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AOL Reverses Course On 401K Match; CEO Apologizes

timothy posted about 2 months ago | from the what-I-meant-to-say-was dept.

America Online 123

An anonymous reader writes "When we last checked in with Tim Armstrong, the AOL CEO was demonstrating 'Leadership with a Capital L' to employees of the company's Patch local news subsidiary by summarily firing an employee in the middle of a conference call for taking photos. Armstrong continued to serve up tasty material for tech bloggers this past week, blaming $7.1 million in extra expenses from Obamacare, and for $2 million in expenses for 'two AOLers that had distressed babies', for a decision to hold all matching funds for employee 401K programs until the end of each calendar year. After a small firestorm in the press, and a petition from AOL employees unhappy with both the policy change and the way it was presented, Armstrong reversed course, reinstating the per-period match and apologizing for mentioning the individual employee cases (TechCrunch is an AOL subsidiary). Incidentally, Armstrong was originally following in the footsteps of IBM, which made similar changes to its 401K program that went into effect last year."

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123 comments

Distressed Babies? (0)

Anonymous Coward | about 2 months ago | (#46201791)

How does this lead to two million dollars in expenses? Is he running his own insurance company for the employees?

Re:Distressed Babies? (5, Interesting)

NicBenjamin (2124018) | about 2 months ago | (#46201811)

How does this lead to two million dollars in expenses? Is he running his own insurance company for the employees?

It's possible. Self-insurance is a thing a lot of companies do. Granted that typically doesn't happen in health insurance, but it is possible.

It's slightly more likely that their insurer jacked up it's rates due to increased costs, or jacked up rates for no reason and claimed it was due to those costs.

What's most likely is that somebody told him about the "distressed babies," and he used that as a rationalization for being a dick on the 401ks.

Re: Distressed Babies? (0)

Anonymous Coward | about 2 months ago | (#46202157)

what's more likely is that he got an unexpected $2M increase in insurance costs, since that is what the summary claims. BUT since insurance fraud is so popular these days, with the main beneficiaries being the insurance company, the gov't and the doctors, we in this country, have decided to nationalize it. Well, nationalize it in a socialist kind of way, where the people owns the liabilities and the gov't owns the profits that aren't stolen. because that is how national socialism works.
Of course this is all dependent on the belief that some sucker would pay $1M dollars to have a baby.
Given the choice, most would not.

Re: Distressed Babies? (1, Informative)

Anonymous Coward | about 2 months ago | (#46202685)

It's the other way around. Now the government owns the losses (funding the insurance subsidy, Medicaid expansion, etc.) and private insurers, drug-makers, hospitals, etc. keep the profits.

That's not socialism*. It's corporate welfare.

* (At least, not socialism as it was defined before Fox News took over the duty of defining "socialism and "communism" to mean "anything Obama does").

Re: Distressed Babies? (0)

Anonymous Coward | about 2 months ago | (#46205369)

"because that is how national socialism works."

and national socialism isn't socialism, it's fascism.

Re: Socialism isn't what you think it is. (0)

Anonymous Freak (16973) | about 2 months ago | (#46206625)

I think you need to research how government-mandated insurance works... The government doesn't make a dime off the insurance companies. And socializing would mean the exact OPPOSITE of what you claim - socializing would make the GOVERNMENT own the liabilities, and the PEOPLE own the profits.

Note: I'm not saying that socialism is good - mostly because "pure" socialism has never happened. Nor has "pure" communism. Every country that claimed to be communist ended up as a dictatorship under the veneer of communism. Pure socialism and pure communism are always doomed to fail because people are inherently greedy - corrupting the systems.

Gene Roddenberry's original Star Trek is as close to "pure communism" that has ever been portrayed. And like in Star Trek: we couldn't handle that system at present. (I don't think we ever will.)

Re:Distressed Babies? (3, Insightful)

alexander_686 (957440) | about 2 months ago | (#46202483)

Actually, most large companies are self insured. They will farm out the “operations” part (billing, negotiating rates, etc.) to a insurance company but will pay all of the costs out of their own pocket.

Re: Distressed Babies? (2)

koomba (2882339) | about 2 months ago | (#46204141)

it's not even necessarily just large companies that do this. my mother is a partner in a small CPA firm with about a dozen partners total, and about 50 employees total. now granted it is a total disaster because of many "distressed" old men in poor health sky rocketing their costs, but they do the same thing. they pay for it.

It's not that rare for larger companies. (1)

publiclurker (952615) | about 2 months ago | (#46202959)

to get a deal where they company will pay for major expenses in exchange for a lower rate for all of their employees. Normally only very large comanies do this. I doubt AOL is counts.

Re:Distressed Babies? (0)

Anonymous Coward | about 2 months ago | (#46205673)

Self insurance is very common with large companies. In fact most all insurance carriers will sell you a self insurance plan that is delivered through the insurance company. The card in the employees pocket says Blue Cross or whatever, but all the costs are paid by your employer.

Re:Distressed Babies? (5, Informative)

yoghurt (2090) | about 2 months ago | (#46201817)

Um, yes. It's called "self insurance". For a large company, they will often outsource the administration to a regular insurance company but they pay the medical bills out of the company pocket. It makes sense because with ten thousand employees, you have enough of a pool to lessen the statistical variation percentage wise. So some years you spend a few percent more and some a few percent less. Insurance charges for this statistical pooling so the company can save money. I guess there were a couple of outlier expenses that broke the average. CEO shouldn't complain - while he expected cost savings, he agreed to take the risk.

"Excess insurance coverage" (4, Interesting)

Anonymous Coward | about 2 months ago | (#46201955)

Um, yes. It's called "self insurance". For a large company, they will often outsource the administration to a regular insurance company but they pay the medical bills out of the company pocket. It makes sense because with ten thousand employees, you have enough of a pool to lessen the statistical variation percentage wise. So some years you spend a few percent more and some a few percent less. Insurance charges for this statistical pooling so the company can save money. I guess there were a couple of outlier expenses that broke the average. CEO shouldn't complain - while he expected cost savings, he agreed to take the risk.

http://safetynational.com/company.html?coinfo=Self-Insurance%3A+How+it+works [safetynational.com] All states allow and most require them to purchase coverage that "limits the amount a self-insured pays for claims from any one occurrence." So state regulations actually prohibited the AOL CEO from taking on too much cost risk in this area. TL;DR - he's a bleeding liar to suggest the two events were related.

