Open Letter to Mr. Lou Gerstner
To sign on to this letter,
please click here: http://members.aol.com/btvpension/endorse.htm
As of April 30, 2001, 2500 IBM employees and retirees have signed
on to this open letter. Thanks to everyone who signed on. Jimmy submitted
the open letter to IBM at the stockholder meeting. He decided not to submit
the 70 pages listing the names of all the IBM employees and retirees who
signed on though. IBM only needs to know how many had signed on, not who
they are, and he announced that number in his speech to the stockholders,
which is on the web at http://members.nbci.com/btvpension/speech042001.htm
This open letter is the largest single concerted protest action by
employees and retirees ever at IBM. But tens of thousands of employees
and retirees have not even seen the letter. Therefore please continue to
circulate the URL for this open letter and encourage employees and retirees
to sign on.
Please sign the form from outside the IBM intranet - your home account.
If the form does not work, please send an email to Jimmy at jolly39@juno.com
with your name, email address, and IBM location or former IBM location
if you are retired. Thanks very much.
April 5, 2001
Mr. Louis V. Gerstner
Chief Executive Officer
International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
Dear Mr. Gerstner:
At the stockholder meeting last year you said that the massive cuts in our retirement benefits were necessary to remain "competitive in the marketplace." We are deeply disturbed, therefore, that since IBM slashed the pensions and revoked lifetime medical of thousands of employees, one individual at IBM raked in $176 million. This same person has unexercised stock options that are estimated to be worth more than $500 million. In other words, rather than saving the company money, there has simply been an enormous shift of resources from tens of thousands of workers to one person. Mr. Gerstner, that person is you.
We do not write this letter lightly. We have been loyal to IBM. We have always worked hard and long hours. Our pensions and retirement medical are not yours to reduce, they are our earned deferred compensation.
We are especially concerned because the new pension and limited medical insurance are particularly a problem for lower-paid workers.
We would like to remind you that the increase in profit IBM reports from slashing our pensions is purely an accounting rule treatment. By law none of the pension trust fund money can be transferred to IBM. By law, it can only be used for retirees. Yet IBM has found an ingenious way to use the pension trust fund, not to help IBM, or even to help the stockholders, but exclusively to enrich IBM executives.
Here is how the executive enrichment scheme works: (1) IBM executive incentive compensation is determined by profit. (2) An accounting rule requires IBM to boost the profit report to the extent the pension fund has a surplus. (3) IBM increased that surplus by slashing pensions with a forced cash balance plan conversion. Thus, slashing the pensions increased the pension fund surplus, and that increased the profit reported under the accounting rule. That profit boost helped you meet a profit target and take millions of dollars of company money for yourself under IBM's executive incentive compensation program. Other executives also got millions, as reported in the proxy booklet.
Analysts and institutional investors discount the puffed up profit from the accounting rule, so stockholders see no rise in stock price from these manipulations. The only ones to benefit from slashing pensions are those, like you, who receive executive incentive compensation. That is why all the institutional investor advisory services urged support for the employee-sponsored stockholder resolution last year, and why it won 28.4% of the vote, the largest vote ever for an IBM stockholder resolution.
You say that slashing our pensions and retirement medical was to make the company more competitive. No one believes that. It seriously hurt IBM. The real purpose was to give you and other executives yet more millions.
The pension fund accounting rule profit in 2000 was a record high of $1266 million, up 58% from the $799 million reported in 1999. 15.7% of IBM's after-tax earnings were pension fund accounting rule profit. The pension trust fund has become IBM's fastest growing profit center–though the profit is only a vapor profit since no money is transferred to IBM.
The pension fund is overflowing. IBM could use the $69 billion pension trust, with its $10 billion surplus, for competitive advantage. IBM could spend the money to provide for retirees instead of hoarding it to boost executive compensation. This proper use would help attract and retain talented employees.
All this money remains in the pension fund and can rightfully be used for no other purpose than to provide retirement benefits. You can use the surplus to restore all the benefits to IBM employees without any cost to the IBM company because the money is already there in the pension fund. The accounting rule manipulation game to boost executive pay should stop now and executives should focus attention on actual company operations. Restoring the earned employee benefits should be an immediate priority.
Thank you for your attention to this important matter. We look forward to receiving your response.
Sincerely,
| James Marc Leas
jolly39@juno.com |
Bill Syverson
syversons@aol.com |
Earl Mongeon
jemongeon@cs.com |
|
Hans Heikel hheikel@msn.com |
Glenn Taulton
gtaulton@hotmail.com |
Phil Nigh
pnigh@juno.com |
|
Ralph Montefusco rmontefu@yahoo.com |
Gavin Wright
no home email |
Dave Wortheim
wortheim@together.net |
To sign on to this letter,
please click here: http://members.aol.com/btvpension/endorse.htm
If you have any trouble submitting an electronic form, please send
the following information to Jimmy Leas at jolly39@juno.com
First name, last name, email address, employee status - employee/retiree
Please print this out and circulate it among your collegues at your IBM site.
Circulating and signing this letter at IBM during break are protected activities under the NLRA.
Additional signers of the open letter to Lou Gerstner from IBM site_________________:
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To sign electronically or for additional copies, this letter is on the web at http://members.nbci.com/btvpension/lettertolou.htm
Return this sign up sheet to:
Jimmy Leas
37 Butler Drive
S. Burlington, VT 05403
fax: (802)864-9319