ARMONK, N.Y. -- International Business Machines Corp. will put a proposal to change the company's pension to a shareholder vote, after the Securities and Exchange Commission said it won't back IBM in discouraging a vote.
In a letter to the world's largest computer maker dated today, SEC special counsel Carolyn Sherman said the proposal was a matter of "widespread public debate." IBM had argued the proposal related to ordinary business operations and couldn't be voted on under government regulations.The SEC's "no action" letter follows a resolution supported by 330 shareholders, mostly IBM employees. The shareholders said that all workers should receive the same medical and pension benefits. IBM had set up a system where some employees were put into a so-called cash-balance plan that could limit benefits.
"We're delighted the SEC is following through," said Jimmy Leas, an 18-year IBM employee who filed the proposal. "This is a matter of public policy that cannot be excluded."
IBM switched to a cash-balance plan from a more conventional pension package in July. Cash-balance plans let employees accumulate benefits steadily over their careers rather than right before they stop working. The setup generally hurts older employees, who earn as much as half of their pension benefits in the last five years of their jobs.
"This is an issue related to age discrimination," said Leas, who writes patent applications for Armonk, New York-based IBM.
IBM fell 1 3/8 to 115 3/4.
Originally, IBM gave anyone within five years of retirement the option of staying in the current plan. In September, IBM gave more workers the option after the cash-balance plan drew fire from employees and members of Congress.
IBM wrote to the SEC in November asking for input on the shareholder proposal to put the pension plan to a vote. Under an SEC rule, companies can exclude shareholder proposals for a number of reasons, and must notify the SEC when they chose to do so.
An SEC no-action letter is generally considered informal advice to companies' requests for guidance.
The proposal will be included in a proxy statement sent out to shareholders in March. IBM will hold its annual shareholders meeting on April 25 in Cleveland.
"This is a small number of shareholders using an inappropriate forum that will benefit them personally," said Jana Weatherbee, an IBM spokeswoman. "We are confident it won't pass."