Re:"Excess insurance coverage" (2)

Aristos Mazer (181252) | about 2 months ago | (#46205915)

> he's a bleeding liar to suggest the two events were related.

No, he's not. I've been digging into this story a bit. This is what I believe to be true based on piecing together comments in several forums: AOL is self insured. They had acceptable risk levels. But they had events that blew away their risk assessments. They're having to reclassify their insurance, and that means higher cost for the system next year.

So, true, they didn't have to pay out for these two events. But they are going to have to pay more next year because these two events mean the computed risk of these events happening next year has been elevated.

I am not saying the above is factually true -- I am not a first source. I'm saying that's what appears to be the case based on many Internet posts. I welcome others doing their own digging for info that contradicts my hypothesis.

Re:"Excess insurance coverage" (0)

Anonymous Coward | about 2 months ago | (#46206225)

> he's a bleeding liar to suggest the two events were related.

No, he's not. I've been digging into this story a bit. This is what I believe to be true based on piecing together comments in several forums: AOL is self insured. They had acceptable risk levels. But they had events that blew away their risk assessments. They're having to reclassify their insurance, and that means higher cost for the system next year.

So, true, they didn't have to pay out for these two events. But they are going to have to pay more next year because these two events mean the computed risk of these events happening next year has been elevated.

I am not saying the above is factually true -- I am not a first source. I'm saying that's what appears to be the case based on many Internet posts. I welcome others doing their own digging for info that contradicts my hypothesis.

> he's a bleeding liar to suggest the two events were related.

No, he's not. I've been digging into this story a bit. This is what I believe to be true based on piecing together comments in several forums: AOL is self insured. They had acceptable risk levels. But they had events that blew away their risk assessments. They're having to reclassify their insurance, and that means higher cost for the system next year.

So, true, they didn't have to pay out for these two events. But they are going to have to pay more next year because these two events mean the computed risk of these events happening next year has been elevated.

I am not saying the above is factually true -- I am not a first source. I'm saying that's what appears to be the case based on many Internet posts. I welcome others doing their own digging for info that contradicts my hypothesis.

I'm going to have to ask you to post actual citations linking to the things you claim to have read. Show that these hypotheses you are repeating came from someone with a little more knowledge of the facts than, say, Nancy Grace.

Because right now it just sounds like white knighting being pulled out of someone's butt.

Re:Distressed Babies? (4, Insightful)

NapalmV (1934294) | about 2 months ago | (#46202003)

CEO pay is also an outlier, what's his plan about it?

Re:Distressed Babies? (5, Interesting)

ebno-10db (1459097) | about 2 months ago | (#46202293)

From the WSJ:

The compensation of AOL Inc. AOL +0.28% 's chief executive, Tim Armstrong, nearly quadrupled in 2012 to $12.1 million, from $3.2 million in 2011

So by cutting his own pay by $10M, he could more than compensate for the $9.1M in extra expenses he claims. It would also bring his compensation into line with global standards. US CEO pay is somewhere around 400x the average employee's. The UK is a very distant second with around 45x. In almost every other developed country, it's between 10x and 20x. Very generously assuming that average employee compensation at AOL is $100k, $2.1M would put him at the generous end of global standards.

Re:Distressed Babies? (4, Insightful)

140Mandak262Jamuna (970587) | about 2 months ago | (#46202573)

Interesting, he raises his own pay by 10 million dollars and then blames Obamacare for 7 million dollar increase in "costs". Even if what this inveterate liar is saying is true, it works out to less than 2 bucks a day per employee.

Re:Distressed Babies? (1)

wiredlogic (135348) | about 2 months ago | (#46205045)

It also seems odd that a business with largely white collar employees was providing them with less coverage than the ACA minimum.

Re:Distressed Babies? (1)

14erCleaner (745600) | about 2 months ago | (#46205671)

Not to defend this bozo, but the $10 million "raise" was undoubtedly due to appreciation in his stock options, since AOL stock increased from $5 to $45 in 2013.

Re:Distressed Babies? (4, Interesting)

fuzzyfuzzyfungus (1223518) | about 2 months ago | (#46202053)

"CEO shouldn't complain - while he expected cost savings, he agreed to take the risk."

He also shouldn't complain because it makes him look incompetent (not that he is likely to even capable of experiencing the feeling of being seen as incompetent, of course). Apparently AOL has something in the neighborhood of 5,500 employees. I suspect that they skew young and reasonably healthy; but modest yearly changes in who's on chemo in a given year could trivially add up to 2 million+ swing. It's a big scary number; but it's only about a dollar per employee per day, across a population of that size.

If that qualifies as big, scary, risk, either you suck at risk management, your company has near-lethal liquidity problems, or various other bad things.

Re:Distressed Babies? Whining Author (0)

Anonymous Coward | about 2 months ago | (#46202337)

The article screams whiny baby, instead of sticking to the 401K rant the CEO had complained about, the author does a lot of moaning about previous rants, and changes the CEO has done.

This is business as we know it, you work for a company and take it serious you get screwed but the asshole that calls-off or comes up with bullshit excuses to not come into work is the one management keeps around. And they wonder why no one is happy!!!

Boo Hoo (0)

Anonymous Coward | about 2 months ago | (#46206009)

So I'm assuming your getting canned has nothing to do with your cheery disposition. Could also be that the person who calls in periodically is still getting more done than you, even though you come in to the office sick and get everyone else sick in the process.

Who are American People? (0)

Anonymous Coward | about 2 months ago | (#46201801)

For Fortune 500 executives, people living on American Land are disposable trash. They never commuted to work, paid mortgage on one salary or lived a "normal" American life.
In any case of trouble they have police with military equipment and FBI lapdogs ready to fire their weapons into the crowds.
Second homes on some island will provide them with comfortable life far away from that country some call U.S.A

Cue AOL railing . . . (5, Funny)

Anonymous Coward | about 2 months ago | (#46201809)

I like AOL. It started the internet super-highway after all, and if not for it, we would all be on modems, gets our software by CD, yada-yada-yada.

