1998 Straight Talk Archives

Older Straight Talk articles and items to our narse members:



A Trend is a Trend is a Trend Dec, 1998
A Productive NARSE Meeting Dec, 1998
Revision-Too Late for Shareholders' Resolutions Dec, 1998
Shouldn't We Have Proof of Arthur's Deception! Dec, 1998
Wanted Poster Dec, 1998
Retiree Contest Dec, 1998
A Letter to the Speaker of the House    Dec, 1998
Good Arrogance, Bad Attitude   Dec, 1998
"Family Night" . . . You Must Be Kidding!    Nov, 1998
Stuff We've Heard    Nov, 1998
Communications Update  Nov, 1998
Political Persuasion...Impact   Oct, 1998
Where Can We Get Bumper and Envelope Stickers?  Oct, 1998
The Revolving Door  Oct, 1998
King Arthur's "Revolving Door" Does It Again! Oct, 1998
Treasurer's Report Oct, 1998
But What Can I Do? Oct, 1998
"Princes of Commerce" Oct, 1998
Arthur the Author Oct, 1998
narse Member Update Letter Sep, 1998
Communciations Growth Sep, 1998
Letters that Touch the Heart  Sep, 1998
Peter McMahon to the Sears Board of Directors  Sep, 1998
Does this Congressman Get It or What! Sep, 1998

Letter from EV Buckardt to the Sears Board

Aug, 1998

You Mean This is Personal?

Jul, 1998

Congressional Letter

Jul, 1998

In the "Rucci, Bronson" Tradition

Jul, 1998

View from the Podium

Jul, 1998

A Trend is a Trend is a Trend

You will be interested in Clif Hook's observations to the Board on Arthur's tendency to reserve piles of gold for a rainy day. Ed.


Dec.18, 1998

Dear Sears Director,

The Deloitte and Touche "Review" of October 12 prompts this letter. In an article titled "Washington briefing", S. E. C. chairman Arthur Levitt discusses earnings management, a euphemism for the six actions public companies take to massage earnings. The first of those actions, he describes as "the overstatement of restructuring charges to clean up the balance sheet". This practice might also be called the allocation of unused reserves to level earnings.

There appears to me to be a pattern at Sears, Roebuck and Co. $1.9 billion was reserved for the 1993 restructuring initiated by the then new chairman Arthur Martinez. With an over funded pension plan absorbing huge portions of restructuring expense, there is reason to wonder how the $1.9 billion was finally used. At the same time, an overly generous $200 million was set aside to close catalog.

In 1998, an after tax $370 million has been expensed to close out the Home Life sale, a sale in which the buyer took all of the Sears employees -- the traditional source of significant expense. Even if the Company a agreed to buy out the Home Life leases, spending 390 million would have to be overstated. Where are the sale proceeds?

The sale of Western auto invites the same concerns. The after-tax loss of $254 million is a huge number that, when combined with the Home Life sale represents a pre-tax loss that pushes the billion dollar range.

The observed trend is this. Set aside an occasional billion dollars and use chunks of it when needed. As a Sears retiree, I know that, on Arthur Martinez' watch, a company that once defined integrity for the business world has become ethically challenged. For that reason, this letter invites your very close scrutiny of trends and recent transactions. As a former officer and shareholder, that scrutiny is appreciated.

Very Truly Yours,
Clif Hooks

cc Managing Director Deloitte and Touche


A Productive N.A.R.S.E. Annual Meeting

On December 19, Chairman Claude Ireson called the N.A.R.S.E. annual meeting to order with 20 members of the N.A.R.S.E. leadership in attendance. Following the Pledge of Allegiance and a moment of silence for our deceased friend Joe Kehoe, the Joe Kehoe award, a plaque, representing great contributions to N.A.R.S.E. and to the return of retiree insurance was presented to a very deserving Mel Schultz.

Bud Defano was awarded the K.M.A. award, a 10 pound four foot long gavel, representing his great work on membership and data management. The gavel (nee sledgehammer) may be useful in speeding up our printer’s schedule.

Tom Dowd presented the year in review, a summary of Sears, Martinez , and N.A.R.S.E. events and actions for 1998. It's safe to say that N.A.R.S.E. and Sears retirees had a better year then Sears and King Arthur.

N.A.R.S.E. is so fortunate to have Treasurer Roy Harris, his expertise, and the countless hours he dedicates to retirees. Roy presented the treasurer’s report and a proposed 1999 budget which was adopted. N.A.R.S.E. can be proud of the fact that, as of this date, more than 80% of each dollar received is spent to communicate with our retiree family; Sears retirees should be even more proud of the fact that every penny came from them. N.A.R.S.E. is possible because Sears retirees care enough to contribute.

Ken Johnson reviewed administrative issues including the changing of the N.A.R.S.E. business location from Oak Park to a professional service that provides phone service, voice mail, and a conference room when needed. The lease on the Oak Park office has been canceled (our P.O. Box stays the same). More information will follow. Two reasons prompt this change; first, we have no office staff and were not present in the office enough to have it make economic sense; second, we are very cheap with your dollars. When finalized, the new arrangements will mean less expense and will provide more personal and better service to retirees.

Bud Defano presented a great story on membership growth. Thanks to you, we add 3,000 names per quarter and stand at 15,600 as of year end; we communicate with 241 clubs; a database is established; all remembers average 31.8 years of Sears service and contribute financially to N.A.R.S.E. in excess of dues.

Field vice presidents Gordon Muschett (retiree activists on usury laws and processes), Art Levin (alternate insurance plans for retirees), and Leo Murphy (cable access television and the very successful Allentown demonstration) provided an overview of past and present activities on their turf plus the unique subjects shown above next to their names.

Attorney Mulder provided an update on the legal battle. Because of its importance, that subject will be reported separately.

President, Pete McMahon, presented the shareholder proposal he submitted to Sears and to the S.E.C. and then introduced Martin Glatzer an authority on corporate governance issues who provided insight into tactics for shareholder actions and proposals on subjects as varied as annual elections for board members and shareholder communication. Mr. Glatzer was most instructive, and we thank him. Because of the pre-set dates that control the window of opportunity for shareholder proposals, we will not be able to use as much of his valuable advice as we want.....but the annual meeting in 2000 will be very fair game.

Dick Bruce had been asked to investigate health insurance costs because of the many retiree reports of runaway cost increases from HMOs to individual participants. His findings will also be reported separately but, through no fault of Dick’s excellent research, they may confuse more than satisfy. We, originally, had a clear choice of Sears coverage or an HMO with understandable pricing; Dick found that factors such as Sears’ reclassification by age (for those retiring after1995) and different HMO marketing strategies have established over 2000 pricing options from 200 HMOs!

Lew Orlow reviewed the history of Sears treatment of retiree health insurance. It was not a pretty picture. Lew documented the tremendous increase in costs and decreases in benefit over the long term.

George Ohare updated Public Cable Access TV which can be a powerful tool for communicating our issue and for "finding" Sears retirees. 250 tapes have been sent out to retiree clubs. There has been great success in getting the tape shown locally around Chicago. For example, the Evanston Community Media center ran the our tape every Wednesday and Thursday in December. Tony Debevetz and Derek Palmer, have placed the video for future viewing. Leo Murphy discussed the placement on community access in Boston.

Two amendments to our bylaws were discussed and passed. First, future N.A.R.S.E. annual meetings will be held the before the Sears annual meeting. Second, there will be a limit of two consecutive terms of one year each for the offices of N.A.R.S.E. Chairman and President.

The 1999 annual Sears meeting will take place May 13 in Atlanta...the N.A.R.S.E. annual meeting will take place May 12 in Atlanta ...be there!        

