charlotte Business Journal
Report outlines Duke cuts
Consultant identifies 574 duplicate corporate and HQ jobs with
From the September 12, 2005 print edition
Duke Energy Corp. and Cinergy Corp. expect to help pay for their $9
billion merger by cutting 1,006 corporate and utility company jobs,
according to a Duke consultant.
The companies have identified 574 duplicative corporate and
headquarters jobs, or about 13.5% of their combined staffs, says the
report by Thomas Flaherty, senior vice president of the Booz Allen
Hamilton consulting firm.
An additional 432 positions are to be cut from the Duke Power Co.
and Cinergy regulated utility businesses, Flaherty's report states.
That's about 3.1% of the units' combined 14,000 positions.
Flaherty estimates the wages and benefits of the positions to be
eliminated average about $95,000 per employee. That means Duke
expects to save $507 million during the five years following the
merger, he says.
Charlotte-based Duke announced the deal in May, saying a bigger,
more diversified company will provide widespread benefits. It
expects the transaction to close in the first half of 2006, pending
approval by regulators in five states and shareholders.
Duke has previously said it expects the merger to eliminate about 5%
of the companies' positions, or about 1,500 of 29,350 jobs.
The Booz Allen consultant analyzed only the companies' regulated
businesses. Duke also expects positions to be trimmed from its
nonregulated units such as merchant power plants, spokesman Pete
The service areas of Duke and Cinergy do not overlap, making it less
necessary to cut positions than in many mergers. For example, the
merger of Wachovia Corp. and SouthTrust Corp. led to 4,300 job cuts,
or about a third of SouthTrust's pre-merger staffing.
A major issue facing regulators in the Duke-Cinergy deal: divvying
up merger savings between utility customers, who want lower rates,
and shareholders, who want higher profits.
Cinergy Chief Executive Officer James Rogers, in an interview
published in Electric Power & Light magazine's July edition, said he
had not laid off anyone in his 17 years at Cinergy. "I am hopeful we
can work our way through this process in a way that doesn't require
us to resort to layoffs," he said.
Flaherty's report, which is included in a recent Duke filing with
the N.C. Utilities Commission, notes Duke has 2,904 positions in its
corporate and shared-services areas, while Cinergy had 1,343. Most
of those jobs are in Charlotte and Cincinnati, respectively.
Most analysts expect Cincinnati to bear the brunt of the lost jobs,
although Duke and Cinergy officials say no decisions have been made.
Cinergy has about 7,800 employees in Cincinnati.
Duke has said it will announce key executive level appointments by
late November. In August, Duke Chief Financial Officer David Hauser
was selected for the same post at the combined company. Jim Turner,
who had been Cinergy's CFO, was named president of Cinergy, taking a
title previously held by Rogers.
Rogers will succeed Paul Anderson as Duke CEO when the merger
closes, with Anderson becoming
chairman of the consolidated company.
Another blockbuster utility industry merger, involving Exelon Corp.
of Chicago and New Jersey-based Public Service Enterprise Group
Inc., is also expected to cut about 1,500 jobs, or 5% of those
companies' combined staffs.
That deal, which is opposed by Exelon labor unions, is also likely
to close next year.
Will divest plants generating 6,200 megawatts
Duke to sell assets outside Midwest
By Stephanie I. Cohen
WASHINGTON (MarketWatch) -- Duke Energy Corp. said Tuesday it plans
to sell 6,200 megawatts of power generation in the western and
northeast U.S. over the next year.
The sale represents nearly two-thirds of its current generation
The power plants slated to go on the selling block are all held by
Duke's merchant subsidiary, Duke Energy North America. Roughly 5,800
megawatts, or slightly more than 90%, of the generation is in
California and Arizona.
Duke's plan, approved by the company's board of directors, will lead
to a noncash, pre-tax charge of roughly $1.3 billion, or 88 cents a
share, in the third quarter, the Charlotte, N.C. energy company said.
Duke said the decision to sell all of Duke Energy North America's
assets outside the Midwest along with the power contracts that
accompany their trading and power generating business, comes after
years spent trying to streamline and return the unit to
profitability. The merchant power division's poor performance has
hurt Duke's profits.