Re:Cue AOL railing . . . (1)

Anonymous Coward | about 2 months ago | (#46201861)

I like AOL. It started the internet super-highway after all, and if not for it, we would all be on modems, gets our software by CD, yada-yada-yada.

Yeah... Sure...

Re:Cue AOL railing . . . (1)

mwvdlee (775178) | about 2 months ago | (#46202013)

Because AOL never distributed software by CD.

Re: Cue AOL railing . . . (0)

Anonymous Coward | about 2 months ago | (#46202529)

Incorrect. Search for AOL CD in Google images. The horror.... The horror...

Re: Cue AOL railing . . . (0)

Anonymous Coward | about 2 months ago | (#46204137)

I know someone who made scale armor out of excess AOL CD's. Best use for the damn things I ever saw,

Re:Cue AOL railing . . . (1)

Sponge Bath (413667) | about 2 months ago | (#46202655)

Wooosh, the joke cruised over your head faster than the speed of comprehension causing severe turbulence. "Captain, the metaphor can't take it anymore, she's breaking up!" SPLOOSH! it crashes into the sea of mediocrity, lost like tears in rain.

Re:Cue AOL railing . . . (1)

Paradise Pete (33184) | about 2 months ago | (#46202141)

I like AOL. It started the internet super-highway after all, and if not for it, we would all be on modems, gets our software by CD, yada-yada-yada.

This is a troll, right?

Re:Cue AOL railing . . . (0)

Anonymous Coward | about 2 months ago | (#46202689)

I like AOL. It started the internet super-highway after all, and if not for it, we would all be on modems, gets our software by CD, yada-yada-yada.

You jest, but I once talked to a guy who, in all seriousness, told me he'd "been on the internet since it was called AOL". Given his overall lack of... clue, I believe that he believed that.

I neglected to tell him about the Eternal September.

Not so far wrong. (3, Insightful)

westlake (615356) | about 2 months ago | (#46203423)

I like AOL. It started the internet super-highway after all, and if not for it, we would all be on modems, gets our software by CD, yada-yada-yada.

AOL spared users the complexities of the Internet Suite of the '90s.

I still have the boxed set of manuals from Delrina. Clients for Telnet and BBS services, FTP. Archie Veronica, Gopher, IRC Chat, Usenet, a Browser, basic photo editing tools, compressed file management and so on.

AOL's clients were written for use by ordinary mortals. They played nice with third party software like mIRC.

GUI. Automatic updates. Fixed price monthly billing. Thousands of local access toll-free numbers. There was a lot to like about AOL and it is past time the geek got off his high horse and admitted it,

Re: Not so far wrong (1)

drummerboybac (1003077) | about 2 months ago | (#46206035)

I remember spending hours trying to get one file to actually send to a friends house via ZMODEM. AOL, or AppleLink Personal Edition if you want to go way way back, was much more accessible.

Re: Cue AOL railing . . . (0)

Anonymous Coward | about 2 months ago | (#46204887)

Your youth betrays you. It was called the information superhighway.

COPIED ENTIRE SUMMARY !! (3, Informative)

johnjones (14274) | about 2 months ago | (#46201839)

um whoever is doing submission checking should at least check that your not copying the ENTIRE summary from techcrunch... hence the subsidiary notice

Guys sort it out otherwise your going to get in trouble with lawyers and users !

John Jones

Re:COPIED ENTIRE SUMMARY !! (0)

Anonymous Coward | about 2 months ago | (#46203009)

um whoever is doing submission checking should at least check that your not copying the ENTIRE summary from techcrunch... hence the subsidiary notice

Guys sort it out otherwise your going to get in trouble with lawyers and users !

John Jones

No, I didn't. Post the link and let people compare.

- AC submitter.

Re:COPIED ENTIRE SUMMARY !! (2)

cgimusic (2788705) | about 2 months ago | (#46204083)

Did you even read the TechCrunch article? They are clearly not similar at all.

Re:COPIED ENTIRE SUMMARY !! (-1)

Anonymous Coward | about 2 months ago | (#46205039)

f-f-f-faggot

awwww (0)

Anonymous Coward | about 2 months ago | (#46205483)

is that your only retort after being proved wrong?

Please read before modding down. (-1, Offtopic)

Anonymous Coward | about 2 months ago | (#46201845)

An Honest Question

What company directs 25% of its users to a partially-working, not-ready-for-production website? Please realize that Beta will not have the features that we want, because they interfere with Dice's plans for Slashdot. Dice presents Slashdot to their advertisers as a "Social Media for B2B Technology" [slashdotmedia.com] platform. B2B - that's the reason Beta looks like a generic wordpress-based news site. To be sure, a large precentage of Slashdotters work in IT, but Slashdot is most certainly not a B2B site.

Reduced to Zero

Nevertheless, Dice is desperate to make money off of Slashdot, even at the cost of losing much of its current userbase. Turning Slashdot into a social platform for IT "decision makers" is a Haily Mary attempt to recoup the failed investment Dice made in buying Slashdot. As they have revealed in a press release [diceholdingsinc.com] detailing their performance in 2013, this acquisition has not lived up to their financial expectations:

Slashdot Media was acquired to provide content and services that are important to technology professionals in their everyday work lives and to leverage that reach into the global technology community benefiting user engagement on the Dice.com site. The expected benefits have started to be realized at Dice.com. However, advertising revenue has declined over the past year and there is no improvement expected in the future financial performance of Slashdot Media's underlying advertising business. Therefore, $7.2 million of intangible assets and $6.3 million of goodwill related to Slashdot Media were reduced to zero.

Change we Can Depend On

The new Beta interface is not the result of a superficial makeover. Keeping in mind that Dice felt confident enough to present it as the new face of Slashdot to 25% of its visitors, it is safe to say that the new commenting and moderation system is exactly how they intended it to be. It is a new design that deliberately cripples the one thing that makes Slashdot what it is today, viz. thebest commenting and moderation system online today. From the users' perspective, there is nothing wrong with Slashdot that demands gutting its foundations and dumping the one part of Slashdot we exactly like. As others have commented, this is an attempt to monetize /. at any any cost [slashdot.org], and its users be damned. Dice views its users, the ones who create the site [slashdot.org], as a passive audience. As such, it is interchangeable with its intended B2B crowd. We, the current users of Slashdot, are an obstacle in Dice's way.

