Securities Exchange Act of 1934
(Amendment (Amendment No. )
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
7, 2022
EMERGING STRONGER
As our clients accelerate their digital transformation journeys as26, 2022.
Since I became your CEO last April, we have increased our focus on helping our clients on the two major transformational journeys they are on: hybrid cloud and AI. In 2020, we announced the separation of our managed infrastructure services business, closed seven strategic acquisitions and launched new industry clouds for banking and telecommunications. And we rapidly expanded our global ecosystem of partners and transformed our go-to-market strategy to better align with oursupport IBM’s hybrid cloud and AI strategy.
I am confident We spun off Kyndryl. We launched IBM Consulting. We closed 15 acquisitions. We delivered new digital capabilities and innovations. We broadened our ecosystem and accelerated changes in our go-to-market model. And we continued to instill a more client-centric corporate culture.
ENGAGINGyear and greater value to you, our stockholders.
In 2020,
ACTING WITHLEADING IN ENVIRONMENTAL AND SOCIAL RESPONSIBILITY
We know that you, our stockholders, and all of our stakeholders, including clients, employees, suppliers and the communities in which we work, are increasingly focused on environmental, social and governance matters. And you should know that we are too.
This year, we took bold, decisive steps to lead in these areas as we enter 2021. As you will see in this Proxy Statement:
Our long-standing values have served IBM for decades. As the world continues to battle aof Directors selected Alex Gorsky as independent Lead Director. Given Alex’s global public health crisis,business, technology, leadership, and board experience, we are committed to building upon our strong legacyconfident he will excel in this role.
Stockholders, I am incredibly proud of the workprogress IBMers have doneachieved to reshapeadvance our future as a hybrid cloud and AI platform companybusiness and help our clients build the digital capabilities they need to thrive. Your Company is well positioned to emerge from this period stronger.
Chairman of the Board
7, 2022
|
|
| ||||||||
| | | | | ||||
| ||||||||
Proxy Summary | | | | | | |||
| ||||||||
| | | 5 | | | |||
| ||||||||
IBM Board of Directors | | | | | | |||
| ||||||||
1. Election of Directors for a Term of One Year | | | | | | |||
| ||||||||
Governance and the Board | | | | | | |||
| ||||||||
| | | 16 | | | |||
| ||||||||
| | | 18 | | | |||
| ||||||||
| | | 19 | | | |||
| ||||||||
| | | 23 | | | |||
| ||||||||
| | | 24 | | | |||
| ||||||||
| | | 24 | | | |||
| ||||||||
| | | 25 | | | |||
| ||||||||
Environmental and Social Responsibility | | | | | | |||
| 2021 Executive Compensation | | | | | | | |
| | | 31 | | | |||
| ||||||||
| | | 32 | | | |||
| ||||||||
| | | 48 | | | |||
| ||||||||
| | | 51 | | | |||
| ||||||||
| | | 52 | | | |||
| ||||||||
| | | 55 | | | |||
| ||||||||
| | | 57 | | | |||
| | | | | 60 | | | |
| ||||||||
| | | 64 | | |
| | ESG HIGHLIGHTS | | | ||||||
| | |||||||||
At IBM, trust and corporate responsibility are integral to
| | | ||||||||
| | |||||||||
| | | | |||||||
| | | | | | |||||
| | | | | | |||||
| | | | | | |||||
| | |||||||||
| | | | |||||||
| | | | | | |||||
| | | | | | |||||
| | | | | | |||||
| | |||||||||
| | | |
| 1. | | | |||||||
| | |||||||||
| 2. | | | Ratification of the appointment of PricewaterhouseCoopers LLP as IBM’s independent registered public accounting firm.
| | |||||
| 3. | | | Advisory vote on executive compensation.
| | |||||
| 4. | | | Three stockholder proposals, if properly presented at the meeting.
