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Coverage of 2006 IBM Stockholders' Meeting in Tulsa, Oklahoma

• The Journal News (Westchester, Rockland and Putnam Counties in New York): IBM annual meeting set for today. By Julie Moran Alterio. Excerpts: The annual meeting is one of the rare times investors hear directly from Palmisano, 54, because he makes few public appearances and seldom gives interviews to the media. A year ago, Palmisano faced an audience of investors dismayed by plunging stock prices following surprise news of missed sales targets in the first quarter. [...]
  Investors will be voting today on nine proposals from fellow shareholders that are opposed by IBM management, including several on executive compensation and pensions that are back after having failed to win a majority of votes in previous years. A proposal by James Leas, a Vermont patent lawyer and former IBMer, to allow employees to choose the pension and retirement medical benefits that were in effect before the company made changes in 1995 and 1999 is back for the seventh time.
  Another proposal that would require the company to stop including pension fund income when determining executive pay is back after receiving 36 percent of the votes at last year's meeting.
  There's also a shareholder resolution that asks the board of directors to create an independent committee to evaluate the risk to IBM's brand and reputation from sending jobs overseas. The resolution was defeated by a 10-to-1 margin last year.
  Steven Bergeron, a 26-year IBM employee who was laid off twice and started work again in January, said he was forced to train his Indian replacement when he lost his job in Poughkeepsie in 2003.
  "I understand what outsourcing means because I'm in the thick of it," said Bergeron, a member of the Alliance@IBM, a group of current and former employees who are seeking to create a union.
  "When you go up in front of shareholders and say the most important thing is to grow revenue, that's fine, but you can't do it at the expense of thousands of peoples' lives," said Bergeron, who plans to confront Palmisano at the meeting today on the topic of offshoring as well as the effect of mergers and acquisitions on employees who lose their jobs.
• Wall Street Journal: IBM Chief Offers an Upbeat Outlook. Palmisano Says Tech Giant Is Stronger in Core Sectors; Dividend Is Raised by 50%. By Charles Forelle. Excerpts: At the meeting, shareholders approved a proposal calling for a simple majority vote, not a supermajority, on all matters requiring shareholder approval. IBM, whose board recommended against the proposal, says its rules don't specifically require supermajority voting, though under New York law a supermajority would be needed for such matters as a merger or dissolution, unless IBM changes its certificate of incorporation to require otherwise. The proposal passed with 61.5% of votes cast in favor. Mr. Palmisano said the board would "take this matter under advisement."
  Four other stockholder proposals each received more than 40% of votes cast, including one calling for clearer disclosure of executive compensation. IBM grants restricted stock, performance stock units and stock options, and makes long-term incentive-plan payouts to top executives along with maintaining executive retirement and deferred-compensation plans. The proposal, submitted by former IBM employee Janet Krueger, recommended that IBM disclose "in plain English" the projected obligations under the various plans for each executive.
  IBM has long had testy relations with its veteran employees and retirees, many of whom say IBM broke its past promises with a series of changes over more than a decade to pension and retirement medical benefits.
  Mr. Palmisano defended his own compensation -- which included $6.9 million in salary and bonus last year, plus $9.5 million realized from options exercises -- in response to questions from shareholders, saying he and the other executives are compensated on long-term objectives. IBM's shares have declined since Mr. Palmisano became CEO in 2002.
  One shareholder and IBM employee, Jim Askew, said he believes Mr. Palmisano's executive pension could entitle him to between $10,000 and $22,000 a day upon retirement. "Is $10,000 a day enough?" he asked Mr. Palmisano. "Do you think you'll be able to live on that?"
  Mr. Palmisano didn't directly respond, but he said that some pension benefits for executives stem from a plan that was recently limited and was put in place to retain executives at a time when the company's fortunes ebbed in the 1990s.
  He also addressed the company's move, announced earlier this year, to freeze employee pension plans, stopping the accrual of new benefits in 2007. "This was a very, very hard thing for me to do personally," Mr. Palmisano said. He said the change was necessary to secure IBM's future. In an allusion to labor costs faced by airlines and automotive companies, he said he wanted to ensure that in the future IBM doesn't suffer "some of what we read about in the papers today."
  If link is broken, view Adobe Acrobat version [PDF--54KB].
• Associated Press, courtesy of Yahoo! News: IBM Boosts Dividend in Bid to Jolt Stock. By Brian Bergstein, AP Technology Writer. Excerpts: TULSA, Okla. (AP) -- International Business Machines Corp. increased its dividend by 50 percent Tuesday in an attempt to jolt the technology bellwether's listless stock price. The move was announced at IBM's annual shareholders meeting, where about 250 investors heard Chairman and Chief Executive Sam Palmisano tout the company's prospects.
