IBM workers' variable pay is the lowest in four years

BY JEFF PLATSKY
Press & Sun-Bulletin

Feb. 9, 2002

ENDICOTT -- IBM Corp. microelectronics division employees will receive the smallest supplemental pay checks in at least four years next month.

Memos distributed to IBM Corp. workers in Endicott on Thursday outlined the structure of the program, with rank-and file workers getting between 2.28 percent and 5.7 percent of their annual pay and management receiving between 3.42 percent and 8.55 percent of their yearly wage in the supplemental payment.

Linda Guyer, a long-time IBM-Endicott employee and president of a group trying to organize domestic IBM workers, said many workers were disappointed by the announcement.

Employees in other division who also received their supplemental pay schedules are getting larger payments, Guyer said. Microelectronics, because of its poor business performance last year, found its supplemental benefit trimmed by about two-thirds from last year. Microelectronics accounts for about 2,000 of the approximate 5,000 people at IBM-Endicott.

"In a year when we've heard about other companies eliminating or postponing bonuses, IBM is paying $1.4 billion worldwide," said Todd Martin, an IBM-Endicott spokesman.

Nevertheless, Guyer said the reduced payments could have a ripple effect across the Southern Tier economy. In the past, colleagues have used the checks -- which could have equaled anywhere from $2,000 to $15,000 and more in previous years, but will be far less this year -- for special purchases such as home renovations or a down payment on a car.

"They used it for some kind of special purpose that they won't be able to do this year," Guyer said.

The variable pay checks will be distributed on March 14.

IBM calls the program "variable pay," a system that rewards employees based on personal performance and the results of their business unit. Payouts could vary among divisions because individual results differed greatly, Martin said.

The Technology Division, which includes Microelectronics, reported a $374 million loss in 2001, on revenues of $10.3 billion. In 2000, the Technology Division reported pre-tax income of $679 million on revenues of $11.5 billion.

At Microelectronics, the payout for those ranked as top-level performers -- those receiving a one in their evaluation -- will be given 5.7 percent, while those one notch below will get 3.8 percent. Employees ranked at a level three, workers achieving most of their goals, will receive 2.28 percent of their annual wages in supplemental pay. Employees ranked below the mid-range are shut out of the supplemental pay program.

Top-ranked managers will receive 8.55 percent of their pay in the lump-sum payment in mid-March. Those ranked one notch below will receive 5.7 percent and those ranked in the middle will get 3.42 percent, according to a memo distributed to Microelectronics employees.

The numbers were confirmed on Friday by the Alliance@IBM, which is trying to organize the IBM work force. Martin called the numbers "on target."

Sixty percent of variable pay is based on company performance and the balance is based on unit performance, Martin said.

By comparison, rank-and-file Microelectronics workers last year received between 15 percent and 6 percent, while managers were awarded between 15.75 percent and 6.3 percent in variable pay.

Some of those who were laid off in the December jobs action, which cost 400 Endicott workers their jobs, will also qualify for the supplemental benefits. Temporary workers are not entitled to variable pay.

"It's not really a bonus," Guyer said of variable pay. "It's part of the pay that's related to how the company does."