Company Name: Int'l. Business Machines Corp. (Recon.)
Public Availability Date: March 8, 2004Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
February 17, 2004 Secretary of the Commission
Securities and Exchange Commission
450 Fifth Street, NW Judiciary Plaza
Washington, DC 20549 Subject: Appeal of Staff Decision on IBM Stockholder Resolution on "Offshoring"
by Michael L. Saville Attention: Secretary of the Commission
Dear Members of the Commission: This letter is to request appeal of the decision that the Staff will not
recommend enforcement action if IBM omits the proposal on "Offshoring" from its
proxy materials. The Staff decision was included in two letters to IBM, both
dated February 3, 2004, copies of which were faxed to me by the Staff on
February 11, 2004. One of the letters, from Daniel Greenspan, Attorney-Advisor, states: "There
appears to be some basis for your view that IBM may exclude the proposal under
rule 14a-8(i)(7), as relating to the Company's ordinary business operations
(i.e., employment decisions and employee relations)."
Another of the letters, from Martin P. Dunn, Deputy Director, indicates that the
decision was based on IBM's letter dated December 16, 2003 and on letters on the
proponent's behalf dated January 13, 2004 and January 19, 2004.
However, I urge you to also consider a letter submitted to SEC Chairman William
H. Donaldson by Congressman Bernie Sanders on January 30, 2004. Mr. Sanders
wrote, "the Stockholder Proposal addresses a fundamental crisis in the American
economy. At a cost of millions of manufacturing jobs, and increasingly, high
tech jobs, American companies, including IBM, are endangering the long-term
health of the United States." Mr. Sanders provided results of a recent study by
the Hass School of Business concerning the expected impact of offshoring: "14
million white collar service jobs representing 11% of the total U.S. workforce
with average salaries of just under $40,000 a year are in danger of being
outsourced overseas." I also urge you to consider additional letters I submitted on proponent's
behalf, dated January 26, 2004 and February 10, 2004, that do not appear to have
been included in the Staff's decision and that provide additional evidence
showing surging public debate and rapidly increasing recognition of a
significant social policy issue. SEC rules and previous SEC decisions provide that such factors as widespread
public debate and increasing recognition of a significant social policy issue,1
impact on communities2, and fundamental corporate policy decision3 transcend
ordinary business and take an issue outside of the ordinary business exception.
Recent articles in the Charlotte Observer and in the New York Times demonstrate
that all four of these factors are now in place for the offshoring issue
addressed by the proposal (though only one of these factors is needed under the
SEC rules to avoid the ordinary business exception). The February 7, 2004 Charlotte Observer (attached) highlights these four
factors. The article begins as follows: "At least 15 states, including South Carolina, are rushing to stem the loss of
white-collar jobs to lower-wage countries. "The Observer found that in just the past four weeks, the states have proposed
legislation ranging from a total ban on state agencies sending work abroad to
banning call centers on state contracts." Remarkably, one of these bills already passed the Indiana Senate with a vote of
39-10 on February 2, 2004 (see attached news release from the state senator who
introduced the bill). The Charlotte Observer article lists the 15 states and notes that "last month,
the federal government joined the battle with a limited, temporary
foreign-outsourcing ban tucked into its current spending plan." Passage of this
provision in the U.S. Senate on January 22, 2004 and into law with President
Bush's signature the following week appears to have accelerated submission of
legislation in the various states. As a union representative quoted in the
article said, passage of the federal provision "gives the green light to all
states that this is a legitimate public policy issue that needs to be
addressed." The Charlotte Observer article also notes the vast impact of offshoring, that
"by one estimate, already called too conservative, the trend would cost the
nation a total of 3.3 million jobs and $136 billion in wages by 2015."
Recognition of the huge numbers of high paid American white collar workers who
have either already lost jobs or could be thrown out of work as a result of the
transfers of work to lower wage countries has prompted the explosion of
legislation and debate on the issue at state and federal level. An article in
the February 15, 2004 New York Times (attached) notes a jump in the number of
states with offshoring bills, further demonstrating the widening debate and
increasing recognition that offshoring is a significant social policy issue.
