Posted by GrumpyGuts on 11 July 2001 at 13:10:04:
I know that many will disagree with the tactic of widening the appreciation of the debate about Gerstners awful behaviour and his reward with the recent Gong. I think this is about embarrasment and bad pr - not about ethics and morals - but whatever your view you may notice an article in the latest Private Eye (13th July - 26th July) page 27 "IBM: Dishonourable Mention".
This is the text of my tip-off to Lord Gnome:
Can it really be true? I doooooon't believe it.
http://www.poughkeepsiejournal.com/today/business/stories/bu061901s1.shtml
However, this is the man who has plundered the IBM pension funds in order to increase his bonuses whilst not even giving IBM pensioners a price index increase?! The same approach has taken place with the UK pensions fund. Also I see a tax investigation!?
For the full story of how IBM under Gerstner has plundered the fund - please have patience as it will make a great "eye" story with many different angles - is at the site for IBM pension plan members to fight which is at:
http://www.gpsu.co.uk/cplan/
Recently 2500 IBM employees and retirees have signed on to this open
letter.
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.
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 vapour 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,
If you'd like any more info please let me know.
"Grumpy Guts"