| |
| | | ||||||||||
| Date: | | | April | | |||||||
| Time: | | | 10 a.m. Eastern Time | | |||||||
| Virtual Meeting Site: | | | www.virtualshareholdermeeting.com/ | |
| | |||||
| Your vote is important. | | ||||
| Please vote by following the instructions on your proxy card or voting instruction form. | |
| ||||||||||||
To express our appreciation for your participation, IBM will make a $1 charitable donation to every stockholder account that votes this year. | | |||||||||||
|
| |||||||||||
| Opportunity@Work aims to rewire the U.S. labor market so workers Skilled Through Alternative Routes (STARs) can work, learn and earn to their full potential. | |||||||||||
|
2022 Notice of Annual Meeting & Proxy Statement 1
| |||||||||||
Items of Business | | | Board’s recommendation | | | Where to find details | |||||
| |||||||||||
| 1. | | | Election of 12 Directors | | | FOR all nominees | | | P. 10-15 | |
| 2. | | |||||||||
| Ratification of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm | |
| FOR | | | P. | | |||
| 3. | | |||||||||
| Advisory Vote on Executive Compensation | |
| FOR | | | P. | | |||
| 4. | | | Stockholder Proposal on Stockholder Special Meeting Right | | | AGAINST | | | P. 72-73 | |
| 5. | | | Stockholder Proposal to | |
| AGAINST | | | P. | |
| 6. | ||||||||||
| |
|
| ||||||||
| |
| AGAINST | | | P. | |
| | | | What’s new? | | | |
|
| ||||||
We continue to enhance our governance, compensation, and sustainability practices and disclosures. Among many other items, since last year, IBM has: • Continued our commitment to active Board refreshment, adding technical experience and diversity with the addition of Alfred W. Zollar in 2021 • Provided enhanced Board diversity disclosure • Introduced Stock Options to ensure a • Disclosed the 2021 diversity modifier results in the 2021 Annual Incentive Program section • Beat, by five years, our ambitious goals to reduce carbon emissions and procure electricity from renewable sources • Announced a new goal to skill 30 million people of all ages with new skills for the | | |
| Director | | | Age | | | Primary Occupation | | | Director Since | | | Committee Memberships | | | Audit Committee Financial Expert | | |||||||||
| Thomas Buberl | | | 48 | | | Chief Executive Officer, AXA S.A. | | | 2020 | | | | | | | | | | | | |||||
| David N. Farr | | | 67 | | | Retired Chairman and Chief Executive Officer, Emerson Electric Co. | | | 2012 | | | | | | | | | | | | |||||
| Alex Gorsky | | | 61 | | | Executive Chairman and Retired Chief Executive Officer, Johnson & Johnson | | | 2014 | | | | | | | | | | | | |||||
| Michelle J. Howard | | | 61 | | | Retired Admiral, United States Navy | | | 2019 | | | | | | | | | | | | |||||
| Arvind Krishna | | | 59 | | | Chairman and Chief Executive Officer, IBM | | | 2020 | | | | | | | | | | | | |||||
| Andrew N. Liveris | | | 67 | | | Retired Chairman and Chief Executive Officer, The Dow Chemical Company | | | 2010 | | | | | | | | | | | | |||||
| F. William McNabb III | | | 64 | | | Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc. | | | 2019 | | | | | | | | | | | | |||||
| Martha E. Pollack | | | 63 | | | President, Cornell University | | | 2019 | | | | | | | | | | | | |||||
| Joseph R. Swedish | | | 70 | | | Retired Chairman, President and Chief Executive Officer, Anthem, Inc. | | | 2017 | | | | | | | | | | | | |||||
| Peter R. Voser | | | 63 | | | Retired Chief Executive Officer, Royal Dutch Shell plc, and Chairman, ABB Ltd. | | | 2015 | | | | | | | | | | | | |||||
| Frederick H. Waddell | | | 68 | | | Retired Chairman and Chief Executive Officer, Northern Trust Corporation | | | 2017 | | | | | | | | | | | | |||||
| Alfred W. Zollar | | | 67 | | | Executive Advisor, Siris Capital Group, LLC | | | 2021 | | | | | | | | | | | | |||||
| | | | | | | Number of meetings held in 2021 | | | 11 | | | 8 | | | 7 | | | 0 | | | | |
| Audit: | | | | |
| Directors and Corporate Governance: | | | | |
| Executive Compensation | | | | |
| Executive: | | | | |
| Audit Committee Financial Expert: | | | |
| Robust Engagement and Dialogue | |
| Off-Season Engagement | |
| Offered engagement to | | | | Met with stockholders owning 37% of shares that voted at the 2021 Annual Meeting | |
| | | | | | |
| | | | | | |
| Outcomes of Stockholder Engagement | |
| EXECUTIVE COMPENSATION | | |||
| • Reconfirmed with stockholders the unique circumstances around the one-time equity award for James Whitehurst in March 2020, and reiterated that no one-time awards were granted to named executive officers in 2021 • Continued our Annual Incentive Program and Performance Share Unit metrics that were established in 2021 • Updated our Compensation Peer Group to increase the weighting of peers in the technology industry, reflect IBM’s and align with the size and scope of IBM following the separation of our managed infrastructure business • Introduced stock options in 2022 as part of the overall equity pay mix for executives, which ensures a portion of equity does not generate value unless IBM’s stock price increases over the price when granted • Disclosed the 2021 diversity modifier | | |||
| | | |||
| | | |||
| | | |||
| | |
| | | BOARD AND GOVERNANCE | | |
| • Continued focus on Board diversity with 2 women directors and 3 ethnically diverse directors added in the last 3 years | | |||
| • Active Board refreshment with more than 60% of the Board new in the last 5 years | | |||
| • Enhanced Board diversity disclosure | | |||
| | | |||
| | | ESG REPORTING AND THE ENVIRONMENT | | |
| • Provided stakeholders with comparable ESG data by reporting under the Sustainability Accounting Standards Board (SASB) framework • Committed to publish EEO-1 data this year after the completion of the Company’s spin-off of its managed infrastructure services business • Published our Diversity & Inclusion Report, assessing the effectiveness of IBM’s diversity, equity and inclusion programs • Set
|
Governance Highlights (PAGE 7)
| ||
|
|
IBM Board2022 Notice of Directors Annual Meeting & Proxy Statement | (PAGE 10)Proxy Summary
Director Nominees5
IBM’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders.
