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IBM’s CEO Ginni Rometty is taking a bonus of $3.6 million for 2014, according to SEC documents posted Friday and spotted by Bloomberg News. She will also receive a 6.7 percent salary increase bringing her salary total to $1.6 million for 2015 — her first raise since becoming IBM CEO in 2012.
Here’s the chart posted in the 8K filing.
News of more money flowing to IBM’s top dogs comes at a dicey time — just days after the company kicked off another round of layoffs last week.
[company]IBM [/company]has taken it on the chin in the past few years for obsessing about attaining $20 earnings per share per year by the end of 2015. That milepost was set in 2012 by former CEO Sam Palmisano (pictured above with Rometty). Critics said IBM was more interested in delivering on that metric that than in building great products people want to buy. Rometty finally jettisoned that $20 EPS goal in October.
IBM share buybacks were also controversial among people who felt IBM should be pouring money back into its businesses, not placating shareholders.
It’s clear that IBM faces big macro issues, most notably the move of many workloads to cloud and Software-as-a-Service (SaaS) infrastructure. That means big companies — IBM’s traditional companies — are buying less on-premise software and hardware. And the big SaaS providers are not necessarily using IBM technology to run their businesses.
Rometty has sold off lower margin businesses, while focusing on cloud, analytics and mobile areas, but many doubt IBM’s claim that it now owns a $7 billion cloud business. In this shift, it faces competition not only from traditional rivals — [company]HP[/company], [company]Dell[/company], [company]Oracle[/company], [company]Microsoft[/company] — but also from made-in-the-cloud giant Amazon Web Services.
Lack of vision?
When I spoke to a former long-time IBM VP last week about other topics, I asked what he thought about his alma mater. He did not want to be quoted by name, but said he has been and remains a fan of Rometty.
However, in his opinion, she was hobbled by IBM’s EPS goal. He likened IBM to a person who is blind in one eye with both hands tied behind his back.
“[IBM] has no sense of what consumers want, that’s the blind in one eye part. The hands-tied part is they’ve been so aggressive in capital allocation, on returning capital to shareholders via dividends and share repurchases, that they’ve not invested in growth,” he said.
An IBM spokesman had no comment, but generally, IBM has disputed the notion that it hasn’t invested in research and development with an eye to building great products. It typically trots out Watson as an example. It would also likely point to an alliance with [company]Apple[/company] announced in July that focuses on building consumery enterprise applications for iPhones and iPads, as a sign that it “gets” what customers want.
That’s all well and good. The question is whether it’s too late.
This story was updated at 8:15 a.m. PST with IBM’s no-comment