The Dice are Cast

This is why they ignore the detailed feedback we have given them in the months since Beta was first revealed. This is also why they now disregard our grievances and complaints. Their claims of hearing us are a deliberate snow job. It is only pretense, since at the same time they openly admit that Classic will be cancelled soon [slashdot.org]:

"Most importantly, we want you to know that Classic Slashdot isn't going away until we're confident that the new site is ready.

Planned Obsolescence

There is a reason [slashdotmedia.com] why "News for Nerds, stuff that matters" no longer appears in the header:

Slashdot Media’s brands include Slashdot and SourceForge. These technology sites provide access to tools, software and forums for enterprise IT professionals working in all industries and companies from the world’s largest to small and medium-sized firms. Slashdot and SourceForge harness the power of social that no other tech site can compete with.

Slashdot Media provides its partners with proven integrated media strategies to effectively influence technology buyers. With over 15 years experience working with the largest and most engaged professional technology communities, Slashdot Media’s expert staff continues to contribute to the success of its partners branding, demand generation, and social media marketing programs.

Don't hold your breath waiting for Dice to fix Beta. Their vision of Slashdot is a crippled shadow of the site as it is today. Don't let them pull the wool over your eyes. Dice doesn't need us.

I, for one, abhor our new corporate overlords.

-- emmagaschs

Beta Rants are the New GNAA (-1)

Anonymous Coward | about 2 months ago | (#46202657)

Really kiddies, relax. Things change. Get over it.

This is the problem with private-sector benefits.. (2)

NicBenjamin (2124018) | about 2 months ago | (#46201859)

It's really easy for them to go away when a couple companies (like IBM) get cheap, the rest else declare the new cheapness to be the industry standard; and everyone gets screwed. If the CEO is sufficiently dickish you can win one or two battles like this one; but unless every single job applicant asks about a specific benefit before taking the job they might change their minds; and if the government forces them to stop cutting benefits they will; but most of the time that shit just doesn't work. Hell most beneficiaries of 401ks probably don't know whether their company matches their contributions annually or per pay period.

OTOH if there's just one government program (like Social Security or Medicare), then everyone knows exactly what Congress is doing about it, and you can't screw beneficiaries without everyone knowing it.

Re:This is the problem with private-sector benefit (1)

liquidpele (663430) | about 2 months ago | (#46202253)

I believe this is talking about the company *matching* your contributions... the company can't control when you contribute to your own 401k. In IBM's case, when I worked there, they matched up to 6% which is pretty damn generous.

Re:This is the problem with private-sector benefit (2)

ebno-10db (1459097) | about 2 months ago | (#46202401)

I believe this is talking about the company *matching* your contributions.

Obviously. Did anybody say otherwise?

In IBM's case, when I worked there, they matched up to 6% which is pretty damn generous.

6%. God bless their generosity. Wanna compare that to what it used to cost them for a defined benefit pension plan? Keep squeezing the peasants and they start to accept it as the new normal.

BTW, did you get laid off, or did you choose to leave? If you chose to, was it because you saw the handwriting on the wall?h

Re:This is the problem with private-sector benefit (1)

Anonymous Coward | about 2 months ago | (#46202733)

BTW, did you get laid off, or did you choose to leave? If you chose to, was it because you saw the handwriting on the wall?

Can't speak for the other poster, but I got sold to another corporation like the chattel the CEOs think we are.

It's fashionable these days to pretty it up by inventing the new-speak "acquihire", but its still CEOs buying and selling what they view as their property.

Re:This is the problem with private-sector benefit (1)

BonThomme (239873) | about 2 months ago | (#46202905)

I've always enjoyed how the named the opposite of a defined benefit plan a 'defined contribution' plan instead of an 'undefined benefit' plan...

Re:This is the problem with private-sector benefit (1)

inode_buddha (576844) | about 2 months ago | (#46204763)

Did he really say 6% ?? Holie shit, that bad. Even back when I was a construction laborer 10 yrs ago, the company matched us dollar for dollar. And that was in a non-union job, all you needed was 3 yrs attendance. The had Oppenheimer manage it, it was a pretty good deal since we were paid really poor to begin with.

Re:This is the problem with private-sector benefit (0)

ebno-10db (1459097) | about 2 months ago | (#46202263)

OTOH if there's just one government program (like Social Security or Medicare), then everyone knows exactly what Congress is doing about it, and you can't screw beneficiaries without everyone knowing it.

You're either a communist or a Canadian. Both start with a 'C', and America's right wing doesn't distinguish between them.

Re:This is the problem with private-sector benefit (0)

Rick Zeman (15628) | about 2 months ago | (#46202377)

It's really easy for them to go away when a couple companies (like IBM) get cheap, the rest else declare the new cheapness to be the industry standard; and everyone gets screwed. .

Yep, it's the start of the race to the bottom that once started the conclusion is almost inevitable. It's like the ripple affect from moving manufacturing out of the US. Once the first company did it the rest had to to compete...of course in typical US "head up the ass" fashion, no one looked longer term to see that the unemployed workers weren't buying new cars, new appliances, etc, thus driving the need to cut costs even further, thus accelerating the race. Hello bottom? America here calling....

abusing the 401k (5, Interesting)

maynard (3337) | about 2 months ago | (#46201875)

There are some who argue that the 401k is a bad investment option.

http://www.fa-mag.com/news/the... [fa-mag.com]

But note that by only disbursing matching funds on December 15th, IBM twists the arms of its employees to plan separation from the company at the most difficult time of transition. Right during the holidays and then a dead point for hiring in mid winter. They also incentivize employee harassment and unfair terminations prior to Dec 15th in order to cut costs by keeping what would have been 401k disbursements. And of course the funds are kept in an interest bearing or investment account controlled by the firm for a year, meaning those gains are lost to the employee.

I'd call that a terrible policy and one that any potential employee should carefully consider. Not only does it represent lost potential 401K gains, but much worse, it's an indication of how poorly management at the firm views its employees. Real 'company store' type stuff.