Director | Age | Primary Occupation | Director Since | Committee Memberships | Audit Committee Financial Expert | |||||||||||||||
Thomas Buberl | 47 | Chief Executive Officer, AXA S.A. | 2020 | |||||||||||||||||
Michael L. Eskew Lead Director |
|
71 |
| Retired Chairman and Chief Executive Officer, United Parcel Service, Inc. |
2005 |
|
|
|
|
|
|
| ||||||||
David N. Farr | 66 | Chairman, Emerson Electric Co. | 2012 | |||||||||||||||||
Alex Gorsky |
|
60 |
| Chairman and Chief Executive Officer, Johnson & Johnson |
2014 |
|
|
|
|
|
|
| ||||||||
Michelle J. Howard | 60 | Retired Admiral, United States Navy | 2019 | |||||||||||||||||
Arvind Krishna | 58 | Chairman and Chief Executive Officer, IBM | 2020 | |||||||||||||||||
Andrew N. Liveris |
|
66 |
| Retired Chairman and Chief Executive Officer, The Dow Chemical Company |
2010 |
|
|
|
|
|
|
| ||||||||
F. William McNabb III |
|
63 |
| Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc. |
2019 |
|
|
|
|
|
|
| ||||||||
Martha E. Pollack | 62 | President, Cornell University | 2019 | |||||||||||||||||
Joseph R. Swedish |
|
69 |
| Retired Chairman, President and Chief Executive Officer, Anthem, Inc. |
2017 |
|
|
|
|
|
|
| ||||||||
Peter R. Voser |
|
62 |
| Retired Chief Executive Officer, Royal Dutch Shell plc and Chairman, ABB Ltd. |
2015 |
|
|
|
|
|
|
| ||||||||
Frederick H. Waddell |
|
67 |
| Retired Chairman and Chief Executive Officer, Northern Trust Corporation |
2017 |
|
|
|
|
|
|
| ||||||||
Number of meetings held in 2020
|
10 |
4 |
5 |
0 |
| ||||
| ||||
| ||||
| ||||
|
IBM’s directors collaboratively contribute significant experience in the areas most relevant to overseeing the Company’s business and strategy.
The skills and experience of our board include, but is not limited to:
| ||
| ||
| ||
| ||
| ||
|
Board of Directors Snapshot
|
|
|
| |||||||||
|
|
|
|
The Board includes directors who have a deep understanding of our business and members who bring new skills and fresh perspectives. We have a deliberate mix of age and tenure on the Board, which reflects our commitment to ongoing and proactive Board refreshment.
Integrated Approach to Stockholder Engagement
| ||||||||||||||||||
|
| |||||||||||||||||
| ||||||||||||||||||
|
| |||||||||||||||||
|
|
| ||||||||||||||||
|
|
| ||
|
| |
|
Business Highlights
In 2020, IBM tookcompleted substantial actions to focus on hybrid cloud and AI capabilitiescapabilities. IBM generated $12.8 billion of cash from operations* in 2021 with capital strategically allocated to business investment, stockholder returns and redefine itself as a platform-centric company positioned to drive sustainable growth. The Company expanded gross profit margin in the year, generated strong free cash flow realization, and reshaped the portfolio, including the announcement to separate the managed infrastructure services business into a new market-leading public company.
debt reduction.
* Cash from operations is presented on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl. |
| |||
|
| |||
|
| |||
|
| |||
Compensation Highlights(PAGE 32)
| |||||
What We Do |
| ||||
| | | Tie a significant portion of pay to Company performance
| | |
| | | Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions
| | |
| | | Require significant share ownership by the Chairman and CEO,
| | |
| | | Utilize noncompetition and nonsolicitation agreements for senior executives
| | |
| | | Remove impact of share repurchase on executive incentives | | |
|
| | | |
| What We Don’t Do | | |||
| | | No individual severance or change-in-control agreements for executive officers
| | |
| | | No excise tax gross-ups for executive officers
| | |
| | | No dividend equivalents on unearned RSUs/PSUs
| | |
| | | No hedging/pledging of IBM stock
| | |
| | | No stock option repricing, exchanges or stock options granted below market value
| | |
| | | No guaranteed incentive payouts for executive officers
| | |
| | | No accelerated vesting of equity awards for executive officers
| | |
| | | No above-market returns on deferred compensation plans |
62022 Notice of Annual Meeting & Proxy Statement | Proxy Summary
The Board believes that the following core attributes are key to ensuring the continued vitality of the Board and excellence in the execution of its duties:
| | ||||||||||||||
|
| ||||||||||||||
|
|
The Committee and the Board identify candidates through a variety of means, including: | | | ||
| | |||
• recommendations from members of the Committee and the full Board • information the Committee requests from the Secretary of IBM | | | • suggestions from IBM management • a third-party search firm, from time to time |
| ||
| ||||||||||||
|
|
| ||||||||||
82022 Notice of Annual Meeting & Proxy Statement | IBM Board of Directors
| Director | | | | Thomas Buberl | | | | David N. Farr | | | | Alex Gorsky | | | | Michelle J. Howard | | | | Arvind Krishna | | | | Andrew N. Liveris | | | | F. William McNabb III | | | | Martha E. Pollack | | | | Joseph R. Swedish | | | | Peter R. Voser | | | | Frederick H. Waddell | | | | Alfred W. Zollar | |
| Client Industry Expertise |
