Offshoring protests to mar IBM meeting

Caroline Humer

NEW YORK: IBM shareholders and retirees angry over the computer company's plans to shift some jobs overseas and rising health-care costs will take their complaints to Big Blue's annual meeting today, 27^th April 2004.

IBM faces eight separate proposals from shareholders who want changes in everything from how it pays its executives to its disclosure on political contributions, at its shareholder meeting in Providence, Rhode Island

The meeting marks an increase in shareholder activism at IBM after a relatively quiet period that followed the campaign in the early 1990s by investors to break up the insider-controlled board and remove top executive John Akers.

As IBM Chairman and Chief Executive Samuel Palmisano and other executives arrive, they may face a larger group of protesters than seen in recent history as these issues gain hold with a broader audience.

It is the first time the Armonk, New York, company has held its annual meeting in a Northeast location in more than a decade, and it comes as the issues of moving jobs to countries like India and China, and the rising cost of health care are gaining attention.

In addition to a group that seeks to unionize IBM called Alliance@IBM, members of Benefits Restoration, which is fighting the higher costs of retiree medical insurance and local groups of The Programmers Guild and The Organization for the Rights of American Workers are expected to protest outside the meeting.

"There are two issues that we're going to focus on at the rally. Number one is the offshoring of jobs," said Linda Guyer, President of Alliance@IBM. "Our message to IBM is to tell the truth," she said, regarding how many jobs are going overseas, what type of jobs and where they are headed.

IBM said in January that it will shift 3,000 jobs from the United States to developing nations this year as part of a plan that includes adding 4,500 net new jobs in the United States and 15,000 total, pushing its head count to about 330,000 this year.

Guyer says she believes IBM is underestimating that number.

An IBM spokesman declined to comment.

One of the proposals IBM shareholders will vote on asks for a review of compensation policies to see whether they create incentives for executives to make short-sighted decisions by linking bonuses to performance measures such as earnings.

The proposal states that some compensation policies may create a temptation for executives to cut costs through methods such as exporting U.S.-based jobs to cheaper locations without regard for the long-term effect on the company.

Another proposal asks the company to exclude earnings from its pension fund when deciding executive compensation. For instance, IBM's pension fund in the U.S. contributed $227 million in income in 2003 while non-U.S. plans had a cost of $254 million.

A separate proposal dealing with compensation asks the company to more fully disclose the details of compensation such as their retirement accounts and other "perks."

In addition, IBM has been asked to adopt certain human rights principles for doing business in China.

The Teamster Affiliates pension fund has submitted a proposal that asks IBM to submit a report on political contributions made with corporate funds.

While there are no health-care issues on the agenda, Sandy Anderson, a former IBM-lifer, plans to protest with his group, Benefits Restoration, outside of the meeting as part of a broader rally. He has been organizing other IBM retirees over the Internet who is angry about higher health-care costs.

IBM pays medical costs for retirees but capped its contributions in the mid-1990s when accounting rules changed. It pays $3,000 to $7,500 per former employee on average, but the costs have risen for retirees as health-care premiums have spiked.

"IBM has one of the most generous retiree medical packages in our industry," IBM spokeswoman Kendra Collins said.