Re:abusing the 401k (1)

Anonymous Coward | about 2 months ago | (#46202007)

IBM twists the arms of its employees to plan separation from the company at the most difficult time of transition. Right during the holidays and then a dead point for hiring in mid winter

I don't understand how that being a dead point in hiring would be a big deal. If you are separating from IBM and still want to have a job, you secure the job first, then quit. If you have a better job lined up even in late November, surely a one time 401k match of a couple of thousand dollars isn't enough to keep someone at IBM. If you are looking to retire, but the holidays are coming up and you for some reason want to wait, drop 401k contribution to zero and forfeit the no more than a couple hundred dollars you would have otherwise accumulated by working 3 or 4 more weeks. The 401k match doesn't make leaving significantly more of a hardship of quitting on a case by case basis.

They also incentivize employee harassment and unfair terminations prior to Dec 15th in order to cut costs by keeping what would have been 401k disbursements.

I personally doubt harassment. I don't think the rank and file management team gets anything related to 401k savings. Same for 'firing', I don't think the 401k factors at all for anyone for firing people, it's just too trivial a chunk of change on a case by case basis. Now what I think IBM was looking forward to with this was enhanced savings from large layoffs. Of course, on that front, IBM's increasingly short term focus has been their undoing on that front. The savings to be realized by laying off people near the end of the year is countered by their desire to keep 'restructuring' charges as far away from the year end report as possible. Now they announced this year particularly they want to do a bunch of layoffs, but get them over with by March. 401k didn't do much for them. About the only realized change is that employees are denied interest on the amount and IBM is reaping those benefits instead.

In terms of dissuading potential employees, it's pretty clear at this point IBM has stopped caring about hiring *new* talent. In fact, their overall strategy could just as likely be about making people *want* to quit because that's cheaper than laying them off.

Re:abusing the 401k (2)

maynard (3337) | about 2 months ago | (#46202089)

Here's someone else who made many similar points to what I posted:

http://www.forbes.com/sites/he... [forbes.com]

First, any employee who leaves IBM’s employment prior to December 15 for any reason other than a formal retirement will not receive any company match to his or her own 401(k) contributions for the entire year. Nada. IBM executives could fire someone on December 14 and the company would not have to pay out.

Second, all employees lose an entire year of the IBM match working for them in the investment sense. ...

As for 'harassment' I think you made the point for me:

In terms of dissuading potential employees, it's pretty clear at this point IBM has stopped caring about hiring *new* talent. In fact, their overall strategy could just as likely be about making people *want* to quit because that's cheaper than laying them off.

What conduct in the workplace constitutes 'making people want to quit'?

Re:abusing the 401k (4, Interesting)

Anonymous Coward | about 2 months ago | (#46202717)

What conduct in the workplace constitutes 'making people want to quit'?

Former IBMer who was driven to quit, so I'll chime in here...

Small things first: they took away the water coolers and free coffee and put in these awful instant coffee pay-per-cup machines (Flavia). At the same time they banned people bringing in their own machines and putting them in the break room (that's a fire hazard, you know). Finally they took away the Flavia machines due to lack of use. Cafeteria food was terrible and very expensive. Team outings / holiday parties are virtually non-existent now. Laptops used to be replaced every two years, then three, now four. I would not be surprised if in the future IBMers are just expected to buy their own laptops.

The raises and bonuses were always pathetic and have been scaled back more and more. If you were 1 (a top performer, 10% or less of the work force), your bonus was somewhere in the neighborhood of 2-3% and your raise was roughly the same or less. And did I mention that raise/bonus money comes out of a company-wide pool now? So if your division/group is crushing it but revenue is slipping company-wide (which it has for years) you're not going to get a bigger pool of money than anyone else. And oh yeah, this year they announced that ONLY 1-rated performers get a bonus. Everyone else, you suck. I would not be surprised if no one gets a bonus/raise next year, seriously.

Speaking of raises, there are two kinds. Top contributor (if you got a 2+ or 1 rating; this year I guess it's just for 1-rated folks) and Market Based Adjustment. If you got a top contributor raise, it was pretty tiny for the most part. The MBA is used to get you to 100% of what they think the median salary for someone in your position and band level is. Last year they decided 90% was good enough. So in other words, if your salary is within 45% of where your position/band peers top out, no more raises unless you were a top contributor (and again, we're talking 1-3% here, and they might not even give you that next year).

One more thing about raises. Last year they decided to move out the date for raises by three months. So in addition to getting a pathetic raise you had to go 15 months without one. I believe this year they're moving it out another month. Again, I would not be surprised if next year no one gets a bonus or raise.

Finally, there's the 401k match. If you're not employed on December 14th, you get nothing. That is some grade-A bullshit and so far they're the only major company with the balls to insult their employees like that. That was the last straw for me and I (and several others) were able to leave and keep our match.

Re:abusing the 401k (0)

Anonymous Coward | about 2 months ago | (#46205513)

A lot of what you describe is very similar to what's going on at Northrop Grumman. And there have been rumors about many of the other things.

They tell us year after year that times are tough there's no money for raises etc, meanwhile the CEO is getting double digit raises every year. They supposedly have a policy of not doing promotions while there have been layoffs in the past 6 months or so and there have been a lot of layoffs in the last few years. I've been getting these tiny raises every year but they are offset by the ever-increasing health care costs (in part because the company cuts benefits every 6-12 months). They cut our number of holidays from 12 to 10 and gave us the justification that it's in line with the industry (which it isn't). Their response to the outrage was basically "just be glad we didn't cut vacation... yet" (which they had done about 2 years earlier). Their big thing now is "employee engagement" and when we tell them what's wrong the response is that there's no money to fix anything. But they paid Gallup millions to give us this uselessly generic survey. And they act surprised that engagement is so low.

There were rumors about them cutting 401K matching, which they claimed were false. But I wouldn't be surprised to see this delayed 401K bullshit since we're about due for another cut in benefits.

Re:abusing the 401k (1)

Cereal Box (4286) | about 2 months ago | (#46202319)

I don't understand how that being a dead point in hiring would be a big deal. If you are separating from IBM and still want to have a job, you secure the job first, then quit. If you have a better job lined up even in late November, surely a one time 401k match of a couple of thousand dollars isn't enough to keep someone at IBM.

