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2002 narse Meeting Minutes

Executive Summary - December 13, 2002 Meeting
National Association of Retired Sears Employees, Inc.

Ken Johnson called the meeting to order at 9:15 a.m. at the HQ office.

Attendees included: Dick Bruce, Ev Buckardt, Tony Debevetz, Bud Defano, Carroll Elijah, Claude Ireson, Ken Johnson, Leo McCormack, George O’Hare, Ron Olbrysh and Mel Schultz. The conference call participants included: Bill Barker, Gordon Muschett, Leo Murphy, Lloyd Van Schoyck and Ken Winkler.

Carroll Elijah reported on NARSE’s November financials. The organization is still in a sound financial condition. The report was discussed and approved by the Board. The annual outside financial audit will be conducted in the near future. NARSE received $300 from the Arizona Sears Retiree Club from their 50/50 raffles held at their monthly meetings throughout the year. Thank you Art Levin and the entire Arizona Retiree Club!

Carroll’s financial report also included information about supplemental insurance that he obtained from Sears Retiree Service, Wausau Benefits, Medco Drugs, and Board member Tony Debvevetz’ knowledge of Medicare and Social Security benefits. The information was in the form of specific examples. The Board congratulated Carroll on his research into this very important issue.

Leo McCormack provided an update to the Board on membership. New members are still signing up. NARSE’s mailing list is in excess of 20,000. Leo reported that our membership figures are looking good this year.

Ken Johnson called for approval of the November Board minutes. The text of the minutes were approved without modification.

HEALTH CARE – Dick Bruce reported that retirees are very upset with the new monthly costs for 2003 that were recently communicated by Sears to its retirees. However, this is no different than what is happening across the country in other plans and companies. Ev Buckardt shared with the Board an article he received from his doctor about geriatric care. The article said that "Medicare is cutting reimbursement rates while the cost of delivering care is increasing…Medicare cuts will force physicians to reduce staff, delay buying new medical equipment, or deny accepting new Medicare patients just to keep a practice open." It went on to state that "Reimbursement cuts have already unleased a backlash with many physicians refusing to accept new Medicare patients in their early 60s because they are close to becoming Medicare beneficiaries." A Board member said that unless you are willing to kick in something extra above your co-pay, a doctor may not take you in today’s environment. Tony Debevetz reported that the Mayo Clinic is no longer accepting Medicare patients.

Bruce also discussed the proposal from New Benefits, Inc., a discount non-insurance medical program. While NARSE does not intend to pursue this program at this time, Bruce suggested that a pilot study be done by one or more of the local retiree clubs. Bruce will further explore this issue with New Benefits.

SEARS SUMMARY ANNUAL REPORT – Ken Johnson led the discussion about the Sears, Roebuck and Co. Summary Annual Report dated December 2002. This Summary Annual Report is required to be given to each benefit plan participant in accordance with the Employee Retirement Income Security Act of 1974. The Summary includes information about the Sears Pension Plan, the Sears 401(k) Savings Plan, the Sears Retiree Group Life Insurance Plan, the Sears Group Retiree Life Insurance Replacement Plan, the Sears Group Medical Plan E, and the Sears PPO Plan. The Board had several questions about the Summary, including what is the minimum funding for the Sears Pension Plan. Ken Johnson suggested that all questions about the Summary Report should be channeled to Dick Bruce who will request Sears to provide answers to these questions.

NARSE SEARS RETIREE SURVEY – Mel Schultz stated that the survey is "off to a good start." The telephone conferees reported that it is being tested in several regions of the country. Responses to date have been very good. The test should be completed during January and the survey will be ready to "roll out" February, 2003.

SEARS ARIZONA RETIREE MEETING – Sears CEO, Alan Lacy, spoke at the Sears Arizona Retiree club meeting on November 21, 2002. It was reported that, among other things, Lacy addressed the issue of health care. He said that costs will continue to rise, but Sears contributions will not. In other words, retirees will continue to bear a bigger burden of their medical costs.

NARSE LEGISLATIVE AGENDA – Mel Schultz provided the Board with a one-page report on this issue. He said that the disastrous Sears Life Insurance "settlement" hammered home the need for new legislation protecting the interests of employees and retirees from corporate legal fine-print escape clauses. Schultz further said that "NARSE has no more important function than development of a comprehensive Legislative agenda…The project needs a committee Chairman, someone familiar with the legislative process…The goal should be clear, concise and quotable list of Legislative objectives (like the Ten Commandments) which NARSE can support (and which can be implemented." This issue was further examined during an Executive Session of the Board.

MISCELLANEOUS

(1) More members are being encouraged to use the free "800" conference call for Board meetings if they are not able to attend in person. This is a great way to stay in contact and have your views heard.

(2) Lew Orlow is back at Elmhurst Hospital. Our thoughts and prayers are with him.

The next NARSE regular meeting is scheduled for Friday, January 10, 2003 at 9 a.m. CDT, 8th Floor Conference Room of HQ. A conference call will be available for those not able to attend at 10:30 a.m. CST.