  Palmisano also defended the company's recent decision to freeze its U.S. pension plan, arguing that "we had to do something" to reduce the liabilities and uncertainties surrounding employee benefits. [...]
  Anticipating what he figured would be a hot topic among shareholders, Palmisano began the investors' question-and-answer session with a discourse of his own on IBM's January decision to freeze pension benefit accruals after 2007 and instead enhance the 401(k) plan.
  Palmisano said he hoped investors would admire the courage it took to make a long-term decision that would keep IBM from meeting the fate of airlines and automakers smothered by enormous pension costs. Later, when 51-year-old IBM consultant Jim Askew said he was concerned and felt betrayed by the pension move -- given that he had banked all his career on a generous retirement -- Palmisano's eyebrows went up.
  "I've been here for 33 years," Palmisano said. "I understand. This was a very, very hard thing for me to do personally."
  Whether investors had other beefs was unclear. Palmisano adjourned the meeting after taking just three questions from the floor and two hand-picked questions submitted over the Web -- including one about how he justified the $19 million compensation package he picked up last year.
• Alliance@IBM: IBM employee questions Palmisano on his pension. Full excerpt: The question I asked Sam at the stockholder's meeting has received a lot of press. I thought it might be useful to post the full question here as the articles in the press have focused only on the "punch line."
  The following is not verbatim...I formulated the question during the meeting, making scribbled notes on the agenda that was handed out at the start of the meeting. I did not write my question completely out...and, in fact, during the initial portion of my question there was quite a bit of friendly banter between Mr. Palmisano and myself. As you can imagine, the banter ended as I neared the end of my question. So...here it goes, to the best of my recollection.
  Hello Mr. Palmisano. Actually, may I call you Sam? (Mr. Palmisano replies that he's been called worse things). I feel that I can call you Sam because I feel like you're one of us, unlike that "last guy that occupied the podium where you're standing."
  I started with IBM at about the same time you did, but haven't done quite as well as you have. (Spoken in a self-depracating tone). But then I know you've worked much harder than I have, and I feel you deserve the position you've attained. And, besides that you were a salesman and I started as an engineer, and we both know that sales guys always do better at IBM. (said with a smile).
  Nevertheless, I've had a great career at IBM, and I truly love this company.
  I also must state that I am very impressed with the generosity of the new enhanced 401k plan, and feel that it is very competitive compared with what other companies offer. Unfortunately, for people like me who are late in their IBM careers, the new plan won't do us much, if any good...
  You and I both attended many meetings in the 70's and 80's with our managers where we were told that our lifetime medical and pension benefits were a form of deferred compensation. I trusted IBM to keep its promises. In fact, I made lifestyle choices based on IBM's promises, including the decision my wife and I made for her to be a stay-at-home mom. I counted on the retirement medical and pension promises IBM had made through all my years as an employee.
  As we know, IBM has not kept its promises to its long-term employees. I've run the numbers. I wasn't affected by the cash balance changes in 1999, but have been affected to the tune of 40% to 50% of my pension benefit from the changes made in 1991 and 1995. I'll be happy to share the specifics with you, the board, or the press. And, this cut doesn't include the cut in my retiree medical benefit, which is even larger than the pension cut.
  On the other hand, with the introduction of the SERP under Lou Gerstner, you and other senior executives have done *very* well, to the tune of $10,000 to $22,000 a day (and that's 7 days a week) for your pension. This is according to the proxy materials we have in front of us, and a recent article on MS-NBC.
  My question for you, Sam, is "is $10,000 a day enough for you to live on, or will further cuts to employee benefits be required?"
  There was brief applause...the only applause of the meeting that wasn't what I'd call "courtesy applause." Mr. Palmisano fumbled for a while, then stated that he felt the "gist of my question" concerned the SERP. He went on to explain that the SERP has now been discontinued, but that Lou introduced it in 1999 because IBM executives were leaving in droves, and something needed to be done to retain them. He said more than this...but I don't recall very well what exactly he did say. He abruptly ended the meeting at this point, twenty minutes early, and after having taken only three questions from the floor, one of which was from a "plant."
  Janet Krueger had a microphone in hand at position 2, but Sam avoided calling on that position knowing that Janet would ask a tough question. Sam didn't know me, so when he looked at the left side of the room for a question, he called on position 4...which was me holding that microphone.
