Xerox Reduces Retiree Benefits Starting in 2019

Xerox Reduces Retiree Benefits Starting in 2019

Overview

 

By Jim Aroune

Inside the Webster Knights of Columbus, 85 Xerox employees spent their afternoon flipping through forms and listening to their health care benefit options.

Most have come to see the road ahead for them.

“For all intents and purposes, it’s over,” said Dave Coriale, head of the Association of Retired Xerox Employees.

What is over is the retirement benefits promised to Xerox employees when the then Webster-based company was a giant.

While they have slowly melted, the company announced this week that the benefits for non-union employees would be gone at the end of this year. Most of the 10,000 to 15,000 people who received letters from the company in recent days would have to pay for half of their benefits beginning in 2019.

Coriale said he saw the writing on the wall earlier this year when super investors Carl Ikahn and Darwin Deason took control of the company, road-blocked a potential merger agreement with Fujifilm, and began the process of making what was left of Xerox more investor-viable.

Xerox called the benefits changes “difficult but necessary decisions.” No one from the company would speak about the changes.

“In effect, it’s a push to motivate these people out,” said Coriale.

Brighton Securities’ Chuck Ward said the benefits reduction was textbook strategy for new leadership of a company others have eyed for merger.

“Do we cut research and development? Do we cut our sales force? Our existing workforce? Or do we cut these high costs for retiree benefits,” Ward said. “The retiree benefits is what goes to the chopping block first.”

Coriale does not believe the benefits reductions will end with this latest decision from Xerox.

“Just because the corporation has decided they’re going to pay 50 percent next year doesn’t mean they’re not going to come back next year and say, `that isn’t enough’,” he said.

One development that could change that is a merger. Wednesday, New York’s Appellate Court overturned the injunction from Xerox shareholders that stopped last spring’s merger agreement between Fujifilm and Xerox.

Fujifilm has already sued Xerox for stopping the deal. It remains to be seen whether it will pursue Xerox again, or, as Wall Street analysts have projected, raise the price for merging.

While Coriale is not sure whether it would mean a preservation of retiree benefits, he does believe a merger could save one aspect of the company for which he worked more than 30 years.

“It would still allow for the existence of Xerox.”