"[U]ltimately, we've determined that achieving our objective of
break-even for [Duke Energy North America] by the end of 2006 is not
realistic without taking on an extraordinary amount of additional
risk," said Paul Anderson, Duke's chief executive officer, in a
Duke's power plants are predominantly natural-gas-fired. The company
was one of the biggest buyers of California power plants when the
state approved deregulation in the late 1990s. The state ordered
California's investor-owned utilities to divest most of their
The sales are not expected to impact Duke's proposed merger with
Cinergy Corp., which seeks to combine Duke's remaining 3,600
megawatts of power generation in the Midwest with Cinergy's
commercial merchant power operations, the company said.
In July the companies filed an application with the Federal Energy
Regulatory Commission seeking approval of the proposed Duke-Cinergy
merger by early 2006. The companies agreed to the billion-dollar
merger, a stock swap, in early May.
Cinergy, Duke to focus on Midwest power markets
Duke looks for buyers for gas assets
By Stephanie I. Cohen
WASHINGTON (MarketWatch) - Duke Energy Corp. said Wednesday it's
begun to identify potential buyers for most of its power plants
outside the U.S. Midwest, in a move to streamline its business ahead
of a pending merger with Cinergy Corp.
"We have had a lot of conversations," said Jim Mogg, Duke's chief
The decision to separate itself from a large pool of its natural gas-
fired power plants - the bulk located in California and Arizona
along with several Northeast plants - means Cinergy's merchant power
business will become the foundation for the merged company.
"We feel the best thing to do is work with the Cinergy platform,"
said Paul Anderson, Duke's chief executive officer, adding "we will
combine our Midwest assets with the existing commercial platform of
In July, Duke and Cinergy filed an application with the Federal
Energy Regulatory Commission seeking approval of their proposed
merger by early 2006. The companies agreed to the billion-dollar
merger, a stock swap, in early May.
Duke announced Tuesday that Duke Energy North America, the company's
merchant power unit, would sell 6,200 megawatts of generation,
nearly two-thirds of its generation portfolio.
The decision highlights how Charlotte, N.C.-based Duke and
Cincinnati, Ohio Cinergy plan to concentrate on building a regional
business in rather than trying to become an energy giant with a
After the sale of its West and Northeast assets, Duke would own
power plants in Illinois, Indiana, Ohio, and Pennsylvania.
This regional approach will "accelerate the synergies" expected
after the merger, said Anderson.
Natural gas concerns
Fueling the decision to sell off a large chunk of its gas-fired
assets is the soaring cost of natural gas that has made Duke's
merchant power business a high-risk, low-return business.
The rising cost of natural gas has hurt spark spreads for companies
like Duke that rely on large amounts of the fuel to generate
electricity. Spark spreads are the difference between the price paid
for natural gas used to generate electricity and price at which the
company sells the electricity.
"In general, we are displeased that the recovery of the fundamentals
of the market seem to have been somewhat stalled," said Anderson.
"We see the recovery being pushed out a bit," Anderson added.
Duke is prepared to sell off its power plants and trading book --
the power contracts that accompany their trading and power
generating business -- to different buyers, said David Hauser,
Duke's chief financial officer of Duke Energy.
Any talk of trying to link the sale of the assets and the book
together "took a lot of players out of the market," Hauser said.
But Hauser said he is "very confident we can move these assets."
"We have determined that the greatest economic value for the company
would be to break the business into pieces and deal with the trading
book and assets separately," said Anderson.
Duke has not reported the book value of the power plants.
"The value of generating assets has improved substantially since
2003," said Anderson.
Shares of Duke gained a penny on Wednesday to close at $28.99.
Cinergy shares closed 8 cents higher at $43.95.
Fitch sees no effect from sale on Duke Energy (DUK) ratings
By Carolyn Pritchard
SAN FRANCISCO (MarketWatch) -- Fitch Ratings said Wednesday that
Duke Energy Corp.'s (DUK) plans to dispose of substantially all of
the generation assets and derivative contracts of its merchant
generation business, Duke Energy North America, will have no
immediate impact on the ratings or stable rating outlook of Duke
Energy Corp. and its wholly owned subsidiary, Duke Capital LLC. The
intended divestiture will require Duke Energy to recognize a $1.3
billion pre-tax non-cash charge in the 2005 third quarter, the
agency noted, but importantly, if implemented, would eliminate the
company's riskiest and poorest performing business segment.
