IBM's CEO and outgoing exec chairman take home $38m in total for 2020 despite revenue shrinking by billions

IBM CEO Arvind Krishna and ex-exec-chairwoman Ginny Rometty were collectively awarded more than $38m in compensation for their services in fiscal 2020, a year in which Big Blue's revenues shrank and operating profit more than halved. According to the 2021 Notice of Annual Meeting and Proxy Statement, Krishna, who was elevated …

[Anonymous Coward]

It looks the "maximize shareholder value" mantra...

... which was devised to avoid executives to take advantage of company profits for themselves is not working at all...

Executives make themselves richer than before - but companies generate far less values for the whole system than before. Especially, they don't generate enough value for the employees and suppliers.

[Potemkine!]

Re: It looks the "maximize shareholder value" mantra...

It looks the "maximize shareholder value" mantra which was devised to avoid executives to take advantage of company profits for themselves is not working at all

Those who create that mantra would told you it's because executives are not paid enough, and should get even more profits - Just pressure the slave wages more, they should be already happy to be allowed to work for money. For now.

[Anonymous Coward]

Re: It looks the "maximize shareholder value" mantra...

Since they're largely paid in share options, they are maximising shareholder value (or at least short term share price) ahead of any other metric, largely by buy backs and cost cutting measures.

[Anonymous Coward]

"Since they're largely paid in share options"

Yes - and it's exactly the short-termism of people who have an evident conflict of interests the issue. Especially the very people who can easily manipulate the share price, and know in advance.

[fajensen]

Re: It looks the "maximize shareholder value" mantra...

... which was devised to avoid executives to take advantage of company profits for themselves

That is what "They" want us to think: There is *Nothing* coming out of Harward University and Chicago School of Economics that has not been carefully crafted and vetted *Exactly* for lending the academic support for CEO's and 0.01% percenters looting and pillageing everywhere!

"They" pay for sponsored professorships at Harward and Chicago, and they are sure getting their moneys worth.

For us simple folks, we must realise we live in "opposite land" - Assume that whatever plus-word some supposedly good and necessary inititive is branded at, It Will do The Opposite!

[batfink]

Nice incentive scheme. It just goes to prove that you need to pay your executives huge salaries because that's the only way you get execs good enough to make your business a raging success.

Note to self: must set up such a scheme. I could get by on that amount of money...

[Eclectic Man]

That thud

was my jaw hitting the ground. US$20k for FOUR HOURS WORK!

I mean, Mary Pickford only got US$10,000 per week:

https://www.celebritynetworth.com/richest-celebrities/actors/mary-pickford-net-worth/

Oh well back to the soup kitchen for lunch.

[spold]

Re: That thud

A little harsh...Ginni does have to shoot another scene along with the vicar and the dalmation each time. It's an IBM best seller compared with most service lines.

[VicMortimer]

Re: That thud

Let's not be silly here.

It's not like there was actually any actual work involved.

[Eclectic Man]

Re: That thud

Yes, of course, I was just assuming, silly me. I type corrected.

[Roland6]

Re: That thud

It was the US$10K for LESS THAN 4 HOURS that got me - that's a very expensive 10-minute phone call.

[Richard 51]

Obscene

While this small group of managers pay themselves gross amounts of money while the company shrinks and even in the areas of 'strategic importance' like cloud they can only grow the business by buying revenue like Red Hat, while paying no or a pittance of an increase to their staff who are not a top performer and making many redundant. This is not about sour grapes, if you believe that people should be paid for performance then all employees should follow broadly the same rules and the only difference should be in the metrics and proportion of remuneration at risk.

[jason_derp]

Re: Obscene

"...if you believe that people should be paid for performance..."

This is capitalism, friend. Nobody believes that.

[Throatwarbler Mangrove]

Re: Obscene

Indeed. People should be paid on a complex metric related to:

A) Who their friends are

B) Which schools they attended

C) How much money they already have (obviously, people with lots of money should be paid more, otherwise it's not worth their time)

[jason_derp]

Re: Obscene

This person gets it!

[Eclectic Man]

Re: Obscene

I think it was Folmi* who claimed that the most valuable person in the business should be paid the most. If that was the man who stoked the boiler, then he should get the most money.

Of course he was way ahead of his time, as they say. And obviously you have to have some objective way of deciding who is the most valuable person in the business. Which is usually done by the managers ...

*Hazy recollection from my Open University B600 'The Capable Manager' course last century

[johnnyblaze]

Unbelievable!

You just couldn't make this stuff up. Execs who've initiated the biggest staff cull in years, who are responsible for a fall in all areas of the business, who show no obvious understanding of the markets they're operating in get handouts in the millions for doing basically... nothing. There are people working 10x harder (you know, doing real work) who barely scrape a living. Something in this world is very, very wrong.

[ecofeco]

Re: Unbelievable!

...and history shows this never ends well.

[John Brown (no body)]

Re: Unbelievable!

who are responsible for a fall in all areas of the business,

I wonder if IBM are the only nominally IT based company in the world to have made a loss during the work from home pandemic where most IT based companies have managed to make profits, some larger than usual.