| |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| Organizational Leadership and Management | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| Global Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| CFO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Specific Risk Oversight/ Management Exposure | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| Technology, Cybersecurity or Digital | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| Academia | |
| |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Government/Regulatory, Business Associations or Public Policy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
| Public Board | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||
| Gender Identity | | Male | | Male | | | Male | | | Female | | Male | | | | Male | | | | Male | | | | Female | | | | Male | | | | Male | | | | Male | | | | Male | | ||||||||
| Race and/or Ethnicity | | White/ Caucasian | | White/ Caucasian | | | White/ Caucasian | | | Black/African American | | Asian/Pacific Islander | | | | White/ Caucasian | | | | White/ Caucasian | | | | White/ Caucasian | | | | White/ Caucasian | | | | White/ Caucasian | | | | White/ Caucasian | | | | Black/African American | | ||||||||
| Born Outside the U.S. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Healthcare | | | | | | | | Manufacturing | | ||||||||||
| | | | | | Information Technology | ||||||||||||||||
| | | | | | Research & Development | | |||||||||||||||
| | | | | | Chemicals | ||||||||||||||||
| ||||||||||||||||||||||
| ||||||||||||||||||||||
| ||||||||||||||||||||||
|
Sidney Taurel
| ||||||
| ||||||
| | |||||
| | | Directors and Corporate Governance | | ||
| | |
returned to AXA in 2012 as chief executive officer for AXA Konzern AG (Germany) and he became a member of AXA’s executive committee. In 2015, Mr. Buberl became the chief executive officer of AXA’s health business and a member of AXA’s group management committee. Mr. Buberl was additionally appointed chief executive officer of AXA’s global business line for life and savings and deputy chief executive officer of AXA in early 2016. He was named chief executive officer and joined the board of directors of AXA in September 2016. He is a member of the supervisory board of Bertelsmann, a member of the Climate Finance Leadership Initiative and the former chair of the Pan-European Insurance Forum. Additionally, during the past five years, he was a director of AXA Equitable Holdings, Inc., a former subsidiary of AXA S.A.
| |||||
| |||||
|
Qualifications
Relevant experience
Mr. Eskew, 71, is IBM’s independent Lead Director. Mr. Eskew joined United Parcel Service in 1972. He was named corporate vice president for industrial engineering in 1994, group vice president for engineering in 1996, executive vice president in 1999, vice chairman in 2000, and he was chairman and chief executive officer from 2002 until his retirement at the end of 2007. Mr. Eskew remained on the board of United Parcel Service until the end of 2014. He is a director of Allstate Corporation, Eli Lilly and Company and 3M Company. In addition, he is chairman of the Annie E. Casey Foundation.
Director since: 2012 Age:
Committee: | | ||||
| | | Audit | | |
| | |
66,67, joined Emerson in 1981 and subsequently held various executive positions. He was named senior executive vice president and chief operating officer in 1999, chief executive officer in 2000 and chairman and chief executive officer in 2004. Mr. Farr was named chairman, president and chief executive officer in 2005 and chairman and chief executive officer in 2010. In 2021, Mr. Farr announced2010, positions he held until his retirement as Chief Executive Officer and will remain Chairman of Emerson until Mayin 2021. He is currently a member of the Executive Committee and the former chairman of the National Association of Manufacturers and is currently a former director of the U.S.-China Business Council.
| ||||||
| ||||||
| | |||||
| | | Executive Compensationand Management Resources
| | ||
| | | Executive | |
60,61, is executive chairman of Johnson & Johnson, and one of just seven leaders to have served in the dual role of chairman and chief executive officer since the company was listed on the New York Stock Exchange in 1944. He joined Johnson & Johnson in 1988. 1988 as a sales representative with Janssen Pharmaceutica.
Mr. Gorsky returned to Johnson & Johnson in 2008 as company group chairman for Ethicon. In early 2009, he was appointed worldwide chairman of the Surgical Care Group and member of the executive committee. In September 2009, he was appointed worldwide chairman of the Medical Devices and Diagnostics Group. Mr. GorskyGroup, and became vice chairman of the executive committee in January 2011. He was named chief executive officer and joined the board of directors in April 2012, and was named chairman of the board of directors in December 2012. Mr. Gorsky is a memberremained chief executive officer until he transitioned to his current role as executive chairman at the end of the Business Roundtable’s Board of Directors and Chairman of its Corporate Governance Committee. Mr. Gorsky also serves2021. He currently sits on the boards of Apple and NewYork-Presbyterian Hospital, and the Travis Manion Foundation, the National Academy Foundation and serves on the Wharton School of the University of Pennsylvania Board of Advisors.
