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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!
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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