• Yahoo! message board post by Janet Krueger. Full excerpt: The same retired gentleman that stood up in Kansas City to congratulate the board on doing a great job and to thank them for his retirement checks used up one of the 3 questions taken from the floor in Tulsa to congratulate Sam on doing a great job and to thank him for his retirement checks... He said the strategy Sam articulated is right on the nose and that he expects the new focus on 'innovation' to really turn things around.
  You'd think IBM would at least be smart enough to hire new retiree plants each year!
  One thing we noticed was that that IBM is definitely into cost cutting; there were no floor demos and no flashy slides or movies. The meeting wasn't put out on webcast and there were no large pictures shown of Sam up on the stage. IBM managers were brought all the way in from Tulsa to hold the floor mikes and signs. Sam just talked about the new strategy with no backup slides or pictures. The only slide used during the meeting was a simple bar chart that Sam used to explain why he had to freeze the pension plan and to show how 'competitive' the new 401K plan will be...
• Yahoo! message board post by Janet Krueger. Full excerpt: That reminds me. During one of his answers, Sam talked about his recent visits in the Oval office and about how gratified he is that the current administration is seeking advice and counsel from the CEOs...
• Yahoo! message board post by Ed Hayden. Full excerpt: Oh yes! Janet and crew are responsible for a major sea change here. It isn't often (ever?) that shareholder proposals to make the executives more open and responsive are carried. It's also really ho-hum to hear Sam tell us that the company has pulled it's socks up and is on a new track. That is said every year and every year they do the same things to the employees to justify this. Funny (or not) but most IBM employees I know/knew worked at 1/2 or less their paid salary if you consider all of the 'donated' hours they put in. I'm getting concerned enough about the ability to squeeze anymore blood out of the employees which seems to be the only way IBM is successful these days. Time to dump my stock I'm thinking.
• Yahoo! message board post by "stu_pidasso_2003". Full excerpt: Is it me or did others feel a sense of outrage and disgust when I read that Palmisano stated 'we will take the matter under advisement' when faced with a 61.5% approval vote on the majority proposal. You realize that board members across the American economy know how the deck is stacked against stockholder proposals by proxies and voting investment funds and 'board unanimous' recommendations that dilute the stockholder voice. Rarely does any stockholder proposal gather greater than 3-4 % of the vote in any corporation. That is why anytime a proposal garners 15-20% of the vote most boards look into the matter as they know that they have heard from their owners. Often they assign the CEO the task to report back and suggest remedies that touch on parts of the issue.
  When Janet's good work gathered 28% of the vote four years ago...IBM sat on their haunches...did nothing...ignored the vote entirely and thumbed their nose at the outcome. Now...faced with four proposals that received over 40% (!!) of the vote....IBM will attempt to do the same unless we raise the issue. If their is no communication from IBM Corporate Communications immediately on this issue then it is time to alert the media and DOG IBM to action. To not take measures will fester into greater owner revolt....and they know it. They want to draw all the attention to the 61% proposal...declare some watered down action and leave the rest to be ignored. We cannot not allow that.
• Daily Oklahoman, courtesy of Technology Marketing Corporation: IBM stockholders meet quietly in Tulsa. Excerpts: IBM, one of the world's most-revered business nameplates, brought its 2006 stockholders meeting to Oklahoma on Tuesday and attracted only 250 shareholders to the Tulsa Convention Center. [...]
  So the crowd was a bit thin, but it still attracted the usual number of shareholder activists, who poked at IBM management over issues of executive compensation, outsourcing and a downsizing of its pension program for employees.
  Janet Krueger traveled from Rochester, Minn., to get her shots in at the compensation and retirement plans devised for Palmisano. A retired 23-year IBM employee and a former "Watson Scholar" with the company, Krueger offered a shareholder proposal that would require greater disclosure of executive compensation.
  "IBM should be an example of good corporate governance, not a company that does the absolute minimum required by law," she said in support of her proposal.
  By Krueger's calculation, Palmisano will earn at least $10,000 per day from IBM upon retirement. She said she added it up and concluded he could claim $1 billion in retirement income. "I only wish that someone owed me a billion dollars," Palmisano replied to Krueger's allegations.
  Still, her shareholder proposal won 41.7 percent of shareholder support -- including proxies -- in a losing effort. "They take seriously anything that gets into double digits," Krueger said of the company's board of directors, who sat on the first two rows of the auditorium. "I think they are listening."
