Nomination and Selection of MND Arrangements

IBM UNITED KINGDOM PENSIONS TRUST LIMITED

Arrangements for Nomination and Selection of Member Nominated Directors

The revised arrangements (the ‘Arrangements’) which IBM United Kingdom Pensions Trust Limited, the Trustee of the IBM Pension Plan and the IBM IT Solutions Pension Scheme (the ‘IBM Plans’) has agreed for the nomination and selection of Member Nominated Directors (‘MNDs’) are detailed below. The Arrangements were adopted by the Trustee on 8 December 2011.

Pending the conclusion of the nomination and selection of MNDs pursuant to these revised arrangements, the existing four MNDs will remain in post under the terms of the MND arrangements in effect immediately before 8 December 2011.

Basic Arrangements

• The Trustee has decided to treat the IBM Plans as one single scheme for the purposes of the MND requirements.
• The Trustee Board will have a maximum of nine directors, one third of whom must be nominated and selected by a process which involves all of the active members and all retiree members of the IBM Plans. For the purposes of these Arrangements a "retiree member" is a person who is in receipt of a pension from an IBM Plan either in respect of his or her pensionable service under the IBM Plans or by reason of transfer credits. Dependants are not included as retiree members for the purposes of these Arrangements.
• The MND profile on the Trustee Board will be three MNDs. Two MNDs will be active members and one will be a retiree member (subject to the provisions below concerning ‘Change of Membership Status Following Election’). See the section, Constituencies, below for more information.
• Deferred members will not be allowed to put themselves forward for nomination as MNDs nor will they be allowed to participate in the nomination or selection process for MNDs.
• Members who have ‘suspended’ their M Plan Membership will be allowed to participate in the nomination and selection process for MNDs.
• If a casual vacancy arises (see below), the Trustee shall operate the nomination and/or the selection process to fill the casual vacancy to maintain or rebalance, as appropriate, the MND profile (set out above) to the extent possible taking into account the profile of the Trustee Board at that time.
• The Principal Employer (‘IBM’) will require that its consent be given for a person who is not a member of the IBM Plans to qualify for selection as an MND. 
• MNDs, whether retiree members or active members, as trustee directors, will have responsibility for all members of the IBM Plans including active, deferred and retiree members.
• The basic term of office for MNDs will be a four year term.  This may be different in the case of an MND filling a casual vacancy.
• An MND can stand again for nomination and selection as an MND at the end of his/her term of office if he/she remains eligible to be an MND.
• An individual who is in receipt of a pension (from an IBM Plan) whilst still employed by IBM and who could, therefore, be considered to be both an active member and a retiree member, will be considered to be a retiree member for the purposes of these Arrangements.
• The nomination and selection process, as set out in this document, will take place within six months of any requirement arising to appoint an MND (or such other period as is reasonable in the particular circumstances and which is consistent with The Pensions Regulator's Code of Practice).
• The removal of an MND requires the agreement of all the other directors of the Trustee.
• MNDs will not be excluded from any function(s) exercised by the directors of the Trustee by reason only of the fact that they are MNDs.
• An active member or retiree member will not be eligible to be appointed and will be disqualified as an MND if he/she is:
o aged under 18 at the date of appointment;
o an undischarged bankrupt;
o disqualified from being a company director or convicted of an offence involving dishonesty or deception; or
o prohibited or suspended from being a pension scheme trustee/trustee director by The Pensions Regulator;
o prevented from doing so by virtue of the provisions of any applicable legislation and/or the Articles of Association of the Trustee Company.

Constituencies

There will be two constituencies: one for active members ('active member constituency') and one for retiree members ('retiree member constituency'). 

The active member constituency will comprise:

• "Standard" M Plan active members;
• I Plan actives;
• Enhanced M Plan members;
• Hybrid M Plan members; and
• Hybrid deferred members.

There will be two MND posts for the active member constituency: one MND will be a "Standard" M Plan active member and the other MND will be either an I Plan active member or an Enhanced M Plan member or a Hybrid M Plan member or a Hybrid deferred member (referred to in these Arrangements "the other active member(s)").  All members of the active member constituency can select two MNDs, one person who is a "Standard" M Plan active member and one person who is from the other active member group. 
 
The retiree member constituency will comprise those persons who are in receipt of a pension from an IBM Plan either in respect of his or her pensionable service under the IBM Plans or by reason of transfer credits. Persons in receipt of dependants' pensions (such as spouses, civil partners, children or other dependants) are not included as retiree members for the purposes of these Arrangements.  There will be one MND post for the retiree member constituency. Retiree members can select one retiree member as MND.
The membership of each constituency will be determined at the commencement of the nomination and selection process and, during the nomination and selection process, members will not move from one constituency to another.
The nomination and selection process will apply separately to each constituency.

The Nomination Process

• Only "Standard" M Plan active members are eligible to be nominated for the post of "Standard" M Plan active member MND.
• Only other active members are eligible to be nominated for the post of other active member MND.
• Only retiree members are eligible to be nominated for the post of MND in the retiree member constituency.
• Only the active members and retiree members described above (as further described in the section headed Constituencies) are eligible to be nominated to serve as MNDs and they must also have a minimum of two years continuous IBM Plan membership (which may include hybrid deferred service and transferred in service – i.e. as a result of a TUPE transfer).
• Individuals will not be allowed to nominate themselves and no representative organisations will be involved in the nomination process.
• Each nominee must give his or her written consent to stand as an MND in advance.
• In each constituency, the MND nomination must be supported by five other members
• There will be no upper age-related limitation for candidates taking up the post of an MND.
• Candidates must be normally resident in the UK.

