Employee Alliance Takes Campaign to IBM Shareholders

Note: IBM employees are available to talk about the shareholder meeting, pensions issues and other activities; contact CWA to arrange interviews.

Members of Alliance@IBM, a professional organization of IBM employees and retirees, are urging shareholders to help guide IBM in the right direction and restore integrity to the company's dealings with employees.

Employees will leaflet and talk with shareholders prior to the April 24 annual meeting, which will be held at the International Trade and Convention Center on Hutchinson Island, in Savannah, Ga.

Following the meeting, IBM employees and supporters will rally just outside the main door of the trade center, with speakers pointing out how IBM's pattern of breaking promises to employees and retirees will harm its ability to hire and retain the professionals it needs to continue to be successful.

Joining IBM employees and retirees at the rally will be Rev. Jesse Jackson; Rev. Leonard Small of the Ministerial Alliance of Savannah; Richard Ray, president, Georgia AFL-CIO; and other community and labor leaders who are supporting the effort.

Shareholders will consider Resolution No. 4, proposed by Alliance member James M. Leas, which would restore to employees the pension and retiree medical benefits choice they had before IBM threw out employees' existing pension plan.

This resolution was supported by 28.4 percent of voted shares at last year's shareholder meeting, where it was first introduced. It calls on the board of directors to give all employees, regardless of age, the same choice and options for pension and retirement medical insurance as the company now gives those within five years of retirement. It also would require that IBM's portable cash-balance provide a monthly annuity equal to that which employees were entitled to under the original pension plan, or a lump sum that is actuarially equivalent.

The resolution has the backing of a number of investor funds and advisors; most recently, the California State Employee Retirement System – Calpers – with eight million shares, indicated support for the measure.

IBM has been taking advantage of a "vapor profits" accounting scheme – using its pension plan to generate paper profits that aren't available for investment, yet count toward the company's bottom line and enhance executives' stock option funds. For the year 2000, the IBM pension trust was $69 billion, with a surplus of $10 billion. This generated 15.7 percent of IBM's after-tax earnings last year, the Alliance pointed out.

A nationwide mobilization by members of Alliance@IBM and other employees forced IBM to restore some of the lost pension benefits, but the damage to employees and to IBM's reputation has been great, said Lynda French, a recent IBM retiree.

IBM itself acknowledged that the average employee will lose 20 percent of his or her retirement pay under the new plan, "but many employees have lost up to half of their retirement pay," French said. IBM also has made drastic cuts in retiree health benefits and has admitted to some employees that their medical accounts will run out of money.

"Reneging on the promises made to thousands of workers sends exactly the wrong message to the skilled, professional employees IBM must hire and retain if it is going to succeed in a very competitive market," said Linda Guyer, an IBM Alliance member from Endicott, N.Y.

"It's important to recognize that more than half of IBM's workforce still doesn't have a choice on the pension plan, or on any other issues that are important to us. IBM chief executive officer Lou Gerstner and all the top executives have employment contracts. We deserve one too," said Earl Mongeon, an Alliance activist in Burlington, Vt.

Also important is the fact that IBM retirees have gone many years without a cost-of- living increase to their pensions, the Alliance pointed out. "Now, retirees are faced with increases in medical benefits payments that will decrease their standard of living dramatically, and many retirees believe that their pension checks will evaporate in the near future. This is no way to treat the people who built IBM," the Alliance said.

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The Communications Workers of America is working with IBM employees who want a voice in their workplace and who are building Alliance@IBM, an affiliate of CWA.