Plant severance raises ire
Wolverine executives to receive millions while hourly workers left out
By Eric Fleischauer
Wolverine Tube executives receive severance packages in the millions, while hourly workers — who lose their jobs Jan. 6 when the Decatur plant closes — will receive none.
Moreover, long-time hourly and salaried employees who have not reached age 55 by Jan. 6 will, under Wolverine’s retirement plan, lose most of their expected retirement pay.
Tension at the plant is high, said several employees.
Decatur Police Chief Ken Collier said Wolverine has hired plainclothes and uniformed off-duty policemen to protect property and employees. He said he is not aware of any threats or violence by Wolverine employees.
“I’m not going to comment on our compensation committee’s philosophy on bonuses and severance for employees,” said Jed Deason, Wolverine’s chief financial officer. “We do have a severance program for salaried employees. Like many companies, there is not a severance program for hourly employees.”
Aside from any earned retirement benefits, the only amounts Wolverine hourly workers will receive in connection with their terminations are conditional bonuses, according to documents distributed to them by management.
For each week of perfect attendance through Jan. 6, they receive $50. Perfect attendance for the entire two months entitles them to another $500. Those who provide two weeks notice before leaving Wolverine for another employer receive a $300 bonus.
Wolverine hourly employees also are eligible for production incentive bonuses of up to $3,600, but only if employees miss no more than two days and only if several conditions not within the control of individual employees are met.
Among the conditions: The plant must produce a specified tonnage of product, and there must be no more than one lost-time injury plantwide for the 60 days ending with the closure.
A supervisor at Wolverine, who declined to be identified for fear of retaliation, said the production goals probably are unrealistic.
“Several people have already left, and more will leave as soon as they find something,” he said. “There’s no way we can maintain that production without experienced people.”
Deason said Friday the plan is fair.
“We have in place a program that will allow employees to earn additional pay during this wind-down period,” Deason said. “We think that’s an equitable way to approach the situation.”
The Wolverine closing is having a devastating effect on salaried and hourly Wolverine employees who turn 55 after Jan. 6.
Under Wolverine’s retirement plan, an employee may retire at age 55 and receive 80 percent of his “approved benefit,” a pension amount that factors in years of service and rate of pay.
An employee who leaves at age 54, however, receives only 34 percent of the approved benefit, regardless of the years he has worked at the plant.
Wolverine is treating the date of closing, Jan. 6, as the retirement date for the Decatur employees. Thus employees who turn 55 after the closing date receive, at most, 34 percent of their retirement benefit, regardless of their years of service.
“If you leave employment prior to attaining early retirement age, which is 55,” said Deason, “your benefit is reduced by the amount you have stated (from 80 to 34 percent).”
He said it still is possible that Wolverine will find a way to build more flexibility into the retirement plan.
“We are evaluating whether there is anything we can do from a legal standpoint, whether there is anything we can do, period,” Deason said. “We are aware of the situation.”
Employees said they are not optimistic that the same employer that is closing the plant to save money would voluntarily increase retirement pay for those under 55.
“I don’t know what I’m going to do,” said a woman who turns 55 shortly after the plant closes, and who has worked at the plant more than 20 years. “I’ve worked there most of my life to build up my retirement. Now it’s gone.”
A 23-year employee who has not yet turned 55 was angry.
“We worked hard out there. Wolverine’s problems have nothing to do with the folks on the floor,” he said. “Why do we get punished when those who ran the company into the ground are rewarded?”
Both employees spoke on condition of anonymity because they said they feared retaliation.
“One topic that is causing some increased emotions revolves around retirement,” said Plant Manager Tim Ledlow in an e-mail he sent to some employees. “As you can see, there is a big difference between 80 percent and 34 percent.”
Deason initially retired in March 2005 after 11 years with the company. He received a lump-sum retirement of $1.6 million. He returned to the company the same year and, in 2006, received total compensation of $686,000.
While hourly employees receive no severance pay from Wolverine, executives receive lots, according to documents the company filed with the U.S. Securities and Exchange Commission over the last three years.
Former Chief Executive Officer Chip Manning, forced out of Wolverine by the new owners in February, received $1.5 million in severance pay and $1 million for signing a non-competition agreement. He also is receiving $20,000 a month for 15 months “to provide consulting and advisory services to the company,” according to documents filed with the SEC. The total package is worth about $2.8 million.
Manning also is receiving free health insurance for two years after his departure.
Manning was Wolverine’s CEO for 15 months. During that time, Wolverine’s share price dropped from $7 to less than $1.
Former Chief Executive Officer Dennis J. Horowitz retired in December 2005 after seven years at Wolverine. Horowitz was the sole eligible employee under an “executive plan” of retirement, and in 2006 he received lump-sum payments under that plan of $5.7 million.
After his retirement, Horowitz also received $225,000 a month for “consulting services” and received $75,000 a year to serve as a director of the company.
When Horowitz started at Wolverine, the company’s shares traded at $40 per share. When he retired, the share price was $5 per share.
Senior Vice President Keith Weil — at Wolverine for nine years — received a $190,000 bonus from the new owners to stay at the company until Aug. 17, at which time he was to be terminated.
Weil was to receive $863,000 in severance pay, $755,000 for signing a secrecy agreement and $294,000 over 18 months for consulting services — a total of $1.9 million. He also was to receive three years of free health insurance after his termination, according to SEC documents.
Wolverine stock was $40 per share when he started at the company and $1.19 per share when he left.
Most other executives at Wolverine have a severance agreement with the company that pays them one year’s salary, provides two years of free health coverage and reimburses the cost of hiring a consultant for six months to find a new job.
Salaried employees losing their jobs when the plant closes will receive severance pay calculated as follows: accrued vacation pay, plus two weeks’ pay, plus one week of pay for each year of employment at Wolverine, not to exceed 26 weeks.
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