The meeting adjourned at 12:00 p.m.

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Executive Summary - November 8, 2002 Meeting
National Association of Retired Sears Employees

Ken Johnson called the meeting to order at 9:17 a.m. at the HQ office.

Attendees included: Tony Debevetz, Carroll Elijah, Ken Johnson, Leo McCormack, George O’Hare, Ron Olbrysh and Mel Schultz. The conference call participants included: Ev Buckardt, Art Levin, Gordon Muschett, Lew Orlow, Joe Reidy, Lloyd Van Schoyck and Ken Winkler.

Carroll Elijah reported on NARSE’s September and October financials. The organization is in a sound financial condition. The report was discussed, reviewed and approved by the Board. The annual outside financial audit will be conducted in the near future.

Leo McCormack provided an update to the Board on membership. The number of "converts" (new members) is on the rise. NARSE’s database is still in excess of 20,000 retirees.

HEALTH CARE – It was reported that retirees are very upset with the new monthly premiums for 2003 that were recently communicated to them by Sears. In this connection, NARSE recently received a proposal from New Benefits, Inc., a non-insurance program that provides access to over 300,00 health care professionals and facilities offering products and services throughout the United States. These products and services include dental, vision, prescription drugs, hearing aids, chiropractic care, alternative medicine, travel assistance, discount legal, long-term/elder care, vitamins, wellness, counseling services, nurse hotline, physician visits and more.

Upon Dick Bruce’s return, a decision will be made on this program at the next monthly meeting.

NARSE SEARS RETIREE SURVEY – Mel Schultz reported that the last retiree survey that NARSE conducted was during the fall of 1999. A lot has happened since that time. The life insurance issue has been settled. Sears is still attempting to find it’s nitch in the marketplace. It recently purchased Land’s End. It’s credit losses are momumental. Aggresssive competition continues to erode traditional Sears strengths. Sears stock has plummeted to one of it’s lowest levels in about 20 years. So, what do retirees consider to be the important issues for them now? We hope to find out through another survey that will be conducted over the next several months. Details of the survey were disclosed and discussed with the Board.

MISCELLANEOUS
(1) The Board approved the appointment of George O’Hare as Vice President of Legislative Liasion;
(2) Alan Lacy will be speaking at the Sears Arizona Retiree Club meeting (Scottsdale, AZ) on November 21, 2002;
(3) Art Levin reported that Dallas, Texas will probably be the next site for the Sears Advisory Council meeting;
(4) Any comments or questions for Alan Lacy should be forwarded to Art Levin as soon as possible;
(5) One of the participants reported that there is a serious morale problem with store managers. Store managers are not permitted to go out and talk to Sears retirees.
(6) Discussed a recent article about Sears and the trade unions which appeared in the S Journal, a monthly Sears publication that is identifed as a "resource for Sears Managers."

The next NARSE meeting is scheduled for Friday, December 13, 2002 at 9 a.m. CDT, 8th Floor Conference Room of HQ. A conference call will be available for those not able to attend at 10:30 a.m.

The meeting adjourned at 12:10 p.m.


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Executive Summary -- September 13, 2002 Meeting
National Association of Retired Sears Employees

STRAIGHT TALK – The next issue of NARSE’s newsletter, Straight Talk, is now at the printers. The drop date is September 20, 2002. This will be the last issue this year. The issue includes numerous articles on healthcare and drug costs. In addition, there are reprints of letters between Ken Johnson and Alan Lacy. The next issue is scheduled to be published February 2003.

MEMBERSHIP YEAR -- Leo McCormack noted that NARSE has adopted a calendar year (January – December) basis for membership expiration, which will be effective January 1, 2003. This will be announced in the September issue of Straight Talk. In addition, current members will be notified that if this membership year change to the calendar year causes any problem in any way, they may deduct $5.00 (to adjust this year’s dues for the January – April period) from the amount that they send for 2003,

GREG LEE LETTER – Ev Buckardt reviewed Greg Lee’s letter regarding health care costs. Lee is the Senior Vice President of Human Relations at Sears Roebuck. Lee said that he wanted to clear up any confusion or misperceptions regarding the ERIP health insurance premium cost. Among other things, Lee said:

"Subsequent to the ERIP and in keeping with the company’s rights to modify its benefits plans, the company …announced in 1995 to all retirees, with the exception of pre-1978 retirees, that it would limit its Company contribution to the 1995 level. This means that post-1978 retirees, including those who had retired under the ERIP, would pay all future medical plan increases. For associates who retired in 1996 and later, the Company stated that it would limit its contribution to the amount that it contributed in the year of retirement."

MISCELLANEOUS
(1) Dick Bruce passed out a handout about marketing discounts for telecom services. This will be discussed at next month’s meeting.
(2) Leo McCormack requested Leo Murphy to verify the status of House Bill 1322, the Tierney Bill regarding the preservation of health care benefits for retirees.
(3) Lew Orlow asked whether any contact has been made with Allstate retirees. Ev suggested that Ken Johnson should be asked the status of this matter upon his return. (4) There are a number of territorial Vice Presidents slots to be filled.

