Alliance@IBM: Submit your Comments

4/27/2006

IBM employee questions Palmisano on his pension

The question I asked Sam at the stockholder's meeting has received a lot of press. I thought it might be useful to post the full question here as the articles in the press have focused only on the "punch line." -Jim Askew-

The following is not verbatim...I formulated the question during the meeting, making scribbled notes on the agenda that was handed out at the start of the meeting. I did not write my question completely out...and, in fact, during the intial portion of my question there was quite a bit of friendly banter between Mr. Palmisano and myself. As you can imagine, the banter ended as I neared the end of my question.
So...here it goes, to the best of my recollection.

Hello Mr. Palmisano. Actually, may I call you Sam? (Mr. Palmisano replies that he's been called worse things). I feel that I can call you Sam because I feel like you're one of us, unlike that "last guy that occupied the podium where you're standing."

I started with IBM at about the same time you did, but haven't done quite as well as you have. (Spoken in a self-depracating tone). But then I know you've worked much harder than I have, and I feel you deserve the position you've attained. And, besides that you were a salesman and I started as an engineer, and we both know that sales
guys always do better at IBM. (said with a smile).

Nevertheless, I've had a great career at IBM, and I truly love this company.

I also must state that I am very impressed with the generosity of the new enhanced 401k plan, and feel that it is very competitive compared with what other companies offer. Unfortunately, for people like me who are late in their IBM careers, the new plan won't do us much, if any good...

You and I both attended many meetings in the 70's and 80's with our managers where we were told that our lifetime medical and pension benefits were a form of deferred compensation. I trusted IBM to keep its promises. In fact, I made lifestyle choices based on IBM's promises, including the decision my wife and I made for her to be a stay-at-home mom. I counted on the retirement medical and pension promises IBM had made through all my years as an employee.

As we know, IBM has not kept its promises to its long-term employees. I've run the numbers. I wasn't affected by the cash balance changes in 1999, but have been affected to the tune of 40% to 50% of my pension benefit from the changes made in 1991 and 1995. I'll be happy to share the specifics with you, the board, or the press. And, this cut
doesn't include the cut in my retiree medical benefit, which is even larger than the pension cut.

On the other hand, with the introduction of the SERP under Lou Gerstner, you and other senior executives have done *very* well, to the tune of $10,000 to $22,000 a day (and that's 7 days a week) for your pension. This is according to the proxy materials we have in front of us, and a recent article on MS-NBC.

My question for you, Sam, is "is $10,000 a day enough for you to live on, or will further cuts to employee benefits be required?"

There was brief applause...the only applause of the meeting that wasn't what I'd call "courtesy applause." Mr. Palmisano fumbled for a while, then stated that he felt the "gist of my question" concerned the SERP. He went on to explain that the SERP has now been discontinued, but that Lou introduced it in 1999 because IBM executives were leaving in droves, and something needed to be done to retain them. He said more than this...but I don't recall very well what exactly he did say. He abruptly ended the meeting at this point, twenty minutes early, and after having taken only three questions from the floor, one of which was from a "plant."

Janet Krueger had a microphone in hand at position 2, but Sam avoided calling on that position knowing that Janet would ask a tough question. Sam didn't know me, so when he looked at the left side of the room for a question, he called on position 4...which was me holding that microphone.


	*4/27/2006* IBM employee questions Palmisano on his pension The question I asked Sam at the stockholder's meeting has received a lot of press. I thought it might be useful to post the full question here as the articles in the press have focused only on the "punch line." -Jim Askew- The following is not verbatim...I formulated the question during the meeting, making scribbled notes on the agenda that was handed out at the start of the meeting. I did not write my question completely out...and, in fact, during the intial portion of my question there was quite a bit of friendly banter between Mr. Palmisano and myself. As you can imagine, the banter ended as I neared the end of my question. So...here it goes, to the best of my recollection. Hello Mr. Palmisano. Actually, may I call you Sam? (Mr. Palmisano replies that he's been called worse things). I feel that I can call you Sam because I feel like you're one of us, unlike that "last guy that occupied the podium where you're standing." I started with IBM at about the same time you did, but haven't done quite as well as you have. (Spoken in a self-depracating tone). But then I know you've worked much harder than I have, and I feel you deserve the position you've attained. And, besides that you were a salesman and I started as an engineer, and we both know that sales guys always do better at IBM. (said with a smile). Nevertheless, I've had a great career at IBM, and I truly love this company. I also must state that I am very impressed with the generosity of the new enhanced 401k plan, and feel that it is very competitive compared with what other companies offer. Unfortunately, for people like me who are late in their IBM careers, the new plan won't do us much, if any good... You and I both attended many meetings in the 70's and 80's with our managers where we were told that our lifetime medical and pension benefits were a form of deferred compensation. I trusted IBM to keep its promises. In fact, I made lifestyle choices based on IBM's promises, including the decision my wife and I made for her to be a stay-at-home mom. I counted on the retirement medical and pension promises IBM had made through all my years as an employee. As we know, IBM has not kept its promises to its long-term employees. I've run the numbers. I wasn't affected by the cash balance changes in 1999, but have been affected to the tune of 40% to 50% of my pension benefit from the changes made in 1991 and 1995. I'll be happy to share the specifics with you, the board, or the press. And, this cut doesn't include the cut in my retiree medical benefit, which is even larger than the pension cut. On the other hand, with the introduction of the SERP under Lou Gerstner, you and other senior executives have done very well, to the tune of $10,000 to $22,000 a day (and that's 7 days a week) for your pension. This is according to the proxy materials we have in front of us, and a recent article on MS-NBC. My question for you, Sam, is "is $10,000 a day enough for you to live on, or will further cuts to employee benefits be required?" There was brief applause...the only applause of the meeting that wasn't what I'd call "courtesy applause." Mr. Palmisano fumbled for a while, then stated that he felt the "gist of my question" concerned the SERP. He went on to explain that the SERP has now been discontinued, but that Lou introduced it in 1999 because IBM executives were leaving in droves, and something needed to be done to retain them. He said more than this...but I don't recall very well what exactly he did say. He abruptly ended the meeting at this point, twenty minutes early, and after having taken only three questions from the floor, one of which was from a "plant." Janet Krueger had a microphone in hand at position 2, but Sam avoided calling on that position knowing that Janet would ask a tough question. Sam didn't know me, so when he looked at the left side of the room for a question, he called on position 4...which was me holding that microphone.