Bernie Sander's Press Conference
and IBM Employee Open Letter

Congressman Bernie Sanders addressed IBM employees and members of the media on April 17, 2001 at a press conference in Burlington, Vermont; he denounced IBM's implementation of the cash balance pension plan for all IBM employees. The statement Congressman Sanders read is displayed below in the right column. James Marc Leas read an open letter from the IBM Employees of Burlington, which they plan to present to Lou Gerstner at the annual Stock Holders meeting. The open letter is displayed below on the left side. A few other employees stated how the cancellation of the pension plan will affect them.

BERNARD SANDERS MEMBER OF CONGRESS INDEPENDENT VERMONT, AT LARGE STATEMENT APRIL 17, 2001 CONTACT: (202) 225-4115 Statement of Congressman Bernie Sanders On: IBM CASH BALANCE PENSIONS (Congressman Bernie Sanders addressed IBM employees and members of the media on April 17, 2001 at a press conference in Burlington, VT in which he denounced IBM's implementation of the cash balance pension plan for all IBM employees.) I am proud to stand here today with Vermont IBMers who have been leaders in the fight to protect the pensions and retiree health benefits for all IBM employees and retirees. Not only has their effort saved tens of millions of dollars in pension benefits for the employees of IBM but their efforts have had a major effect on other corporations throughout the country who were giving thought to moving in the same direction of IBM. (Honeywell) It appears that in some sections of corporate America personal greed has raised its head in an unprecedented manner. I think that this is bad for the moral values of our country and bad for our economy. As the petition signed by almost 1,000 IBM employees and retirees indicates, at the same time that IBM has slashed the pension and lifetime retirement health benefits of thousands of employees, one individual at that company has raked in $176 million in total compensation and stock option exercises over the past two years. Not only that, but this same person has unexercised stock options that are estimated to be worth over $500 million. And that individual of course is Lou Gerstner, the CEO of IBM. What we are seeing here, therefore, and what must be opposed at every level of our society, is a massive shift of wealth from thousands of hardworking employees to one individual. IBM made a promise to its employees regarding its pension plan and retirement health benefits package - and it must keep that promise. At a time when IBM’s pension trust fund has total assets worth $69 billion, and a surplus of $10 billion (money above and beyond what is needed to pay out all benefits to all employees), it is simply unacceptable for the company to renege on the promises and benefits that it made to tens of thousands of its employees, in order to enrich one individual. Click here if you would like to enter a comment about this story. April 17, 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 vapor 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, James Marc Leas  jolly39@juno.com Bill Syverson syversons@aol.com Earl Mongeon jemongeon@cs.com Hans Heikel  hheikel@msn.com Glenn Taulton  gtaulton@hotmail.com  Phil Nigh pnigh@juno.com Ralph Montefusco rmontefu@yahoo.com Gavin Wright no home email Dave Wortheim wortheim@together.net Click here if you would like to enter a comment about this story.