The next NARSE meeting is scheduled for Friday, October 11, 2002 at 9 a.m. CDT, 8th Floor Conference Room of HQ. A conference call will be available for those not able to attend at 10:30 a.m.

The meeting adjourned at 11:15 a.m.

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Executive Summary - July 12, 2002 Meeting
National Association of Retired Sears Employees

Claude Ireson called the meeting to order at 9:12 a.m. at the HQ office.

Attendees included: Dick Bruce, Bud DeFano, Carroll Elijah, Chuck Harrison, Claude Ireson, Leo McCormack, Ron Olbrysh, and Mel Schultz. The conference call participants included: Ken Johnson, Gordon Muschett, Lloyd Van Schoyck, and Ken Winkler.

The minutes of the June 14, 2002 meeting and also the financial report were discussed, reviewed and approved by the Board.

NARSE MEMBERSHIP YEAR
It was discussed and approved by the Board, with one abstentiion, to change the membership year, for dues purposes, from May 1 – April 30 to a calendar year beginning January 1, 2003. Members renewing this year, through September 30, 2002, will receive a card indicating their dues have been paid through December 31, 2002. Renewals received during the last quarter of this year will be for calander year 2003. The Board member who abstained felt that the change in membership year was unfair to those who already paid their dues.

MEETING WITH LACY
On June 22, 2002 Ken Johnson had a breakfast meeting with Sears CEO, Alan Lacy. The meeting was a follow-up to some comments Lacy made at Sears Annual Shareholders Meeting where he said: "Sears does not recognize NARSE. Sears will work with the Advisory Council as it represents a broader spectrum of interests and more retirees." Ken reported that it was a very cordial session. Ken followed up this meeting with a June 27, 2002 letter to Lacy. Ken reminded Alan that if Sears' goal is a broader spectrum of interests and more retirees, the Advisory Council alone will not accomplish this.

Ken further said in his letter:

"NARSE has contacts with more than 20,000 retirees in 48 states. Your Council has an estimated contact with 4,000 – 6000 retirees in 17 states. NARSE meets on a monthly basis. Your Council has only met twice (2001 & 2002) and is not scheduled to meet again until February 2003. NARSE has a strong, vibrant membership and contact list that continues to grow. In addition, our influence extends far beyond our membership. It also includes family members, friends, relatives, and media and political contacts. All could work to the benefit of Sears, its employees and its retirees.

"Only by working together can the ‘Sears Family’ be brought back together…we will not go away simply by you stating that Sears will not recognize NARSE. We are the voice of retirees that want Sears to succeed NARSE is ready and willing to work with Sears and your Advisory Council. This would certainly be more inclusive and represent a far larger share of Sears retirees. If the key is a unified approach this should be attainable to the mutual benefit of all. The retirees made Sears a great company; we want today’s Sears to again prosper and grow. Such growth and prosperity will benefit employees, shareholders, retirees and officers alike.

"Sears was a model previously for the manner in which employees and retirees were treated. At this time it appears that all business needs a role model. We recognize that you have a ‘lot on your plate.’ In addition you have several retiree groups: the Advisory Council, NARSE, the retiree volunteers, the 275+ retiree clubs, and a number of disabled that I do not believe are a separate group. NARSE would work with you, Sears, the Advisory Council, whomever to make Sears the role model for all retirees.

"We hope you will consider your options regarding NARSE and involve us for the improvement of all concerned. Hopefully you will consider the two suggestions we discussed: 1) Send a 'certificate' of life insurance to each retiree detailing his/her status through 2007 and at the end. This would provide some comfort and remove a lot of questions, including ‘Was my form received?" 2) Explain what the company and the individual are paying for Medical Insurance…"

Claude read Lacy’s response to the NARSE Board, as set forth in a July 10 letter to Ken. In summary, Lacy is "confident the Advisory Council has the breadth, resources, will and integrity to represent retirees well…Because we interact with many stakeholder groups, we will work with the Advisory Council as the single, national point of contact for retirees"

Regarding the life insurance issue, Lacy said that "Retirees affected by the life insurance settlement will be receiving new information in September from the insurance provider." And finally, in response to the request to explain what the company and the individuals are paying for Medical Insurance, Lacy said: "Because we aggressively negotiate rates each year with a number of health plans, we do not disclose this sensitive and confidential information." Lacy concluded by thanking NARSE for its "continued support of Sears, its employees and its retirees."

Among other Board comments about Lacy’s response, one member said that it was NARSE, specifically Ken Johnson, not Lacy’s Advisory Council, that informed Lacy that many retirees were still upset because they did not know the value of their post-settlement life insurance policy. As a result, Lacy told Ken that: "retirees affected by the life insurance settlement will be receiving new information in September from the insurance provider." Again, this was a benefit provided to retirees by NARSE’s conversation with Lacy, not the Advisory Council.

