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2004 Straight Talk Archives

NOVEMBER 18, 2004, A DAY THAT WILL LIVE IN INFAMY FOR MANY SEARS RETIREES WHO LOVED THEIR ONCE-GREAT COMPANY

The November 18, 2004 morning Chicago Tribune broke the shocking news, "Kmart snaps up Sears for $11 billion. Deal for Chicago icon creates No. 3 retailer."

For months the business press has reported Kmartıs struggle to survive bankruptcy, Sears Lacy's unproductive efforts to turn around flat sales, and bottom fishing investors patiently circling the waters like sharks, waiting to pick up choice real estate locations at bargain prices.

On November 18 the sharks struck, triggering scores of business articles, a sharp jump in Kmart and Sears share prices, and new responsibilities for Edward Lampert, Chairman of the new Sears Holdings Corp, Alan Lacy, new Vice Chairman and CEO of Sears Holdings, who also receives a 50% salary increase plus other generous incentives, and Aylwin Lewis, new president of Sears Holdings and CEO of Kmart and Sears Retail, reported to lack retail experience.

Sounds like everybody's happy with the new arrangement, subject to Shareholders' approval.

But is everybody happy? Are Shareholders happy? Are currently employed associates happy? Are retirees who built the company happy? After the bones have been picked and cast aside, will investors, bond holders and the Pension Benefit Guarantee Corporation be happy?

Most important, will customer/shoppers be happy? How long will it take for the new Kmart and Sears organizations to define themselves, develop effective buying and selling strategies, and decide how, what and where each store is selling. With so many other places to shop, will the shopping public have the patience to wait while the restructuring takes place, or respond favorably with their wallets, if and when it is ever completed? Aylwin Lewis's challenge is awesome!

On November 18 the retiree telephone lines hummed. Retirees and many employed associates wonder what the news may mean for them, and for their families. When a big billionaire and millionaires divide up the spoils, little people become frightened about their future.

The theme of retiree phone calls, utter disbelief that Kmart, a bankrupt, troubled retailer could buy Sears, regarded for decades as the internationally recognized model for innovative marketing to millions? For years, foreign companies sent their key executives to Sears to train and learn their successful merchandising and marketing methods.

What the hell happened?

How did Sears fall from incon to irrelevance?

Retiree callers say, Shame on Sears. Shame on Lacy. They ask, "Are you going to the Wake?" "When will the funeral service be held?"  "Should we hold a Blue Light service, now that Sears has died?" "I had a tear in my eye when I read the paper. So sad,"one said. "November 18, 2004 will live in infamy," said another.

Then retirees express fears about what little remains of their retirement benefits, promised to them years ago by Sears executives they trusted more than many of the "short-timers" who occupy or will soon invade the Hoffman Estates campus.

What will happen to retirees' pension payments? What will happen to retirees' health care and medical insurance? What will happen to what little is left of retirees' life insurance benefits, fought unsuccessfully in court for years, and reduced by the judge to a pittance of what they paid for and were promised for years? What hope can retirees have for their remaining benefits at the hands of ³bottom fisher² investors who hve a reputation for dissecting and dismantling the companies they buy up, while richly rewarding themselves?

Are these concerns limited to retirees? What about currently employed associates? Don't you think that they are concerned about their futures and their families? Who can they trust? Out of desperation will they look to unions for help?

As the billionaire and millionaire owners move the pieces around, sell this and that, it will behoove them to think about the little people, hard working associates, formerly loyal retirees and their families, friends and neighbors and the great American shopping public who will judge their actions and ultimately decide whether to shop at Kmart or Sears, or just take their business elsewhere.

During their working years, Sears retirees were proud to be associated with a company known to be a good place to work and a good place to shop for their familyıs needs. In recent years, retirees have been deeply shamed by the sorry state of their once-great company, and can only hope against hope that the management of the new Sears Holding Corp. will find the wisdom and hard-nosed merchandising ability to restore Sears to its position as a premier American retailer, while living up to its responsibilities to currently employed associates and retiree families.

Mel Schultz, Sears Retiree
Northbrook, Illinois
November 21, 2004

In Memorium: David Paul Norum
Retired V.P. of Taxes
Chicago Tribune
July 22, 2004

David Paul Norum, 72, of Northbrook. Beloved husband of Renate, nee Pelzer; loving father of Karin (Jon) Johnson and Kirsten (Tom) Muller; dear brother of Jay Norum and the late Judith Rizzo; cherished grandfather of Linnae and Krista Johnson and Matthew and Annika Muller.

David was the Corporate Vice President of Taxes with Sears Roebuck and Co.