[Anonymous Coward]

Re: Unbelievable!

In all fairness, their business model hasn't worked for the last ten years and they've just been sucking dry what was left in existing contracts, and in customers locked in by the remnants of the need for backwards compatibility of mainframe software. Emulating all that stuff on Linux shouldn't be too hard: business opportunity (if you have a good IP lawyer).

I'm very disappointed by Arvind. I really thought he might make the kind of radical change that's needed, but it looks as if he's just joining the feeding frenzy before the corpse rots.

[Anonymous Coward]

Not surprised at declining revenues..

.. if my experience with their sales team is anything to go by.

I contact the sales team in one country to talk about buying quite a bit of gear. They just take my contact details with a vague promise to get back to me - that happens two days later, and I end up speaking to a gent of Italian origin who calls me from their Irish office via a German number (seriously), and I get an email with a waffly e-brochure that was thick on big words and utterly bereft of useful information. He asks some questions (not enough IMHO), and we schedule a call in a few days. Which he missed, calling some 40 minutes later at which point I was into my next call.

Never heard from them again.

Yeah, I can believe declining revenues.

[Yet Another Anonymous coward]

Re: Not surprised at declining revenues..

>I contact the sales team in one country to talk about buying quite a bit of gear.

I don't think they sell gear anymore - that's so 2010

Now they will partner with you dynamically to partner your requirements into a dynamic partnership

[Anonymous Coward]

Re: Not surprised at declining revenues..

Oh, I got them to switch off the BS talk pretty quickly. The disadvantage sales people have with me is that I (a) know exactly what I want (and need), (b) have had to experience to much sales talk already and (c) they discover pretty quickly that not only do I get competitive bids (even though they resemble telcos in their efforts to thwart comparisons), but I also value my time.

The good ones adjust because they recognise I wouldn't be talking to them if I didn't have the budget to buy, the dumb ones end up on the list of outfits not to deal with again unless forced by circumstances.

IBM is heading for that list. I tend to give two chances because I too can have off days, but that's where I draw the line.

[ecofeco]

Re: Not surprised at declining revenues..

IBM should have been on that out list of yours years ago.

[Anonymous Coward]

Re: Not surprised at declining revenues..

Nah, it merely suggests I've diligently managed to avoid them for years :)

[Eclectic Man]

Re: Not surprised at declining revenues..

I seem to recall the advertisement, decades ago:

"No-one ever got fired for buying IBM."

[Manolo]

Exhibitionist self-enrichment

A former Labour PM called this "exhibitionist self-enrichment".

And a few years later accepted a job on the board of a big bank where he handed out such bonuses.

[Anonymous Coward]

I bet I could do a betterjob of being a crap CEO than that!

I reckon I could ruin IBM utterly within 12 months. What would I get paid for that, then? £50 million? Two hundred mill? Gissajob, I can do that! 8-}

[David 132]

Re: I bet I could do a betterjob of being a crap CEO than that!

You're a greedy rapacious plutocrat growing fat on the sweat and toil of the labouring classes. I hereby offer to do the job of running IBM into the ground, for the bargain basement rate of only £49 million. It'll mean personal sacrifices, but it's a noble cause and I'm a good person.

[Eclectic Man]

Re: I bet I could do a betterjob of being a crap CEO than that!

I think you need to join the queue, there are loads of people in line ahead of you to be crap CEOs paid squillions for wrecking companies.

[fajensen]

Re: I bet I could do a betterjob of being a crap CEO than that!

I will do it for 5 Dollars!

[David 132]

Re: I bet I could do a betterjob of being a crap CEO than that!

Well you see, you’ve already delivered a cost saving of £48,999,995... wow, I can tell you are a much better candidate!

[Pascal Monett]

That is a shareholder problem

As long as shareholders agree to avoid tying a CEO's revenue to the company's revenue, that's what they get.

If shareholders continue to agree to give massive payouts to CEOs who deliver massive reductions, well they'll get less money out of it. I'm sure they can afford it because, if not, they would have done something about it already.

[Anonymous Coward]

Re: That is a shareholder problem

That would be true if shareholders were interested in the long term health of the company, and its capacity to generate profits. But now shareholders look at buybacks and other schemes to make quick money - even if the company shrinks and shrinks...

[Anonymous Coward]

Re: That is a shareholder problem

Coincidence of not, it the buybacks and other quick schemes which create the largest stock price gradients which in turn offer those with the highest level of "intelligence(*)" the highest returns. Why invest in the long term when "intelligence" can double your money in a year.

[Anonymous Coward]

"Why invest in the long term when "intelligence" "

Of course - as long as the big money are made in that New York casino called Wall Street why bother to run a real company and make profits from real goods and services?

The issue is the system is already showing all of its cracks - and may not work for much longer.

[ecofeco]

Re: That is a shareholder problem

Shareholders do have as much leverage as you think they do and are often overruled when they press for accountability and more responsible managers.

There are hundreds of such examples if you google for them.

