And layoffs continue

IBM CEO takes bonus, gets a raise

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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.

ibm salaries 2014

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.

Tough transition

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

13 Responses to “IBM CEO takes bonus, gets a raise”

  1. Much better job

    After 14 years, I put my 2 week notice in March 2013 as I saw huge cracks in the very foundation of this once great company. When you start to see that management and executives stop believing in IBM and verbally saying this out loud, there is a major problem. IBM has already let go of too many highly skilled employees and other companies have hired them and reaped the benefits. The remaining people left at IBM in the U.S. are either new, don’t care about the company anymore and hanging around just to retire or can’t find work else where. The true IBMers are long gone and Ginni is to blind to see this. 😂

  2. As a former employee, I saw the writing on the wall when the layoffs began in the 90’s. Who knows how long this cycle continues? And I would never say that I was/is an IBM’er.
    IBM= I’ve Been Mismanaged. I just hope the stock holds up!

  3. Screwed IBMer

    11 consecutive losing quarters and she gets a bonus. Meanwhile I have to look over my shoulder every day , wondering when the axe will fall and I will be replaced by some cheap unskilled foreign labor. We lost our bonus plan last year due to performance and despite excellent ratings have not had a raise in 5 years……this is not only unjust, it borders on criminal

  4. This company is making huge layoffs, shares are down, revenues and earnings missed expectations, strategy and vision are dubious to say the least.
    Honestly, in such situation it should be illegal for bonuses to be distributed to the top management.

  5. tyelmene

    This is a fascinating article. It’s interesting because there is no way an average attorney or any good, bad or mediocre accountant won’t read it and not come away with exactly the opposite conclusion that any true ‘value-minded’ business person or even any reasonable human being would.

    To an attorney or an accountant, IBM is following a cost reduction path that (in their demented reality) creates value, and therefore qualifies such cost reduction activities as positive behavior by management (thus justifying bonuses and raises). Because accounting (what used to be just score keeping), M&A paper value shifting and all the other legal mumbu-jumbu garbage that has long become confused with actual customer-realized value creation built by employee-capability development, has become then norm, the ignorant IBM CEOs in the photo are smiling all the way to the bank. Now, after 30-40 years of this accounting-concussed-as-business nonsense, entire generations have come to unquestioned belief systems that leave us with stupid senior MBA corporate managers like those two who are rewarded at 1000, 2000 or 3000 times the amount of the rank and file and perpetuate the problem (the rank and file folks by the way who actually deliver real value) . Such is the broken nature of our modern corporate business landscape. And that’s bad, but… if only reality wasn’t so, so much worse than that.

    When these same senior corporate management as_hole_, repurpose corporate earnings that would otherwise be re-invested back into the business or returned to shareholders to be given to political lobbyists to alter the rules of our collective society to meet similar accounting-only objectives (that justify more bonuses and salary increases), then capitalism itself has been broken by these flawed, less-than free market beliefs. Unfortunately as evidenced by this article, this is EXACTLY where we find our selves today.

    Yes, this article is very interesting because in highlighting this discussing, yet highly acceptable senior management reward practice going on at IBM, it vividly illustrates exactly how stupid we’ve all become.

  6. Blue Knight

    Rometty is running the company just the way Warren Buffett wants it run. That’s why she is getting rewarded. IBM (now) is nothing but a big pyramid scheme with the pyramid inverted … fewer on the bottom … more on the top. Picture it like a spinning top. When it runs out of inertia … it will topple. The ones on the bottom will be crushed. The ones on the top will jump off with their golden parachutes. – Blue Knight

  7. I find this behavior reprehensible, not because it is happening in the midst of layoffs, but because it assumes a reward is deserved. Gianni and the upper brass have been slow to act. Her vision is strong…although manifesting far too late.

    Ginni shouldnot be dipping into the honeypot until her vision demonstrates real results. Moreover, when that time comes, she should be sharing the reward with the many people who,s backs she gets to stand upon and claim victory.

    Shame on you Ginni.

  8. In the midst of laying off workers, some of whom may have worked harder than the CEOs, there is still enough money left over to feed the greed.

    How do you look your workers in the face after taking such a bonus and tell them to find another job because of money shortages? The timeliness of this is so disrespectful to the ones being laid off.

    Folks in the US favor blaming class warfare on the President, but acts such as this from IBM are the real reasons that real workers have a problem with those who already have a lot.

    Of course, I am under the impression that the severance packages of those being laid off are not near as bountiful as a $3.6 million bonus and a 6.7% raise. Any data on this?

  9. Amjad Wyne

    “IBM “has no sense of what consumers want, that’s the blind in one eye part”… this line is sad but is very true. I used to analyze marketplace data at IBM… Around 2011, I was able to put together a complete picture for one of IBM’s major marketplaces (again, not a statistical sample but a complete picture based on every customer in that marketplace) and the results were not pretty. IBM’s definition of what constituted value for the customer was miles away from what customers viewed as value. Even worse was the fact that when I made the leadership aware of this gap, their reaction was, “customer does not know what it really wants”….It really is sad…it is a great company but….