  The meeting concluded in less than two hours after Palmisano considered about a half dozen questions from the audience and some submitted via Internet ahead of the meeting. Jim Askew of Boulder, Colo., brought things to a close with a final assault on executive compensation and IBM's decision to implement a 401(k) plan for employees instead of a traditional pension plan.
• New York Times: The Shareholder Spring. By Gretchen Morgenson. Excerpts: Annual shareholder meetings are typically dull, scripted affairs, but as executives and directors of public companies step into the spotlight at this year's gatherings, some for the first time are hearing organized and articulate shareholder discontent.
  And officials at many of those companies are digging in their heels, using stockholder-financed war chests to resist shareholder demands for more say in executive pay practices and director elections.
  "Even if there's any inclination to concede the shareholder is right, these guys are not going to say it in a public forum," said Daniel J. Steininger, chairman of the Catholic Funds, a mutual fund company in Milwaukee, and author of proposals on director compensation that are under consideration at seven companies this year. "Having to meet with the shareholders when your stock is down over a four-to-five-year period is not a fun experience; they'd rather be at the dentist having a root canal." [...]
  Increasing stockholders' say in director elections is another hot topic at meetings this year. At most companies, directors can be elected if they receive just one vote — if they vote for themselves, for instance. Investors can only register their displeasure with a board by withholding their votes from directors under current rules at most companies.
• Communications Workers of America (CWA): CWA Launches Assault on Bad Corporate Policies. Excerpts: CWA made a case for responsible corporate governance at IBM, General Electric and AT&T this week, at the first of several shareholder actions on the calendar this spring. [...]
  Representatives of the Alliance@IBM/CWA Local 1701 on April 26 turned out at the company's annual meeting in Tulsa, Okla., to support a resolution calling for simple majority rule on all matters requiring shareholder approval rather than the supermajority previously required. The measure passed with 61.5 percent of votes cast.
  Also at the meeting, Janet Krueger, an Alliance@IBM member and former IBM worker, submitted a resolution calling for clearer, "plain English" disclosure of executive compensation, which includes restricted stock, stock options and long-term incentive plans. That resolution received more than 40 percent of shares voted. Jim Askew, another Local 1701 member, took CEO Sam Palmisano to task at the meeting on changes to the company's 401(k) plan between 1991 and 1995 that will cause older workers to retire with 40 to 50 percent less than they previously could have expected.

• "John, Jack, or maybe even Jill?" by "civilliberty". Excerpts: I have worked for about 7 organisations in my time (3 consulting ones). I have yet to work for an employer that I have enjoyed less than IBM based on all my experiences. Their general thriftiness both direct and indirect makes me think they had scottish origins (sorry to all you scots on here - nothing personal). Their appraisal system is universally the most unfair I have ever encountered and despite the word from management that it is deemed to be the most fair so far there are many consultants that are disaffected by it (remember you are just speaking for yourself - I'm speaking from a larger base).
• "Will not be changing any time soon" by "deep_eye". Excerpts: You hit the biggest complaint dead on. The stinginess, the absolute, rub-your-face-in-it, dime-store, bargain basement cheapness of the organization and how they perceived what should have been their greatest asset - their employees - as just another mark to be cheated. I personally saw many, many individuals, who just about killed themselves to bring superior products and projects in on IBM's behalf and were then "rewarded" with ridiculously low single digit "raises" or "bonuses" or who faced the brilliantly rigged "appraisal" system. It figures that they must now resort to brainless lackeys to repackage their pathetic offerings to the naive masses.
• "You're on to something" by "Dose of reality". Full excerpt: Qualities required for client favor:
  1. Honesty and trust
  2. Technical competence
  3. Putting the clients needs and business case ahead of IBM revenue
  4. Personality
  5. Intellectual curiosity
  6. A desire to help
  7. Sophisticated communication skills
  Qualities required to get a "1" rating:

  1. PBC Gamesmanship
  2. Desire to goose billable hours at all costs
  3. Honed suck-up skills
  4. Biased preference for IBM products
  5. Absolute adherence to and praise for all IBM policies
  6. Low cost - Never ask for anything from IBM
  Anyone see a problem with this conflict???!
• "Once upon a time" by "wonderaboutibm". Excerpts: Before you graced the IBM scene, and even before the PwCC acquisition, most IBM employees were covered by what Gerstner called "variable pay." While as I remembered there was supposed to be variability in it, it pretty much came to 10% of pay. This was in addition to my departmental bonus, which usually was targeted at around 20% of pay. And through 2000 and 2001, that is pretty much what I got.