[ecofeco]

Re: That is a shareholder problem

Do not have

[sabroni]

Re: That is a shareholder problem

No. It's a problem for anyone who isn't a massively overpaid CEO.

Shareholders are just part of the same issue. The company should exist to make a product and provide good employment for it's workers not to provide revenue for a bunch of rich gamblers.

Shareholders are the problem.

[Death_Ninja]

Re: That is a shareholder problem

Wall Street isn't about "long term" anything any more.

Its operating since 2008 on a post-growth model.

The idea that someone gives you $1m to make your company make more product and more profit that is shared back to the lender in dividends is such an outdated concept.

Its all about non-GAAP numbers and Wall Street concepts of casino gambling gaining money out of thin air.

Nothing in the world of big finance fits the concepts you have in your mind about how things work any more and its this complex web of dependencies that creates both massive wealth for the few and economic disaster for the many.

And there is no putting that genie back in the bottle as far as I can see.

[Morten Bjoernsvik]

One of the worst CEOs in history lost $134Billion in marked cap in 9 years

Mrs Rometty reign started with a shareprice of $182/Market cap $211B (01/2012) and ended $128/$114B (12/2020). The stock has only lost 35% (due to heavy buybacks), but marked cap has lost ~$100B. Also add the RedHat acquisition of horrendously $34B on top of it. IBM now has net debt of $52B. In 2012 they had $25B in net debt.

Ken Lay of Enron is often called the worst CEO in history loosing $65Billion, and Carly Fiorina managed to halve the value of HP in just 5 years. But they are just geniuses compared to Mrs Rometty.

[Anonymous Coward]

Re: One of the worst CEOs in history lost $134Billion in marked cap in 9 years

Well, when your company is called International Business Machines and you no longer make or sell business machines, you're probably going to have a bad time.

I mean, IBM's computer division is doing pretty well these days, except they don't own it and it's called Lenovo now.

Their hard drive division is doing ok, except they don't own it and it's called Western Dataloss now.

I guess they still make mainframes. Except nobody sane buys mainframes any more. Oh, and they're selling that off too.

So what does International Business Machines make now?

"Cloud Somethingorother"

So, nothing at all. That the company still exists is the shocking part.

[ecofeco]

Re: One of the worst CEOs in history lost $134Billion in marked cap in 9 years

Nailed it.

[James Anderson]

Re: One of the worst CEOs in history lost $134Billion in marked cap in 9 years

Still making mainframes, customers still buying them, IBM still making money on them.

The mainframe hardware and associated software and services have been subsidising IBMs attempts to re-imagine their business for 20 years now.

[Aristotles slow and dimwitted horse]

Re: One of the worst CEOs in history lost $134Billion in marked cap in 9 years

"So what does International Business Machines make now?"

IBM Research makes science and they are still quite good at it. Albeit still not as good at the making and testing of science as Aperture Labs are; their "Enrichment centre" programme is still the benchmark for "doing science" as far as I am concerned.

[John Brown (no body)]

Re: One of the worst CEOs in history lost $134Billion in marked cap in 9 years

"I mean, IBM's computer division is doing pretty well these days, except they don't own it and it's called Lenovo now."

And not forgetting their printer business, now called Lexmark.

[Anonymous Coward]

Re: One of the worst CEOs in history lost $134Billion in marked cap in 9 years

It still boggles my mind that Fiorina thought that her disastrous reign at HP gave her the business credentials for a run at POTUS. I bet Rometty resurfaces in politics too.

[Anonymous Coward]

Pension? A WHAT?

How many former and current IBMers have been involved in lawsuits about pensions? How many in the US have been hurt by the decision to only do their pitiful 401(k) matching in Dec? And yet there is funding of pensions for people who should have been placed on a performance improvement plan.

My, my, my....

[earl grey]

overpaid wankers

This is for all of them.

[Anonymous Coward]

Wimipedia: Rometty's tenure as IBM's CEO was marked by noteworthy awards, including by Bloomberg's 50 Most Influential People in the World, Fortune's "50 Most Powerful Women in Business", Time's 20 Most Important People in Tech and Forbes' America's Top 50 Women In Tech.

[Anonymous Coward]

Wikipedia: [Rometty's] tenure has also been met by fierce criticism relating to executive compensation bonuses, layoffs, outsourcing, and presiding over 24 consecutive quarters of revenue decline.

[ecofeco]

Failing upwards

Must be nice. I'll bet their bollocks doesn't smell either.

[sabroni]

Re: I'll bet their bollocks doesn't smell either.

To be fair, there aren't many women with smelly bollocks.

[Anonymous Coward]

Re: I'll bet their bollocks doesn't smell either.

That's because those that do have them tend to keep the jar lid tightly closed.

[Val Halla]

A definition of Cloud

Vapourware.

[Anonymous Coward]

Jim Whitehurst, the Red Hat bod

I note that Jim got

> and $130,562 for all other compensation

I presume that was for giving up his no.1 parking spot by the front door and now having to slum it 4 spaces further down the line?

[Michael Wojcik]

To be fair...

... this isn't a job that just anyone can do.

I mean, I couldn't do it. I'm capable of feeling ashamed.