Too Late for Sears Shareholder's Resolutions
Not Too Late for Proposals & Nominations

Be advised that Sears has again sent out conflicting signals. On the 3rd QUARTER 1998 INTERIM REPORT - COMPANY INFORMATION it indicates that: Shareholders who wish to present a proposal or nominate a candidate for election to the board at the 1999 annual meeting of shareholders must notify the company no earlier than January 25, 1999 and no later than February 5, 1999. In a phone conversation with Brian McKeough (Ph: 847-286-9238) of Hesters office, he indicates the cutoff for shareholder resolutions was November 27, 1998 according to the By-Laws of the Company. My submission was not timely! Of course we all read those company bylaws! However if we wish to present a statement at the annual meeting, we must mail or fax it in within the timeframe as indicated above. He asked that mail or faxes be sent to Hester in care of McKeough. His fax number is 847-286-0959. I have contacted my attorney and the SEC for determinations. While we may not make it to the proxy statement, lets think of some pertinent statements that you mail or fax which may give Arthur Martinez some concern and thoughts for reflection. During his term, Sears stock has not grown with earnings per share down 8% over the last five years! He's sold of all the assets except Service and Receivables while taking millions for himself at the expense of retirees and stockholders. Let King Arthur know that retirees are demanding their promised life insurance reinstated and we will not go away! Keep the pressure on ! ! ! !


Below is an outline of a submitted shareholders resolution which you may wish to use as a start for your own. I understand that we have until February 9, 1999 to submit under changing rules according to Sears third quarter statement. The submission of Shareholder resolutions to be considered at the annual meeting is a basic principle of effective shareholder activism as frontal assaults are rarely successful. "You have to go through the back door, " confirms Amy Domini of Domini Social Investments. One of her favorite tactics is to introduce resolutions for the shareholders to consider at the annual meeting. The best resolutions are the ones that promised, if passed, to make management's lives miserable. "We'll file a resolution on a sensitive matter like management compensation," says Domini, " and only agree to withdraw it if the company will speak to us about the issues we're really concerned with." Surely, with all your expertise, you may create a resolution for Sears management to consider! Good luck, and HAPPY NEW YEAR!!!

12610 SE 49th Street
Bellevue, WA 98006-2958

December 26, 1998

Mr. Thomas P. Hester
Corporate Secretary
Sears Roebuck & Co.
3333 Beverly Road
Hoffman Estates, IL 60179

RE: Shareholder Resolution

Pursuant to Rule X-14 of the Securities and Exchange Commission, this letter is a formal notice to the management of Sears Roebuck & Co. for the coming Annual Shareholders Meeting of 1998, that I request a Shareholder Resolution. I, Gordon H. Muschett, is a shareholder of 100 shares of stock in my IRA account in the street name of Salomon Smith Barney, will cause a resolution to be introduced from the floor the resolution noted below. It will be shown on the books and records of the Company that I have been the owner for over one year and have attended the last shareholder meeting. It is my intent to retain the stock past the scheduled 1998 shareholder meeting. However, circumstances arising after such date may change my holding of the issue.

I ask that if management intends to oppose this resolution, my name and address as indicated above, together with the number of shares owned and represented by me be recorded on the stock ledger of the corporation. And the resolution be printed in the proxy statement together with the text of the resolution and the statement of rational for its introduction. I also ask that the substance of the resolution be included in the notice of the annual meeting.

SHAREHOLDER RESOLUTION RESOLVED: That the Stockholders of Sears Roebuck & Co. assembled in person, and by proxy, hereby request that the following be presented: Following the Annual Meeting of the Management of Sears Roebuck & Co., Sears will create a post meeting report to be sent to all shareholders of record. The report shall include a brief resume of questions and answers of general interest, a summary of the discussions, identification of participants, and the actual vote for and against all resolutions.

RATIONALE: “Stockholders are entitled to accurate information as what transpires at the Annual Meeting, so that they can act in their own interest. If stockholders cannot act together, they cannot act effectively”. (Quote from United States Appellate Court, Judge John J. Biggs, Jr.)

Had a proper post-meeting report of the Annual Meeting been out to shareholders, there are some areas of interest shareholders would have learned: (a) A proposal was submitted for the future election of Directors. New Directors were proposed to be elected annually and not by class, as is now provided. (b) That Sears retirees dominated the question and answer period with concerns for management’s decision to systematically reduce long standing promise of paid-up retiree life insurance benefit retroactively to January 1, 1978 for 84,000 retirees.

Respectfully submitted,

Gordon H. Muschett
Ph: 425-747-7230; Fax: 425-641-3375;
E-Mail: gordonm@seanet.com


Shouldn't We All Have Proof of Arthur's Deception?
Order Yours Now!

Early in December, all retirees received, as required by law, the Summary Annual Report for Sears Group Life Insurance Plan. Page 2 of that document has, under the heading Your Rights to Additional Information” the following information:

"You have the right to receive a copy of the full annual report, or any part thereof for the Sears Group Life Insurance plan, Sears Group Medical plan and Sears Health Care Alliance plan.

To obtain a copy of the full annual report, or any part thereof, write Sears, Roebuck and Co., department 707 BEN, EC-131A,3333 Beverly Road, Hoffman Estates, Illinois 60179.

You also have the legally protected right to examine the annual report at the main office of the plan, Sears, Roebuck and Co., department 707 BEN, EC-131A, 3333 Beverly Road, Hoffman Estates, IL 60179, and at the U.S. Department of Labor in Washington D.C. or to obtain a copy from the U.S. department of labor upon payment of copying costs. Requests to the department should be addressed to Public Disclosure Room, N5507, Pension and Welfare Benefit Administration, U.S. Department of Labor, 200 Constitution Avenue NW , Washington DC 20210”

Sign up folks!!!!!!       

The Wanted poster . . .
See it Soon in your Neighborhood Stores!

The following was developed by Mel Schultz to recover names of Sears retirees and to tell our story.....every community bulletin board should have one!

wpe2.jpg (4074 bytes)

You can help the National Association of Retired Sears Employees locate the 84,000 retirees who are being cheated out of promised life insurance by chairman Arthur Martinez.

Friends, Neighbors, Relatives of Sears retirees can help them fight to restore paid up life insurance they were promised and earned by paying into the program for ten consecutive years while they were actively employed

Call or write if you know a Sears retiree who can be added to our mailing list, and learn about efforts to restore and protect promised benefits.



Retiree Contest . . . Great Fun & "Glorious" Prizes

Here's your chance to be creative, express your feelings about Sears chairman Arthur Martinez, and win prizes of inestimable value (sorry, no money).

Watchers of the Dave Letterman Late Night Show will appreciate the wit and sarcasm of his nightly TOP TEN lists. Now retirees can use their imagination to make up their own top 10 list describing Arthur Martinez’ chapters in his book, yet to be released. Enter the retirees' top 10 contest before 12-31-98, using the entry form below.

Considering our very limited budget, prizes for the best single overall winning entry are (1) one fashionable, highly visible yellow T shirt imprinted with "Sears unfair to retirees," (2) ten sheets of "Sears unfair to retirees" adhesive labels (16 labels to a sheet), and (3) 10 "Sears unfair to retirees" bumper stickers. Additional prizes of similar value may be awarded, based on the "merit" of individual entrees, or portions thereof.

The winning entry will be published in the next N.A.R.S.E. quarterly newsletter in early 1999.

