IBM’s revenues have been shrinking. That was the major theme of 2013, which became crystal clear on Tuesday when IBM released earnings: it was a four-in-row miss on revenue expectations.
With that as a backdrop, CEO Ginny Rometty announced what shouldn’t be a shocker: IBM’s senior executives, including herself, would not be getting their bonuses.
“In view of the company’s overall full year results, my senior team and I have recommended that we forgo our personal annual incentive payments for 2013,” she said in the earnings press release.
This could be a sizeable hit to their 2013 incomes. Executives apparently actually earned their bonuses, but opted to turn them down, an IBM spokesperson tells us:
“Ginni and her senior team would have been eligible for annual incentive payments, but have recommended that they forgo them for 2013 for the reasons stated in Ginni’s quote. These executives are forgoing their annual incentive payment, which in last year’s proxy constituted 27% of Ginni’s compensation and on average 17% of the SVP’s compensation. 2013 Proxy, page 21.”
Specifically, in 2012 Rometty received a nearly $US4 million cash bonus ($3,915,000), according to documents filed with the SEC. Her base salary for 2013 was $US1.5 million. She also received $US9.3 million in stock awards which IBM calls “Performance Share Units” as part of her total $US16.2 million pay package. The PSU’s are used as bonuses, too, IBM says, though they are also used to encourage executives to stick around.
For 2103, CFO Mark Loughridge who retired on Dec. 31, was slated to earn a $US1,046,000 in cash and 5.75 million shares of stock as a bonus.
Steve Mills, who runs the Software unit (the one that did show a bit of growth), was slated to get $US968,000 in cash and 5 million shares of stock as a bonus.
J. Randall McDonald, the top HR guy, was scheduled to earn a $US788,000 cash bonus for 2013.
The documents didn’t disclose executive pay on some of Rometty’s newest brain-trust members, such as Erich Clementi, promoted in 2013. He runs IBM’s largest business unit, its Global Technology Services business.
Clementi has been specifically tasked with getting IBM’s cloud business to blossom. In June, when IBM bought cloud provider SoftLayer, it promised the cloud would become a $US7 billion business for IBM by the end of 2014.
It’s still not clear how much of the stock incentives senior execs are forgoing. But if these executives don’t get any of their PSU’s, that would something.
This chart illustrates IBM’s growth trend:
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