According to the article, "the National Foundation for American Policy, a
research group, says 30 bills are pending in 20 states to curb the use of
offshore contractors by state and local govemments." 4
Transfer of jobs to lower wage countries has been vigorously opposed by several
presidential candidates. The New York Times article notes that John Kerry had
introduced a bill restricting offshoring in the Senate, while President Bush
announced support for job transfers to low wage countries, further demonstrating
the widening debate on the issue, not just in state legislatures and the halls
of Congress, but also among the candidates for President. The New York Times article talks specifically about IBM, stating that IBM "says
it plans to transfer 3,000 jobs overseas, many of them white-collar jobs like
computer programmer." One laid off IBMer who lost his job to offshoring is
quoted: "No attempt was made to retrain us to help us get other jobs."
An article in The Times of India (attached), dated February 15, 2004 illustrates
the increasing debate on transferring jobs to lower wage countries raging in
Washington and in state legislatures: "As the outsourcing issue dominates the US presidential election campaign,
Senate Democrats have introduced a new legislation under which American
employers will be required to warn their employees and affected communities
before moving any job overseas. "The Jobs for America Act has been introduced in response to President George W
Bush's annual economic report released on Monday which highlighted the benefits
of sending jobs overseas. "Gregory Mankiew, President's chief economic adviser, defended outsourcing of
jobs after the release of the report, saying it was "probably a plus for the
economy in the long run". However, he later apologised in a letter to the House
of Representatives Speaker Dennis Hastert and regretted that his comments had
been misinterpreted. "Democrats see the outsourcing issue as their main chance to win support away
from Bush. Employment is expected to be a major issue in the 2004 polls with
Democrats repeatedly noting that the US economy has lost more than two million
jobs since 2001. "Dismissing Mankiew's theory as `Alice in Wonderland economics', Senate
minorities leader Tom Daschle introduced the Bill on Thursday. It requires any
company that plans to lay off 15 or more workers and send those jobs overseas to
disclose how many jobs are affected, where the jobs are going and why they are
being offshored. "Apart from giving workers a three-month notice, the companies will be required
to notify federal and state agencies responsible for helping laid off workers.
The Bill also calls on the department of labour to compile statistics of
offhored jobs and report annually to the US Congress."
In addition to widespread reporting in print media, the debate on offshoring,
and specifically about IBM's offshoring, has also been widely reported in
broadcast media, including a continuing series on the Lou Dobbs show entitled,
"Exporting America" (transcript of one recent segment mentioning IBM is
attached). The Staff letter indicates that the initial decision on ordinary business was
based on the resolution addressing "employment decisions and employee
relations." However, proponent would respectfully ask the Commission to consider
reversing the Staff's initial decision in view of the rapidly growing
recognition that transferring work to lower wage countries and laying off
American workers has become widely recognized as a significant social policy
issue. Reversal is also in order in view of the extremely widespread public
debate on the issue that has emerged at the federal level and in 20 state
legislatures within the past four weeks. Reconsideration and reversal of the initial Staff decision is also in order in
view of the growing recognition that large scale transfers of high paying jobs
to lower wage countries has already had adverse impacts on communities and the
US as whole, and these adverse impacts are likely to persist-at least until
retraining programs touted by supporters of offshoring are implemented and as
yet unknown new high-paying job opportunities for retrained workers open up.
Reconsideration and reversal is also in order in view of the fact that the
resolution provides a fundamental corporate policy proposal that is appropriate
for shareholder vote-not the ordinary business type "employment decisions and
employee relations" that are the exclusive domain of management.
It is worth noting that corporate executives, like those at IBM, can personally
gain by transferring work to lower wage countries and laying off thousands of
their higher paid American workers. Therefore, where significant social policy
issue, widespread public debate, severe impact to communities and the entire
country, and fundamental corporate policy issue are at stake, stockholder
oversight is appropriate. Conclusion:
The debate on offshoring has exploded nationally in the past few weeks as House,
Senate, presidential candidates, and legislatures in various states recognize
that millions of American workers, including thousands of IBM employees, have
lost or are in imminent risk of losing jobs, with potentially huge adverse
consequences for local and national economies. The recent upsurge of federal and
state legislation and the upsurge of articles in the broadcast and print media
further demonstrate that the stockholder proposal is a matter of widespread
public debate, addresses a significant social and corporate policy issue, and
addresses an issue with substantial impact on local and national economy.
Therefore the proposal "transcends" ordinary business "employment decisions and
employee relations," and is appropriate for a shareholder vote.