Correct, you should have a job lined up first, but it's very, very difficult to time something perfectly so as to minimize the matching hit (i.e., as soon after 12/15 as possible). And the amount of money you forfeit is not a trivial amount. IBM matches 6%, so for your average 100K+ salary, that's 6K+ of investment money flushed right down the toilet if you leave towards the end of the year. You can't just look at it as "oh well, I lost out on 6K." Look at it as "I lost out on 6K that could've been invested for the next 20 to 30 years."

And I do have to give credit to AOL for one thing. They have a sense of shame, which is more than I can say for IBM.

Re:abusing the 401k (1)

swb (14022) | about 2 months ago | (#46202017)

One big problem with many 401ks are the crummy investment options. I worked for a small company whose 401k investment options were those offered by the company that managed the fund. Crap returns, high overhead.

Re:abusing the 401k (5, Interesting)

maynard (3337) | about 2 months ago | (#46202223)

http://wallstreetonparade.com/... [wallstreetonparade.com]

If you work for 50 years and receive the typical long-term return of 7 percent on your 401(k) plan and your fees are 2 percent, almost two-thirds of your account will go to Wall Street. This was the bombshell dropped by Frontline’s Martin Smith in this Tuesday evening’s PBS program, The Retirement Gamble.

This is not so much a gamble as a certainty: under a 2 percent 401(k) fee structure, almost two-thirds of your working life will go toward paying obscene compensation to Wall Street; a little over one-third will benefit your family – and that’s before paying taxes on withdrawals to Uncle Sam.

Documentary here:

http://www.pbs.org/wgbh/pages/... [pbs.org]

Re:abusing the 401k (1)

the eric conspiracy (20178) | about 2 months ago | (#46202433)

Costs ARE a big deal when it comes to investing.

Not all 401Ks are high cost. It's often worth lobbying your HR department to get good low cost investment options. A few Vanguard or Fidelity Spartan funds made a huge difference.

Get a company like Vanguard in there to run your 401K plan and you will be very happy that your investment options are offered by the same company that runs your plan. They are brilliant.

Also in this mobile world it pays to roll over to a IRA as soon as you can so you can pick the low cost funds yourself. Don't let that 401K sit around.

Re:abusing the 401k (1)

BonThomme (239873) | about 2 months ago | (#46202997)

lol, I can beat that. my employer went into the investment business and manages the funds in their 401K (and charges their employees fees)

(their principal business has nothing to do with financial management)

What do you expect? (0)

Anonymous Coward | about 2 months ago | (#46202041)

With the multinationals, like IBM, people are a commodity - not a resource - but a commodity. And with companies like IBM that arbitrage wages between the Third World and the Western World (buying REALLY cheap Third World labor and marking it up to Western levels), Americans and their 401Ks are just something that chips away at IBM's bottom line. They DO have to keep their revenues up other that poor poor CEO won't be able to get the what he deserves for his stock options. Although, regardless on how well IBM does, he'll be paid tens of millions - even if he's fired for incompetence: and he wold still get his pension that pays full salary.

But be assured, as he's canning people here in the US, he is creating jobs - in piss poor

Re:abusing the 401k (1)

the eric conspiracy (20178) | about 2 months ago | (#46202383)

It's pretty much always a no-brainer to contribute enough to your 401K in order to get the company match. That's usually an instant 50% return on your money. Every serious financial analysis makes that the first savings priority.

As far as the issue of tax rates, early in retirement it's generally possible to delay taking social security for a couple of years, and use that time to convert your 401K to a ROTH plan at extremely low tax rates.

The article you linked to is not very credible because it misses both of these extremely important considerations that make 401K plans a critical part of retirement planning.

Another factor to consider when reading this sort of thing when written by a financial planner is that these people have a vested interest in discouraging people from using 401Ks - money in these plans is not available to them and the outrageous fees they charge for the privilege of putting you into ill-advised investments.

Re: abusing the 401k (0)

Anonymous Coward | about 2 months ago | (#46202515)

My employer does the same thing, and also doesn't guarantee a match every year, and if they make one, it's a fixed amount ($1500 for 2013). I guess for most employees, that is like a 1% match. But honestly, that's just the sprinkles on the cake, not even icing..

My solution (1)

iced_773 (857608) | about 2 months ago | (#46203189)

What I do is seek a contract, then through my own LLC provide a solo 401(k), provide my own healthcare, etc. My benefits won't vanish on someone else's whim, and I have access to all the funds offered by my favorite investment manager. Plus my clients don't have to supply the benefits they would otherwise offer, and only have to pay for the hours I work (and I only have to be around when there is work).

Then again, there's kind of a seller's market for people with multiple computer science degrees, so YMMV. Maybe I wouldn't be saying this if finding contracts were harder.

Re:abusing the 401k (0)

Anonymous Coward | about 2 months ago | (#46206683)

It is simply a one year vesting schedule that resets every year. It is equal to or better then a 5 year 20% step vesting schedule for the first 4 years. As far as the possible gains that the employee doesn't get, it also insulates them from a possible loss.

The big problem is the clause that the employee loses all if they leave the company for any reason before the New Year. Anyone want to bet that December becomes layoff month? Or that certain stocks will be manipulated in early December id this practices become wide spread?

I agree that the guy is a douche.

Excuses (4, Interesting)

bmullan (1425023) | about 2 months ago | (#46201905)

I believe there are companies that are using the excuse of the Affordable Care Act to lower benefits and thus save costs. If AOL hadn't used the excuse of the AFA then it would have been some other excuse. I don't suppose anyone saw the interview withe AOL CEO? Jeez that was an aweful looking work environment. There must have been a thousand people all sitting in from of keyboards on row after row of very long tables. The only interaction a person seems to have are to the person left or right of themself. I also noticed nearly everyone seemed to have their lunch in front of them (evidenced by take-out bags, a dish etc in view). Many tech workers any more are being asked to work like senseless drones at their jobs. I don't know where AOL employee satisfaction ranks but I see that AOL is NOT listed in the top 100 companies to work for in 2014: http://jobs.aol.com/articles/2... [aol.com]

Re:Excuses (1)

Bite The Pillow (3087109) | about 2 months ago | (#46202155)

It is odd to see a brown bag meeting like this. But rarely would the CEO address employees in their workplace. It is usually in a place intended for such meetings, and then webcast remotely if needed.
In other words, if you don't know what you are talking about, don't jump to conclusions and then post about how your conclusions are terrible.