  But alas and alack, the money ran dry, or more appropriately, went to the stock buybacks (now running at about 70 billion over the last ten years -- check the SEC filings.) PwCC incomers were subject to at least two salary cuts that I know of, the cuts to be replaced by -- you guessed it!! -- target bonuses , which, as I understand it,were of course not met. The variable pay was discontinued, and bonus potential is now upwards of 11 to 12 percent if you get a 1 rating and if you are lucky. 2+s got 6 - 8 % I think and 2s got 2 - 4 %. And of course IBM proudly tells us 3s got nothing.
  You must admit ... for a 2+ rating to go from 25 - 30 % bonus a few years ago to about 7 % today, with roughly the same salary, does not make for too happy a camper. Perhaps this employee (and they are legion, believe me) is some washed up specimen, a despicable expense rather than a valuable asset? Perhaps, at least in the eyes of IBM Finance.
• "You have as much chance of getting a bonus in BCS as..." by "deep_eye". Excerpts: Getting hit in the head with a meteorite while watching Seinfeld reruns on your yacht with your new wife, Miss America, 2005. Making a financial killing by sending $500K and your bank account number and access code to Mr. Umbutu Limumba of Nigeria, to help his close friend, Mr. Sekki Jambambi move funds out of Nigeria and share them with you. Beating a speeding ticket in Bugnutz, Alabama Yeah, I got your bonus, right here.... I do like your phrasing though - "you may get a bonus, but it is not a certainty." Before becoming a spinmeister for IBM, did you sell used cars?
• "Effective HR policy is timeless" by "Dose of reality". Excerpts: The simple fact of the matter is that we do not connect reward to performance. It is a game of musical chairs with 2 or 3 chairs for every 100 players. The variation in performance between those in the 70th - 95th percentile and those in the top 5% is a small fraction of the variation in reward. To add insult to injury, due to the margin of error on evaluations, there are many that are graded to the 70th - 95th percentile with real performance that is significantly better than those lucky few that bootstrap themselves into a "1" rating on false pretenses.
  The incremental margin contributed by the 70th - 95th percentile as compared to those in the middle of the pack is sufficient to pay an enticing bonus, yet they barely get a token. This is the fundamental problem with HR management here. We expect staff to work on spec, and then fail to reward them for their efforts and results. We don't have to be in boom times to warrant an equitable compensation policy.
  It is mass exploitation, pure and simple, and no one should be willing to accept it. We are balancing the books on the backs of the front line staff and destroying the energy and continuity of the organization in the process.
• "The 'Alumni Effect' or the Hydra's teeth revisited" by "DM Bingham". Full excerpt: he Big Pigs that run the blue Pig have no sense beyond their own immediate gratification. The principle of reaping what you sow is a foreign concept. I offer a not unsubstantial example from the Strategic Outsourcing world.
  IBM has laid off thousands of employees in Austin over the past ten years. Many hardware types moved over to Dell when it was a > $ 1 B per year enterprise and built it up. Many of the programming people moved to jobs in the Texas State agencies, either as programmers or programming managers. Others went into the State Purchasing organization.
  In the subsequent move away from spaghetti-coded mainframe programs running those State agencies to modern Web-based ones, the Pig's hardware penetration disappeared. The home town favorite Dell has their stuff everywhere. Gee ! Can you imagine !
  The really big hurt to the Pig is their failure to win the major outsourcing deals that were awarded in 2005. Two major Call Center contracts worth $ Billions went to Accenture despite huge Blue cost concessions. Allegations were made of leaks of the IBM proposal to ACN during the downselection period. Gee ! Can you imagine !
  Similar things have occurred in Arizona, where the IBM Tucson plant has shed lots of people over the years. As well, the former American Express employees in Phoenix now litter the streets. There is no way the Pig can win back the allegiance of the thousands of people it has scr5wed. They live every day to Pay Back the Beast.
• "Thoughts" by "whitespider". Excerpts: But look ... supply chain is what it is and may be an alright practice with some good people in it ... however it is also embedded within IBM and hence you will bs subject to the usual rubbish of unrealistic utilisation targets, no training, little chance of meaningful career progression, and an approach to bonuses that is predicated on using staff variable pay as a cost control mechanism rather than a tool to motivate performance and encourage the right behaviours for clients and the corporation. You will have to put up with marketing people who make plans to make plans, and legions of administrators who never see clients and just manage internal "processes".
