At issue in this year’s proxy is a proposal that calls on IBM to give all employees the same retirement medical insurance and pension choices available to employees who are within five years of retirement, according to The Wall Street Journal.
The proposal also recommends a portable cash balance plan that will provide a monthly annuity equal to that expected under the old pension plan or an equal lump sum.
In a filing with the Securities and Exchange Commision, IBM said its old compensation and benefits package, designed in the early 1990s, was “out of line” with competitors, claiming a need to move toward “performance-based programs”.
IBM notes that 75% of its competitors, including Cisco Systems, EMC, Microsoft, Oracle and Sun Microsystems don’t currently offer a pension plan.
In an earlier filing supporting the proposal, a dissident shareholder had said that IBM acknowledged that the average employee would lose 20% of retirement pay, and that younger workers who stay with IBM throughout their careers would “suffer the most loss” under the new programs.
However, in today’s filing, IBM noted that 60% of its hires were “mid-career,” and that just 10% of new hires were likely to attain 30 years of service.
IBM’s annual meeting will be held in Savannah, Georgia, on Tuesday, April 24, 2001.