Sears Retirees Top Ten List
(with apologies to David Letterman)

This fall of 1998, according to the Wall Street Journal, Random House planned to publish Sears chairman Arthur Martinez’ new book, "The Hard Road to the Softer Side -- Lessons from the Transformation of Sears," memoirs of his six years at the helm. According to the journal, his book has been dropped from the fall lineup because he hasn't had time to finish it. (Chicago magazine says that attorneys discouraged the fall publication of the book)

Here is a top ten list of titles for the chapters in Arthur Martinez’ new book:


Submitted by Sears Retiree:         (name)                          Date:                           


Unit/Location Last Served:                                                                       

Year Retired:                                                                                            

Mail entrees for "Retiree Top Ten" to N.A.R.S.E., P.O. Box 874, Oak Park, IL 60303 -- 0874. Entrees should be post marked no later than 12-31-98      

A Letter to the Speaker of the House

Although lengthy, the following is recommended to your reading. Gordon Musghett’s letter to then Speaker elect Livingston will be re-sent to the new Speaker when elected. Gordon has provided a N.A.R.S.E. history and a thoughtful summary of some dangerous trends impacting retirees in today’s society. Editor

December 13, 1998

Speaker-elect Bob Livingston
United States House of Representatives
Washington, D.C. 20515

Dear Speaker-Elect Livingston,

I understand that you have promised to make Social Security a priority and will introduce H.R. 1 when Congress convenes in January. As you are aware, your proposal will be an attempt to preserve the Social Security trust fund from raids by the President and Congress. According to the Congressional Budget Office, Social Security generates $117 billion more in revenue than it pays out in benefits. Moving Social Security off-budget would have an immediate effect of throwing the federal budget back into a deficit but moves the budget to a honest process. Your Bill will be certain to offer an opportunity for much thought and discussion in Congress.

However, concurrently, seniors are interested not only in Social Security, but healthcare, and other promised benefits by the corporations that they dedicated their lives, which now are being reneged.

As a retired executive of a large Corporation, I am writing to you on behalf of the families of 84,000 retirees, many who are your constituents, and millions of Americans, namely, the active and retired employees of all corporations. I am urgently requesting your support on an issue of vital importance to them. It is of national importance concerning the vesting of welfare benefits in retirement. If the actions I will illuminate below stand in the Courts, every worker should live in fear of losing their promised retirement benefits!

I’d like you to picture yourself in the following situation. You purposely sought employment at this Company because of it’s professed benefits and pay equal to or better than competition policies. When you were hired, and during your tenure, you were promised many benefits upon retirement. You have worked faithfully for this large corporation and dedicated most of your adult life. You, along with the thousands of others like you, made a significant contribution to the Corporation’s success and measurably assisted in the Company’s growth to become a major factor in American business. These benefits were reaffirmed not only by national and local executives but in meetings, letters, internal signing, and by letter at your retirement, etc. You, as an executive of the Company, reiterated the promise of all these benefits to thousands of employees. Prior to your retirement, you had carefully reviewed promised benefits, and all expenses to ensure that you would be able to sustain yourself and your family in your retirement years without outside assistance other than Social Security. You wanted to be absolutely certain that your family would be able to carry on after your demise based on the promised benefits. Life insurance premiums were one of the expenses that you did not have to be unnecessarily concerned about. After all, the Corporation promised retirees a paid-up life insurance policy at 40% of your active coverage, after 10 years of service and attaining age 60. You cancelled other life insurance policies, as you had the company’s promise of paid-up life insurance at retirement. You paid into the life insurance program for years.

Then, years after you accepted a well earned retirement, a new Chairman of the Board decided that you and other retirees were a “BURDEN” to the Corporation! Without warning, in September 1997, he announced a change to the long promised benefits. Particularly onerous was his decision to cancel the long promised retiree life insurance. These changes were made retroactive to January 1, 1978. In addition, he revealed that current active employees would not receive any life insurance or hospitalization benefits upon retirement. During your tenure, never, never, was it mentioned that this benefit or others could be cancelled or reduced!

The Chairman announced that if we needed life insurance, we would have the option of paying premiums with substantial yearly cost increases to make up the difference between the original amount and the declining amount. At the end of the 10th year, however, the policy would be worth only $5,000…which could be considered as a cruel joke at the expense of the family. $5,000 doesn’t even pay for a modest funeral today!

It is a very difficult situation for many retirees. Inflation has lessened their purchasing power and there has not been a cost of living adjustment to their pension since retirement. It is double jeopardy; retiree life insurance benefit is lessened but they have to make an increasing outlay of money to maintain the benefit at the amount they were told was paid up for life upon retirement.

The Corporation that I’m discussing is Sears Roebuck and Company. The Chairman is Arthur Martinez, with 6 years of service. Since his heralded arrival at Sears as a “turnaround artist”, we’ve seen his actions to our beloved Company fall flat. Sears CEO Martinez made these decisions under the pretext of “increasing shareholder value” when, in fact, this is an easy way for senior officers in corporate America to pay themselves larger stock options and incentives.

Of equal concern to retirees is the fate of hospitalization benefits going forward. Employees who retire after 1999 no longer will be eligible for the company’s contribution to premiums for Medicare at age 65. While Sears is not the first employer to eliminate its portion of contributions toward retiree health care premiums, it is one of the largest companies to do so. Will the retirees supplemental Medicare and spousal hospitalization benefits be the next to be taken away? Sears Vice-President of Benefits stated in a November 1997 letter to Sears retiree club presidents: “If we weren’t changing the retiree life insurance program, we would be forced to look at other avenues to reduce costs, avenues that would be less acceptable to retirees.” Not too subtle! There is a reserve on Sears Balance Sheet for $2.7 billion, representing Post Retirement Benefit. (FASB 106 requirement)….could this be the next windfall for Mr. Martinez to “increase shareholder value”?

A prudent person would be led to conclude that this step in reducing employee and retiree benefits is a step toward the elimination of all benefits for Sears active and retired employees. This is more evidence of a systematic, relentless, dismantling of benefit programs at Sears. Management will go on its merry way, paying themselves huge incentives, and touting their success in “ increasing shareholder value”.

In a letter of December 17, 1997 to Chairman Martinez, Harris W. Fawell put the issue in proper perspective when he wrote: “I know the long term business decisions have to be made, but it seems to me that any decision to alter long adhered to employee benefit programs should be taken as a last resort. If changes must be made they should be made prospectively, not retroactively. While perhaps within the letter of the law, this action by Sears may be a breach of faith and good will that is more serious than might be otherwise perceived. I raise the point of concern not only for Sears retirees, but out of concern for the impact your decision could have for ERISA.”

Senator Edward M. Kennedy, in his letter to Chairman Martinez states: “Furthermore, the elimination of medical benefits for Sears over 130,000 retirees would cost the federal government approximately $665 million in Medicare cost per year. In addition, it is extremely likely that the retirees them selves would sustain substantial out-of-pocket costs if forced to rely on Medicare.”

Illinois Senator Carol Mosley-Braun wrote: “ I believe, however, that Sears made an implicit commitment to its workforce that in the exchange for hard work and loyalty Sears would provide for retirees and relatives.”

Congressman Joseph P. Kennedy wrote on October 22, 1997: “By slashing retirement benefits with such casual disregard, Sears is not only tarnishing its own image by not holding to previous commitments, but is also serving to tarnish the loyal work record of its former employees. I ask you to reconsider the decision you have made and to avoid following this dishonorable trend in corporate America.”

Sears is a company that earned $1.19 billion in net profit in 1997, clearly not in any danger of going out of business or becoming non-competitive. To bring this entire issue into proper perspective, this net profit of $1.19 billion included a benefit of $37 million for the cancellation of employee life insurance. Also signing a consent decree for $390 million as a settlement to customers for illegally collecting from 190,000 bankrupt customers and failing to file reaffirmation agreements. Again, take away from the most needy to pay for the consequences of Sears ethically challenged management in their business dealings.

Sears retirees are fighting back as best they can. Among other actions taken by Sears retirees are the filings of ten Class Action Lawsuits. These Class Actions are now being consolidated in the Chicago Court of Judge Moran awaiting his decision on Class Action Certification.

