[Congressional Record Volume 148, Number 14 (Thursday, February 14, 2002)]
[Extensions of Remarks]
[Page E155]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               REGARDING THE TESTIMONY OF KARL V. FARMER

                                 ______
                                 

                        HON. WILLIAM D. DELAHUNT

                            of massachusetts

                    in the house of representatives

                      Wednesday, February 13, 2002

  Mr. DELAHUNT. Mr. Speaker, Mr. Karl Farmer, a retiree of the Polaroid 
Corporation, testified before the Senate Committee on Health, 
Education, Labor and Pensions last week. I would like to take this 
opportunity to see that Members of the House also benefit from his 
powerful testimony on the lack of worker and retiree protections under 
our current pension and bankruptcy laws. I ask my House colleagues to 
consider his experience, and join with me in enacting new safeguards to 
ensure retirement security for all workers and retirees.

  Testimony of Karl V. Farmer, Before the Senate Committee of Health, 
                     Education, Labor and Pensions

       Good morning. My name is Karl Farmer, and I am a former 
     Polaroid employee and chairman of the Official Committee of 
     Retirees for Polaroid Corporation. I am also accompanied 
     today by counsel for the Official Committee of Retirees, 
     Scott Cousins, of Greenberg Traurig, as well as Betty Moss, 
     another former Polaroid employee.
       I am 55 years old. I have lived in Roxbury, Medford, 
     Bedford and Lawrence, Mass., and I recently moved to New 
     Hampshire.
       I started working for Polaroid more than 30 years ago as an 
     engineer and became a retiree after I left the company on 
     September 29, 2001. At the time I started with the company, 
     Polaroid was one of THE places to work. It was an especially 
     good company for minorities, very progressive. Polaroid was 
     doing affirmative action programs before it became 
     fashionable or mandatory. It was a family company with a 
     caring upper management.
       Up until 1988, 1 had begun to save for my retirement by 
     contributing 2% of my pay to the Polaroid 401 (k). Polaroid 
     matched that contribution dollar for dollar so that I was 
     able to start building for my retirement with a diversified 
     retirement plan.
       But in 1988 Polaroid started the mandatory ESOP plan which 
     required employees to contribute 8% of their pay to the ESOP 
     plan. I had always understood that most ESOP plans did not 
     require workers to contribute to them, but Polaroid required 
     that we contribute to this one.
       Because of the mandatory requirement that we contribute to 
     the ESOP, I was no longer financially able to contribute to 
     my 401(k). As a result, my retirement was then tied up almost 
     exclusively with the ESOP and Polaroid stock. I have not 
     figured out how much money I would now have if I had 
     continued to contribute to my diversified 401 (k) instead of 
     the ESOP, but I am meeting with a financial advisor from 
     Fidelity next week, and I'm sure they'll be able to tell me 
     the bad news.
       I didn't really realize the danger of not being allowed to 
     diversify my retirement account until August 2001 when I was 
     told my job was being eliminated, and I was promised a 
     severance package, which included medical, dental and life 
     insurance coverage at employee prices for six months, along 
     with six months severance pay. This transition period 
     actually took me to retirement--where I could count on my 
     ESOP and pension plans.
       The day I was to receive my first severance payment I 
     called to verify that it was being deposited. I later learned 
     that many people who were supposed to receive severance 
     payments that day did not, and the next day Polaroid declared 
     Chapter 11. As a result, Polaroid is not paying my severance, 
     or providing the medical, dental or life insurance it had 
     agreed to. I have been left unemployed with no benefits. I 
     had to break a lease and vacate my apartment. I had also 
     taken out two loans on my 401 (k) plan, and I will now be 
     unable to pay those back. As a result, I'm also going to be 
     hit with a huge tax penalty for making withdrawals on my 401 
     (k).
       As for my ESOP plan, I had 3500 shares which, at their 
     peak, were worth about $210,000. Without asking me, or 
     apparently anyone else, management decided to liquidate these 
     shares for about $300.
       We learned, after the fact, that State Street Bank & Trust, 
     the trustee of the fund, started liquidating Polaroid's ESOP 
     shares in mid November 2001, and completely liquidated the 
     fund by mid-December 200l. After the liquidation was 
     complete, Gary DiCamillo, Polaroid's current CEO, sent out a 
     letter on December 10, 2001 to all employees notifying them 
     that ``it was in the best interest of participants in the 
     ESOP fund to liquidate all shares.''
       Many of us cannot understand how the trustee of a 
     retirement savings plan acted ``in our best interest'' by 
     selling the ESOP stock when it reached 9 cents a share. Not 
     only that, the liquidation of those shares means the 
     ``employee owners'' have almost no influence. We used to own 
     almost 20% of the company. Now we cannot even vote on the 
     Polaroid bankruptcy and related matters. We decided to try to 
     influence the process, even if we were disenfranchised former 
     owners of the company. It took a big effort to pull folks 
     together to fight for what's been promised. People are 
     scattered and we do not have lists of everyone who has been 
     affected. Still, we organized. I'm the chair of the Official 
     Committee of Retirees of Polaroid, which was recently 
     recognized by the bankruptcy court. This allows us legal 
     representation with the bankruptcy proceedings.
       The offices of both Senator Kennedy and Representative 
     Delahunt have worked very diligently with us in our fight for 
     justice. And recently a letter was sent to Polaroid's CEO 
     from the entire Massachusetts Congressional delegation 
     denouncing Polaroid's actions. Our committee and its 
     constituents thank you and the other members of the 
     Massachusetts delegation for those clear signs of support. In 
     the same spirit, we urge you to change the rules on ESOP 
     programs to allow employees some control of their own 
     destiny.

     

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