IBM has the burden of showing that the resolution may be omitted by showing that
there is not in fact increasing recognition of a significant social policy issue
or a fundamental corporate policy issue, that it is not a matter of widespread
public debate, and that it will not severely impact the national economy or the
economies of local communities. IBM has not met any of these burdens.
Therefore, proponent respectfully requests the Commission to consider this
appeal and to allow a vote on the issue at IBM's shareholder meeting. Thank you
very much for your attention to this matter. Sincerely,
/s/ James Marc Leas, Esq.
cc Mr. Stuart S. Moskowitz, IBM Senior Counsel
Michael L. Saville, proponent Attachments
"States Battle Overseas Job Drain; Recent Proposals Cover Foreign Call Centers,
Outsourcing Other Work," The Charlotte Observer, February 7, 2004.
News release issued by the office of Indiana State Senator Jeff Drozda, "Drozda
hails Passage of Anti-Outsourcing Bill," February 2, 2004.
"Many New Causes for Old Problem of Jobs Lost Abroad," by Steve Lohr, The New
York Times, February 15, 2004. "Democrats Move Anti-Outsourcing Bill in the US Senate," The Times of India,
February 15, 2004. Lou Dobbs interview on moving high tech jobs off-shore, broadcast January 20,
2004. Sincerely, /s/
James Marc Leas, Esq. cc Mr. Stuart S. Moskowitz, IBM Senior Counsel
Michael L. Saville, proponent Attachments
letter to the commission requesting appeal of the initial Staff decision
"States Battle Overseas Job Drain; Recent Proposals Cover Foreign Call Centers,
Outsourcing Other Work," The Charlotte Observer, February 7, 2004.
News release issued by the office of Indiana State Senator Jeff Drozda, "Drozda
hails Passage of Anti-Outsourcing Bill," February 2, 2004.
"Many New Causes for Old Problem of Jobs Lost Abroad," by Steve Lohr, The New
York Times, February 15, 2004. "Democrats Move Anti-Outsourcing Bill in the US Senate," The Times of India,
February 15, 2004. Lou Dobbs interview on moving high tech jobs off-shore, broadcast January 20,
2004. -----FOOTNOTES----- 1 "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. Examples include the management of the workforce,
such as the hiring, promotion, and termination of employees, decisions on
production quality and quantity, and the retention of suppliers. 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." \43/ (Release 34-40018; IC-23200; File
No. S7-25-97, "Amendments to Rules on Shareholder Proposals," Final Rule, under
section III. "The Interpretation Of Rule 14a-8(c)(7); The "Ordinary Business"
Exclusion). The Staff has denied no-action letters numerous times on the basis of widespread
public debate and increasing recognition of a significant social and corporate
policy issue. One of the first such cases was the Staff decision to deny a
no-action letter in the cash balance pension case of IBM (February 16, 2000). A
recent example is ExxonMobile Corporation (March 11, 2003), in which the Staff
denied a no-action letter. The Staff noted "the widespread public debate
concerning the impact of non-audit services on auditor independence and the
increasing recognition that this issue raises significant policy issues."
2 In Pacific Telesis (February 2, 1989) and in Dupont (March 6, 2000) the Staff
denied no-action letters for resolutions because they involved impact on
communities. 3 In Union Camp (February 12, 1996) the staff denied a no-action letter because
the resolution involved corporate policy regarding sales of chemicals. In Eli
Lily (February 25, 2001), the staff denied a no-action letter because the
resolution involved corporate policy regarding pricing of drugs.
4 The widespread public debate on job losses because of offshoring and the
increasing recognition that offshoring is a serious social policy issue is
illustrated by the rapid increase in the number of states considering bills
restricting offshoring: Date of...........Number of states considering......Source of information
publication.......bills curbing offshoring
1/4/04............at least 4 states.................Los Angeles Times
1/24/04...........at least 8 states.................The Telegraph of Calcutta
2/2/04............9 states..........................News release by Sen.
JeffDozda of Indiana 2/7/04............at least 15 states................The Charlotte Observer
2/15/04...........20 states.........................The New York Times based on
National Foundation for American Policy findings [INQUIRY LETTER]
January 30, 2004 The Honorable William H. Donaldson
Chairman
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549 Dear Chairman Donaldson:
I am writing to urge you to rule against International Business Machines
Corporation's (IBM) request to exclude the Stockholder Proposal on Offshoring
(Stockholder Proposal) from a vote at IBM's year 2004 Annual Meeting. The
Stockholder Proposal should not be excluded because it does not relate to mere
"ordinary business" opcrations nor a "personal grievance." Instead, it addresses
a serious social policy issue: exporting U.S. jobs to low wage countries.
