Straight Talk Archives
Older Straight Talk articles and items to our narse members:
|A Trend is a Trend is a Trend
|A Productive NARSE
for Shareholders' Resolutions
We Have Proof of Arthur's Deception!
|A Letter to the
Speaker of the House
Arrogance, Bad Attitude
|"Family Night" . . .
You Must Be Kidding!
|Stuff We've Heard
|Where Can We Get
Bumper and Envelope Stickers?
|The Revolving Door
Arthur's "Revolving Door" Does It Again!
|But What Can I Do?
|"Princes of Commerce"
|Arthur the Author
|narse Member Update Letter
|Letters that Touch the Heart
|Peter McMahon to
the Sears Board of Directors
|Does this Congressman Get
It or What!
Letter from EV
Buckardt to the Sears Board
You Mean This is Personal?
In the "Rucci,
View from the Podium
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.
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
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
Very Truly Yours,
cc Managing Director Deloitte and Touche
A Productive N.A.R.S.E. Annual
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 printers 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
treasurers 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
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 Dicks 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
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 ! ! ! !
GORDON H. MUSCHETT wrote:
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
Mr. Thomas P. Hester
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 managements decision to
systematically reduce long standing promise of paid-up retiree life insurance benefit
retroactively to January 1, 1978 for 84,000 retirees.
Gordon H. Muschett
Ph: 425-747-7230; Fax: 425-641-3375;
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
"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
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
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
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
(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:
Unit/Location Last Served:
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 Musghetts 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 todays society. Editor
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!
Id like you to picture yourself in the following
situation. You purposely sought employment at this Company because of its 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
Corporations success and measurably assisted in the Companys 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 companys 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 doesnt even pay for a modest
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 Im 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, weve 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
companys 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 werent 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
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
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 Martinezs 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
.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 its 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
kings 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
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
Presidents 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 employers 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
employers 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
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
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 heads 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 its best.
"Family Night" . . . You Must Be
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 arent
shopping at Sears anymore. As every sales manager knows, "ten percent of nothing is
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 Arthurs 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.
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
Bumper stickers/envelope sticker sales are outrageously
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
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
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.
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
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
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
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.Whos next?
"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?
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.
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 books 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." Lets 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
N.A.R.S.E. members met in Chicago on Aug. 15. September marks
the one year anniversary of King Arthurs 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
Arthurs 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
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
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
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
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, its 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
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
Very truly yours,
Letters that Touch the Heart
We receive letters that touch your heart:
The family of Clyde Thomas of North Carolina sent a check and
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
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
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 Arthurs "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.
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
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
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
retirees 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.
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;
lets 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,
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 Schultzs 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
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, its time you take it personally! Youre just
beginning to get the idea!
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.
Edmund E. Dusek
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
shouldnt be blamed for a costly and embarrassing scandal that erupted last year
related to Sears illegal collection of debts from bankrupt creditcardholders. . . .
However, Levins resignation is not related to the investigation of the
re-affirmation matter Sears spokeswoman Paula Davis said Friday. Levins exit
appears to have caught the company by surprise."
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!"