After Nominations

• Where there is only one nomination for the "Standard" M Plan active member MND post, the other active member MND post or the retiree member MND post, the MND candidate for that MND post will be deemed to have been selected. If more than one candidate is nominated for any of the MND posts, an election will be held for that MND post.
• Where a vacancy is not filled because there are no nominations, the nomination and selection process will be run again for the particular vacancy, to bring the number of MNDs up to the full complement of three. It will be run at an interval of six months from the end of the original nomination and selection process (or at such earlier interval as the Trustee shall decide). In the event that the re-run of the nomination and selection process is again unsuccessful, the Trustee shall re-run the nomination and selection process again at such intervals as the Trustee shall decide, but not being at an interval of more than three years from the end of the last nomination and selection process.
• The Trustee may decide that the term of office of a person appointed as a result of a re-run nomination process may be varied from the basic four year term and will take a similar approach to that set out in the Casual Vacancies section below.
• Where the Trustee has discretion to decide upon an interval or term of office as set out above, its decision shall be consistent with the Pensions Regulator's Code of Practice.

The Election Process

• MNDs will be elected by ballot.
• In the active member constituency, each member of this constituency will have a vote for candidates standing for each of the two available MND posts (ie the "Standard" M Plan active member MND and the other active member MND).
• In the retiree member constituency, each member of this constituency will have a vote for the retiree member MND post.
• The ballot process will be conducted by the ‘Electoral Reform Services’ or other suitable independent entity using the Single Transferable Voting system. Where there is a casual vacancy and the vacancy needs to be filled particularly promptly, the Trustee has the discretion to decide whether the Single Transferable Voting system or the First Past the Post system may be used.  If this discretion is not exercised the Single Transferable Voting system shall be used.
• Members in the active member constituency shall cast their votes using electronic voting. Members on Leave of Absence and retiree members may cast their votes using either electronic or postal voting.
• IBM’s Pensions Trust department will be responsible for managing the overall process and for answering any questions which may arise.

Change of Membership Status following Election

• Following the election of an MND, if he/she becomes a deferred member (by ceasing to be an employee of IBM or opting out of Plan membership) he/she will cease to be an MND. This will result in a casual vacancy.
• Where following the election of an MND in the active member constituency:
o if the MND in the other active member MND post ceases to be an employee of IBM and becomes a retiree member of an IBM Plan; he/she will be entitled to remain on the Trustee Board as an MND. It is explicitly acknowledged that in these circumstances this may well result in more retiree member MNDs than active member MNDs. Where the MND decides not to remain on the Trustee Board this will result in a casual vacancy.
o if the MND in the "Standard" M Plan MND post ceases to be an employee of IBM or ceases to be a "Standard" M Plan active member, he/she will cease to be an MND. This will result in a casual vacancy for the post of "Standard" M Plan MND post.

Casual Vacancies

If a casual vacancy arises (for example, on the resignation or death of an MND or following a change of membership status), the Trustee shall operate the nomination and selection process to fill the casual vacancy of MND required to reach the MND profile of two active members (one a "Standard" M Plan active member and one from the other active member group) and one retiree member, to the extent possible taking into account the profile of the Trustee Board at that time.
• The nomination and selection process shall take place within a six month period of the vacancy arising or, within such other period as seems reasonable to the Trustee having regard to the particular circumstances of the IBM Plans. For the avoidance of doubt, in appropriate circumstances, this may include waiting until the next scheduled nomination and selection process to fill the vacancy.
• The term of office of any MND appointed to fill a casual vacancy may be either the basic term of four years or it may be adjusted so as;
o to be less than four years, being the same as the remainder of the term of office of the MND who created the casual vacancy, or
o to be more than four years constituting a term of four years, plus the balance of the term of office of the MND who created the casual vacancy (for example where the casual vacancy arises late in the four year term of office of the MND who created the casual vacancy).
• Where the Trustee has discretion to decide upon a reasonable period or term of office as set out above, its decision shall be consistent with the Pensions Regulator's Code of Practice.
• Where a vacancy arises and it is decided to wait until the next scheduled nomination and selection process to fill the MND vacancy, the Trustee shall have discretion to appoint a temporary Trustee director who shall be the next person from the ‘List of Reserves’ with the highest number of votes recorded in the relevant position. This appointee will not have the status of an MND but will be a Trustee director filling the vacancy on a temporary basis.  The List of Reserves will be a published list of the five retiree members, the five "Standard" M Plan active members and the five other active members who were ranked next highest in the most recently held elections, behind the candidates who were actually appointed as MNDs. The Trustee shall appoint a temporary director from whichever class of member is appropriate in order to maintain the correct balance of two active member MNDs and one retiree member MND. If an active member has become a deferred member since the List of Reserves was published, that person shall not be considered for a temporary Trustee director role. 

MND Trustee Knowledge and Understanding

Education, training sessions and information will be available to potential nominees, actual nominees and successful candidates to enable them to understand the roles and responsibilities of the position.

Reviewing the Arrangements

The Arrangements will be reviewed by the Trustee at four year intervals or earlier if there is a material change to the IBM Plans' circumstances and/or the membership taking into account the requirements of the Pensions Regulator's Code of Practice.

Last Updated: 03/01/2012

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