IBM was wrong to force UK workers off final salary pensions – judge

Re: Read between the lines

As has been said, 'Shareholder Value' can be interpreted in many different ways. In fact, so many that the directors may actually do pretty much whatever they like. After all, you can always argue some sort of shareholder value. So, directors are in reality given almost total freedom to do whatever they like. In return, the shareholder can vote (at AGMs etc.) at regular intervals to change directors etc. if they wish to. One such reason might be that the shareholder does not believe the director is giving shareholder value. That's the risk the director takes in his/her decisions.

So, IBM directors could quite happily not have done this and accepted lower EPS for a quarter and simply said they thought it was right. It is then up to the shareholders to do something about it. They can vote at elections etc. or do things like sell the shares, where if enough do so, the shareprice will fall heavily. Of course, this affects the value of the directors shareholding, which is a primary reason why they don't tend to do anything that could negatively affect the shareprice. Given good shareholder returns will always tend to raise the shareprice as ROI is good/improves.

It has become increasingly common for the employee to be considered a resource and dealt with in a pretty poor way in many companies. However, if you look at history, you soon realise that treating employees badly often results in the company doing rather badly, as has been said in earlier replies. So, now, some more enlightened companies are beginning to realise that treating employees reasonably and doing things like honouring contracts is actually good for the business in the long run, even if the short term is affected. Additionally, more shareholders are realising this as well.

After all IBM and HP (both companies that have treated their employees pretty poorly in the past) are doing so well now? Both seem to be heading downwards rapidly. Even if they can keep shareholder returns good for a few more years, it will come to an end at some point.

Re: Read between the lines

"Shareholder value" is not the right phrase and it is most certainly not the "primary goal" even if one were to take a liberal understanding of your term - assuming you are in the UK that is.

The correct phrase as used in the relevant Companies Act is "Duty to promote the success of the company [for the benefit of the members]" and is just one of seven statutory duties of directors. Moreover, in promoting the success of the company, the director must (by law) have regard to other factors which are contained within the Act and which include considering the interests of the company's employees, impact on the community and environment, and fostering relationships with both customers and suppliers.

Only by an extreme simplistic view can you interpret the act as saying that the primary goal of a director is to maximise shareholder value.

Re: Read between the lines

In this case it would appear that those responsible forgot that they were dealing with a work-force based in the UK and treated them as if they were in the US.

A common mistake made by many Americans, they seem unable to realise that laws differ and that laws of the USA are not universal.

The gulf in differences in quite staggering... effectively in the US an employee has no rights whatsoever compared to the UK. AFAIK many of these rights come from contract law where both parties have to agree to contractual changes, rather than a company just making changes as they feel fit.

Re: Now how many more years...

I left IBM a few years ago when it was clear that IBM Global Services in the UK was taking the piss in terms of reduction of benefits for employees and a strangulation of department budgets.

I'm now happily working for a competitor, winning business from IGS with a reassuring degree of regularity.

While I don't pretend to have been one of the best or brightest at IBM, they certainly lost a valuable employee and I wasn't the only one to walk.