• "Supply Chain Interviews in May" by "old chop". Full excerpt: I've been invited to what seems to be a gang interview session for the BCS Supply Chain Management group in May. I would expect to be interviewing at the level of Project Manager, Engagement Manager, or whatever that level is called at IBM...I've got more than 25 years behind me since college. I understand all the angst expressed here by the new college grads, but I'm interested in what life is like for those of us with more than a few gray hairs. I'm not interested in career growth, and I don't need any lectures on the evils of the Beltway Bandit biz, I'm just trying to pay the mortgage in Fairfax. What would be the rough pay band be for the level of experience that I've described. (MBA, tons of experience in supply chain in government and industry.)
• "When you put it that way" by "Dose of reality". Excerpt: From one gray hair to another, the root sources of angst for the new college grads are the same as they are for the gray hairs. If you are truly just looking for a paycheck and are not interested in career or compensation growth, or incentive pay commensurate with above baseline performance, then you might find a home here. If you have a thick skin, can tolerate taking orders from arrogant SOB's with less talent, skills, and knowledge then you, then you might even not dread going to work every day. If you can spin team member straw into gold without losing your patience, you might even enjoy it!
• "IBM is a good place, it that's all you know" by "terrymarry". Excerpts: IBM is a good place, it that's all you know Author: terrymarry Date: Apr 25, 2006 8:13 PM EST I think you got this wrong. I am compelled to respond to you. IBM is in fact a bad place to work. Let me tell you why! IBM spends an inordinate amount of money in its HR-Separation process. There is a whole bunch of people who is job it is to offload you at IBM's choosing. If I were IBM, I would have spent an equal amount of money in retaining the talent they have. I for one left IBM and got a phenomenal job elsewhere (a competitor mind you). IBM has been, is and will continue to leave a trail of bad blood wherever it goes and whatever it chooses to participate in.
  I bet you 10 dollars for every dollar you have in your pocket that the deals IBM is losing now are due to former IBMers who are now in a position of power telling IBM to "go, stuff it" This is not whining. It is a hard, cold fact. You believe whatever you believe in. This is the world I live in and know the facts. Once you leave IBM, you will find out, but for now, it is a blurry world for you. No hard feelings, just hard facts.
• "What is it?" by "O_Byteme". Excerpts: I haven't been there in over 10 years, but when I was working at my development lab, IBM had built up a generations of good will among its employees, which it was in the process of slowly eroding away with endless rounds of benefit takeaways, small or nonexistent raises, accelerated schedules and unpredictable layoffs, accompanied by an ever increasing spiral of executive salaries and bonuses. The environment, however, felt more like a graduate school study dorm, as my co-workers seemed to be about the best and brightest I had ever worked with, and the spirit was one of cooperation instead of competition, as we were all pretty enthusiastic about creating this extremely complex product with as close to zero defects as humanly possible. The overall management structure seemed to be based on the military model, with regiments, companies, platoons and squads being replaced by divisions, areas, departments, and teams. I guess this was required in order to get so many thousands of people working together efficiently, and it didn't seem overly intrusive.
  So I know what it felt like to work there, but I still don't know how I would define what the "culture" at IBM was, although I think I know what it was supposed to be: equal opportunity based on talent and initiative, reward for hard work and loyalty, respect for the customer and the individual, and a commitment to your work and to your community. All of this of course seemed like just talk by the time I left, but it meant a lot to me and to a lot of others when we joined. My question, though, is this: what is the perceived "culture" at IBM now? Is it even a question that has relevance any more?
• "The short answer" by "Dose of reality". Full excerpt: The best analogy I could make is that IBM has been changed from America in the 50s/ early 60s to the Soviet Union of the same period.
  Not only has the baseline floor of universal benefits and treatment been eviscerated, but we have eliminated any semblance of a meritocracy as well. The entire organization is presided over by a tenured politburo that is virtually devoid of the best and brightest that were in the pipeline in lieu of the sociopaths that found themselves the most adept and the most interested in bootstrapping themselves up the hierarchy with a combination of deft politics and blind ingratiation to the organization.
  We’ve transformed the corporation from one built for success into one that is built for short term survival.
  As to what the "perceived culture" is, it depends on one's tenure. New hires see it as a blue chip employer, but once the rookie year is over, all but the most dense understand that there is no future here, unless you want to be a civil servant.
• "It has changed...a lot" by "Thirty and Out". Full excerpt: I retired a few years ago after thirty years and ten days. The "culture" has changed a lot.
  With the birth of my first child, my third line manager in R&D stood in my doorway and told me to go home. Later I was surprised with the silver spoon sent by Frank Cary.