| |||||
| | ||||
| | ||||
| | | Audit | |
become a four-star admiral in the U.S. Navy and the first60,61, is a retired United States Navy officer. Admiral Howard began serving in the United States Navy in 1982, after graduating from the U.S. Naval Academy. During her 35 years of service, she led sailors and marines as, at various times, the Commander of a ship, an Expeditionary Strike Group, a Task Force, and a Naval theater. In 1999, she became the first African American woman to command a ship in the United States Navy. In 2014, she was the first woman to
Admiral Howard’s distinguished career in national defense has included both at-sea and ashore posts, placing her in key leadership positions within the areas of engineering, operations, and strategic planning and policy. Admiral Howard is a graduate of the U.S. Naval Academy and the U.S. Army Command and General Staff College. She was the J.B. and Maurice C. Shapiro Professor of International Affairs at the Elliott School of International Affairs at George Washington University from 2018 to 2020, where she taught in the areas of cybersecurity and international policy.
In 2022, she was appointed by the President to the Board of Vistors of the U.S. Naval Academy. | ||||||
| ||||||
| | |||||
| | | Executive (Chair) | |
58,59, became the chief executive officer of IBM, and a member of the Board of Directors in April 2020. He was elected chairman of the Board of Directors in December 2020. Mr. Krishna joined IBM in 1990. Mr. Krishna led the IBM Cloud and Cognitive Software business unit from 2017 to April 2020 and was a principal architect of the acquisition of Red Hat, the largest acquisition in the Company’s history. Mr. Krishna also served as the director of IBM’s Research division from 2015 to 2020. Previously, he was general manager of IBM’s Systems and Technology Group, IBM’s development and manufacturing organization. Prior to that, he built and led many of IBM’s data-related businesses. He has an undergraduate degree from the Indian Institute of Technology, Kanpur, and a PhD. in electrical engineering from the University of Illinois at Urbana-Champaign.
| |||||
|
Andrew N. Liveris 67 | | ||||
| | | Directors and | | |
| | | Executive | |
66,67, joined Dow in 1976 and subsequently held various executive positions, including vice president of specialty
| | | |||||
| | ||||||
| | | Audit | |
63,64, served as chairman of The Vanguard Group, Inc. from 2008 until his retirement in 2018 and served as chief executive officer from 2008 to 2017. He joined Vanguard in 1986. In 2010, he became chairman of the board of directors and the board of trustees of the Vanguard group of investment companies.
| | | |||||
| | ||||||
| | | Executive Compensation and Management Resources | |
62,63, is the president of Cornell University and a professor of computer science, information science and linguistics. She took office in 2017. From 2000 to 2017, Dr. Pollack held various positions at the University of Michigan with increasing responsibility, including dean of the School of Information, vice provost for academic and budgetary affairs, and finally, provost and executive vice president for academic affairs. Dr. Pollack is a fellow of the American Association for the Advancement of Science, the Association for Computing Machinery and the Association for the Advancement of Artificial Intelligence. Dr. Pollack has served as editor-in-chief of the Journal of Artificial Intelligence Research, a former president of the Association for the Advancement of Artificial Intelligence, a former member of the technical staff in the Artificial Intelligence Center at SRI International, a former member of the advisory committee for the National Science Foundation’s Computer and Information Science and Engineering Division, and a former member of the board of directors of the Computing Research Association. Dr. Pollack also served on the Steering Committee of the Jacobs Technion-Cornell Institute, the academic partnership between Cornell and Technion-Israel Institute of Technology at Cornell Tech.
| ||||||
| ||||||
| | |||||
| | | Executive Compensation and Management Resources | |
69,70, joined Anthem in 2013 as chief executive officer and was named chairman of Anthem’s board in 2015. He was the chairman, chief executive officer and president until late 2017 when he retired and became the executive chairman, a position he held until his retirement in May 2018.
| |||||
|
Peter R. Voser Retired Chief Executive Officer, Royal Dutch Shell plc, a global group of energy and petrochemical companies; Chairman, ABB Ltd., a global group of power and automation companies Director since:2015 Age: 63 Committees:
| | ||||
| | | Audit (Chair) | | |
| | | Executive | |
62,63, joined Shell in 1982 and held a variety of finance and business roles including chief financial officer of Oil Products. In 2002, he joined the Asea Brown Boveri (ABB)
the ABB Group executive committee. Mr. Voser returned to Shell in 2004, becoming a managing director of The Shell Transport and Trading Company, p.l.c. and chief financial officer of the Royal Dutch/Shell Group. He was appointed chief executive officer of Royal Dutch Shell plc in 2009 and held that position until his retirement in late 2013. Mr. Voser was named chairman of ABB Ltd. in 2015 and was the interim chief executive officer from April 2019 until February 2020. He is a director of Temasek, as well as Group Chairman of the Board of PSA International Pte Ltd, Singapore, a Temasek subsidiary. Mr. Voser is also active in a number of international and bilateral organizations. Additionally, from 2011 until 2019, he was a director of Roche Holding Limited.