MISCELLANEOUS –
(1) Claude gave special recognition to Dick Bruce, Lew Orlow and Dave Silgers for the article appearing in the June 20, 2002 issue of the Chicago Sun Times (front page of the Business Section) reporting on what is happening to health care costs for retirees.
(2) Ken Winkler said that a Sears Reunion will be held Saturday, September 21, 2002 in the old Sears building on Ponce de Leon Avenue, Atlanta, Georgia. This is the fourth reunion that former Sears employees of this facility have held since it ceased operations in 1988. In years past, 1200 –1500 former employees have attended.
(3) Claude tabled further discussion of the change in membership year and the publication dates of Straight Talk until the August meeting when Ken Johnson returns.

The next NARSE meeting is scheduled for Friday, August 9, 2002 at 9 a.m. CDT, 8th Floor Conference Room of HQ. As usual, a conference call will be available for those not able to attend, at 10:30 a.m. CDT.

The meeting adjourned at 11:42 a.m.


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Executive Summary - June 14, 2002  Meeting
National Association of Retired Sears Employees

Ken Johnson called the meeting to order at 9:05 a.m. at the HQ office.

Attendees included: Bill Barker, Dick Bruce, Tony Debevetz, Bud DeFano, Carroll Elijah, Chuck Harrison, Claude Ireson, Ken Johnson, Leo McCormack, Ron Olbrysh, Lew Orlow, Derek Palmer, Mel Schultz, and Dave Silger. The conference call participants included: Art Levin and Lloyd Van Schoyck.

Minutes from the Fifth Annual Meeting of NARSE, May 8, 2002, were reviewed and approved. The monthly financial report was also approved.

SEARS ANNUAL SHAREHOLDERS’ MEETING
Ken Johnson reported on his comments at the annual Sears Shareholders’ Meeting and Alan Lacy’s response. Ken told Lacy that Sears retirees and NARSE want Sears and Lacy to be "very successful   . . . in all areas." Ken concluded his presentation by asking Lacy whether he supported his staff "working with experienced and interested individuals from NARSE to review the Sears Health Benefit cost problem in an effort to find an affordable solution." Lacy responded by telling Ken that "Sears does not recognize NARSE. Sears will work with the Advisory Council (that Lacy created) as it represents a broader spectrum of interests and more retirees."

The June, 2002 issue of STRAIGHT TALK , which is now being mailed, addresses the FACTS about NARSE and the Sears Advisory Council. Among other things, NARSE presently has about 20,000 retiree contacts in all 50 states and the District of Columbia. The Sears Advisory Council represents an estimated 4,000 – 6,000 retirees in 17 states. Ken questioned why Sears feels there is a problem working with both groups that are interested in Sears retiree concerns. Would this not be more inclusive? Does the independence and existence of NARSE concern Sears since NARSE is not a mouthpiece of Sears? NARSE is ready, willing and able to work with Sears.

EXECUTIVE SESSION
The Board then went into an Executive Session to discuss the present and future relationships with NARSE and the Sears Advisory Council, the Sears Retiree Clubs around the country, and Alan Lacy.

MISCELLANEOUS
(1) The Board approved the appointment of Lew Orlow as Vice President of Retiree Club Relations;
(2) Art Levin reported that Alan Lacy will be speaking at his Sears Retirees Phoenix, Arizona meeting on November 21, 2002;
(3) Since Bud Defano could not attend the May NARSE annual meeting, Ken Johnson presented him with the Joseph M. Kehoe award at today’s meeting. Bud was the first membership chairman and he single-handedly built a database and established communications with thousands of Sears retirees and clubs everywhere and promoted membership in NARSE.

The next NARSE meeting is scheduled for Friday, July 12, 2002 at 9 a.m. CDT, 8th Floor Conference Room of HQ. A conference call will be available for those not able to attend, at 10:30 a.m.

The meeting adjourned at 11:25 a.m.

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Executive Summary - May 8, 2002
National Association of Retired Sears Employees

Fifth Annual Meeting - Wednesday, May 8, 2002

Chairman Ken Johnson called the meeting to order at 2:15 p.m. and welcomed the approximately 85 attendees. The April 12, 2002 minutes were approved and will be posted to our web site shortly.

Ev Buckardt introduced the first speaker, Susan Chandler, Chicago Tribune Business Reporter.

DEVELOPMENTS IN RETAILING TODAY - SUSAN CHANDLER
Susan Chandler opened with a broad, historical overview of the retail industry. She said that in 1962, three retailers opened for business: Wal Mart, Target and Kohl¹s. These three retailers are all doing very well today. They know what they stand for. Wal Mart is low prices. Target is "cheap chic." Kohl¹s is affordable clothing for suburban families. None of them are tinkering with their business. On the other hand, of the three retailers over a century old - Sears, Penney's and Wards - only Sears and Penney¹s still remain. Both of the retail survivors are trying to transform themselves. They are going through a "generational shake-out." Will they survive? Chandler said, ³We don¹t know yet.²

Of Sears and Penny¹s, Sears is the more complicated retailer because of it¹s credit card operation. More than 1/2 of its profit still comes from credit. In effect, Sears is more like a bank than a retailer. It is unclear today what Sears stands for.