Largest producer seeks profitability
The San Diego Union-Tribune
Duke will sell units, cut losses in state
By Craig D. Rose
September 15, 2005
Duke Energy Corp., one of the big companies that scooped up power
plants in California during deregulation, is selling off its
facilities here as part of an effort to cut its losses in the
wholesale electric generation business.
The sale would include Duke's lease on the South Bay Power Plant,
two other major power plants in the state and a smaller generator in
Oakland. The plants made the North Carolina company one of the
largest power producers in the state.
Duke, the largest utility owner in the country, said Tuesday it was
selling the properties, along with most of its other unregulated
plants outside the Midwest, because its North American wholesale
power group was unlikely to reach a goal of being profitable by the
middle of next year.
The company is also selling its energy trading assets.
Duke Energy North America, its wholesale and energy trading unit,
posted a second-quarter loss from continuing operations before
interest and taxes of $56 million, compared with a loss of $38
million a year earlier.
The company plans to take a charge of $1.3 billion in connection
with the sale of its power plants and trading operations.
Outside of its wholesale power business, Duke's regulated utilities
provide electricity to 2 million customers in North and South
The company has suffered from the soaring price for natural gas, the
fuel used by many of its plants to generate electricity, said Jeff
Bodington, president of Bodington & Co., a consultant to power
"Natural gas has become so costly and power prices have not gone up
as much," Bodington said. "Duke and many others who own gas-fired
plants are caught in a squeeze."
The San Diego Unified Port District, owner of the South Bay plant,
and local environmentalists said yesterday they were assessing how
Duke's sale plans might affect their shared goal of shutting down
the South Bay plant and redeveloping the bay-front site.
Under terms of its lease with the port, Duke was obligated to tear
down the facility and clean the site by 2010. The plant is capable
of generating 700 megawatts, or enough to power about 700,000 homes,
and is considered an essential facility for electric reliability in
A spokeswoman for the port said the district's priorities for the
site remain constant.
"It will be to continue to do what Duke has already agreed to do
namely build a smaller footprint power plant on the current location
or an alternative site and ensure that it is air-cooled, not water-
cooled," said Irene Jackson, the port spokeswoman.
The South Bay Power Plant uses bay water to cool its generators,
which raises water temperatures and affects the marine ecology.
Construction of a newer facility elsewhere would reduce air
pollution in the region, along with eliminating any impact on San
Diego Bay, said Laura Hunter, a spokeswoman for the Environmental
Health Coalition, a local group.
"We are very committed to getting rid of the South Bay Power Plant,"
Hunter said. "It is causing risks to human health and devastating to
With roughly 4,400 megawatts of electric generation in the state,
Duke has been among the top power producers in California. Along
with nearly all other large electric generators, the company became
the target of market rigging allegations during the power crisis of
At one point, former South Bay power plant workers alleged the
company manipulated electricity output to drive up prices during the
crisis. The company denied the charges.
Duke also aroused ire when it briefly charged $3,880 per megawatt of
electricity during the crisis, or 100 times greater than its typical
cost before the crisis. The company said the charge was
In further controversy surrounding Duke, former Port Commissioner
David Malcolm pleaded guilty in 2003 to a felony conflict-of-
interest charge related to his role as a $20,000 per month
consultant to Duke.
The company's holdings in California include the state's largest
power plant at Moss Landing, with capacity to generate about 2,500
megawatts, as well as its 1,000-megawatt Moro Bay plant and a 165-
megawatt facility in Oakland.
In 2004, Duke agreed to pay more than $208 million to resolve
overcharging and market rigging allegations, while continuing to
deny any wrongdoing. The company characterized the settlement as a
practical way of resolving the dispute.
The company's plans now call for selling a total of 6,200 megawatts
of power generation in the West and Northeast. Duke will remain
active in the wholesale power business largely through its pending
$9 billion acquisition of Cinergy Corp. The combined companies will
have 3,600 megawatts of wholesale generation.
Cinergy has regulated utility operations in Ohio, Indiana and
Wholesale power generators operate in freelance fashion, selling
their electricity to the highest bidders. Regulated utilities, by
contrast, are bound to provide service to given regional customer
Jan Smutny-Jones, executive director of the Independent Energy
Producers, which represents wholesale suppliers and formerly
included Duke among its members, said Duke's announcement comes at
time when prospects for wholesale generators in the state have
He noted that California electricity demand is growing steadily and
said the state Public Utilities Commission had clarified rules for
utilities to acquire new power plants and additional electricity,
creating a road map for transactions with wholesale providers.