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. There is an ongoing and widcspread public debate in the Congress and throughout
the country concerning the issue of corporations in the United States exporting
decent paying jobs to low wage countries such as India and China. This matter
goes far beyond the day-to-day business operations of IBM.
Indeed, the Stockholder Proposal addresses a fundamental crisis in the American
economy. At a cost of millions of manufacturing jobs, and increasingly, high
tech jobs, American companies, including IBM, are endangering the long-term
economic health of the United States. As the Ranking Member of the House Subcommittee on Financial Institutions and
Consumer Credit and a leading opponent of reckless, unfettered free trade, I
have observed that an increasing number of Members of Congress, organizations,
and citizens throughout the country are alarmed by the devastating loss of jobs
and its implications for the future. Given that, the Stockholder Proposal
constitutes a question of social policy that stockholders should be permitted to
present. I can certainly appreciate why executives at IBM do not want this issue
discussed. Their short-sighted policies may indeed enhance the company's bottom
line but in the long term they undermine the very U.S. economy that sustains
them and they betray the workers, customers, and, indeed, the entire nation that
contributed to IBM's success. In light of the serious social and corporate policy issues that the Stockholder
Proposal raises, moving U.S. jobs overscas should not be considered a matter
relating to IBM's ordinary business operations. Therefore, I do not believe that
IBM should omit the proposal from its proxy materials in reliance on rule
14a-8(i)(7). The issue of moving U.S. jobs overseas is affecting millions of workers at
thousands of companies, and is the subject of broad press coverage. Over the
last three years, the U.S. has lost 3 million manufacturing jobsrepresenting
more than 16 percent of American factory jobs. And, according to a recent study
by the Haas School of Business, 14 million white collar service jobs
representing 11 percent of the total U.S. workforce with average annual salaries
of just under $40,000 a year are in danger of being outsourced overseas.
For all of the above reasons, this resolution should be included in IBM's proxy
materials for their 2004 Annual Meeting under the SEC's current rules.
Therefore, I arge you to 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, /s/
Bernard Sanders
Member of Congress [INQUIRY LETTER]
February 26, 2004 VIA FAX 202-942-9525
U.S. Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, NW
Washington, DC 20549 Re: IBM Stockholder Proposal of Michael Saville Response to Proponent's request
for reconsideration of Staff's February 3, 2004 ruling Ladies and Gentlemen:
The staff's February 3, 2004 no-action letter granting IBM relief under Rule
14a-8(i)(7) is fully correct, and there is no legal or factual basis for
reconsidering such decision. At the outset, we wish to point out to the Commission that it took until
yesterday evening, February 25, for Mr. Leas to send us his letter dated
February 17th seeking reconsiderationover a week delay at a time when Mr. Leas
knows that we are about to go the press on the proxy statement. We also find
this disturbing because we made every good faith effort to keep Mr. Leas up to
date on this matter, providing both him and the proponent with a copy of the
SEC's no-action letter via e-mail within one hour of our receipt of such letter
on February 11. Mr. Leas attributes his present tardiness to "a lapse of memory"
we call it unconscionable. Substantively, there is nothing in Mr. Leas' letter which merits any new legal
response. The Proposal, as filed, wasand remainsfully excludable from IBM's
proxy statement for the myriad of reasons we outlined in our December 17
no-action letter request. Mr. Leas, as an attorney who has appeared multiple
times, both on behalf of himself as well as others filing stockholder proposals
with IBM over the years, is very familiar with the SEC's no-action letter
process under Rule 14a-8. Yet, in all of Mr. Leas' multiple correspondences, he
has utterly failed to refute any of the legal arguments we have set forth in our
letter, or to distinguish any of the precedent we have cited. We stand by the
contents in our earlier correspondence in this matter. The subject proposal was and remains defective on its face. We have fully met
our burden of proof, and Mr. Leas has utterly failed to show otherwise. The SEC
correctly recognized this fact in its February 3 letter and as such, the
proponent's reconsideration request should be denied. Sincerely yours,
/s/ Stuart S. Moskowitz
Senior Counsel [INQUIRY LETTER]
February 27, 2004 Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
450 Fifth Street, NW Judiciary Plaza
Washington, DC 20549 Subject: Response to IBM's letter of February 26, 2004 concerning Stockholder
Resolution on "Offshoring" by Michael L. Saville
Attention: Keir Gumbs Dear Members of the Office of the Chief Counsel, Division of Corporation
Finance: In IBM's letter dated February 26, 2004, IBM's senior counsel makes a materially
false and misleading statement to the SEC concerning delivery of my request for
reconsideration to him. He falsely quotes what I said in my phone message. He
does not provide the full quotation, though it was brief and he was not limited
in word count, and he changes its words and meaning.1 As much as I regret my delay in sending a copy of my letter to IBM, the delay
had no effect on IBM's response: IBM states that nothing in my letter describing
the sweeping changes in public debate on this issue since IBM's December 16,
2003 letter merits any new legal response. Instead IBM resorts to ad hominem
argument. IBM has no response to the sea change in facts demonstrated by the Senate vote
and passage into law with President Bush's signature at the end of January of a
bill restricting offshoring of certain federal jobs; the large number other
bills recently introduced in the Senate and House and in 20 state legislatures
since the beginning of January; and the emergence of offshoring jobs to lower
wage countries as a central issue in the presidential campaign in recent weeks.