  When I was in large systems marketing as a Systems Engineer, your contributions were directly recognized with bonuses. It truly was "pay for performance".
  My last ten years were in Services - first consulting services and then strategic outsourcing. This is when and where things changed. Changed in that every manager seemed to be trying to save their own asses. People became limitless resources - limitless in that there was not limit in the time and effort you were expected to contribute. Billing 2,080 hours in a year (do the math...52 weeks at 40 hours a week) was "meet requirements." Managing a "transition" of an outsourcing deal became a painful experience. Folks from the acquired working diligently knowing they were now part of IBM. And I became more and more aware that their efforts would soon be met with efficiency standards. That is, not that the systems are running efficiently we don't need you...good bye. What moral bankruptcy in just thirty years!
  Glad I am gone after thirty years and ten days.
• "Yup - it has" by "DM Bingham". Excerpts: I'm tempted to contrast what is going on now with what went on back in the day... Let me try to speak outside the compare and contrast mode.
  The first thing that comes to my mind about the IBM "Culture" is the Climate of Fear. Every non-management employee is in peril of his job at all times. I believe that fear and anger are closely allied so in that sense most employees are also angry. Angry at the reality that their livelihood can be snatched away not necessarily because of poor performance but because of non-business related reasons, even for something out of control such as a chronically ill child who uses "too much" Medical Benefits.
  Layoffs are supposed to trim business units' staffing to the existing environment in order to return to profitability. IBM uses layoffs to tickle the books to pad SP's pay and benefits. Case in point: IBM used to claim that layoffs were "one time" events and therefore used the event to hide other extraneous losses under the category of severance charges. Not so anymore. Our sleeping dog auditors call them "on going business" and won't let the Pig's Finance people get away with what they used to when Clueless Lou was in charge.
  Along with the omnipresent anger I believe there is also rampant bullying going on. Like a recent article in Fast Company said, tumultuous conditions attract psychopaths who are looking for a situation in which they can inflict pain. When the Pig decided to go out and hire "Industry" expertise in 2002, HR turned to the horde of laid off Wall street types and lured in some unbelievably bad characters. The several I dealt with then in Telco were extraordinary liars. Today in Proposal Support, the costing people are at the mercy of the Sales types who make no bones about their intimidation techniques while the victims' management cowers as far away as possible. This push to close no-profit business is facilitated by the "no-rules hold anymore" paradigm. It is not profitable to the business but it supports the kleptocrats.
  When Sprint signed the big SO deal SP gave himself a $5 M bonus. Has he given it back now that the deal has collapsed?
  Lastly I would point out that fatigue is omnipresent. You Consultants whine about your 95 - 100 % utilization requirements. We in SO Delivery are expected to work 113 % of the work year to "Meet Requirements". We in Proposal Development are not billing a real Customer but Industry. The high figure is to pay for the lard-butt multi-layers of management we have to carry in Delivery.
  So in my view, the IBM Culture can be characterized by these words: fear, anger and fatigue. That's every day.
• "Where to assess the culture in an organization" by "Dose of reality". Excerpt: However, what they have created, in order to satiate their "corporate greed and furtherance of personal agenda", is an environment that stifles creativity, asks for, but ignores performance, stagnates, micro-manages and bureaucratizes compensation, micro-manages work assignments to the detriment of the development of staff, and discourages responsiveness to the needs of customers.
• "Maybe I am in the wrong GBS unit" by "wonderaboutibm" Full excerpt: But... where the hell is IBM's supposed skill in customer relations? I just get on one after another project that features nasty, snarling and disgusted customers. It's not just me, either: I am asking coworkers and getting the same feedback that I get from my own customers.
  IBM mgmt looks as though it's becoming a yellow-bellied marshmallow in the face of customer demands. I think the customer base has caught on to this delivery weakness and is exploiting it for what it is worth. Then, too, there are the real and significant problems of IBM delivery, which as we all know is fragmented and not well trained enough. It all seems to be feeding into the vicious downward cycle that GBS is slipping into.
• "They smell blood" by "Dose of reality". Full excerpt: A market bully can only thrive if he isn't called out. We are no longer dealing from a position of strength, since the competition has out maneuvered us on price and quality. The market knows we are having trouble sustaining our top line, let alone growing it. They know that we are desperate to hold onto the contracts that we have. Add to that the fact that the grass roots dissatisfaction at the customer level spreads more and more with each dilution of our resource quality, the increasing lack of staff motivation, and our multitude of "David Spade moves (no, no, no....", and customers are bound to get aggressive with us. Unless they are hopelessly dependent on us, they have all the negotiating power.
