IBM Is Giving Its CEO A Big Bonus Again Despite The Company's Tumbling Stock Price

IBM's Ginni RomettyIBMIBM CEO Ginni Rometty

IBM CEO Ginni Rometty is getting a nice raise for 2015 and earned most of her bonus for 2014 even though the company’s stock is performing terribly.

Rometty got a $US100,000 increase in salary, from $US1.5 million in 2014 to $US1.6 million in 2015. She’s also being granted $US13.3 million in restricted stock units in 2015, up from $US12.75 million last year, but she won’t actually receive those shares until three years after they were granted (Feb. 2017 and 2018 respectively).

She earned most of her 2014 bonus, bringing in $US3.6 million out of a possible $US4 million. And she’s eligible for a bigger $US5 million bonus in 2015.

Meaning, if she earns her full bonus in 2015, she’ll be awarded $US19.9 million in total compensation in 2015, compared to $US17.9 million awarded in 2014. That’s an 11% raise.

Now, $US20 million isn’t an excessive salary for the CEO and chairman of one of the biggest, most venerable tech companies in the world, and a highly profitable one at that. Plenty of other CEOs earn millions more.

Still, at the end of 2013, when the company’s revenues and profits declined, Rometty and her senior staff opted not to take their cash bonuses at all.

IBM is still going through a rough transition with declining revenues. Earlier this year, Rometty made the tough-but-necessary choice to abandon the company’s Roadmap 2015. That was a promise made by her predecessor to hit $US20 EPS by 2015. IBM was twisting itself into financial engineering pretzels to try and meet that promise.

The stock tumbled on that news in October and hasn’t recovered, leading it to be one of the worst performing stocks on the Dow two years running.

That said, Rometty is making a lot of decisions that appear to be good for the company’s turn-around, like shedding low-margin or unprofitable businesses, investing billions in hot new areas like cloud computing, and signing on huge new partners like Apple, Twitter, Tencent.

A change in leadership right now would not be good, Bill Kreher, technology analyst for Edward Jones tells us. So we can understand why IBM’s board would entice her to stay. Still, the company’s annual layoff cycle and troubled financials have led to some poor moral among the Big Blue workforce, sources tell us. Rometty has got a low 48% per cent approval rating from employees who rated her on job-hunting site Glassdoor. So, her raise might not go over too well with everyone.

Here’s the chart IBM just shared on executive pay:

2014

Annual

2015 Cash

2015 Long-Term

Incentive Award

Incentive

Payout

Salary Rate

Annual Incentive

Target

Performance Share

Units*

V. M. Rometty

$US

3,600,000

$US

1,600,000

$US

5,000,000

$US

13,300,000

M. J. Schroeter

$US

747,600

$US

725,000

$US

979,000

$US

4,500,000

S. A. Mills

$US

703,500

$US

745,000

$US

1,005,000

$US

5,000,000

J. E. Kelly III

$US

791,100

$US

700,000

$US

945,000

$US

5,000,000

R.C. Weber**

$US

737,520

$US

650,000

$US

878,000

$US

N/A

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