| | | |||||
68 | | ||||||
| | | Executive Compensation and
| | |||
| | | Executive | | |||
| | |
| | | Alfred W. Zollar Executive Advisor, Siris Capital Group LLC, a private equity firm Director since: 2021 Age: 67 Committee: | | ||||
| | | Directors and Corporate Governance | |
| | | THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED ABOVE. |
| | | | | | | | | | | |||||||
| Director | ||||||||||||||||
| | Audit | | | Directors and Corporate Governance | | | Executive Compensation and Management Resources | | | Executive | ||||||
| |||||||||||||||||
| Thomas Buberl | | | | | | | | | | | | |||||
| |||||||||||||||||
| |||||||||||||||||
David N. Farr | | | | | | | | | | | | ||||||
| Alex Gorsky | | | | | | | | | | | | |||||
| |||||||||||||||||
Michelle J. Howard | | | | | | | | | | | | ||||||
| Arvind Krishna | | | | | | | | | | | | Chair | | |||
| |||||||||||||||||
Andrew N. Liveris | | | | | | | | | | | | ||||||
| |||||||||||||||||
F. William McNabb III | | | | | | | | | | | | ||||||
| |||||||||||||||||
Martha E. Pollack | | | | | | | | | | | | ||||||
| |||||||||||||||||
Joseph R. Swedish | | | | | | | | | | | | ||||||
| |||||||||||||||||
Peter R. Voser | | Chair | | | | | | | | | | ||||||
| |||||||||||||||||
Frederick H. Waddell | | | | | | | Chair | | | | |||||||
| Alfred W. Zollar | | | | | | | | | | | | |
| |||||||||||
|
| |||||||||||
| | The Executive Committee is empowered to act for the full Board in intervals between Board meetings, with the exception of certain matters that by law may not be delegated. The Committee meets as necessary, and all actions by the Committee are reported at the next Board of Directors meeting. The Committee did not meet in 2021. | | ||||||||
| Members: | | | Arvind Krishna (Chair)
Alex Gorsky Andrew N. Liveris Peter R. Voser Frederick H. Waddell | |
| ||
|
Number of meetings in | |
| Audit Committee | | |||||||||||||
| Members: Peter R. Voser (Chair) David N. Farr Michelle J. Howard F. William McNabb III Audit Committee Financial Experts: David N. Farr Michelle J. Howard F. William McNabb III Peter R. Voser Number of meetings in 2021: 11 | | | Key Responsibilities: The Audit Committee is responsible for reviewing reports of IBM’s financial results, audit results, internal controls, and adherence to IBM’s Business Conduct Guidelines in compliance with applicable laws and regulations, including federal procurement requirements. Concurrent with that responsibility, set out more fully in the Charter, the Audit Committee performs many other functions, including: | | ||||||||||
| • selecting the independent registered public accounting firm and reviewing its selection with the Board; • annually preapproving the proposed services to be provided by the accounting firm during the year; | • receiving and discussing reports relating to key controls and processes, including cybersecurity. | | | • reviewing the procedures of the independent registered public accounting firm for ensuring its independence with respect to the services performed for IBM; and • meeting with management prior to each quarterly earnings release. | | |||||||||
| The Audit Committee chair, pursuant to authority delegated by the Audit Committee, may approve engagements with the independent registered public accounting firm that are outside the scope of the services and fees approved by the Committee, which are later presented to the Committee. The Board has determined that each member of the Committee qualifies as an Audit Committee Financial Expert as defined by the rules of the SEC. Charter:http://www.ibm.com/investor/att/pdf/auditcomcharter.pdf | |
| ||||||||||||||
|
|
| |||||||||||||||
| Members:
Alfred W. Zollar Number of meetings in 2021: 8 | | | Key Responsibilities: The Directors and Corporate Governance Committee is devoted primarily to the continuing review and articulation of the governance structure and practices of the Board. Concurrent with that responsibility, set out more fully in the Charter, the Directors and Corporate Governance Committee performs many other functions, including: | | ||||||||||
| • recommending qualified candidates to the Board for election as directors of IBM, including the slate of directors that the Board proposes for annual election by stockholders at the Annual Meeting, and planning for future Board and Committee refreshment actions; • advising and making recommendations to the Board on all matters concerning directorship practices, and on the function and duties of the committees of the Board; • making recommendations to the Board on compensation for non-management directors; | | | • reviewing and considering IBM’s position and practices on significant public policy issues, such as protection of the environment, corporate social responsibility, sustainability, and philanthropic contributions; and • reviewing and considering stockholder proposals, including those dealing with issues of public and social interest. | | ||||||||||
| As discussed above, the Committee is responsible for recommending qualified candidates to the Board for election as directors of IBM. The Committee recommends candidates based on their business or professional experience, the diversity of their background (including gender and ethnic diversity), and their talents and perspectives. Charter:https://www.ibm.com/investor/att/pdf/IBM-Directors-and-Corporate-Governance-Committee-Charter.pdf |