It is Chandler¹s opinion that Alan Lacy¹s vision of Sears is not clearly defined. He is still focused on cost-cutting. However, you "can¹t cost-cut your way to retail success." You must get people excited about coming into your store. To be successful, a retailer needs an overall theme to "tie everything together." According to Chandler, Sears has still not found this theme.

Chandler also touched upon Sears and the apparel business. She said that women do not like Sears clothes. The perception is that Sears apparel "looks like a place where their grandmothers shop" and even grandma is not shopping there today. She added that "very few people make Sears a destination for clothing." She suggested that Sears should target the African-American and Hispanic women for clothing.

Chandler concluded with a question and answer period and expanded upon several of the points made in her presentation. She said that retailing is an honored profession in Europe. However, here the mentality is that you only go into retailing if you can¹t do anything else. She noted that Alan Lacy said recently that the Chicago State Street store is ³not meeting top line projections.² She feels that the store looks okay, and may do well with their toy section, but the store is devoid of customers during week day evenings and on the weekend. Chandler was well received by all of the attendees. One attendee suggested that her presentation should some way be given to Sears.

SEARS ADVISORY COUNCIL MEMBERS (CLUB PRESIDENTS) PANEL
This panel was led by Art Levin, President of NARSE and of the Phoenix, Arizona Sears Retiree¹s Club. Ten of the eighteen Sears Advisory Council (SAC) club presidents were present at this meeting.

As background, SAC was formed during January, 2001, at the instigation of Sears new Chairman, Alan Lacy. The purpose of the Council was "to meet together for frank talk and an open exploration of how to improve the Sears-retiree relationship." Lacy pledged to work with the Council on retiree issues.

The first and only meeting, to date, was held January 31 - February 1, 2001. Eighteen Sears Retiree Club Presidents attended this meeting. In his opening remarks at this inaugural meeting, Lacy told the group that: "I view all of you as a very important part of the Sears family...I know some things have happened, especially around the benefits issues, that have caused a rift in those feelings. In my early tenure, one of the things I wanted to do is sit down with you to get your input on how to make this better, make it how it should be..."

At this same meeting, Lacy promised to make every effort to protect remaining retiree benefits. He and the executives who met with the club presidents assured the attendees this was not an attempt to circumvent NARSE.

With this background, Art Levin said that since this January, 2001 meeting, sixteen months ago, SAC has heard nothing from Lacy. Neither did Lacy respond to the SAC letter sent to him. SAC will be meeting with Lacy after the Shareholder¹s meeting tomorrow. At this meeting, Levin said that Lacy will be asked what is the future role of SAC? He will also be asked whether the formation of SAC was only a public relations effort aimed at all Sears retirees.

Levin then asked the Club presidents what their member¹s concerns were. The biggest concern for most retirees was the cost of health insurance. Other comments included: "the life insurance settlement will not bring the retirees back into the fold." - "the company¹s merchandise program and philosophy needs improvement." - "medical claims not being processed in a timely fashion." - "can¹t get waited on in Sears stores and service is bad."

AARP UPDATE - STEVEN CARTER
Tony Debevetz introduced Steven Carter, the Acting Illinois State Director for AARP. AARP has made a substantial financial contribution to legal firms who represented Sears retirees in their effort at restoring their life insurance benefits.

Carter reported that there are 1.6 million AARP members in Illinois and 35 million members nation wide.

The speaker updated the group on the various federal legislation proposals for prescription drug coverage. He said that for any proposal to succeed, it must meet four criteria: it must have real value at an affordable price; it must be an understandable benefit; it must be available to everyone in all parts of the country; and it must contribute to bringing down the cost of all drugs.

SERVICING SEARS RETIREE HEALTHCARE BENEFITS
Ken Johnson introduced the speakers for this session. They include Martin Flower and Denell Thomas with Wausau Benefits Co., and Stanley Aldis with Sears HQ Benefits.

Wausau Benefits Co. replaced United HealthCare for servicing retiree medical benefits on April 1, 2002. However, the speakers said that there has been no benefit changes as a result of switching companies. Wausau has numerous advantages for retirees: they are customer focused; they have a flexible and adaptive integration of claim processing and administration; they had 50 years of benefits administration experience; and they have Medicare crossover.

The attendees were told that Wausau has a team dedicated solely to Sears. This team includes 27 customer service representatives, 3 supervisors, and 1 manager. They have a dedicated 800 number for Sears: 1-800-756-6938.

The speakers all responded to various questions from the attendees and Ken noted that the next issue of Straight Talk will include an article by Dick Bruce regarding this subject matter.

SEARS HARDLINES:
ANTICIPATING AND DELIVERING ON THE CHANGING NEEDS OF OUR CUSTOMERS -
LYLE HEIDEMANN

Lyle Heidemann is the Executive V.P. and General Manager of Sears Hardlines. He has been with Sears for 35 years. Looking over the audience, he said that he has either worked for or with many of the attendees.

