IBM Announces Bonus for Executive Despite Company’s Underwhelming Perfomance
IBM’s performance was bleak in 2014 and the company saw a decline in sales and profits. However, that doesn’t mean the chief executive isn’t entitled to a bonus, right?
IBM’s chief executive Virginia Rometty is receiving a massive bonus of $3.6 million, apparently due to her performance last year. The tech firm has been struggling with its transition as cloud-based software and services company, and has posted low revenues for 11 quarters.
Back in 2013, top executives of the Armonk, New York-based company including Virginia Rometty refused to accept a bonus. That was due to the company’s poor financial performance for that year. IBM didn’t look too good in 2014 as well but it seems the performance was good enough for Ms Rometty to accept a bonus.
This bonus seems more like a vote of confidence by the company in her abilities to end IBM’s struggles. IBM stated that the company is progressing by selling less profitable divisions and by investing in new business ventures.
Apart from the said bonus of 3.6 million dollars, Ms Rometty’s base salary is also getting a boost of 6.7%. Her salary has been $1.5 million since she took the position back in 2012. That means she will now be getting $1.6 million, as revealed by a regulatory filing a couple of days ago.
Not only that, but her target bonus is being raised to $5 million in 2015. IBM also stated that she is eligible for a maximum of $13.3 million in stock grants, that will be rewarded to her based on performance in the next three years.
Last week, IBM revealed that its sales were down 6% in 2014 and stood at $92.8 billion, while net income saw a decline of 27% and was at $12.02 billion. The company took a U-turn on its goal to achieve $20 per share this year and said they expect annual earnings to be around $15.75 to $16.50/share.
IBM’s plan to enter cloud computing, data analytics and mobile software has proved very difficult for the company. However, they seem to be committed with the idea of diversification.
We have a long way to go before 2015 comes to an end, so it will be interesting to see how Ms Rometty plans to get the company out of turmoil. She would definitely have to justify those incentives with her performance.
Let’s see what the future holds for IMB!