| ||||||||||||||
|
|
| ||||||||||||||
| Members:
Number of meetings in | | | Key Responsibilities: The Executive Compensation and Management Resources Committee has responsibility for defining and articulating IBM’s overall executive compensation philosophy, and administering and approving all elements of compensation for elected corporate officers. Concurrent with that responsibility, set out more fully in the Charter, the Executive Compensation and Management Resources Committee performs many other functions, including: | | |||||||||
| • reviewing and approving the corporate goals and objectives relevant to the Chairman and CEO’s compensation, evaluating performance in light of those goals and objectives and, together with the other independent directors, determining and approving the Chairman and CEO’s compensation based on this evaluation; • reviewing IBM’s human capital management, diversity and inclusion and other management resources programs, including overseeing, along with the full Board, the succession-planning process of the CEO and other senior management positions; | | | • approving, by direct action or through delegation, participation in and all awards, grants, and related actions under IBM’s various equity plans; • managing the operation and administration of the IBM Supplemental Executive Retention Plan; • reviewing the compensation structure for IBM’s officers and providing oversight of management’s decisions regarding performance and compensation of other employees; and • monitoring compliance with stock ownership guidelines. | | |||||||||
| The Committee reports to stockholders as required by the SEC (see Members of the Committee are not eligible to participate in any of the plans or programs that the Committee administers. Charter:https://www.ibm.com/investor/att/pdf/ Resources_Committee_Charter.pdf | |
182022 Notice of Annual Meeting & Proxy Statement | Certain Transactions and Relationships
| ||||
Under the IBM Board Corporate Governance Guidelines, the Directors and Corporate Governance Committee and the full Board annually review the financial and other relationships between the independent directors and IBM as part of the assessment of director independence. The Directors and Corporate Governance Committee makes recommendations to the Board about the independence of non-management directors, and the Board determines whether those directors are independent. In addition to this annual assessment, director independence is monitored by the Directors and Corporate Governance Committee and the full Board on an ongoing basis. | | |
A.W. Zollar.
20202021 Annual Meeting of Stockholders. IBM’s policy with regard to Board members’ attendance at annual meetings of stockholders is available at https://www.ibm.com/investor/governance/director-attendance-at-director-attendance-at-annual-meeting-of-stockholdersannual-meeting-of-stockholders.
2022 Notice of Annual Meeting & Proxy Statement | Corporate Governance 19
In connection with the retirement of Executive
| |||
The Board strongly believes that its leadership structure strikes the right balance of allowing our Chairman and CEO to promote a clear, unified vision for the Company’s strategy, providing the leadership critical for effectively and efficiently implementing the actions needed to ensure strong performance over the long term, while ensuring robust, independent oversight by the Board and Lead Director. | |
| | | | |||||||||||||||||||||
Role of the Lead Director | | |||||||||||||||||||||||
| | | ||||||||||||||||||||||
| | | | Mr.
preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, which are held at every Board meeting;
serve as liaison between the Chairman and the independent directors;
approve information sent to the Board;
approve meeting agendas for the Board;
approve meeting schedules in collaboration with the Chairman to ensure there is sufficient time for discussion of all agenda items;
authority to call meetings of the independent directors; and
if requested by major stockholders, ensure that he is available, as necessary after discussions with the Chairman and Chief Executive Officer, for consultation and direct communication. | | | | | In addition to these core responsibilities, the Lead Director engages in other regular activities, including:
one-on-one debriefs with the Chairman after each meeting;
analyze CEO performance in Executive Session in conjunction with the Executive Compensation and Management Resources Committee
review feedback from the Board and committee evaluation process, working with the Directors and Corporate Governance Committee
spend time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of the Company; and
attend Directors and Corporate Governance and Audit Committee meetings in addition to the Executive Compensation and Management Resources Committee | | | | | |||||||||||
| | |
| |||
The full Board reviews our leadership structure at least annually to ensure the allocation of responsibilities remains appropriate. | |
202022 Notice of Annual Meeting & Proxy Statement | Corporate Governance