Heidemann presented a vision for Sears, which includes "Building a New Sears." This means that Sears must become the "first choice provider of goods and services for America¹s homes and families." This will include many changes, including creating a new buying experience in the store, centralize wraps, changing the sales model in most stores, and changing the store organization by eliminating some checklist positions and getting manager presence back on the sales floor. With these changes, the company hopes to achieve a "more direct line with the customer."

He then presented changes that will be taking place in the stores during the period of May -September, 2002. He reiterated that the store must be "more relevant to our customers.² In the area of apparel, Sears is moving back to the² good, better, best" model, with emphasis on ³better.²

Heidemann said that there will be a full-line store repositioning. That means the company must be "relevant and dominant in the businesses we decide to stay in." "Relevant and dominant" will normally mean being 1, 2 or 3 in a product category. Sears also will be going to a "one fixture look for the entire store."

Regarding the managing of expectations, the speaker said that there are "no silver bullets, including the new Covington line." There will still be some "bumps in the road...We aren¹t fixed yet." It is a major undertaking when you are repositioning and restructuring your core business. Heidemann touched upon Sears SG&A which is at 26.7%. He said that "this is higher that we can afford." Wal Mart¹s SG&A is at 17.7%.

During the question and answer period, Heidemann said that Sears is "looking at off-mall full line stores" to bring it¹s merchandise closer to the customers. In response to a question about Brand Central, he said that Sears has 40% of the appliance business, 3/4 of which is the Kenmore line.

Ken Johnson thanked Heidemann for speaking to NARSE. He was very well received.

NARSE AWARDS
Ev Buckardt presented this year¹s NARSE Awards. The Joseph M. Kehoe Award was given to Bud Defano. Bud was NARSE¹s first membership chairman. He single-handedly built a database and established communications with thousands of Sears retirees and clubs everywhere and promoted membership in our Association.

Ev then presented three Distinguished Service Awards. They were given to the following individuals:

Dick Bruce - Dick was one of the first retirees to pursue legal action for the restoration of his Sears life insurance benefit. Later, his suit was one of 12 claims selected from a larger group of retirees for consideration by the United States District Court for the Northern District of Illinois. Dick participated in these negotiations and sacrificed his own opportunity to file an individual claim in the interest of the best possible settlement for all affected retirees.

Tony Debevetz - An active charter member since December, 1997, Tony has served as the Secretary of the organization, and currently is a Director of NARSE. During this time, he has also served as NARSE¹s representative with the American Association of Retired Persons (AARP). As a result of that relationship, AARP made a substantial financial contribution to the legal firms representing Sears retirees in their struggle for the restoration of life insurance benefits. Also, at Tony¹s request, AARP senior officials have attended NARSE¹s Annual meetings as speakers, informing attendees of the latest legislation, company benefit trends, and other developments of vital concern to retirees, nationwide.

Ken Winkler - Ken serves as a NARSE Vice President for the Southern Region. He was responsible for making all of the arrangements in Atlanta for NARSE's Third Annual Meeting and the Sears Shareholders' Meeting in 2000, including preliminary meetings with the large local Atlanta Retirees Club and other Clubs in the region to promote interest and participation in both events. Ken¹s many calls and visits with Clubs in his region have maintained strong two-way communication with retirees there.

Ev said that all of the award recipients have given generously of their time and experience, and their untiring efforts on behalf of Sears retirees are recognized and greatly appreciated.

NARSE OFFICERS AND DIRECTORS
Ron Olbrysh, Secretary and General Counsel of NARSE, presented to the attendees the proposed slate of officers and directors for NARSE for fiscal year 2002 - 2003.

Officers:

President Art Levin
Vice Presidents Leo Murphy - Government Relations
Leo McCormack - Membership
Secretary/General Counsel Ronald Olbrysh
Treasurer Carroll Elijah
Regional Vice Presidents Blair Holden - Central/Plains
  Dave Micheal - Southwest/Southern Pacific
  Gordon Muschett - Pacific Northwest
  Lloyd Van Schoyck - Florida
  Buzz Williams - Central Pacific/Mountain
  Ken Winkler - South

 The slate of officers and directors were approved by the membership.
 
CONCLUSION
Ken Johnson thanked Dave Silgers, who again planned and organized this year¹s Annual Meeting. Dave received a round of applause for a job well done.

The meeting portion of the Annual Meeting adjourned at 5:25 p.m. The next regular NARSE meeting is scheduled for Friday, June 14, 2002 at 9 a.m. CDT, 8th Floor Conference Room of HQ. A conference call will be available for those not able to attend at10:30 a.m.

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Executive Summary - April 12, 2002 Meeting
National Association of Retired Sears Employees

Ken Johnson called the meeting to order at 9:25 a.m. at the HQ office.

Attendees included: Dick Bruce, Ev Buckardt, Bud Defano, Chuck Harrison, Ken Johnson, Leo McCormack, Ron Olbrysh, Lew Orlow, Mel Schultz, and David Silger. The conference call participants included: Art Levin, Gordon Muschett, Derek Palmer, Lloyd Van Schoyck, and Buzz Williams.