In addition, as a result of Martinez’s actions, retirees have organized a national association…the National Association of Retired Sears Employees (NARSE). Many of the principals involved in its formation are former presidents, other senior officers, officials, and executives of Sears. NARSE is representing the interest of 133,000 Sears Retirees and dedicated to the restoration and protection of their Sears retirement benefits. Coalitions have been formed with retirees in Sears Canada, Boeing, and other organizations.

We are all aware of the shifts in power over the decades….from management to labor unions and back. Unfortunately, each of these wide swings of the power pendulum produced abuses of one kind or another, by both sides. Today, the pendulum has clearly swung back to management…but it’s a different kind of management. Sears management today is substantially comprised of people hired from other companies. They have no historical perspective regarding the company, as well as loyalty to retirees who helped build Sears over the years. They are well compensated, have extended signing agreements, contracts, and earn substantial incentives based on most current earnings results. They spend a large fortune on consultants and are paid a king’s ransom. They are quick to repudiate, and unwind, retiree benefit programs which were in force decades before they were hired.

Fewer employers are covering the under-65 health care. The drop of coverage stems from two things: employer efforts to cut health-care costs and new financial reporting requirements that started in 1993. The Financial Accounting Standards Board made publicly held companies reflect retiree cost liabilities on their balance sheet. If you expect an employer to report future liabilities for retirees on their balance sheet, then you can expect that employers are going to drop the coverage.

In January 1998, a precedence setting ruling by the Sixth U.S. Circuit Court of Appeals, regarding General Motors cut back on coverage, has opened the door for companies to change their retiree benefit offerings even though they have made promises to workers over the years. The Court said the company could cut back on the coverage offered to its retirees, even though it said it would provide full coverage. The Court said it had reserved the right to make changes in the legal description outlining the pension and health care. After a ten year fight, GM retirees appears to have lost its appeal to the Supreme Court.

Ron Pollack, executive director of Families USA, a lobby for health-care reforms, has stated, ”At this juncture, the handwriting is on the wall that this decline (in employer-based coverage) is taking place and will continue to take place.”

Those ages 55-64 are now falling out of employer based retiree based health coverage. Pressure is now building for the government to step in and assist, which may be through employer mandates or an expansion of public health programs. President Clinton is suggesting that those 62-65 may buy in to Medicare. The President’s plan requires beneficiaries to pay their premiums. However, many advocates for the uninsured are calling for federal subsidies for the lower income retirees which may threaten the solvency of Medicare when many baby boomers retire in mass. The Census Bureau has estimated by 2010, the number of individuals 55-64 will balloon by 60% to 35 million.

A recent study by William M. Mercer Inc. of New York indicated in 1993 that 46% of large employers offered early-retiree benefits but dropping to 38% in 1997.

Medicare Part A trust fund, which provides hospital insurance, will remain solvent to 2007, and lawmakers may have to take other steps, perhaps like raising the eligibility age to 67.

Under COBRA, early retirees can continue to pay for the coverage under an employer’s plan up to 18 months after leaving the company. During that time, they pay 102% of the cost of the premium to cover costs and part of the employer’s administrative costs.

Another disturbing issue is that over the last ten years, Sears has taken over $2.0 billion in restructuring expense. This was used as an inducement and enticement for employees to take early retirement with promises of benefits. And then, reneging on their promises to these same people, who now do not have the where with all to defend themselves.

Quite aside from the outrage of Sears retirees, as taxpayers, we are deeply concerned that a company such as Sears, who in the past was regarded as a moral and ethical corporation, is allowed to get away with this retroactive change in retiree benefits. I am sure other corporations with similar oriented leadership will follow. The fall out in terms of additional costs that state and federal taxpayers will assume could be enormous!

I am asking your assistance to protect all retirees, including those of Sears, from corporations making retroactive decisions affecting their lives and of their families long after they have retired. Please help us stop the “Corporate Benefit Bandits” by writing a letter to Chairman Martinez urging him to rescind the benefit cuts he retroactively put in place,

The Employment Income Security Act covers pension plans. On behalf of present and future retirees, I am asking that you assist in a review of ERISA and promote reasonable legislation for modification that will cover all benefits promised by a corporation that will protect the rights of all employees and retirees.

ERISA needs to protect employees and retirees from moral and ethical lapses of Corporate America.

Sincerely submitted on behalf of 133,000 Sears retirees, employees and future retirees of all corporations,

Gordon H. Muschett
Field Vice President National Association of Retired Sears Employees, (NARSE)
Phone: 425-747-7230, Fax: 425-641-3375
Email: gordonm@seanet.com


Good Arrogance, Bad Attitude, Miserable Communication

The following was received from a 1993 retiree who asked not to be identified. It is passed on as a “head’s up” to others.

“I called state Street Bank expecting to be able to roll over my Allstate and Morgan Stanley Dean Witter stock from my 401(k) to an existing IRA. I was told that, since I retired over 15 months ago, I had to roll over the entire profit-sharing account, not just the Allstate and Dean Witter stock. I asked why this wasn't in the letters sent to me, and I was told they couldn't tell us everything in these letters and it would have been too much troubled to send a complete letter explaining the requirements.” Sears communication....not at it’s best.


"Family Night" . . . You Must Be Kidding!

In his recent letter to Bob Mettler, President of Full Line Stores and to Al Stewart, the President of Retail Stores Mel Schultz expressed his thoughts on their invitation to "a special invitation to Sears family night" on Sunday, November 22nd, 1998. His feelings are beautifully expressed, and they are a model for all of us who feel hostile towards an invitation to “family night” when the head of the family has disgraced himself and insulted and injured our individual families. The “Family Night” invitation creates a glaring contradiction. King Arthur wants our dollars and our contribution to the success of a Sears that, under his leadership, is contemptuous of retirees and committed only to obscene profits for the Martinez family. How can we support that Sears on “Family Night” or any other night or day?


Dear Messrs. Mettler and Stewart,

A few days ago, I received "a special invitation to Sears family night" on Sunday, November 22nd, 1998 over your signatures. I would like you both to know why neither I nor any member of my immediate family will attend.

I am a Sears retiree. I retired in 1987 after 36 years of service in retail advertising and sales promotion. For years I helped plan and communicate events of all kinds, including family nights, such as you are promoting. Believe me, I understand what it takes to put together a successful event like this. I salute you both and everyone connected with the event, for all your hard work. I wish you well, and hope the event is a great success -- but my family and I cannot attend. And I seriously question whether many retirees will attend, much as they would like to.

As you know, last September Arthur Martinez informed 84,000 of us that he was retroactively changing and reducing our life insurance coverage and shifting the cost to us in a way that is harsh and unfair, especially at our age, health and financial status. As you also know, retirees are fighting Martinez cruel and shortsighted decision in every way we can in the courts and in the "court of public opinion". From any of us who truly love the company, Martinez has, unfortunately, created the equivalent of a "Sears Civil War" with Sears brother fighting against Sears brother. He has alienated a large base of most loyal Sears customers and their families who would prefer to contribute to sales and profits as they have always done, rather than find ways to "bad-mouth " Martinez and Sears.

Since September, 1997 with few exceptions, my family and I have stayed out of Sears stores. We throw way all Sears advertising materials and letters which come into our home. We cancelled our "whole house" maintenance agreement, which we have had since the very inception of the program. We rarely, if ever, use our Sears charge card. Our associate discount has lost its meaning, since we aren’t shopping at Sears anymore. As every sales manager knows, "ten percent of nothing is nothing".

In the last year, we have made thousands of dollars of purchases elsewhere, purchases we would have happily and naturally made at Sears.

We have two married sons and seven grandchildren. None of them will shop at Sears again unless and until our life insurance is restored, and all other promised and earned retirement benefits are secure.