Memorial service will be Friday at 3 p.m. at the Village Presbyterian Church, Northbrook, IL. In lieu of flowers, memorials would be appreciated to NSWB/American Cancer Society, 820 Davis St., Suite 340, Evanston, IL 60201 or Village Presbyterian Church, 1300 Church St., Northbrook, IL 60062. Funeral info: Hanekamp Funeral Home, 847-272-3890 or www.hanekampfuneralhome.com. Published in the Chicago Tribune on 7/22/2004.

Sears Announces Changes in its Compensation and Benefit Plans

As recently announced, Sears is shifting its focus from providing retirement  benefits through the Pension Plan to increasing the company match in the Sears 401(k) Savings Plan to the highest in retail. The information here describes the changes and  how they affect current associates.

However, Sears has informed NARSE that these changes will not affect current retiree benefits. These changes are being made to better align the Sears compensation and benefit plans with other retailers.

Set forth below is a brief look at the enhanced company match, as explained by Sears:

For every $1 you contribute of the first 1% of eligible pay, Sears will contribute $1.50.

PLUS

For every $1 you contribute up to the next 4% of eligible pay, Sears will contribute an additional $1. Sears currently matches 70 cents for every $1 you contribute up to 5% of eligible pay for a maximum match of 3.5%. With the new  match, the maximum match from Sears increases to 5.5% - a 2% greater match!
 
Here's  a brief look at how these changes affect associates:

Associates age 40 and over as of December 31, 2004:
If you are a Pension Plan participant as of December 31, 2004, you will have the one-time option to keep the current Pension Plan and 401(k) company match of 3.5% or to move to the enhanced 401(k) company match of 5.5% and not accumulate a future benefit in the Pension Plan. Additionally, Sears will continue to subsidize retiree medical if you qualify for  coverage at retirement.

Associates under age 40 as of December 31, 2004: 
Starting in 2005 the enhanced 401(k) company match of 5.5% will replace your pension benefits. Additionally, Sears will not contribute toward retiree medical; however, you may be eligible for coverage if you meet  the eligibility requirements at retirement.

Associates hired on or after January 1, 2004 and associates who are not eligible for the Pension Plan: 
You will be eligible for the increased 5.5% company match in the 401(k) Savings Plan. Additionally, Sears will not contribute toward retiree  medical; however, you may be eligible for coverage if you meet the  eligibility requirements at retirement.

Important things to note:  
No associate will lose any benefits earned under the Pension Plan as of December 31, 2004. No associate will become a participant in the Pension Plan after January 1, 2005.

Why Sears is Making These Changes
Sears wants to provide benefits that are in line with those offered by our  best competition. We also want to do a better job of providing benefits that  suit our current workforce. Some of our associates don't spend their entire career with us and want to earn benefits that are more flexible. A 401(k)  plan can serve those needs. That's why we have decided to shift our focus to  the 401(k) Savings Plan and increase the company match to the highest in retailing.

By addressing the interests of associates while responding to the cost structure of our competitors, we create a situation in which associates and  Sears can win together.
 
A Retirement Program for Today's Workforce
Pension benefits are designed to reward long years of service, so an  associate who leaves Sears with even as much as 10 or 15 years of service  typically has earned only a small benefit under the Pension Plan. Associates who leave with less than five years of service have earned no vested pension  benefits at all. These days, associates average 10 years of service, which is now common in the retail industry. The Pension Plan has become much less  meaningful for a large part of our workforce as a result. So, Sears will be  shifting our focus from providing retirement benefits through the Pension  Plan to offering an enhanced company match in the 401(k) Savings Plan.

Options for Associates Age 40 or Over.
Sears Pension  Plan and 401(k) Savings Plan Associates who, as of December 31,2004, participate in the Sears Pension Plan and are 40 years old and over will have the chance to choose one of the  following:    

Stay in the current program: Contribute to the Sears 401(k) Savings Plan at the current company match of  3.5% on eligible contributions plus continue earning a future benefit in  the Sears Pension Plan.  
OR 
Move to the new program:
 Contribute to the Sears 401(k) Savings Plan at an enhanced  5.5% company match on eligible contributions, keep the pension benefit earned through December  31, 2004 and stop accumulating a future benefit in the Sears Pension Plan.    

Keep the following in mind:
You do not have to take any action right now. The current pension and 401(k) programs will continue unless you decide to move to the new program. You  will receive a personalized packet at your home in early April to help you make your decision. You will also have access to an online modeling tool and other resources during the April and May decision period. 

If you choose to move to the new program, you will not lose any benefits you have earned under your current plans as of December 31, 2004:

Pension Plan:
You will not  accumulate any future pension benefits as of December 31, 2004. You will be entitled to this benefit at normal retirement age (age 65), as long as you  are vested - have five or more years of service - at the time you leave Sears. To see an estimate of this benefit as of December 31, 2003,  close this window and view your benefit listed under Sears Pension Plan. The pension amount shown reflects your qualified and non-qualified benefit,  as applicable.  