IBM does not dispute the existence of these new facts. I would make one further argument: The SEC policy regarding sufficiently
significant social policy issues includes diserimination matters but is not
restricted to discrimination. Discrimination is given as one example of a
sufficiently significant social policy issue in the SEC's May 22, 1998 final
rule, entitled "Amendments to Rules on Shareholder Proposals." The policy allows
for other issues that rise to the level of "sufficiently significant" to
"transcend the day-to-day business matters and raise policy issues so
significant that it would be appropriate for a shareholder vote."
Offshoring is increasingly viewed as an attack on the existence of a large
middle class in this country and an attack on the American way of life. As
Congressman Sanders wrote in his letter to the SEC, the Haas School of Business
noted that 14 million white collar jobs representing 11% of the total U.S.
workforce with average annual salaries of just under $40,000 a year are in
danger of losing their jobs to offshoring. Offshoring has emerged as a
fundamental policy issue not just for IBM and other companies but also for the
entire country. By failing to address the explosion of developments on the offshoring issue
since its December 16, 2003 letter, IBM has not met its burden of demonstrating
that the resolution may be omitted. By failing to even try to dispute the point
that offshoring has emerged as a sufficiently significant social policy issue
and is a matter of widespread public debate, IBM has not met any of these
burdens. Therefore, proponent respectfully requests the SEC Staff to reconsider its
decision and to allow a vote on the issue at IBM's shareholder meeting.
Thank you very much for your attention to this matter.
Sincerely, /s/
James Marc Leas, Esq. cc Mr. Stuart S. Moskowitz, IBM Senior Counsel Michael L. Saville, proponent
-----FOOTNOTES----- 1 Given that there are six business days between the date I submitted to the SEC
and the date he received a copy, and that two or three business days for mailing
time from Vermont is reasonable, the delay cannot accurately be characterized as
"unconscionable." [INQUIRY LETTER]
March 1, 2004 Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
450 Fifth Street, NW Judiciary Plaza
Washington, DC 20549 Subject: Stockholder Resolution on "Offshoring" by Michael L. Saville
Attention: Keir Gumbs Dear Members of the Office of the Chief Counsel, Division of Corporation
Finance: The increasing significance of the social and corporate policy issue and the
increasing widespread public debate on "offshore outsourcing" are highlighted in
a front page article in today's Wall Street Journal, "Business Coalition Battles
Outsourcing Backlash, Big Lobbyists, Companies Aim at a Blizzard of Bills Meant
to Keep Jobs at Home," March 1, 2004. The article confirms the points in my
request for reconsideration and goes much further. The lead sentence in the article, "with overseas outsourcing a hot U.S. election
year issue, big business is quietly mounting an offensive against state and
federal efforts to keep jobs at home and otherwise restrain globalization,"
highlights business recognition that offshoring as a hot issue and that keeping
employees in jobs is a significant social and corporate policy issue that merits
a major corporate offensive. The resolved clause of Mr. Saville's stockholder resolution is highlighted even
in the name of the new business coalition, "Coalition for Economic Growth and
American Jobs." The inclusion of "American jobs" in the name of the coalition
illustrates that the big business groups are sensitive to the social and
corporate policy issue of terminating Americans as they transfer work to lower
wage countries. The coalition "comprises about 200 trade groups-including the U.S. Chamber of
Commerce, the Business Round Table, the American Bankers Association, the
National Association of Manufacturers and the Information Technology Association
of America-as well as individual companies." Thus, the coalition includes the
biggest names in American business. The new organization includes "some of the best-financed trade groups in the
U.S." and its purpose is to "beat back federal legislation that would restrict
foreign outsourcing by government contractors." The article paraphrases a
business representative saying that "business is alarmed by a provision in the
federal government's omnibus fiscal 2004 spending bill that bars companies that
bid for certain work done by government employees from moving work offshore."