Fuck I love weed (0, Offtopic)

Anonymous Coward | about 2 months ago | (#46201909)

Fuck I hate beta

AOL's David Shing, Professional Nothing (4, Interesting)

McGruber (1417641) | about 2 months ago | (#46201989)

On Gawker, Sam Biddle points out that while AOL claimed it couldn't afford its old retirement plan, it is able to afford "Shingy," who Biddle describe as a "professional nothing". Shingy's job title is "Digital Prophet," which means "he's gloating about the fact that he has a make believe job at AOL, unlike most tech charlatans, who try to conceal it":

This Man Is Representing AOL on Live Television [gawker.com]

Re:AOL's David Shing, Professional Nothing (0)

Anonymous Coward | about 2 months ago | (#46202463)

On Gawker, Sam Biddle points out that while AOL claimed it couldn't afford its old retirement plan, it is able to afford "Shingy," who Biddle describe as a "professional nothing". Shingy's job title is "Digital Prophet," which means "he's gloating about the fact that he has a make believe job at AOL, unlike most tech charlatans, who try to conceal it":

This Man Is Representing AOL on Live Television [gawker.com]

To be quite honest, the great majority of CEOs are professional nothings. They are paid better and have much more influence on the company, than Shing.

And all they do is look busy doing random misguided "management".

Lemme guess... (1)

oscrivellodds (1124383) | about 2 months ago | (#46202035)

he got an immediate bonus for saving so much (?) money by coming up with the idea of delaying employee 401k matching funds. That must be why CEOs get paid so much to play golf with their buddies from other companies... like IBM.

Actually, it's a great idea, especially if layoffs are in your bonus generating toolkit for the coming year. Those employees who get laid off won't get the 401k matching because they won't make it to the end of the year, thus saving even more money and generating an even bigger bonus for the CEO.

And no doubt the shareholders will see these brilliant moves as reflecting the can-do mind-set of the CEO and will bid up the share price accordingly.

The pundits on CNBC will be pounding the table about it because that's the sort of leadership that America needs at the top of her largest corporations. Hey, if he is too dumb to take care of himself, you sure don't want him running the company! Gee, maybe that goes for Washington, too...

Eat the rich!

Re:Lemme guess... (4, Insightful)

ebno-10db (1459097) | about 2 months ago | (#46202355)

Eat the rich!

They probably taste lousy. I'd settle for the oppressive treatment they received in the radical days of the Eisenhower administration.

I wish people had a better understanding of history. Calling for a return to the tax structure (up to 90% on the wealthy's incomes), the percentage going to employee compensation, etc., that we had in the 1950's probably would get me branded a "socialist" (by people who don't even understand what the word means). Yet that's what we had in those idyllic Ozzie and Harriet days that so many, including the right wing, see as a lost golden era.

Re:Lemme guess... (0)

Anonymous Coward | about 2 months ago | (#46203643)

They only want the superficial return to the Golden Age, not the actual substance of it. Which is decidedly unobtainable anyway, unless you want to bomb Europe and Asia into ruins.

Re:Lemme guess... (2)

Third Position (1725934) | about 2 months ago | (#46205113)

Calling for a return to the tax structure (up to 90% on the wealthy's incomes), the percentage going to employee compensation, etc., that we had in the 1950's probably would get me branded a "socialist" (by people who don't even understand what the word means). Yet that's what we had in those idyllic Ozzie and Harriet days that so many, including the right wing, see as a lost golden era.

More likely it would just get you branded as an idiot. You might want to keep in mind, in the 1950's the US was the only game in town. Europe was recovering from 2 world wars, made in Japan was synonymous for cheap junk, Korea was in the midst of a civil war, and China and India were mostly known for mass famines. If you wanted to play in the big leagues, you played in the US.

Try charging those kind of tax rates now, and see if you can count to 10 before a major amount of capital flees to friendlier shores.

Re:Lemme guess... (0)

Anonymous Coward | about 2 months ago | (#46205529)

Calling for a return to the tax structure (up to 90% on the wealthy's incomes)

Try charging those kind of tax rates now, and see if you can count to 10 before a major amount of capital flees to friendlier shores.

Don't let the door hit you in the ass on the way out. Because the proletariat doesn't want ass-prints on its new door!

Exactly why we need ACA (1)

ugen (93902) | about 2 months ago | (#46202661)

So that a smug overpaid CEO of a sinking remnant of a company could not complain about employees receiving "too much money" for the healthcare for their family. Incidentally, this douche's compensation is north of 25 million dollars. That would pay for a dozen families health needs.

Insurance (0)

Anonymous Coward | about 2 months ago | (#46202665)

This is the reason for insurance, to spread the unexpected costs of a few over a large pool of people. Sounds like it worked. Perhaps their pool is not large enough. Either way, how does he still have a job?

Sounds To Me (4, Interesting)

Greyfox (87712) | about 2 months ago | (#46202793)

It sounds to me like AOL and IBM need a union. Bonus; if they trick some poor guy from India into coming over and working for them on a H1B, I bet the union could figure out how to hold the H1B if he ever decides to try to find other work.

Re:Sounds To Me (0)

Anonymous Coward | about 2 months ago | (#46204911)

>It sounds to me like AOL and IBM need a union

Because burning down your own house to get rid of the rats is the optimal solution?

Re:Sounds To Me (1)

OhPlz (168413) | about 2 months ago | (#46205903)

What good is a labor union going to do? Any techie that's unable to negotiate their own compensation is probably a techie that needs to brush on their interviewing and technical skills. The proper thing to do in this situation is to voice displeasure, discuss concerns with management, and ultimately.. work somewhere else. I'm going through the same thing right now. It sucks, but it's a far better option. Labor unions will do nothing but suck dues from your paycheck and reward mediocrity. The folks who excel will get to watch the least among them get the same raises and bonuses while being forced to fund a union whose real motivation is politics and revenue.