Minutes from the March 8, 2002 NARSE meeting were reviewed and approved. In Carroll Elijah’s, NARSE Treasurer, absence, Leo McCormack reported that the organization is financially sound and we have about 20,000 retirees in our data base.

NARSE ANNUAL MEETING MAY 8, 2002
The revised agenda for the annual meeting was distributed and discussed. The topics and speakers include:

“Developments in Retailing Today” - Susan Chandler, Chicago Tribune Business Reporter.

“Sears Advisory Council Panel” led by Art Levin, NARSE President. Panel will consist of club presidents from across the country.

“Servicing Sears Retiree Healthcare Benefits” - Martin Flower & Denell Thomas from Wausau Benefits Co. (Wausau replaced United HealthCare April 1, 2002); and Stanley Aldis, Sears Headquarters Benefits Representative.

“Sears Hardlines: Anticipating and Delivering on the Changing Needs of our Customers” - Lyle Heidemann, Executive V.P. and General Manager of Sears Hardlines.

In addition to the above speakers, there will also be a talk by a local representative of AARP.

Art Levin reported that, to date, 8 - 10 Advisory Council members said they were attending the Sears Shareholders Meeting on May 9. Art said that possibly 13 or 14 of the 18 Advisory Council members may ultimately show up. Those members arriving in time, will be a part of Art’s panel discussion at the NARSE meeting. The Advisory Council has been dormant for the past 18 months. What is it’s future? This topic will be discussed at the Council’s meeting with Alan Lacy.

MISCELLANEOUS -
(1) Lew Orlow reported that there is still much confusion in the field about medical benefits for retirees over the age of 65. Ken said that many calls coming into NARSE are from retirees asking about healthcare coverage. These calls are being referred over to Sears Headquarters.

(2) The Board is reviewing and soliciting questions to be asked at the Sears Annual Shareholders meeting May 9. Questions may be e-mailed to Ken Johnson at ken8644@attbi.com.

(3) Mel Schultz is in the process of developing another retiree survey aimed at determining retiree’s feelings toward Sears after the life insurance settlement.

(4) Ken reported to the Board that neither Sears nor Alan Lacy responded to any of the written health care questions addressed to Lacy over one month ago. Ken hand delivered the letter to Ron Culp at Sears who was to get it to Lacy. There will be a follow-up.

(5) Chuck Harrison and Mel Schultz reported on the status of creating a new cartoon, logo and slogan for NARSE. They shared with the Board some preliminary ideas. This is still a work in progress.

(6) Bud Defano said that the VA has a prescription drug program for veterans. This program will be further explored by NARSE members.

(7) Ken asked the Board to call retirees to discuss the NARSE Fifth Annual Meeting and ask them to attend.

The next meeting of NARSE will be it’s Annual Meeting on Wednesday, May 8, 2002 at the Stonegate Conference and Banquet Centre, 2401 West Higgins Road, Hoffman Estates, Illinois. The meeting will begin at 2 p.m. and is scheduled to conclude at 5 p.m. with a social hour and dinner following. The next regular NARSE meeting is scheduled for Friday, June 14, 2002 at 9 a.m. CDT, 8th Floor Conference Room of HQ. A conference call will be available for those not able to attend at 10:30 a.m. The meeting adjourned at noon.

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Executive Summary - March 8, 2002
National Association of Retired Sears Employees

Ken Johnson called the meeting to order at 9:16 a.m. at the HQ Office.

Attendees included: Bill Barker, Dick Bruce, Ev Buckardt, Tony Debevetz, Bud Defano, Chuck Harrison, Ken Johnson, Ron Olbrysh, Lew Orlow, Mel Schultz, and David Silger. The conference call participants included: Art Levin, Gordon Muschett, Derek Palmer, Joe Reidy, and Buzz Williams.

Minutes from the February 8, 2002 NARSE meeting were reviewed and approved. Ken thanked Ron for the speed in the distribution of the minutes. The Board also discussed and approved placing each month’s approved minutes on the NARSE web site. Carroll Elijah, NARSE’s treasurer was absent due to a broken leg and surgery yesterday, but Ken reported that we are "alive financially."

MARCH 5 COURT HEARING ON PROPOSED SETTLEMENT
Three retirees spoke at the Fairness Hearing that was for the purpose of determining whether the proposed life insurance settlement was fair, adequate and proper, and whether the Court should enter judgment approving the settlement. Ken Johnson said Mel Schultz did a "phenomenal job of showing the negative impact to retirees." Among other things, Mel told the court that: "The media and the American public must understand that this is a ‘win-lose’ solution – a big win for Sears and Corporate America – a big loss for Sears retirees. And the biggest loser in this sad dispute is the American public, and millions of workers in large and small companies everywhere." Mel was quoted extensively by the Chicago media. Representatives from both the Chicago Sun-Times and Chicago Tribune were present at the court hearing.