"We should, for a change, be in a decent position for getting more
generation," Smutny-Jones said.
But Michael Shames, executive director of the Utility Consumers'
Action Network in San Diego, said he saw the market differently.
"What we are seeing is that Calpine, the largest independent power
producer is on the brink if bankruptcy," Shames said. "And if there
was money to be made, I don't think Duke would be getting out."
A spokesman for San Diego Gas & Electric, which provides electricity
to about 1.3 million customers in the region, declined to comment on
whether the utility might be interested in the South Bay facility.
SDG&E sold the plant to the port district in the late 1990s to
comply with the state's deregulation plan for utilities to divest
assets in order to encourage competition from new providers, such as
Duke started paring its wholesale power business after the
bankruptcy of Enron Corp. in December 2001 and the ensuing collapse
of wholesale electricity markets. The company sold plants in the
Southeast that can generate 5,325 megawatts in May 2004 for less
than the cost to build them and has sold interests in Australia and
Buyout firms, hedge funds and investment banks such as Goldman Sachs
and Morgan Stanley have become active in buying power plants and
Bloomberg News contributed to this report.
S&P no longer considering downgrade of Duke Energy ratings (DUK, CIN)
By Gabriel Madway
SAN FRANCISCO (MarketWatch) -- Standard & Poor's Ratings Services
said Thursday that it has removed Duke Energy Corp. (DUK) from
creditwatch with negative implications. The outlook is stable. Duke
Energy's ratings were placed on creditwatch on May 10, after the
company said it was acquiring Cinergy Corp. (CIN) in an all-stock
transaction. S&P said the outlook was based on its assessment that
Duke Energy's plan to sell 6,200 megawatts of merchant generation
capacity in the western and northeastern U.S., along with the
disposition of its book of electric and gas contracts, will improve
the company's business risk profile.
"Duke was one of the companies that followed the lead of
Duke bites the bullet on wholesale power
By TOM FOWLER
Company will close most Houston-based energy, trading units
Duke Energy will shut down most of its troubled Houston-based
wholesale power and trading business, selling all of its power
plants outside the Midwest region and unwinding that unit's trading
Like many power companies, Duke ventured boldly into the deregulated
power markets in the 1990s, buying power plants in California and
elsewhere and creating an energy trading business.
But with the energy trading industry's collapse beginning in 2001,
Duke's enormous investment has faltered, as indicated by the
financial hit expected with the wind-down of the venture. Duke
expects to take a pretax charge of $1.3 billion, or 88 cents per
share, in its third-quarter earnings related to the move.
The business unit, Duke Energy North America, known as DENA, employs
800 people, including 375 in Houston, but it is not yet known how
many jobs will be affected, Kate Perez, director of public affairs,
The company will be looking for spots elsewhere in the company,
which is in the midst of taking over another utility, Cincinnati-
based Cinergy, that may create some openings.
Just this week, teams of employees began meeting to coordinate the
company's pending $9 billion merger.
"Management has noticed the work some of the top people at DENA have
done, so we'll see if we can put them in jobs in other parts of the
company," Perez said.
Cinergy has a smaller trading and marketing operation that may take
on some of those employees. Cinergy had about 190 Houston employees
as recently as May, when the merger was announced, but a company
spokeswoman could not provide an updated number Tuesday.
Duke was one of the companies that followed the lead of Enron into
the deregulated energy business during the 1990s.
When the Houston company went bankrupt in late 2001 and shuttered
its massive Enron Online marketplace, one of the largest players in
the business was removed.
Revelations about Enron's practices undermined the credibility —
and creditworthiness — of other players.
Government investigations into trading practices followed, leading
many to cut back or eliminate trading.
In an interview with the Chronicle earlier this year, Duke Energy
Chairman and CEO Paul Anderson said the merchant energy industry
collapse left Duke "shaken up."
"It had a model that assumed there would be a deep and robust
trading market, particularly in California," Anderson said. "When
everything collapsed, the company found itself with a business model
that depended on factors that didn't exist anymore."
Duke will sell about 6,200 megawatts in power generating assets,
with more than 90 percent of the plants in California and Arizona.
