General Motors gives EDS bonus for Y2K help : LUSENET : TB2K spinoff uncensored : One Thread

Tuesday April 18 01:00 PM EDT

General Motors gives EDS bonus for Y2K help

General Motors gave Electronic Data Systems, one of the largest consulting and computer systems integration companies, about $62 million as a bonus for helping the automaker avoid any major Y2K failures in its vast computerized systems.

In its 10-Q filing with the Securities and Exchange Commission in 1998, GM had agreed to pay EDS $75 million as an incentive if its computer systems and microprocessors--embedded in a wide variety of cars and auto parts--continued working "before, on and after Jan. 1, 2000, without causing significant business disruptions."

GM paid EDS only $62 million of the $75 million proposed bonus, with the remaining $13 million paid to EDS by Delphi Automotive Systems, according to an EDS spokesman. Delphi assumed responsibility for the balance of the bonus payment when it was spun off from GM in the second quarter of 1999. EDS is also a spinoff from the automaker.

GM paid EDS the bonus at the end of the first quarter of 2000 because the automaker's computer systems did not cause "a significant business disruption resulting in material financial loss," GM reported in its current annual report.

The countdown to the millennium was fraught with fear that computer systems would crash because of the date rollover to Jan. 1, 2000. But the much-feared Y2K bug hardly raised its head at the beginning of the new century.

Analysts pointed out that most IT (information technology) firms work on straight time and materials billing, with a few exceptions, including Cambridge Technology Partners, which distinguishes itself with a fixed price arrangement. Fixed pricing, guarantees and bonuses are something IT firms seem to be happy to do without.

"The arrangement was a little out of the ordinary," said Gregory Gieber, an analyst at Brown Bros. Harriman. "It was shrewd on GM's part--a good way to incentivize something that is important to make sure it gets done right."

GM paid about $472 million, not including the bonus, to EDS from January 1997 through December 1999.

-- (news@of.note), April 20, 2000


GM offers EDS rare Y2K bonus

-- (Early@GM/EDS.article), April 20, 2000.

"It was shrewd on GM's part--a good way to incentivize something that is important to make sure it gets done right."

Yep...and it was shrewd on the part of EDS to force early retirement on 6,000 employees who got the work done. That happened in the July/August timeframe of 1999.

-- Anita (, April 20, 2000.

How do you know the 6000 had been working on Y2K, Anita? It makes sense, but I wouldn't mind being able to read something about that if possible.

-- (Enquiring@minds.etc), April 20, 2000.

I looked for some links for you, Enquiring, but I'm not going to find one that SPECIFICALLY states that the folks who worked on Y2k were the ones offered early retirement. The links I DID find related to the EDS SEC filing of first quarter 2000, wherein they reflect on how much of their effort in the years 1997, 1998, 1999 were on technology, and in particular the Y2k effort. Those links reflected 8,000 versus the 6,000 I mentioned, BTW.

Certainly, not ALL the folks offered early retirement were directly associated with Y2k remediation. Clerical staff was included as well. I learned about the early retirement offer from a fellow with whom I'd communicated for several years. HE worked on Y2k remediation for EDS for 3-4 years straight at various firms, including GM. He was ALSO involved with testing embedded systems on oil rigs in the 1997 timeframe. He was a salaried worker for EDS, so when the 7 days/week, 12-hour days came, he didn't make more money. By summer of 1999, he was 51 years old, the Y2k work was FINALLY completed, and he thought he could go back to working 5 days/week, 8- hour days when he got the early retirement notice.

I suppose it's because I followed this guy's health problems throughout these years that I feel he got royally gypped by EDS. He was ALWAYS in a high-stress situation, and his heart suffered from it. I wouldn't have stayed with EDS myself, but some folks have company loyalty, and MAYBE thought that bonus from GM would actually be shared with the workers.

-- Anita (, April 20, 2000.

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