Bob and Al, this situation doesn't make me any happier than it does you. Lord knows, I wish we could all shop at Sears again.


Melvin J. Schultz


Stuff We've Heard

The word on the street has it that King Arthur and his key staff had a contentious Saturday meeting on the subject of Holiday Marketing which Arthur described as "broke”. The Bob Mettler response to Arthur’s direction that $50 million be removed from the advertising budget was (allegedly) a loud "you can't do that". The reported Arthur response to him was "get a life".

Could there be grumbling in the upper ranks? Could the revolving door pickup speed? Stay tuned.   


Communications Update

Representing us , I wrote to the individual Sears Board Members and, for the second time, reviewed communication topics so that they have some appreciation for the hard work and commitment of so many retirees who do all of this. Implied in this update (which is being used here for the more important audience of retirees) is the clear message of permanence and growth that is characterizing retiree actions. We will not go away. Editor

To the Sears Board of Directors,

Working with the National Association of Retired Sears Employees in the communications area, it is my responsibility and pleasure to, again, briefly update you on progress since our Oct. letter on communications subjects.

Shareholder proposals have been submitted.

Our quarterly newsletter is enclosed.

N.A.R.S.E. has developed a "wanted" poster for distribution to organizations such as food stores that offer public access to bulletin boards. The purpose of the poster is to solicit names and addresses of Sears retirees for our database which is enjoying phenomenal growth (over 15,000 on its way to 50,000). You can assume the wanted poster, although accurate, is not a compliment to the actions of Sears, Roebuck and Company. Retiree clubs will have a master Wanted” poster to duplicate locally within the next week or two.

Cable access television in Chicago has twice run the one-hour panel discussion titled "Battle for Benefits". The panel of nine Sears retirees represented positions from President through Sears product lab assistant. What they passionately discussed and shared in common was the miserable Arthur Martinez decision to retroactively reach into their families’ pocket by reducing earned life insurance benefits. 225 copies of the one-hour show are in production for distribution to Sears retiree clubs for their distribution to local cable access channels. The show will not replace Seinfeld, but it sure is getting our issue a wide audience. As but one example, highly placed Inland Steel retirees with similar concerns were prompted by the Chicago viewing to join forces with us. Nationwide distribution will tell a whole lot of folks about the mean spirited side of Sears. Fax me at 410 250 1972 if you would like a copy.

Bumper stickers/envelope sticker sales are outrageously good.

Our representatives continue to speak at retiree and other events. There is a growing demand for speakers because we are finding retirees who, universally, want to be part of this cause and also because, retirees are finding our organization.

As you will read in the quarterly news letter, the recent N.A.R.S.E. communications picketing event at Hoffman Estates was surprising in the support provided by current Sears associates. Possibly, they are worried about promises made to them.

Although volatile, website productivity appears to be about 60 to 70 hits a day. That's a whole lot of contacts from interested people. The promise is growth.

Our Annual Meeting is Dec. 19 in Chicago. Please expect us to communicate the things you as a Director should know. You deserve to have the other side of the story ....so that good decisions can be made and bad ones reversed.

Tom Dowd
N.A.R.S.E. Communications


Political Persuasion...Impact

We can have great impact when enough Sears retirees contact or correspond with and follow up with their congressional leaders. The following letter was drafted in the hopes that it might make it easier for Sears retirees to draft a letter for their Representative/Senator. I hope that it is useful to you.

Ben Cubito...Legislative Affairs

Dear Senator/Congressman,

I retired from Sears Roebuck in company in....and, at that time, as part of my retirement benefits, was given a paid up life insurance policy of $....Never, at any time, did the company state that it could or would cancel or reduce this benefit. Now, the Current chairman of Sears has announced that he is reducing this benefit 10 per cent per year over a ten year period. This action will leave me with a paid up life insurance policy for $5000 . When announced, there was also the option of paying premiums with substantial yearly cost increases to make up the difference between the original retiree insurance amount and the declining amount. As you know, $5000 today will barely cover the cost of the most modest burial. With inflation, it is a cruel joke at the expense of my family.

At the time of my retirement, I carefully reviewed all of my expenses to be sure that I would be able to sustain myself and my family in my retirement years without any outside assistance other than Social Security. Insurance premiums were one of the expenses that retirees could look to reduce given that Sears had a paid up life insurance policy as part of our earned retirement benefit. So many Sears retirees let policies lapse because of the promised Sears insurance benefit.

It is a very difficult situation. Inflation has lessened the purchasing power of our pension. We have no cost of living adjustments in our pension plan. It is double jeopardy; our insurance benefit is lessened, but we have to make an increasing outlay of money to maintain the benefit at the amount we were told was paid up at the time of our retirement.

I am asking for your assistance to protect retirees from large corporations making retroactive decisions affecting our lives and families long after we've retired. These decisions are made under the pretext of “increasing shareholder value” when, in fact, this is an easy way for senior officers in corporate America to pay themselves larger and larger incentives while increasing the value of huge stock options. This is certainly true at Sears.

Sears retirees are proud in the fact that their careers built a company. We expected the reward for 30 to 40 years of service to be a comfortable retirement without the need for government or other assistance. Now, that expectation is being changed by a corporate America whose greed and reach can extend beyond the current workforce into the homes and families of hundreds of thousands of retirees who have no representation in the company. If we were current employees in disagreement with company decisions, we could resign and find another career. It is more difficult to resign from being a retired senior.

The Employment Retirement Income Security Act covers pension plans. Why can't ERISA be modified to cover all retiree benefits promised by the company? We neither ask for nor nor want special financial assistance from the federal government. We are asking for your vigorous support and protection against further erosion of our earned and promised benefits. I look forward to your response and to working with you on this issue that is so critical to seniop Americans.

Sincerely, Sears retiree


Where Can We Get Bumper and Envelope Stickers?

Bumper stickers are available at 5 for $5.00...envelope stickers are available at 20 pages (16 stickers per page) for $5.00. Order from N.A.R.S.E. c/o Ev Buckardt 1001 East Westleigh Rd. Lake Forest, Il. 60045


The Revolving Door

Are you familiar with the Arthur Martinez revolving door? Gary Crittendon, the Chief Financial Officer resigned in August. Tony Rucci, the Human Resources VP and a significant person in the retiree life insurance decision resigned and lasted about 90 days with his new employer. Goldstein, the credit VP resigned, but we were assured it had nothing to do with the credit debacle. Bronson, the Benefits VP, "retired" at age 54. Levin, the VP and general counsel resigned, but we were assured it had nothing to do with "flawed legal advice". The Real Estate VP resigned, and Jane Thompson has been moved from the Presidency of hard lines to a strange position with a much better view of the door.Who’s next?


King Arthur's "Revolving Door" Does It Again!

Another senior officer becomes a victim of Arthur's "Clean Sweep Program". This time it's Alice Peterson, Vice President and Treasurer of Sears, since 1993. She has been assigned to the newly created position of Vice President and General Manager of Sears Online. What's that?

Question: When will it stop?
Question: Why hasn't Arthur replaced his Vice President and General Legal Counsel, his Chief Financial Officer and now his Vice President and Treasurer?
Could the answer be, "Too much turmoil" at Sears?

Stay tuned for the next chapter in King Arthur's round table and see who falls next?


Treasurer’s Report

Financial support continues to be outstanding as more and more retirees are located and indicate their desire to be a part of our efforts with dues and contributions. We are blessed with a phenomenon whereby people very much want to be part of this cause. Communication with retirees in the form of postage printing, database development, WebSite creation, and maintenance have accounted for 76% of our total expenditures to date. That percentage will increase because it includes some one time infrastructure related start-up costs such as incorporation and application for tax exempt status. Administrative expense such as office rental, telephone, and supplies will continue, but they are modest. It is not possible to estimate the expense personally incurred by special contributors, N.A.R.S.E. officers, and Board members who have given so much. Thanks to you, we have some money in the bank and the means to continue communication and other efforts. With the exception of communication expense, we promise to be so “cheap” that Scrooge would envy us. Your generosity makes us tick.

