From: jkrueger@andrewscg.com
To: dsparry@prodigy.net
Cc: jolly39@juno.com
Sent: Wednesday, December 20, 2000 11:08 AM

Subject: Plea for Congress to ask the SEC to intervene on behalf of our shareholder resolution

At the following web site, you can read the letter that was recently sent to the SEC and IBM defending why our shareholder resolution should be included on the 2001 proxy sent out to IBM shareholders:

http://www.allianceibm.org/SECresprel.htm

As you know, the main intent of the resolution is revise all calculations of executive compensation and bonuses so that they do not inadvertantly reward executives for hoarding pension funds. Congressional support for our resolution could help tip the balance in our favor. Please consider forwarding this to your representative and senators. Let them know you are a cosponsor of the resolution and ask for them to either call Chariman Levitt at the SEC or send a letter like the one below.

Thanks!
Janet Krueger 

The Honorable Arthur Levitt, Jr.
Chairman
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC  20549

References:

Dear Chairman Levitt:

I am writing to urge you to rule that International Business Machines Corporation (IBM) should not exclude the Stockholder Resolution on Executive Compensation, Vapor Profit and Transparent Profit Reporting (Stockholder Proposal) from a vote by 2 million shareholders at IBM's year 2001 Annual Meeting. This Stockholder Proposal was submitted to IBM by 162 IBM stockholders. The Stockholder Proposal should not be excluded because it does not relate to mere "ordinary business" operations. Instead, it addresses a serious corporate and social policy issue: executive incentive compensation.

IBM's own letter to the SEC acknowledges that the executive compensation is an item that is not excludable under the SEC rules. If executive compensation is not excludable as ordinary business then the other item in the resolution, the reporting required to determine and verify that executive compensation, is not excludable either.

The SEC's May 22, 1998 final rule entitled "Amendments to Rules on Shareholder Proposals" states:

The policy underlying the ordinary business exclusion rests on two central considerations. The first relates to the subject matter of the proposal. Certain tasks are so fundamental to management's ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight . . . . However, proposals relating to such matters but focusing on sufficiently significant social policy issues (e.g., significant discrimination matters) generally would not be considered to be excludable, because the proposals would transcend the day-to-day business matters and raise policy issues so significant that it would be appropriate for a shareholder vote.

IBM claims that SEC rules permit it to exclude resolutions that relate to "ordinary business" operations of the company. IBM characterizes the resolution as concerning pensions. However, the resolution is clearly and exclusively about executive compensation and the reporting required for the change in executive compensation proposed. Even if IBM were right that the resolution requested a change in pension policy at IBM--which it does not--in this instance IBM's conduct goes well beyond the scope of ordinary business operations and extends to serious corporate and social policy.

As such, under SEC's current rules, this resolution should be included in IBM's proxy materials for their 2000 Annual Meeting. Therefore, I ask that you send a letter to IBM letting the company know that you will seek enforcement action if this resolution is not included in IBM's proxy materials.

Thank you in advance to your consideration of this important matter.

Sincerely,

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