It will keep the wholesale plants it is acquiring through the
The merger, which must be approved by regulators, would allow Duke
to complement its gas-fired operations in the Midwest with Cinergy's
Halliburton threatens Army officials who point out contract abuse
WASHINGTON, Sept. 16 (HalliburtonWatch.org) -- A former contracting
officer with the U.S. Army Corps of Engineers (USACE) told a
congressional committee today that Halliburton regularly threatens
government officials who complain about contracting abuse.
Christy Watts, who was Chief of Contracting at USACE in Louisville,
Kentucky, said Halliburton and USACE "habitually" violate
contracting regulations and demand employees conceal it from the
public. She described a culture of fear and intimidation designed to
protect Halliburton's bottom line.
"One point I need to make very clear: in my 18 years in contracting,
I had never, with any other company except Halliburton, been treated
in such a demeaning and intimidating manner," Watts told the Senate
Democratic Policy Committee. "When pointing out to Halliburton
personnel their contractual non-compliances, I was threatened
verbally and physically intimidated for performing my job," she said.
Watts told the committee about frightening examples of Halliburton
officials throwing temper tantrums or telephoning her home after
midnight to scream at her for awarding contracts to competitors. In
one instance, she was verbally accosted after informing the company
that it violated regulations by failing to award 20 percent of
subcontracts in Alaska to small businesses.
Watts, who worked for USACE for 12 years, is a self-described
Republican who voted both times for President George W. Bush. She
says contracting abuse and intimidation by her employer occurred in
the Clinton administration as well.
"The problems are systemic and have been occurring for decades -
through both Republican and Democrat administrations," she
said. "Please serve the interests of the American people and address
this as an issue of right and wrong - nothing more, nothing less."
Her superiors apparently have contempt for the government. She said
USACE "views contracting professionals as a drag on their ability to
do what they want." If a contracting officer speaks out against
abuse, "they can expect to be terminated," she said.
When Watts left her employment with USACE, her superiors were
worried she might go public with her allegations. So, they demanded
a settlement agreement which banned her from contacting the U.S.
Office of Special Counsel, which would be tasked with investigating
her complaints. "I have concluded that the act of preventing me from
communicating my concerns of contract abuse and unlawful activity
freely to the Special Counsel is evidence of waste, fraud, abuse and
corruption," she said.
Watts also disclosed an internal Army memorandum from her superior
who admitted that Watts could make USACE "look really bad, if all
the problems are found that I think they will find."
Another USACE whistleblower, Bunnatine H. Greenhouse, also spoke
before the committee. Greenhouse's allegations of contracting abuse
are being investigated by the Justice Department and the Pentagon's
inspector general. Nevertheless, USACE recently demoted her after
she disclosed her complaints to Congress. "I was removed because I
steadfastly resisted and attempted to alter what can be described as
casual and clubby contracting practices by the U.S. Army Corps of
Engineers commanders, and because I presented testimony before this
body on June 27, 2005," she said.
Although USACE officials were invited to the committee hearing, they
declined to appear.
Halliburton's KBR subsidiary stands to gain additional contracts to
repair damage left by Hurricane Katrina. Estimates of the federal
government's reconstruction costs have been as high as $200 billion.
USACE has already utilized KBR's Navy contract, or CONCAP, to hire
the company for Katrina clean-up work. The Navy has currently
provided two task orders to KBR, one worth $12 million for cleaning
up and repairing navy installations in Pascagoula and Gulfport,
Mississippi. The other, worth $15 million, will be used by USACE and
KBR for pumping water and building temporary morgues in New Orleans.
But some members of Congress are demanding an oversight committee to
prevent contracting abuse. Sens. Joseph Lieberman (D-CT) and Susan
Collins (R-ME), who is chairman of the Senate Homeland Security and
Governmental Affairs Committee, announced a bill that would expand
the role of the special inspector general for Iraq reconstruction to
include oversight of contracts awarded in response to Katrina.
More Information: http://www.halliburtonwatch.org/news/watts.html
Pension Documents Refer to Ill. Official
By MIKE ROBINSON
CHICAGO - An attorney who pleaded guilty in a scandal involving a
multibillion-dollar state pension fund said he was told that
associates of a "high-ranking public official" directed pension fund
fee kickbacks to campaign donors, court documents allege.
While the filings made public Thursday did not name the public
official, individuals familiar with the plea agreements said the
person described as "Public Official A" was Gov. Rod Blagojevich.
