An email from Jimmy Leas

Folks,
A second stockholder resolution, entitled, Executive Compensation Proposal (see it below), was recently submitted to IBM for a vote at the next IBM stockholder meeting. Don Parry, an IBM retiree submitted this resolution.

Please use the form at the bottom of this email to sign on as an official cosponsor or endorser. Simply press "forward", then fill in the form and email to the IBM Corporate Secretary and to me. Or you can cut and paste the form into your own email. If you own shares of IBM stock and submit the form before the November 12 deadline you will be an official cosponsor. Otherwise you will be an endorser.

Please circulate Don's resolution widely and encourage everyone to sign on. It has excellent information about how executives boost their multi-million dollar compensation with terrifying results for retirees and their families.

The other resolution is the 2002 Stockholder Resolution on Pension and Retirement Medical that I submitted to IBM. You can see that resoluton and sign on at http://www.geocities.com/btvpension/Resolution2002.htm

Please do not cosponsor both resolutions since SEC rules do not allow a stockholder to sponsor more than one resoluton.

The deadline to be an official cosponsor of either resolution is November 12 at 5pm. Please add your voice to one of these resolutions. Thanks very much.
Jimmy

Resolved: The stockholders request that the Board of Directors adopt a policy that executive compensation will be determined in the future without regard to any pension fund money that accounting rules may require the Company to treat as income, so that the compensation of senior executives will more closely reflect their performance in managing the business.

Accounting rules require IBM to treat a portion of certain pension fund surpluses as income even though no pension fund money is transferred to the company. To the extent IBM bases executive compensation on such pension income, it distorts the principle of pay for performance.

At the end of 2000, IBM's defined benefit pension plans had a total surplus of $10.7 billion in excess of benefit obligations. The surplus arose, in part, from stock market gains, the 1999 creation of a cash balance pension plan that cut the projected retirement pay of many employees, and the withholding of retiree cost of living adjustments from 1989 to 2001. An increase in the expected rate of return on pension assets also contributed to the growth of pension income that was credited to IBM under the accounting rules.

IBM reported "record after-tax profit of $8.1 billion" for 2000. But "net periodic pension income" from the Company's defined benefit plans accounted for $1.17 billion of that total. Without that $1.17 billion in "pension income," IBM's reported net profit would have fallen from the prior year to just $6.9 billion.

Despite this fact, IBM's five top executives were given $11.67 million in cash bonus awards "for the year's performance." They were given an additional $12.87 million under the Long Term Incentive Program based largely on IBM reaching predetermined income targets. It therefore appears that the compensation of these executives was strongly influenced by the "pension income" that permitted IBM to report a "record after-tax profit" for 2000.

We believe compensation ought to be based on performance. It should not be distorted by "pension income" because that source of reported income does not reflect the operational performance of the Company, money actually received by the Company, or the performance of executives.

A related concern, according to a Wall Street Journal report, is the possibility "that companies can use pension accounting to manage their earnings by changing assumptions to boost the amount of pension income that can be factored into operating income." The possibility of earnings management is increased when changes in assumptions, or cuts in retirement benefits, have the potential to increase the compensation of senior executives by millions of dollars.

Please (1) press the key to "forward" this email or cut and paste the following form into a new e-mail, (2) fill it in and (3) email to the IBM corporate secretary and to me. Here are the addresses:

IBM Corporate Secretary,
James M. Leas

You can also print and mail in hard copy. Please also circulate to friends and colleagues. Deadline: To be listed by IBM as an official cosponsor IBM must receive your note before November 12 at 5pm.

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Office of the Secretary
International Business Machines Corporation
New Orchard Road
Armonk, NY 10504

IBM Corporate Secretary

Sir:
Please add my name as a cosponsor of the 2002 IBM Stockholder Proposal on Executive Compensation submitted by Donald Parry.

Full Name___________________________________________________
Street Address_______________________________________
City, State and Zip _______________________________________
Home email address_______________________________________

I own at least one share of IBM stock Yes or No? ___________
If yes about how many shares? _______________
Please provide the following to help IBM identify you as an owner of shares:
If you know the FCTC/Equiserve Account # _____________________
and/or name of broker (including TDSP) ___________________________

I am an IBM employee Yes or No? ___________
I am an IBM retiree Yes or No? ___________
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