From Jimmy Leas

Thank you for signing on to the open letter to IBM Chairman Lou Gerstner.

The open letter: So far 2612 IBM employees and retirees signed on the Open Letter to IBM Chairman Lou Gerstner, and dozens more are signing on each day. The open letter and the stockholder resolution helped us achieve very good articles in the Washington Post, the New York Times, the Wall Street Journal, and the Gannet newspapers. We dominated the broadcast and print news in Savannah at the stockholder meeting. The open letter can be seen at http://www.geocities.com/btvpension/lettertolou.htm.

This open letter is the largest concerted action by IBM employees and retirees ever. 2612 is a great number but lets face it: tens of thousands of employees and retirees have not seen the letter yet. Circulation is from one employee or retiree to the next. Therefore, please continue to circulate it to other IBM employees and retirees you know so that the information it contains becomes more widely known by employees and retirees.

I submitted the open letter at the stockholder meeting but I decided not to submit the 70 pages including over 2200 names of IBM employees and retirees who had signed on by April 23. I decided that IBM just needs to know the number who signed on, not their names or email addresses. I announced the number in my speech to the stockholders (below). When you circulate the open letter please let folks know that we will just publish the number who sign on and we will not give their name or the list of names to IBM.

Here is the speech I gave to the stockholders and the Board of Directors at the IBM meeting in Savannah on April 24.

How Mr. Gerstner used the pension fund to get more millions for himself
(speech to stockholders by IBM employee, James Marc Leas, April 24, 2001)

You might think that slashing pensions would save the company some money and be good for stockholders.

But IBM's cost was already zero, so it saved no money. IBM pays nothing for retiree pensions because the $70 billion pension trust fund earns almost twice as much in interest as it pays out to retirees. The pension fund is growing without any IBM funding. It has a $10 billion surplus, and IBM has paid nothing for pensions for the last six years.

Mr. Gerstner will tell you that the savings from slashing pensions were spent for other employee benefits--higher pay, stock options, and stock purchase plan. Normally if you don't buy one thing you can use the money to buy something else. Not true for pension trust fund money. By law it can only not be used for pensions. The alternate programs he will tout were actually funded with IBM dollars not pension fund savings. The savings from slashing pensions all remain in the pension fund boosting the surplus.

Part of the pension fund surplus boosts IBM profit under an accounting rule. That may sound good at first, but none of the $1.171 billion accounting rule profit boost is transferred to IBM from the pension fund. It's just an accounting rule treatment. Analysts and institutional investors discount this illusionary accounting rule part of IBM profit so it did not boost the stock price and there was no advantage to stockholders.

But it did boost executive pay which is based on the profit report, including the accounting rule profit. IBM's five top executives got $28.9 million in executive incentive compensation in part because of the pension fund boost to profit. That is 28 million reasons a year why Mr. Gerstner slashed pensions.

I will tell you something about regular IBM employees. We work hard to meet and exceed our targets and we don't look to retirees or the retirement trust fund for help to meet them.

Although this accounting rule profit is illusionary, it is IBM's fastest growth engine. Accounting rule profit soared 68% last year to $1.171 billion and is now 15% of IBM's overall profit. The growth in vapor profit was more than IBM's total profit growth. In other words, without this profit boost from the pension fund IBM's profit would have declined. Slashing pensions helped executives look good and get the bonuses and executive incentive pay even though profit from real company operations declined.

At last year's annual meeting Mr. Gerstner declared that the charge of an "inflated income statement was vacuous and not true." This year the SEC required IBM to publish the full amount of that inflated income statement in the annual report on page 57, $1.171 billion.

At the stockholder meeting last year Mr. Gerstner also said that the massive cuts in retirement benefits were necessary for IBM to remain "competitive in the marketplace."

In fact, slashing pensions and retirement medical made IBM much less competitive and made IBM's competitor's more competitive.

Thousands of incredibly talented and dedicated employees left IBM to join competitors. IBM had to hire thousands of new employees to replace them. Many programs were delayed. Costs went up. That is why profits from real company operations declined last year.

The pension and medical cuts were especially a problem for lower paid workers.

In the largest protest action ever at IBM twenty two hundred IBM employees and retirees have signed on to an open letter to Mr. Gerstner during the past three weeks. It is time for pension fund manipulations to stop, for executives to focus on real company operations, and for the board to restore earned retirement pay and retirement medical.

Jesse Jackson will be joining stockholders, employees, and retirees at a news conference and rally outside this convention center after this meeting ends. Mr. Gerstner, I would like to invite you to speak at this rally too.

I have the open letter to Mr. Gerstner and 70 pages filled with signatures of 2,238 IBM employees and retirees (as of April 23). You can get a copy of the open letter from me or see it on the Internet at http://www.geocities.com/btvpension/lettertolou.htm

James Marc Leas

Pictures from the rally at the stockholder meeting: http://www.allianceibm.org/savphotos.htm

Difficulty signing on from within IBM: Send the URL for the open letter to your home email account and sign on from there. Or send an email to me at jolly39@juno.com giving your name, email account and IBM location (or your last location if you are a retiree).

Join with other IBM employees and retirees: In addition to signing on to the open letter, you may wish to get your name on the email list of one or both of the following organizations: Alliance@IBM is an organization of IBM employees, retirees, and former IBM employees interested in forming a union. Alliance is affiliated with the Communication Workers of America. The web site is http://www.allianceibm.org and you can add your name to the email list, receive weekly news updates, join a retiree counsel, or join a local affiliate at your IBM location. You can add your name at the web site or send an email to Lee Conrad

IBM Employees Benefit Action Coalition (IEBAC) is an organization of IBM employees, retirees, and former IBMers focusing on the pension and retirement medical issues. IEBAC is involved in organizing employees and retirees, a class action lawsuit, federal legislation, stockholder resolutions, and coordinating with employees at other companies. Send an email with your name and location to at Janet Krueger.

Thanks again for signing on to the open letter to Lou. I am gratified with the large number of employees and retirees who signed on. It has been a great success in very way. As Mr. Gerstner would say, we have momentum. Lets use that momentum to get hundreds more employees and retirees to sign on.

If you have thoughts on what we can do next to build this campaign please send them to me at jolly39@juno.com We need your thoughts, ideas, and participation.

Jimmy

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