IBM Shareholders Fend Off Bid to Revise Pension Plan
An employee-driven effort to force IBM Corp. to offer its traditional pension plan to all workers was rejected Tuesday but gained more than enough shareholder support to keep the issue alive at least another year.
A resolution at the annual shareholders meeting called for the company to give all employees a choice between a cash-balance plan--which critics say hurts loyal employees who spend their entire careers at one company--and the previous, more traditional pension plan.
The proposal had not been expected to pass, but by getting more than 3% of the vote, employee shareholders won the right, under Securities and Exchange Commission guidelines, to bring up the issue again at next year’s meeting.
The tally had 755.4 million shares against the proposal and 299.7 million, or 28.4%. for it.
Some IBM employees have complained that they are losing benefits they had counted on because of a mandated changeover to a cash-balance plan. The new plan, designed to offer more immediate benefits and flexibility, is intended to appeal to employees who are unlikely to stay with one company until retirement.
Since September, IBM has offered a choice to employees at least 40 years old with at least 10 years’ service. That option allows about 65,000 employees to retain their old pension package.
About 1,000 shareholders attended Tuesday’s meeting, and some major investors and advisory firms, including the California Public Employees’ Retirement System, supported the IBM workers’ resolution.
James Leas, an engineer and patent lawyer for IBM in Burlington, Vt., who wrote the resolution, called the vote for it “phenomenal” since shareholder issues opposed by the board seldom get much support.
Also at the annual meeting, IBM announced it was raising its dividend a penny a share and that its board authorized spending up to $3.5 billion in additional funds to buy back stock.
Chief Executive Louis V. Gerstner said the change was necessary to keep IBM competitive.
On the New York Stock Exchange, IBM rose $6 to close at $112.50.