Thank you. Roy Harris  


But What Can I Do?

The single most frequently asked question from Sears retirees is "what can I do...how can I help?" The following will offer some suggestions that can be incorporated into a personal campaign: Develop a Personal action plan...include at least one action on November 19 the national "BETRAYAL OF TRUST DAY" Support your local retiree club/organization activities and efforts geared to recover retiree life insurance. Join N.A.R.S.E....support N.A.R.S.E....send us your ideas...communicate activities. Write to individual members of the Sears Board of Directors monthly. Ask dependants to write. Find ways to involve the media...local and not so local. Solicit new club members...build the club and national database...research your Christmas card and othe lists...send names and addresses to N.A.R.S.E. Play “tit for Tat”...send Arthur and members of the Board of Directors receipts for Sears type merchandise purchased elsewhere as a protest for what they have done to us. Write state and national political leaders...tell our story...endorse ERISA type legislation to protect our remaining benefits...solicit their intervention with Sears. Demonstrate at Sears facilities and elsewhere.


“Princes of Commerce”

At the August 10 hearing in Chicago Federal Court (a hearing/action that grew out of the credit bankruptcy fiasco), Joe Kehoe was eloquent in describing retiree interests in such matters. Judge Lindberg was just as eloquent. Judge Lindberg referred to Arthur as a "Prince of Commerce” and went on to define “Princes of Commerce” as individuals more concerned with their own accumulation than that of employees and shareholders even when fraud is involved...the Judge broke the code.


Arthur the Author

Did you know that King Arthur has written a book titled "the hard road to the softer side of Sears" to be published by Random House? According to Chicago magazine, the book’s publication is delayed because "Martinez’ lawyers are said to be wary of letting it out before the Justice Department concluded its investigation into Sears illegal debt collection from bankrupt clients." Let’s help Arthur write a final chapter that includes the return of retiree life insurance. 


narse Member Update Letter

What follows is a letter sent by Claude and Pete to NARSE members. It is reprinted here because it contains news and information that will be of interest to all retirees. Since you make all this possible, the sincere thanks that they express apply to you. Editor

Dear N.A.R.S.E. Member,

This letter provides you with a very special bumper sticker. Thousands will be exposed to the ugly side of Sears when you wear it on your bumper, and we sincerely encourage you to do so. Honk when you see our stickers!

The bumper sticker communication also allows the opportunity for a brief update. On the legal front, our attorneys anticipate Judge Moran's granting of effected-class status to Sears retirees in October/November. Settlement discussions and/or further court actions will follow. To the extent that the words “attorney” and “optimism” can exist in the same sentence, our attorneys feel good ...they are optimistic.

N.A.R.S.E. members met in Chicago on Aug. 15. September marks the one year anniversary of King Arthur’s mean-spirited decision. A recent letter from us to 221 retiree club presidents asks them to plan and implement their contributions to publicly commemorate a sad one-year anniversary. Further, they are asked to plan and implement activities that tell our story and to do so under the banner of a fall campaign titled "the Sears Family Benefit Restoration Campaign...the betrayal of trust." You are asked to commemorate the year one anniversary with a letter to the Sears Board of Directors and to find a way to participate in the fall campaign...join a club, join in club activities, form a club or group, express your feelings in public forums, use your bumper sticker, write monthly to the Sears Board and political leaders, support N.A.R.S.E., involve the media, participate in the WebSite, etc. Do your own thing but find a way to make your presence felt this fall.

Negative headlines continue to chase Arthur and Sears: "Come see the softer side of Sears -- its earnings" Wall Street Journal "Sears tangled in new credit controversy" Crain's Chicago Business "Sears car part venture suffers a big backfire" Crane's Chicago Business "Sears request rejected" Chicago Sun Times "Another top exec resigns at Sears" Chicago Tribune "Sears puts furniture store chain up for sale...Sears unlikely to reap a windfall" Chicago Tribune "Lateral move may be a step down" Chicago Tribune

Articles like the above and many more subjects of interest are available in detail on the internet at the N.A.R.S.E. WebSite -- address........ www.narse.org.... Although new, the WebSite has already enjoyed substantial traffic (in the thousands of hits) and promises to be an efficient, superior, two-way means of communication. We encourage you to look up your organization on the Web. Also, we are investigating and making progress with the use of cable TV to tell our story.

Thanks to you, the database that did not exist four months ago is pushing 11,000 names and growing exponentially. Please continue to send us names and addresses. The track record says clearly that people want to be part of this effort.

35 retirees met Arthur and an entourage of analysts and reporters at Sears in Torrance, California on Aug. 13. Since it was before store opening, they demonstrated and chanted in "fashionable yellow retiree T-shirts" from door-to-door as the entourage walked through the store. We salute them. New clubs are forming weekly.

Arthur’s revolving door for key staff continues to revolve. Recently, Chief Financial Officer Gary Crittendon resigned and joined Benefits, Human Resources, Credit, General Counsel, and Real Estate Vice Presidents in finding life better on the outside. Former Human Resources V.P. Rucci has left his Executive VP, H. R. job at Fidelity after about three months there. Jane Thompson has been moved to a location with a better view of the door. Excepting retirements, how many senior executives resigned during your years at Sears?

Isn't it a terrible irony that a company in the midst of an ethical crisis spends millions on the strange new ad campaign funding "kids in crisis" and millions in support of needy Chicago families while causing a financial crisis for its closest family members, 84,000 Sears retirees?

Let us hear from you. One way communication is the sound of one hand clapping; good two-way communication creates a noise that King Arthur can't stand. Let us know (WebSite ...www.narse.com...or fax 410 250 1972 or phone 708 445 0133) what you are doing -- what works -- what needs to be done.

There would be nothing...no Internet, no updates, no bumper stickers, no activities, no legal support, no annual meeting type successes, no N.A.R.S.E....without your generosity. Your dues and your donations have enabled us to spend thousands of dollars on communication and activities that tell the story of the ugly side of a once great company. 76 percent of expenses to date have gone to communications, and that percentage will rise now that some one-time infrastructure expenses are in the rear view mirror. If you were wondering what to do with an unexpected inheritance or windfall, we can promise you that N.A.R.S.E. makes creat use of all donations. It seems inadequate to say “thank you”, but we say those words from the heart; you are the financial and emotional engine that drives N.A.R.S.E.

The widow of Clyde Thomas, a Sears retiree, may have said it best. She sent these simple words: "Clyde is deceased, but I am sure he would have supported your efforts to preserve Sears commitments to their retirees.”

Folks, its about commitments and promises and integrity and contracts. In the comfortable shade of these values, your actions will reverse a cruel decision and remind a company that needs reminding of what these words really mean. Because of what you do, we will win.

Claude Ireson, Pete McMahon


Communications Growth

The following documents the contents of a recent communication to the Sears Board of Directors. It traces the steady growth of our communications capabilities, and, in doing so, provides you with an update you deserve because there would be no growth without your efforts. Editor

It is my privilege to work with the National Association of Retired Sears Employees in the area of communications. As Directors, you should know of some of the communication vehicles in place and some of our plans for the future as well as our communication direction. In addition to being honest with you, it is our hope that your knowledge of N.A.R.S.E. communication abilities, the insurance issues, and input from a variety of sources including legal advice will prompt the re-examination of a very bad decision.

We have a story to tell. It is a sad story of a giant Corporation choosing a defenseless target, gutting a promised retirement benefit retroactively, and blaming the decision on competition a fraction of the size, profitability, and desirability of Sears, Roebuck and company.