The individuals spoke only on condition of anonymity.
The governor has not been accused of any wrongdoing in the pension
investigation into the Illinois State Teachers Pension Fund. The
documents did not say whether the "high-ranking public official"
knew of the payments.
Two men pleaded guilty Thursday to charges stemming from the scandal
and agreed to help prosecutors. The allegations were contained in
court documents filed in connection with the two plea agreements.
Steven Loren, the Chicago-based former outside attorney for the
pension fund, pleaded guilty Thursday to attempting to obstruct the
Democratic National Committee, pleaded guilty to one count of
Blagojevich spokeswoman Abby Ottenhoff said she did not know who the
official named in the documents was and called the statements in the
court documents "speculation based on testimony from an admitted
A spokesman for the U.S. attorney's office, Randall Samborn,
declined to comment on the allegations contained in plea agreements.
The allegations involve a former pension fund trustee, Stuart
Levine, a millionaire campaign donor, who has been charged with
engineering corruption at the pension fund and has pleaded not
In the court documents, authorities said Loren told them companies
wanting to do business with the pension fund paid placement fees to
an unidentified person who would then split the money with "certain
"Based on his conversations with Levine, it was Loren's
understanding that Levine's associates, who were close to a high-
ranking public official, would use those placement fees as an
incentive or reward to those who made campaign contributions," the
plea agreement said.
It said that "those people would get money without providing any
In Cari's plea agreement, he said Levine told him Public Official A
played a role, through two close associates, in picking consultants
for financial firms that dealt with state pension funds.
"Levine said that this was part of a fundraising strategy," the plea
Loren would ordinarily face a sentence of one to 1 1/2 years under
federal sentencing guidelines, and Cari about three to four years.
But prosecutors have agreed to recommend giving them a break in
exchange for their cooperation.
Atlanta Business Chronicle
PBGC: Delta still on the hook for pension
Thursday September 15
Delta Air Lines Inc.'s bankruptcy filing does not relieve it of its
responsibility to fund its pension.
Pension Benefit Guaranty Corp. Executive Director Bradley Belt said
in a statement on the federal organization's Web site that Delta's
pension is underfunded by $10.6 billion with a possible employee
loss of $2.2 billion.
"The financial challenges facing the airline industry are
significant, but nothing in the bankruptcy code requires companies
to skip their pension funding payments," Belt said. "Indeed, these
companies will continue to pay for fuel, wages, health care,
utilities and aircraft leases. As long as companies remain in
operation with ongoing pension plans, they have a legal obligation
to meet their funding requirements."
Delta is due to pay $150 million to its pension before the end of
2005. Cash-draining pension payments were one factor in Delta's
A bill wending its way through Congress, sponsored by Sen. Johnny
Isakson (R-GA), aims to give airlines even more time make good on
their pension shortfalls.
But with Senate confirmation hearings on a proposed U.S. Supreme
Court justice and the aftermath of Hurricane Katrina, the bill
couldn't be passed in time to kept Delta out of bankruptcy court.
Bankrupt United Air Lines Inc. this spring terminated its pension at
a cost of $6.4 billion, the largest in history, and bankrupt US
Airways Group Inc. also has terminated its pensions at a cost of
Delta CEO Gerald Grinstein has said that he doesn't want to do that
to Delta's employees, who number more than 20,000 in metro Atlanta
alone. He has said that Delta wants to pay its obligations, it just
needs more time to do it.
Published September 15, 2005 by the Atlanta Business Chronicle
"It's become a kind of system to bail out companies,"
Whoops! There Goes Another Pension Plan
By Mary Williams Walsh
September 18, 2005
ROBERT S. MILLER is a turnaround artist with a Dickensian twist. He
unlocks hidden value in floundering Rust Belt companies by
jettisoning their pension plans. His approach, copied by executives
at airlines and other troubled companies, can make the people who
rely on him very rich. But it may be creating a multibillion-dollar
mess for taxpayers later.