That "business is alarmed" further highlights the significance of offshoring as
a corporate and social policy issue to business leaders. That the biggest
business organizations are alarmed and have formed this coalition demonstrates
the increasing intensity of the debate on the offshoring issue.
The article notes that in addition to concern about federal legislation,
"stopping state initiatives is a major goal of the coalition," and points to
"the unusually rich crop [of bills in state legislatures] in a relatively short
time. About 80 bills aimed at keeping jobs in the U.S. by limiting international
outsourcing have been introduced in about 30 states." Comparison with an article
in the New York Times on February 15 which cited twenty states shows that the
number of states with such bills has jumped about 50% in the last two weeks.
The article says that "during the past two weeks, coalition representatives from
banking, insurance and high-tech trade groups attended hearings of Maryland
state legislators to oppose a pending oursourcing bill. Three labor unions
argued for the bill at the sessions." Not only through participation in
hearings, the American Banking Association "is very effective at the grass-roots
level because every state has a banking association,' said Ed Yingling, the
group's executive vice president" in the article. Furthermore, "the coalition is
preparing a public-education campaign," according to the article. Thus, the
coalition is adding its voice to the widespread public debate.
The article describes the argument advanced by the big business groups: "the
coalition says the ousourcing bills create unintended consequences for state
governments that have international programs and fail to acknowledge the
money-saving benefits of work done outside the country." Thus, the big business
groups highlight the social and corporate policy issue, the trade off between
saving money and job loss. IBM has not addressed the widening of the public debate on offshoring and the
increasing recognition that offshoring involves a significant social and
corporate policy issue since its December 16, 2003 letter. This despite the fact
that fellow top business organizations have recognized offshoring as a "hot"
social and corporate policy issue and that they formed a coalition to advance
their views in the widening public debate. IBM is seeking to keep the issue from
a vote by the shareholders even though it is now a central issue in Congress, in
a majority of the state legislatures, and a hot issue in the presidential
campaign. IBM has not met its burden of demonstrating to the SEC that the
resolution is a matter of ordinary day-to-day business and may be omitted from a
vote by shareholders. IBM's position is contradicted by the position of leading
business organizations who recognized offshoring as a significant social policy
issue and formed a coalition to participate in the widespread public debate. In
view of this development IBM cannot meet its burden. Therefore, proponent respectfully requests the SEC Staff to reconsider its
decision and to allow a vote on the issue at IBM's shareholder meeting.
Thank you very much for your attention to this matter.
Sincerely, s/ James Marc Leas, Esq.
Copies of this letter are simultaneously being sent by email to:
cc Mr. Stuart S. Moskowitz, IBM Senior Counsel Michael L. Saville, proponent
[STAFF REPLY LETTER]
March 8, 2004 James Marc Leas
37 Butler Drive
S. Burlington, VT 05403 Re: International Business Machines Corporation Reconsideration request dated
February 17, 2004 Dear Mr. Leas: This is in response to your letters dated February 17, 2004, February 27, 2004,
March 1, 2004, and March 8, 2004 concerning a shareholder proposal submitted to
IBM by Michael L. Saville. On February 3, 2004, we issued our response
expressing our informal view that we would not recommend enforcement action to
the Commission if IBM omitted the proposal from its proxy materials in reliance
on rule 14a-8(i)(7). You have asked us to reconsider our position.
After reviewing the information contained in your letter, we find no basis to
reconsider our position. Sincerely, /s/
Martin P. Dunn
Deputy Director Enclosures cc: Stuart S. Moskowitz
Senior Counsel
Office of the Vice President
Assistant General Counsel
International Business Machines Corporation
New Orchard Road
Armonk, NY 10504
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