There are three enclosures to this letter. The first is a page of envelope stickers with the text "Sears unfair to retirees -- restore promised insurance." Their significance lies in the demand for them. In less than six months time, N.A.R.S.E. has distributed more than 1/2 million of these stickers...with almost no communication of their availability...with a cost to the clubs and the many individual retirees who ordered them. The demand is actually growing; 200 pages were shipped yesterday. There is no way to measure how many sets of eyes see or how many impressions are made by a these stickers. Can we agree that it's a lot of both.

The second enclosure is new. It is a bumper sticker that was requested by many of our retiree members. The message is the same. The distribution is just starting. Please join me in picturing the number of impressions made and the number of people who will scratch their heads and wonder what is wrong at Sears when this bumper sticker graces 100,000 bumpers. I put mine on today (my car, of course, my wife's car is, as you might expect, off limits) and got several questions from neighbors within two hours. They were shocked at my answers. Until today their prior knowledge of my feelings towards Sears was limited to the fact that I once loved the values of Sears Roebuck and company.

The third enclosure is the N.A.R.S.E. quarterly information piece titled "straight talk". Its last distribution was limited to 9000 Sears retirees and 164 retiree clubs (now 221). The distribution of the first quarterly was less than 4300, and we realistically look forward to the day we mail 50,000 "straight talk" communications. On that day, it will be so much easier to coordinate activities.

You are welcomed to our new Internet WebSite at...www.narse.org. The "our story" segment is recommended to you. The Internet is an excellent communication device we use for news, events, education, and core messages. Although it has been in use for us less than two months, it’s promise of both clearly superior two-way communication and unbelievable growth is a given. We got 88 "hits" on Aug. 10...my service anniversary with Sears.

A key to our communications future is our database. As of our last Chicago N.A.R.S.E. meeting on August 15, we have a clean list of 10,524 with 221 clubs. Although these are such small numbers to Sears, understand that the database did not exist 4 months ago. As a shareholder, I sincerely wish that Sears sales and profits grew as fast as our database. The point to be made it is that people want to be part of this movement.

Add to the above the media contact list that grows hourly and club meetings with an effective speaker's bureau and you have our communication basics with one huge exception. There are 84,000 communicators with the motivation and the skills to tell our story in a way that will cause change. The Internet, “Straight Talk” and all of the rest are just bits of paper and electrical impulses. Our ultimate victory lies in the actions of the 84,000, and trust me when I tell you you have motivated them. The question raised is this: what will come first... The court victory by lawyers we support or the court victory in the court of public opinion?

Do not look on this as David vs. Goliath; we don't because this is quite different. David and Goliath had prior warning of the fight and time to negotiate a different settlement; their confrontation was honorable battle not a retroactive sneak attack; they wanted to kill each other, and we have no desire to kill Sears; they were never friends, and we were once Sears Best Friends; David had a secret weapon and stood alone...their fight was over in two minutes; we do not have a secret weapon, but we do have a true and compelling story to tell; we stand 84,000 communicators strong, and, unless Judge Moran or the Sears Board develops an acceptable accommodation for retirees, this fight will last for years.

Thanks for letting me share some of the N.A.R.S.E. communication opportunities with you. We wish you great insight and a decisiveness on this issue.

Very truly yours,
Tom Dowd


Letters that Touch the Heart

We receive letters that touch your heart:

The family of Clyde Thomas of North Carolina sent a check and this comment

“Clyde is deceased, but I am sure he would have supported your efforts to preserve Sears commitment to their retirees. This is a contribution for the support of the cause.”

Martha S. Ganss from Mississippi closed her letter with this paragraph:

“It saddens me to see the kind of company Sears has become. For so long I felt such an allegiance to them and felt proud to be working for a company which I thought exemplified honesty and ethics in the business world. I do not hesitate to voice my opinion of them now at every opportunity and no longer patronize them.”

Phil Fusano sent these comments:

“Keep up the good work. With great people like you who made Sears what it is we will win this case! I think we should all buy a T shirt like you had in Chicago (Sears unfair to retirees) and wear it all over the U.S.A. Remind Martinez we built this Company for him to go from “rags to riches” with our blood sweat and tears.”

Comments like these are a reminder that real people have real feelings towards the Sears they once trusted.


Peter McMahon to the Sears Board of Directors

The disastrous Western Auto sale prompted me to express my thoughts to the Sears Board. In the hope that those thoughts would be of interest to our retirees, my letter follows, and I solicit your reactions. Pete

September 11, 1998

To the Sears Board of Directors,

I was absolutely astounded to read in the newspaper that Sears blames Parts America failure on "faulty advice" given by a consulting firm. Once again, Sears publicly blames “faulty advice" as the reason for a failed decision. Martinez blamed "faulty advice" for the half billion dollar credit writeoff. How can the primary decision maker in a 42 billion dollar Corporation authorize the dismantling of one of the company's cornerstones and then blame the "outsiders" he hired as consultants? How can he not take the responsibility for his actions and decisions? Is he accountable?

Might this admission raise the possibility of another class-action lawsuit? Sears has announced there will be a 200 to 250 million dollar "after-tax" writeoff in the third quarter. This is a huge penalty to shareholders for losses due to Sears acting on "faulty advice".

Regarding automotive, I am puzzled at the N.T.B. (National Tire and Battery) commercials. Who is N.T.B.? Is Sears embarrassed to mention that N.T.B. is a member of the Sears family of businesses? Has "faulty advice" destroyed the once acclaimed Sears automotive franchise? Those who developed universally admired and revered house brands such as Road Handler tires and Die Hard batteries must be horrified! Sears can kiss good bye a franchise that not long ago delivered an 80 million dollar annual profit before being turned into a 70 million dollar annual loss.

Insiders tell us that Sears spends/wastes more than 50 million dollars a year on consulting fees. The money spent on consultant fees would have paid the premium for retiree life insurance benefits for a longtime. Martinez must have acted on "faulty H.R. advice".

I trust that, with the mountain of problems and financial losses that Arthur Martinez is bringing on Sears, the compensation committee will require that the incomes of Arthur and his key executives reflect the quality of their decision making more than consultant input. It would also be ludicrous to "restart" executives stock options. Lingering effects of the credit debacle, "faulty advice", failing off the mall strategy, potential legal implications concerning frozen credit balances, class-action suit settlements, a silly decision to fund mistakes with money promised for retiree benefits, and a key executive revolving door are far more significant to the long-term price of Sears stock than current market fluctuations.

It is fortunate that Arthur’s "turnaround" book was not completed as scheduled. The final chapter may not treat him kindly. He has put a once great corporation in harms way, and he is accountable.

Peter McMahon
President...National Association of Retired Sears Employees


Does this Congressman Get It or What!

Philadelphia retiree Jim Curran wrote to his Congressmen and received this extraordinary response:

Dear Mr. Curran,

Thank you for contacting our office to express your concerns about the unfair changes that Sears Roebuck is making in your retiree life insurance plan.

My staff has contacted Sen. Kennedy's office and reviewed the letter that the senator sent to Arthur C. Martinez Chief Executive Officer of Sears. I have pledged my full support to the retired workers of Sears in this crusade to preserve their life insurance and medical benefits. Sears employees have worked hard for Sears and worked hard to support their families. You relied in good faith and the company's commitment to continue life insurance after you retired. You shared the cost of that insurance, and you believed those same benefits it would be there when you needed them.

Unfortunately Mr. Martinez was unable to satisfy the needs of the retirees. He believes that phasing down life insurance benefits was the right thing to do to serve the interests of retirees, associates, shareholders, and customers.