As chief executive of Bethlehem Steel in 2002, Mr. Miller shut down
the pension plan, leaving a federal program to meet the company's
$3.7 billion in unfunded obligations to retirees. That turned the
moribund company into a prime acquisition target. Wilbur L. Ross, a
so-called vulture investor, snapped it up, combined it with four
other dying steel makers he bought at about the same time, and sold
the resulting company for $4.5 billion - a return of more than 1,000
percent in just three years on the $400 million he paid for all five
Two years later, as the chief executive of Federal-Mogul, an auto
parts maker in Southfield, Mich., Mr. Miller worked on winding up a
pension plan for some 37,000 employees in England. The British
authorities balked at the idea, fearing that such a move would swamp
the pension insurance fund that Britain was creating; it began
operations only last April. But the investor Carl C. Icahn has
placed a big bet that Federal-Mogul will pay off after the pension
plan is gone; he has bought its bonds at less than 20 cents on the
dollar and is offering money to help the insurance fund. He, too,
stands to make millions.
Now Mr. Miller is at Delphi, the auto parts maker that was spun off
by General Motors in 1999. If past is prologue, one of the most
powerful turnaround tools at his disposal will be his ability to
ditch Delphi's pension fund. He did not return numerous telephone
calls seeking his views for this article, but in the past he has
said that his first priority at Delphi was to "resolve"
its "uncompetitive labor cost structure." That includes the roughly
$5.1 billion gap between the pensions it has promised employees and
the amount it has put aside to pay for them.
If the obligation to make good on Delphi's pensions eventually
lands, in whole or in part, at the door of a governmental guarantor,
few should be surprised. The Pension Benefit Guaranty Corporation
has become an increasingly popular option for private-capital funds
and other investors who are seeking to spin investments in near-
bankrupt industrial companies into gold. The key is to shift the
responsibility for pensions, which weigh as heavily as bank loans on
a company's balance sheet, to the pension corporation.
The same financial alchemy has been performed at Polaroid and US
Airways, at textile companies like Cone Mills and WestPoint Stevens,
and at a host of smaller companies over the last four years. And
bankruptcy specialists say that it is almost certain to keep
happening, because shedding pensions - and pensioners' health care
obligations - is turning into an irresistible way to make a high-
risk investment pay off.
"It's become a kind of system to bail out companies," Thomas Conway,
vice president of the United Steel Workers of America, said of the
pension corporation, which Congress created in 1974 to protect
retirees if their employers went bust. "People have been able to use
it tactically, as a business strategy, and I don't think that's what
Ex-Tyco execs get up to 25 yrs
NEW YORK (Reuters) - Dennis Kozlowski and Mark Swartz, former Tyco
International Ltd. top executives who were found guilty of stealing
more than $150 million from the company, were each sentenced on
Monday to up to 25 years in prison.
The sentences, were handed down by Judge Michael Obus, who presided
over the pair's grand larceny and conspiracy trial in Manhattan
Supreme Court. They were sentenced to between 8 1/3 years and 25
Former Chief Executive Kozlowski, 58, and Chief Financial Officer
Swartz, 45, were each found guilty in June of 22 counts of grand
larceny, conspiracy, fraud and falsifying business records. They
have vowed to appeal the verdicts.
The two were ordered on Monday to pay restitution to the company of
around $134 million. Kozlowski was also fined $70 million and Swartz
was fined $35 million by the state.
Both Kozlowski and Swartz briefly addressed the judge before the
sentencing. Kozlowski said he recognized he would be punished but
asked the judge to "please be as lenient as possible."
Earlier, Kozlowski attorney Stephen Kaufman said to the judge about
his client that "he is a good man. He is a decent person. His
reputation has been tarnished, but his life should not be
Prosecutors had asked for the maximum sentence for both men.
Prosecutor Owen Heimer told the judge that Kozlowski committed
larceny and fraud on an "unprecedented, staggering scale." He said
the jury verdict showed that Kozlowski perjured himself when he took
the stand in his own defense.
"The defendant absolutely refuses to take any responsibility for his
actions," Heimer said.
Kaufman asked the judge to impose a fair sentence and consider his
client's charitable works in areas such as education and health
care, seeking to counter prosecutors' contention that Kozlowski only
gave to causes that furthered his self interests.
Both Kozlowski and Swartz were handcuffed and remanded to the New
York state prison system following the sentencing. Defendants are
usually taken to Riker's Island to await transfer within several
weeks to a permanent state facility.
Kaufman said he would be filing an appeal on Monday to attempt to
keep Kozlowski out of prison pending appeal.
