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IBM To Scale Back Severance Payments

April 5, 1993

NEW YORK (AP) _ International Business Machines Corp. said today it plans to reduce payments to employees who leave the company.

The move is designed to reduce the cost of incentive programs encouraging voluntary departures, as well as the costs of future layoffs. But it also could boost the number of workers opting to leave under current offers that are more generous.

Under the change, which was disclosed to employees Friday, IBM said that starting July 1 it will award departing workers a maximum of 26 weeks’ pay and as much as six months of paid medical coverage.

It currently offers as much as a year’s pay and 18 months of medical coverage.

IBM plans to trim more than 25,000 people from its work force this year, which was about 300,000 at the end of 1992.

The savings under the new offer, which was first reported in The Wall Street Journal, will depend on the experience of departing employees. Some analysts have criticized IBM for being too generous as it reduces its work force.

IBM stock was down 62 1/2 cents to $51 in morning trading on the New York Stock Exchange.

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