  Yes, it is all part of the vicious downward spiral, and the financials haven't come close to realizing the fundamental weakness in our operations and business model.
• "Wrong again" by "Dose of reality". Full excerpt: Revenue growth requires business acumen.
  Cost cutting requires nothing more than motivated financial hatchet men, and HR/legal to clear the path.
  Which do we have more of at IBM? I rest my case!
  If they were capable of growing revenue, they would, but they have been resorting to cost cutting to close short term profit gaps. The revenue CONTRACTION implications of those actions come next year, so every year they start in a deeper hole. Someone really should take their shovel away.
  We are addicted to the cost cutting drug, and all the desire for growth opportunities in the world won't fix that until we get "clean".
  If you want revenue growth, we have to tap the "power of three". United we stand, divided we fall. Two heads are better than one. Translation:
  Stop pitting revenue hungry sales guys against reality based delivery guys
  Get incentives for cross-divisional success instead of pitting us against each other
  Be able to measure all in profit transparently and readily - take the transfer pricing shenanigans out of the mix - it is a game used to reward the connected in lieu of the effective.

• Job Cuts Status & Comments page:
• From the General Visitor's Comment page:
  • Comment 4/25/06: Here is what I don't understand about IBM. How can this company keep a low life performer like Sam Palmisano around and pay him gobs of money each year, i.e. 19 million dollars per year? It just doesn't make any sense. In fact, it is so ridiculous it is laughable. No wonder IBM is in such trouble. -Anonymous-
  • Comment 4/27/06: Fellow IBMers & Retirees, I am an IBM (downsized) retiree. I would like to share with you a frustrating experience I had with the new IBM Human Resources. I am raising a granddaughter & recently applied for health benefits for her. I submitted an application & a copy of the court-ordered custody to IBM Benefits in Raleigh, NC. They were denied.
    I appealed the decision & resubmitted all requested documentation including a copy of her father's Death Certificate & her mother's Disability info. They were denied again. Reason: Because I am a grandparent, a 'Parent/Child Relationship' doesn't exist as stated in the IBM Health Plan. OK, so I sent a certified letter to Randy Macdonald (IBM Sr VP Human Resources to get an explanation for the real meaning of a 'Parent/Child Relationship'. About 3 months later, after another registered letter to him, he finally responded reluctantly.
    These are his exact quotes from his letter "The appeal is final and binding so I saw no need to respond. I apologize. I am bound by the plan; therefore, I must support the previous stated position of IBM." He wouldn't even take the time to answer my question. That's why he makes the big bucks. I guess according to the existing IBM Benefits Plan, Parents, Spouses, Ex-Spouses, Children, Step-Children, & Domestic Partners can exist, but Grandparents & Grandchildren are Virtual persons and don't exist.
    This is the NEW IBM and reading between the lines, I foresee major changes coming for the outdated old IBM Health Benefits Plan & they aren't good. Hold on to your socks IBMers & Retirees, it's coming. Good Luck to you all. Ed Grigor (Retired from OLD IBM) - Edward J. Grigor -
  • Comment 4/27/06: I have been intrigued with the way Sam gets paid. Especially, at last two performance review time, my manager said to me that I am already paid good and he cant raise the salary any more. He also went on to say that mine is one of the highest salaries in the group. Mostly he is giving everyone the same reason. I am more than convinced that the salary that one earns is a function of the power one holds in the company and not his/her performance. -Anonymous-
  • Comment 4/27/06: Anyone else notice that the yearly amount saved by recent pension pension reductions, supposedly due to severe current conditions, matches the amount to be spent on increased stock dividends, due to current strength in market conditions. So to get that money back, all you have to do is purchase the amount of stock that, as a proportion of total IBM stock, matches your personal pension loss, as a proportion of total pension losses. -Anonymous-
  • Comment 4/27/06: The IBM Health Plan is so bad now, that if you retire and then get married, after retirement, your spouse is not covered. The same holds for having a child, after retirement, they are not covered either. Ever Onward, IBM...Poor Executive management means the masses of real WORKERS have to suffer. -Anonymous-
  • Comment 4/28/06: Kudos to the IBMer on microphone 4 who asked Sam the tough questions. Interesting that Sam wouldn't respond to whether he felt $10,000 a day in retirement was enough to live on. How can you respect such a pompous A$$ like Sam who wouldn't respond to that question. Yes, Sam has indeed been called worse names than "Sam". What an A$$. -Anonymous-
• Pension Comments page