Besides accusations of stealing more than $150 million in secretly
forgiven loans and undeserved bonuses, Kozlowski and Swartz also
were accused of defrauding investors by selling $575 million in Tyco
stock while misrepresenting the company's finances.
"...cutting about 1,500 of the combined companies' 29,350 jobs."
Charlotte Business Journal
Duke mulls power plans with Cinergy
Duke Energy Corp. is expected to consider new generating plants as
part of its planned acquisition of Cinergy Corp., including new coal
technology to reduce emissions linked to global warming.
New nuclear-power generation also is an option for Duke in the
longer term, Chief Operating Officer Fred Fowler told Reuters in an
Fowler told the news agency he thought it could take up to 10 years
before a new nuclear plant is built in the United States, while a
renewal of nuclear power could require joint participation between
government and the private sector.
Meanwhile, Cincinnati-based Cinergy said Tuesday it would begin the
preliminary engineering and design of a coal-fired power plant in
Indiana in a partnership Vectren Corp. (NYSE:VVC) of Indiana.
The integrated gasification combined-cycle generating station would
turn coal to gas, removing most of the sulfur dioxide and other
emissions before the gas is used to fuel a combustion turbine
generator. The technology uses less water and has fewer emissions
than a conventional coal-fired plant with required pollution control
"This is a major step in meeting the future need for additional
generation in Indiana," Cinergy Chief Executive James Rogers says in
a written statement. "With the dramatic increase in price and
limited supplies of natural gas and oil, we must maintain coal as a
significant option for our electric supply in the Midwest."
Duke announced in May its intention to acquire Cinergy (NYSE:CIN) in
a $9 billion stock transaction, creating a giant electric utility in
the Southeast and Midwest.
The combined company, to be based in Charlotte, will have 5.4
million retail customers. Annual revenue will total about $27
billion, with estimated net profits of $1.9 billion per year.
Under the merger agreement, each common share of Cincinnati-based
Cinergy will be converted into 1.56 shares of Duke common stock.
Duke shareholders will own 76% of the combined company, with Cinergy
shareholders owning the balance.
The companies say the merger will create $400 million in annual cost
savings within three years. About half of those savings will stem
from cutting about 1,500 of the combined companies' 29,350 jobs.
Duke (NYSE:DUK) has about 8,000 employees in the Charlotte area.
Duke Chief Executive Paul Anderson will become chairman of the
combined company, with Cinergy's Rogers becoming president and chief
Charlotte-based Duke is a diversified energy company with a
portfolio of natural gas and electric businesses, both regulated and
unregulated, and an affiliated real estate company.
Duke says it expects all necessary approvals by the first half of
"…cutting 6,000 jobs…"
Charlotte Business Journal
BofA to pay up to $117M to MBNA execs
Bank of America Corp. has agreed to pay up to $117 million to MBNA
executives after the companies merge.
BofA announced in June it would buy Delaware-based MBNA in a stock
and cash deal valued at $35 billion, combining the third- and fifth-
largest credit-card companies in the country into what could be the
According to a filing with the Securities and Exchange Commission,
most of the costs are in the form of retention payments meant to
reduce the incentive of MBNA executives to resign in order to
collect severance benefits, as well as to better preserve management
continuity and to align the interests of the executives with BofA's
BofA has agreed to pay MBNA Chief Executive Bruce Hammond $23
million over two years. Hammonds will be CEO and president of Bank
of America Card Services after the merger.
Other top executives to receive retention payments are John Cochran,
chairman and CEO of MBNA America Bank ($22.7 million); Chief Lending
Officer Richard Struthers ($17 million) and Chief Administration
Officer Lance Weaver ($17 million).
Not all executives of MBNA (NYSE:KRB) have signed retention
agreements. According to the SEC filing, Chief Financial Officer
Kenneth Vecchione would be eligible for a $5.8 million severance
package. Other executives would be eligible for a collective $31.3
million in severance.
When Charlotte-based BofA announced the merger, it said it expected
to save $850 million in expenses by 2007 by measures that include
cutting 6,000 jobs and eliminating overlapping technology and
marketing costs. Together, the companies have 200,000 employees.
BofA (NYSE:BAC) will take a $1.25 billion after-tax charge against
earnings for restructuring costs. The bank didn't say when it will
take that charge.
The acquisition, which is subject to shareholder approval, is
expected to close in the fourth quarter.
Just address an email to DukePension@yahoogroups.com
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