401(k) Savings Plan:
If you are  currently contributing, you will continue to receive the 3.5% company match  on eligible contributions made through December 31, 2004. The enhanced  5.5% company match will begin on January 1, 2005. If you're not already contributing to the 401(k) Savings Plan, you may enroll at any time.

Note for part-time associates age 40 and over who become eligible to participate in the Pension Plan during 2004: Packets will be available to you early in 2005, and you can make your decision then. You do not have to take any action now. If you do not become  eligible for the Pension Plan during 2004, you will become eligible for the enhanced  5.5% company match  on eligible contributions made to the 401(k) Savings  Plan.

Retiree Medical Benefits
Sears will continue to subsidize coverage for associates age 40 and over as of December  31, 2004 who qualify for retiree medical at retirement. The retiree medical subsidy will never be higher than the subsidy available during 2004.

Any thoughts, suggestions or comments on this announcement can be emailed to NARSE Chairman, Ron Olbrysh: ron1061@comcast.net

In Memorium Charles F. Moran
Chicago Tribune
April 12, 2004

WHEATON, IL...Charles F. Moran, retired business leader and civic benefactor, passed away at his home in Wheaton on Monday (April 12).

He retired in 1993 as Senior Vice President and a member of the Sears, Roebuck and Co. Management Committee after a 40-year career with Sears. Most recently he was Chairman of the Board of Denny's Corporation and President of the Homan Arthington Foundation, which was responsible for redeveloping the original Sears headquarters
location on Chicago's West Side into affordable housing for 300 families in the North Lawndale neighborhood.

Mr. Moran was born in Brooklyn, NY in 1930, and developed a lifelong love for sports and humor. He starred as a catcher at Drew University in Madison, NJ, played in the Northern League on a team affiliated with the New York Yankees, and earned positions with numerous traveling  All-Star baseball teams. He caught batting practice for the Brooklyn

Dodgers on several occasions, including for the 1949 major league All-Star game at Ebbets Field.

One All-Star team appearance in 1948 led him to Maueb Chunk (now Jim Thorpe), PA, where he met his wife of 52 years, Dolores Huber. After a short Army stint, Mr. Moran joined Sears as a trainee at its Hackensack, NJ store. In 40 years and six moves, he took on increasing responsibility, ranging from spilling paint as a trainee to selling the Sears Tower, from plowing Sears parking lots to building new parking lots, and from integrating Dean Witter and Coldwell Banker into Sears to then subsequently leading the divestiture of these units.

Mr. Moran also acted as Chairman of Thermadyne Holdings Corporation and Prodigy Services (a joint venture between Sears and IBM that was a key precursor to the Internet). He acted on numerous corporate boards, including Discover Bank and the Morgan Stanley Trust Company, SPS Transaction Services, Inc., Advantis, Inc., DeSoto, Inc., and Dean

Witter Reynolds, Inc. His other civic contributions included membership in the Sorin Society at the University of Notre Dame, and as a benefactor to many needy students.

He leaves a loving family and numerous friends and colleagues who will miss him for his many contributions. His ongoing legacy is his family -- wife Dolores, daughter, Mary (William) Deatherage; son, Charles (Dianne) Moran; daughter, Alice Moran; son John (Laura) Moran and 11 grandchildren.

Visitation will be at 4 to 9 p.m. on Wednesday, April 14 at Williams-Kampp Funeral Home at 430 E. Roosevelt Rd. in Wheaton. A funeral Mass will be held at 10 a.m. Thursday, April 15 at St. Mark Catholic Church at 303 E. Parkway Dr. in Wheaton.

In lieu of flowers, contributions may be made to the Rush University Medical Center Philanthropy Department, Suite 250, Chicago, IL 60612, or to the Homan Square.

In Memorium - Mary Ellen Moloney
Chicago Tribune - Feb. 15, 2004

Mary Ellen Moloney, age 87, beloved daughter of the late Patrick and Margaret; loving sister of Sr. Margaret Mary Moloney, R.S.M.

Retired 40 year employee of Sears-Roebuck. Visitation Monday, 4 to 9 p.m., at Hursen Funeral Home (SW Corner of Roosevelt and Mannheim Rds.), Hillside/Westchester.

Lying in state Tuesday, 10 a.m. until time of funeral Mass 10:30 a.m. at St. Thomas the Apostle Church, 1500 Brookdale Rd., Naperville, IL. Interment Mt. Carmel Cemetery. Funeral info toll free 800-562-0082 or www.hursen.com.

Published in the Chicago Tribune from 2/15/2004 - 2/16/2004.

 

 

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