Ken Johnson told the court that "the proposed settlement is unacceptable in the minds of most Sears retirees…Many not directly involved in this have said that the proposed settlement is a victory. There are no victories in a ‘family feud.’ …We are disappointed to stand here today in this courtroom with Sears ‘on the other side.’ We remain concerned for Sears, the current employees, and Sears retirees . . . .we want a better future for all. We give Alan Lacy credit for his efforts to settle the insurance issue and to begin repairing the damage done to Sears retirees by Arthur. We acknowledge the proposed settlement of the litigation as in the best interests of Sears and the retirees at this time. We remain concerned for the promised benefits to Sears retirees and for the continued erosion of the benefits for current Sears employees…NARSE will continue to represent retirees and to work for these causes, including Federal legislation that is fair to Companies, employees, and retirees regarding earned benefits."

Dick Bruce spoke "from the heart" without a prepared text, but basically reiterated what Mel and Ken had said. All three speakers did a great job in their presentations to the Court. Mel sent a copy of his presentation to Steve Mulligan at Sears asking him to include it in the next Sears newsletter to retirees. The next communication to NARSE’s membership, which will be in letter format, will include Mel’s, Ken’s and Dick’s comments to the court.

Before ruling, Judge Moran told the retirees that there was "good facts, bad law" in this case. He said that the law does not favor retirees. He suggested that retirees go to Congress to change the laws. Judge Moran then approved the settlement that would restore only 10% of the life insurance benefits that Arthur took away.

Bud Defano asked if Sears would let each retiree know exactly what the settlement proposal means to them. He said that the formula for determining what each retiree is entitled to is very confusing. Ken will contact Ron Culp at Sears about this issue. Ev will contact Mike Mulder, the attorney for the plaintiffs about it. Dick Bruce said that Sears is responsible for the administration of this settlement agreement.

MEMBERSHIP UPDATE –
 In Leo McCormack’s absence, Ken reported that NARSE has 53 new members since last month. The membership base is "alive and well." Ken said that the monthly meetings will continue and for those who are unable to attend, a conference call will be available.

A letter will go out within the next two weeks to NARSE’s membership providing them with an update on the court action, and information about the annual meeting. In addition, the next issue of Straight Talk will have membership and renewal forms. The Board also recommended that national media be placed in NARSE’s database for future mailings.

NARSE ANNUAL MEETING –
Dave Silger reported that NARSE’s annual meeting would take place on Wednesday, May 8 at the STONEGATE Conference and Banquet Centre, 2401 West Higgins Rd., Hoffman Estates, Illinois. The meeting will run from 2 – 5 p.m. Open Bar from 5 – 6 p.m. Dinner will be served at 6 p.m. A special rate of $68.00 per night was negotiated with LaQuinta Inn, 2280 Barrington Rd., Hoffman Estates, Illinois for those coming to the meeting from out of town. A bus will be available to transport attendees from the Inn to the NARSE meeting facility.

To market the annual meeting locally, Ken Johnson, Ev Buckardt, Mel Schultz, Dave Silger, and Dick Bruce will attend next week’s Chicago Retiree’s Club meeting in Darien, Illinois to tell them about the results of the “Fairness Hearing” and to invite them to the NARSE annual meeting. NARSE will not be protesting or picketing this year’s Sears annual stockholder’s meeting.

The agenda for this year’s meeting is being finalized. Ken Johnson will determine the availability of Alan Lacy. Tony Debevetz will contact AARP for a speaker. The Sears Advisory Council will also be invited and Art Levin will chair a panel from the Council. Gregg Lee, Senior Vice President of Sears Human Resources will also be called to ascertain his availability to speak at the annual meeting.

SUPPLEMENTAL INSURANCE –
Ken Johnson reported to the Board that the two key issues now facing retirees are
:

(1) rising health care premiums and
(2) the need for federal legislation to protect earned benefits.

Regarding the first issue, Dick Bruce reported on his discussions with New Benefits, Inc., a privately held Dallas, Texas company, which offers a wide array of non-insurance health benefits, including dental, prescriptions, vision, travel assistance, nurse hotline, counseling, chiropractic, etc. Depending upon the benefit, savings could range from 10% - 60%.

After an extensive Board discussion, it was decided to solicit Sears interest in this plan to determine whether they would like to offer it to their retirees. Ken will meet with a Sears representative to discuss this program.

MISCELLANEOUS –
(1) Chuck Harrison, Mel Schultz, Lew Orlow, and Dave Silger are working on developing a new NARSE logo and an original cartoon reflecting the issues now facing retirees.

(2) Special thanks were given to Art Levin’s retiree club who sent a $500 check to NARSE.

(3) It was reported that the NARSE web site has already had more than 58,000 "hits."

(4) As a result of Joe Reidy’s question about whether Sears was still doing attitude (morale) surveys, the Board decided to explore conducting a retiree attitude survey about Sears, “post settlement.” Mel Schultz and Bud Defano will co-chair this project.

The next NARSE meeting is scheduled for Friday, April 12, 2002 at 9 a.m. at HQ office. The meeting adjourned at 12:02 p.m.

 


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