With this decision, Mr. Martinez has shown the relationship of trust between employees and companies is being unfairly violated. The company is wrong to break its promise, even if it is legal to do so, and that is by no means clear. I wish you well in your battle in court. I support your position and stand ready to do all I can to see that you get the fair relief you deserve.

Again, thank you for sharing your views. If I can be of any assistance on this or any other federal matter, please do not hesitate to contact our office

Sincerely, Jon D.. Fox Member of Congress

A hand-written P.S. said: “I will work with Sen. Kennedy to ultimately solve this problem.”


Letter from EV Buckardt to the Sears Board

To the Board of Directors,

This evening, I finished responding to this week's letters, faxes, and e-mails from retiree club presidents and individual Sears retirees. Responding to them is a labor of love, but one that sadens me because it should not be necessary. It is, however, very necessary because of the corporate tragedy visited upon 84,000 retirees by an Arthur Martinez decision to change the status of 84,000 people from Sears Best Friends to dedicated adversaries...an unwelcome change of status that we regret.

A recently retired Sears officer commented on Arthur's amazement that so many former officers would lead the charge against his retroactive decision. Arthur's amazement clearly defines his indifference to and ignorance of a 100 year old culture that truly valued performance, the less fortunate, and loyalty. Retirement benefits were the promise and the reward for many years of those shared values.

Let's consider the financially less fortunate. See them in the context of fixed incomes twenty years old. If a Sears employee retired in 1978 with a thousand dollars pension per month, that person is still receiving 1000 dollars per month. Sears pension does not include a cost of living adjustment. Just imagine the loss of buying power in that twenty year span. Add in the cost increases for retiree medical benefits... an increase of 400 percent since Arthur Martinez arrived at Sears. Now add new life insurance premiums which can be hundreds of dollars annually depending on the retiree’s age. The results of these considerations leave Arthur open to valid charges of bayoneting the wounded.

Arthur's contempt for retirees is well-documented. He is taking away retiree life insurance. Formal communication with retirees stopped on his arrival. His personal spokesperson has publicly stated more than once that “Sears retirees are a burden...if they want life insurance they should pay for it.” Arthur badly underestimated the situation when he told his staff that retirees will lose interest and go away. Arthur has said that retirees should spend their time “cleaning their garages.” An Arthur approved rationale for his fateful decision is the fact that the “average policy was only $17,000.” When asked in a conference call how he felt about broken promises, Arthur said that he “never made any promises.” At the Annual Meeting, Arthur said that he did not view his cruel decision as an ethical issue. Wow!

Has the picture of Arthur's arrogance and contempt for retirees and promises made to them become more clear? Can you now understand the depth of retiree commitment to changing a decision that , over the years, has the capacity to become the public's model for corporate irresponsibility? Can you begin to see Arthur as a man without compassion whose loyalty is limited to an agenda of personal accumulation?

It is time to seek an equitable solution to this tragic dilemma. Cut the Company losses; win the war; abandon the battle; let's do it before legal action requires it; let's do it to the advantage of retirees more than attorneys; let’s save millions in legal expenditures; give a little save a lot.

Next month marks the first anniversary of an amazingly bad decision. Reverse it. Let us become Sears Best Friends again.

Very truly yours,
Ev Buckardt


You Mean This is Personal?

 At the press conference following the annual meeting, Arthur, responding to the comments and questions of outspoken Sears retirees, told the press that he "could had not help but take it personally". The following paragraphs are a small portion of Mel Schultz’s reaction to King Arthur "taking it personally." It was recently sent to the Board of Directors.

‘And every one of the 84,000 retirees has had to take it personally’. Every one of their dependents and beneficiaries has had ‘to take it personally.’ The lives and futures of more than 84,000 former Sears Best Customers have been damaged by this ‘hard business decision’, and they are ‘taking it personally.’

And now Arthur says he is "taking it personally’. What a rotten shame! He must be ‘taking it personally’. What a rotten shame! He must be ‘taking it personally’ as he rides back and forth in his helicopter and as he commutes weekends to his East Coast retreat. He must be ‘taking it personally’ as he contemplates the profit he will enjoy from hundreds of thousands of shares of stock that have been awarded or optioned to him. And then, there is always the personal embarrassment he has had to suffer, standing in front of shareholders at the annual meeting attempting to justify how he and his ‘puppet’ Board of Directors have cheated the very people who built the business they now so ignominiously mismanage. Arthur, it’s time you take it personally! You’re just beginning to get the idea!


Congressional Letter

The following letter was sent by Ed Dusek to Congressional Representatives and Senators. It is FYI on this webpage because it reminds all of us of the importance of frequent communication and pressure on the folks who determine the law of the land. If it sounds like we need persistence equal to "the rain drop treatment", it is because we do:

Senator Kay Bailey Hutchison Room 283 Russell Senate Office Building Washington, D.C. 20510-4304

Dear Senator Hutchison:

Sears, Roebuck and Co. has reneged on a long standing commitment to its retirees to provide them with paid-up life insurance in retirement. Sears' CEO decided that retirees, starting in 1998, must pay their own annual life insurance premiums. This additional cost is substantial for the retiree.

Sears retirees were told, while working as well as upon retirement, that their life insurance coverage, at retirement, would drop to 40% of the active duty value but then would stay at that level for as long as they lived. That commitment is now broken.

To make matters worse for many retirees, President Clinton has suggested a program that would allow everyone without health care, age 52 through 64, to participate in medicare. While my fellow Sears retirees and I are in favor of health care for all, I can perceive how the CEO of Sears will be provided an easy chance to eliminate our retiree health care benefit.

I believe it is unfair for our government to give top management the opportunity to turn company obligations over to the government and to the taxpayer. Every retiree knows he worked hard for and deserved every part of his promised retirement benefits. These benefits are what once made companies like Sears great. Associate loyalty to the company helped create the wealth that made these benefits possible. Sears made millions in profits last year...there was no need to take money away from the group least able to afford it, its retirees.

In closing, I ask that you introduce or support legislation that will prevent companies from arbitrarily eliminating benefits once promised to former employees and that you keep companies from passing-off their retiree health insurance costs to all taxpayers. Companies that promised paid-up life insurance and health care benefits should be made to honor their commitments.

Yours truly,
Edmund E. Dusek


In the "Rucci, Bronson" Tradition

Joe Kehoe asked Arthur why the authors of "flawed legal advice" still prospered in the company. Within two weeks off his question, the following parts oif a Susan Chandler article appeared in the Chicago Tribune:

"Michael D. Levin, head of the legal department at Sears, Roebuck and company resigned unexpectedly Thursday to return to private practice. The move comes two weeks after Sears C.E.O. Arthur Martinez told shareholders Levin shouldn’t be blamed for a costly and embarrassing scandal that erupted last year related to Sears illegal collection of debts from bankrupt creditcardholders. . . . However, Levin’s resignation is not related to the investigation of the re-affirmation matter’ Sears spokeswoman Paula Davis said Friday. Levin’s exit appears to have caught the company by surprise."


The View from the Podium

At the May 14 meeting, Cliff Hooks spoke powerful words to the demonstrating retirees in front of the Rubloff auditorium. The following are his brief reflections on what it felt like to speak to that audience and to participate in the meeting that followed:

"On May 14, 1998 my pride was restored not in Sears the Corporation but in the people who are Sears . . . the more than 200 people from all over the United States who joined together to represent all retirees at the Annual Shareholders meeting. They cared enough tro show Arthur Martrinez that we will not give up, and we will not go away. My pride was restored when Arthur was questioned by retirees, and, before he could attempt to answer, he had to wait for the sustained applause to subside. I realize that my pride in Sears has always been based on the people who built Sears not strangers whose priority is to selfishly build their personal wealth at the expense of anyone. I am so grateful to my fellow retirees for their reminder of what is really important!"

Cliff Hooks



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