Joyce M. and Thomas J. Hamm - Page 12

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          later one".  The fact that the ITO II program provided for a                
          leave of absence which ultimately determined the effective date             
          of petitioner's retirement further supports our conclusion that             
          the ITO payment was severance pay related to retirement.                    
               Our conclusion is further supported by the fact that the ITO           
          II program was implemented to "reduce the number of employees"              
          and to "help IBM become more competitive and efficient".  The               
          first page of the ITO II program documents includes a "Summary              
          Plan Description" that states:                                              
               Due to staffing dynamics and IBM's need to become more                 
               competitive and efficient, IBM intends to reduce the                   
               number of employees in eligible skill families at                      
               various locations. * * * The program is intended to                    
               help IBM become more competitive and efficient by                      
               reducing its workforce while retaining essential skills                
               and to assist employees who choose to participate in                   
               the program in making the transition into a new career                 
               or retirement.  The ITO II program is voluntary;                       
               however, if we do not have sufficient volunteers for                   
               the ITO II program, IBM will continue to take                          
               involuntary actions in the near future * * *                           
               The fact that eligibility for participation in the ITO II              
          program was determined, in part, by whether the employee's                  
          position fell within certain "functional skill families" also               
          supports our conclusion.  Eligibility for participation in the              
          ITO II program was determined as follows:                                   
               The ITO II Project Office will establish 'functions'                   
               within IBM.  Within each function, the Project Office                  
               will group similar skills together into 'families'                     
               creating functional skill families.  Based on these                    
               business decisions, management will decide which                       
               functional skill families are eligible to participate                  
               in the program. * * *                                                  

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