IBM's head honcho Ginni Rometty was paid $16.45m for running the company last year though this was dramatically lower than it could have been – the exec herself downgraded her final incentive score and the board agreed.
According to a 2019 Notice of Annual Meeting & Proxy Statement this week filed with America's Securities and Exchange Commission, IBM’s CEO, president and chairman could have made roughly 15 per cent more than she did.
Rometty was paid a base salary of $1.6m, the same as the prior two years, and received stock awards of $10.8m. The annual incentive payment was cut to $4.05m from the potential of $5m.
"For 2018 performance, the board approved an annual incentive payment of $4.05m, which represented 81 per cent of Mrs Rometty's target opportunity and was in line with the company incentive score," the filing stated.
These three payments took Rometty’s total package for 2018 to $16.45m, down from $17.7m in 2017 and $31.85m in 2016. No "bonus" was paid.
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Three metrics were used to calculate Rometty's 2018 package including revenue growth of IBM's "Strategic Imperatives" - social, security, mobile, cloud and analytics - operating net income and operating cash flow. Gross profit margin was up to 46.4 per cent and operating earnings per share was up too, the filing pointed out.
As such the "weighted incentive score was 96. Overall results were strong for the full year, with IBM returning to growth in revenue [to $79.9bn] and achieving about $40bn in Strategic Imperative Revenue."
"However, this performance was not with the consistency that management set for itself across all markets and units, and while IBM also performed well on other key non-financial factors such as diversity and workforce engagement, the Chairman and CEO recommended to the [Executive Compensation] Committee a 15 point downward qualitative adjustment to the final incentive score, and the Committee approved the recommendation."
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Nevertheless, the filing stated IBM's 2018 performance was the best it has been since 2011, when Rometty took over from Sam Palmisano and revenues peaked at $106.9bn. Since then, IBM sold its x86 server biz, some software lines and has seen organic sales in some legacy tech areas waste away.
For 2018, Cognitive Solutions was flat year on year at $18.48bn; Global Business Services edged up to $16.8bn from $16.34bn; Technology Services and Cloud Platform was up to $34.46bn from $34.27bn; Systems fell to $8.03bn from $8.19bn; and Global Financing was $1.59bn from $1.69bn.
Business highlights, as mentioned in the filing, included growing cloud revenue 12 per cent to to $19.2bn, the "most successful product cycle to date" for the Z mainframe, and GBS returning to growth.
One thing that is new for 2019 is that Rometty and the exec team will no longer be measured on revenue growth of the Strategic Imperatives, now it will be for the whole of IBM - something that analysts said they wanted to see changed.
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"In 2015, IBM began focusing on Strategic Imperatives revenue to ensure strong growth in cloud, analytics, mobile, social, and security, which formed the critical elements of our transformational business strategy. Now that Strategic Imperatives revenue has reached about $40bn and 50 per cent of total IBM revenue, the committee, with input from management, investors, and its consultant, reassessed the performance measures for the Annual Incentive Program," the filing said.
On top of the financial compensation, Rometty also racked up business travel costs of $1.101m for using the corporate jet and being driven around by designated IBM personnel. In 2017, she charged $897,797 for travel and $840,782 in 2016.
"IBM's security practices provides that the chairman and CEO be driven to and from work by IBM personnel in a car leased by IBM or by an authorised car service," the filing stated.
"These amounts [in the $1.1m figure] also include the aggregate incremental cost, if any, of travel by her family members or other guests on both business and non-business occasions."
Execs being ferried around will come as no surprise to any Reg reader - it is pretty standard across the tech industry. But Rommety's bill will be noted with interest by IBMers forced to curtail travel costs in recent years.
For the current financial year, '19, the board has made no change to Rometty's base salary or target annual incentive. The exec was granted an annual long-term incentive awards valued at $13.3m, comprising Performance Share Units and Restricted Stock Units.
Some other interesting snippets of information contained in the filing were the relatives of IBM's senior staffers that are employed by the business: Rometty's brother-in-law works at IBM, as does the son of board director Michael Eskew, the wife and daughter of veep and controller RF Del Bene and the brother of Dr JE Kelly, an executive veep.
The Annual Meeting of Shareholders, in which they get the chance to vote on various IBM things is scheduled for 30 April. ®