Re:Sounds To Me (0)

Anonymous Coward | about 2 months ago | (#46206289)

What good is a labor union going to do? Any techie that's able to negotiate their own compensation is probably a techie that needs to use their interviewing and technical skills. The proper thing to do in this situation is to work somewhere else. Labor unions will do nothing but protect the longest working employees from grossly unfair management practices, suck dues from your paycheck and reward those who successfully meet the minimums as mutually defined by labor and management. The folks who excel will get promoted and/or preferred hours or they will use their interview skills, while being employed by an employer who is forced to deal fairly with every individual, as defined by the union contract and thus unabel to single out the jew/creationist/moslem/atheist for petty personal vengeance .

REVERSE COURSE AND APOLOGIZE FOR BETA (-1)

Anonymous Coward | about 2 months ago | (#46202831)

Please post this to new articles if it hasn't been posted yet. (Copy-paste the html from here [pastebin.com] so links don't get mangled!)

On February 5, 2014, Slashdot announced through a javascript popup that they are starting to "move in to" the new Slashdot Beta design. Slashdot Beta is a trend-following attempt to give Slashdot a fresh look, an approach that has led to less space for text and an abandonment of the traditional Slashdot look. Much worse than that, Slashdot Beta fundamentally breaks the classic Slashdot discussion and moderation system.

If you haven't seen Slashdot Beta already, open this [slashdot.org] in a new tab. After seeing that, click here [slashdot.org] to return to classic Slashdot.

We should boycott stories and only discuss the abomination that is Slashdot Beta until Dice abandons the project.
We should boycott slashdot entirely during the week of Feb 10 to Feb 17 as part of the wider slashcott [slashdot.org]

Moderators - only spend mod points on comments that discuss Beta
Commentors - only discuss Beta
  http://slashdot.org/recent [slashdot.org] - Vote up the Fuck Beta stories

Keep this up for a few days and we may finally get the PHBs attention.

-----=====##### LINKS #####=====-----

Discussion of Beta: http://slashdot.org/firehose.pl?op=view&id=56395415 [slashdot.org]

Discussion of where to go if Beta goes live: http://slashdot.org/firehose.pl?op=view&type=submission&id=3321441 [slashdot.org]

Alternative Slashdot: http://altslashdot.org [altslashdot.org] (thanks Okian Warrior (537106) [slashdot.org])

OINK (1)

ncmathsadist (842396) | about 2 months ago | (#46203125)

Yet another tiresome example of the first class pig also known as Tyrannosaurus Executivus Capitus Vugaris. The greed of this disgusting species is breathtaking.

Tim Armstrong's Performance at Google (1)

conoviator (1991610) | about 2 months ago | (#46204089)

I'd appreciate hearing from Google employees about their impressions of Mr. Armstrong while he was an executive at Google. Is this a case of a competent upper level executive proving themselves too flawed to run a company as CEO?

401K matching changes: tax on bad mathematicians (0)

tlambert (566799) | about 2 months ago | (#46204233)

401K matching changes: tax on bad mathematicians

The 401K matching delay change only matters under to conditions:

(1) You aren't around for when the match happens, and it doesn't happen at severance ("the end of your tenure at the company").

That actually was not the case here.

(2) You are bad at simple math.

This is the case that the change counts upon to save the company money.

If you are bad at simple math, you can't work backwards from the maximum contribution amount to get to the exact amount of employee contribution that results in the highest possible employee contribution as a percentage of the total allowable contribution.

The rules change just tail-loads the employer match amount. The net effect is that if you contribute a specific amount per month, and the total of your contributions plus the employer match exceeds the allowable total yearly contributions, then the amount of contributions by you to the total goes up and the employer total contributions goes down.

Given that there's calculators for these amounts all over the web to 'maximize employer 401K contributions' (just google the phrase), anyone who doesn't have their per pay period contribution calculated out to the penny is leaving money on the table; the only difference is whether it's by overcontributing for one pay period, and leaving that amount on the table, or it's overcontributing on multiple pay periods, and potentially leaving it all on the table.

So with per-pay period contributions by the company, if you are a math dullard or too stupid to operate a web calculator, you leave a little bit on the table, and if you do the math, you leave only a few fractions of a cent on the table. With tail-loaded contributions, if you are a math dullard or too stupid to operate a web calculator, you leave potentially all of it on the table, and if you do the math, you leave only a few fractions of a cent on the table.

It's just one more of those places where, while you were bitching about never using algebra or percentages in your future life back in 7th grade, you should have been paying attention and learning math instead.

Personally, I have no problem with people who are bad at math paying more for things, just as I have no problem with them not getting the maximum sales commission they could possible get by pushing a client to purchase after the end of the month instead of before it, or them buying lottery tickets.

Re:401K matching changes: tax on bad mathematician (0)

Anonymous Coward | about 2 months ago | (#46204323)

You can also lose quite a bit if

3) The stock market funds where you have designated for your 401K contributions goes up during the calendar year. The S&P 500 went up by 30 percent in 2013.

Of course, the market can go down too, but that happens relatively infrequently on a year-over-year basis.

Re:401K matching changes: tax on bad mathematician (1)

tlambert (566799) | about 2 months ago | (#46206719)

You can also lose quite a bit if

3) The stock market funds where you have designated for your 401K contributions goes up during the calendar year. The S&P 500 went up by 30 percent in 2013.

Of course, the market can go down too, but that happens relatively infrequently on a year-over-year basis.

This isn't why people are pissed. The change is intended to cause any 401K program to extract more money out of the employees pretax earnings and less money out of the company's matching contribution, so that the company pays out less in benefits.

It only works if the people they try to pull it on are too stupid to do basic math and/or are too stupid to do minimal financial preplanning. The people complaining are agreeing that they are too stupid. Or they are just complaining because "we fear change".

Since when is AOL or Patch relevant to anything? (0)

Anonymous Coward | about 2 months ago | (#46204995)

Seriously, since when is AOL or Patch relevant to anything?

These idiots have been on a long, slot slide into oblivion for decades. And having recently made the incredibly deft investment of $315 million for HuffPo, they have been even less relevant and obviously on the edge of delirious and most likely approaching deranged...

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