IBM Grants Rometty Record Bonus for 2016 After Shares Recover

  • Annual incentive tied to operating net income, cash flow
  • IBM stock rose 21 percent in 2016, first gain in four years

IBM Touting Hypocritical Hiring Plans?

IBM Chief Executive Officer Ginni Rometty got her biggest bonus as head of the company last year after the shares rose about 21 percent, the first annual gain in four years.

Rometty received a $4.95 million payout under her annual incentive plan, the largest since she was named CEO of International Business Machines Corp. in 2012, according to a regulatory filing from the Armonk, New York-based company. The bonus was tied to goals for operating net income, operating cash flow and revenue from the company’s “strategic imperatives,” according to a March proxy statement. She received a $4.5 million payout in 2015.

Rometty is in the fifth year of a multiyear turnaround of IBM, working to shift the company into a purveyor of cloud software and services and offer newer technologies such as artificial intelligence. Last month, IBM reported revenue that slipped for the 19th consecutive quarter, indicating that growth in its newer businesses have yet to offset declines in the old ones.

The company’s stock rose almost 21 percent in 2016, outperforming the S&P 500 Index. It also performed better than tech companies that investors typically put in the growth category, including Amazon.com Inc., Alphabet Inc., and Facebook Inc.

The rise in the stock price stems from a number of factors, including investor belief that IBM is near its bottom and performance will improve going forward, Toni Sacconaghi, a Sanford Bernstein & Co. analyst, wrote in a note Monday. Other reasons could be “a market embrace of lower volatility and high-dividend stocks” and a stable investor base of index funds and billionaire Warren Buffett, the company’s largest shareholder, he wrote.

Rometty’s target for her bonus and her $1.6 million salary will remain unchanged in fiscal 2017, the filing said. She’ll also receive equity awards worth about $13.3 million. Some of the equity award will be tied to company financial goals while the remainder will be hers after a number of years if she remains on the job.

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