Time Inc. Ends Stock Options to Employees
Unilateral
action prompts arbitration by the Guild
Earlier this year Time Inc. announced to the Guild that it would be ending its Stock Option grants in 2005. The Guild was reluctant to publicize this at the time because it was receiving mixed messages from the company.
For instance, after the
company’s HR representatives informed the Guild of its intent, CEO Ann Moore
indicated to an employee in an e-mail that the company would probably be
replacing the options with a profit-based program.
Who do you believe, HR
reps or the CEO? Apparently the HR reps, who insisted that no such program was
being contemplated. The Guild filed for an arbitration to be held by
arbitrator Martin Scheinman, who mediated the Stock Option settlement of
February 2002 between the Guild and Time Inc. that resolved the Profit-Sharing
arbitration filed by the Guild in 2001.
In an astonishingly
bizarre move at the arbitration, held on September 24, the company said that
Arbitrator Scheinman should not have jurisdiction over the Stock Option issue,
despite the clear understanding of both parties in the 2002 settlement that he
would “retain jurisdiction over any disputes concerning the issues
resolved.”
The company asserted
that only issues regarding the 2002 Stock Option memorandum of agreement, the
resolution, and not any dispute over the Guild’s Contract with Time Inc.,
could be heard by Scheinman. In essence what the company is saying is that
they did not violate the 2002 agreement and if the Guild has any dispute to
bring forward, it’s an alleged contract violation and there was no agreement
between the parties to have Scheinman preside over that.
In this case the bait
was the agreement to give Scheinman jurisdiction
“over any disputes,” and the switch was from Time Inc.’s attorney
in the 2001-02 case, Martin Oppenheimer, to Joseph Baumgarten.
Guild lawyer Irwin
Bluestein said at the hearing that he and Oppenheimer had agreed that
Scheinman would hear the new dispute arising out of the company’s ending of
Stock Options. Scheinman asked Baumgarten if he was aware of this. Baumgarten
replied, “No, I was not, and I am not.”
In other words, he was
insisting that he couldn’t take Bluestein at his word. Scheinman said that
he would have to figure out whether Oppenheimer and Bluestein had such an
agreement, and thus far neither Baumgarten nor Oppenheimer has responded to
attempts by Bluestein to confirm the agreement.
But that was only six
weeks ago, and evidently that was not nearly enough time for a stonewalling
Time Inc. to answer a simple yes or no question.
The Guild hopes that its
covered employees have good fortune in 2005, because the company is certainly
not going to provide for them. Here’s how things stand as of today:
·
2% raises for everyone on
February 1 (if the 2004 raises are any guide).
·
No Stock Options or
Profit-Sharing (traditionally worth roughly 8%-10% of salary).
·
100% increase in health-care
premiums for everyone, going up to as much as 2.5% of salary.
·
Specialist-visit co-pay
increase of 33% (from $15 to $20).
·
Prescription-drug co-pay
increases of as much as 433% (from $7.50 to $40).
·
10% decrease in coverage for
United Healthcare members for all non-office visits, including hospital,
X-ray, lab and surgery).
It’s very hard to
calculate the cost of all of this, but New York Guild President Barry Lipton
estimated at a health-benefits meeting held on November 4, that the total
package could be a decrease equivalent to 9.5% to 11% of the salary of
Guild-covered Time Inc. employees.
The Guild’s
counterproposals for health benefits will follow in another On Time shortly.
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11/04/04