| | | Full Board Self-Evaluation | | ||
|
| | | Each Individual Committee has Self-Evaluation | |
| | | One-on-One Interviews with the Chairman of the Board | |||
|
| |||||
| ||||||
| ||||||
|
| |||||
| ||||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| | | Feedback from Chairman | |
| | | Results Discussion | |
| | | Follow-ups | |
| | ||||||
In succession planning, the Board discusses: | | | |||||
| | • Succession process and timeline • Profile and candidate assessments, both internal and external, for the CEO and other senior leadership positions | | | • Leadership pipeline and development plans for the next generation of senior leadership • Diversity, inclusion, and Company culture | | |
| | The Executive Compensation and Management Resources Committee also regularly reviews succession planning and the Company’s management resources programs, overseeing a broad range of human capital management topics, including diversity and inclusion. |
| ||
|
|
|
| ||||
| Cybersecurity is a critical part of risk management at IBM. To more effectively address cybersecurity threats, IBM leverages a multi-layered approach. IBM has a dedicated Chief Information Security Officer (CISO) whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes. The CISO Both the Board and the Audit Committee each receive regular updates from senior management, including the CISO and cybersecurity experts, in areas such as threat intelligence, major cyber risk areas, emerging global policies and regulations, cybersecurity technologies and best practices, and cybersecurity incidents. | | ||
| ||||
| Climate change is a serious concern that warrants meaningful action on a global basis. IBM considers risks as identified by the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) in its risk management process. IBM senior management assesses the significance of environmental and climate-related risks. In addition, they manage these risks and provide regular updates to the Board and to the Directors and Corporate Governance Committee. IBM has established | |
20202022 Notice of Annual Meeting & Proxy Statement | Director Compensation23
Name (a) | | Fees Earned or Paid in Cash ($) (b) |
| | All Other Compensation ($) (c) |
(1) | | Total ($) (d) |
| |||
Thomas Buberl(2) |
| 219,375 |
|
| 2,691 |
|
| 222,066 |
| |||
Michael L. Eskew |
| 395,000 |
|
| 246,667 |
|
| 641,667 |
| |||
David N. Farr |
| 325,000 |
|
| 70,051 |
|
| 395,051 |
| |||
Alex Gorsky |
| 345,000 |
|
| 89,629 |
|
| 434,629 |
| |||
Michelle J. Howard |
| 325,000 |
|
| 18,097 |
|
| 343,097 |
| |||
Shirley Ann Jackson(3) |
| 113,083 |
|
| 57,223 |
|
| 170,306 |
| |||
Andrew N. Liveris |
| 325,000 |
|
| 143,032 |
|
| 468,032 |
| |||
F. William McNabb III |
| 325,000 |
|
| 9,772 |
|
| 334,772 |
| |||
Martha E. Pollack |
| 325,000 |
|
| 21,418 |
|
| 356,418 |
| |||
Joseph R. Swedish |
| 325,000 |
|
| 32,663 |
|
| 357,663 |
| |||
Sidney Taurel |
| 325,000 |
|
| 272,839 |
|
| 597,839 |
| |||
Peter R. Voser |
| 325,000 |
|
| 83,990 |
|
| 408,990 |
| |||
Frederick H. Waddell |
| 341,667 |
|
| 47,137 |
|
| 388,804 |
|
|
|
|
| Name | | | Fees Earned or Paid in Cash ($) | | | All Other Compensation ($) | | | Total ($) | | |||||||||
| (a) | | | (b) | | | (c) | (1) | | (d) | | |||||||||
| Thomas Buberl | | | | | 325,000 | | | | | | 38,901 | | | | | | 363,901 | | |
| Michael L. Eskew | | | | | 395,000 | | | | | | 539,632 | | | | | | 934,632 | | |
| David N. Farr | | | | | 325,000 | | | | | | 162,671 | | | | | | 487,671 | | |
| Alex Gorsky | | | | | 345,000 | | | | | | 219,084 | | | | | | 564,084 | | |
| Michelle J. Howard | | | | | 325,000 | | | | | | 69,668 | | | | | | 394,668 | | |
| Andrew N. Liveris | | | | | 325,000 | | | | | | 323,856 | | | | | | 648,856 | | |
| F. William McNabb III | | | | | 325,000 | | | | | | 56,698 | | | | | | 381,698 | | |
| Martha E. Pollack | | | | | 325,000 | | | | | | 80,046 | | | | | | 405,046 | | |
| Joseph R. Swedish | | | | | 325,000 | | | | | | 79,086 | | | | | | 404,086 | | |
| Sidney Taurel(2) | | | | | 81,250 | | | | | | 76,358 | | | | | | 157,608 | | |
| Peter R. Voser | | | | | 325,000 | | | | | | 205,490 | | | | | | 530,490 | | |
| Frederick H. Waddell | | | | | 345,000 | | | | | | 133,815 | | | | | | 478,815 | | |
| Alfred W. Zollar(3) | | | | | 59,583 | | | | | | 13 | | | | | | 59,596 | | |
Reports: NoneReports20202021 were timely filed, except that one Form 4 to report a transaction under the IBM Excess 401(k) Plus Plan for each of Messrs. James J. Kavanaugh and Kenneth M. Keverian were filed late due to an unintentional administrative error.20202021 through June 30, 2021,2022, at a total cost of approximately $7.9$6.7 million. The primary carrier is AXA/XL Specialty Insurance Company.
242022 Notice of Annual Meeting & Proxy Statement | Director Compensation
Name and address | Number of Shares Beneficially Owned | Percent of Class | ||||||
The Vanguard Group(1) |
| 73,806,391 |
|
| 8.28% |
| ||
100 Vanguard Boulevard | ||||||||
Malvern, PA 19355 | ||||||||
BlackRock Inc.(2) |
| 62,271,273 |
|
| 7.0% |
| ||
55 East 52nd Street | ||||||||
New York, NY 10055 | ||||||||
State Street Corporation(3) |
| 51,957,682 |
|
| 5.83% |
| ||
State Street Financial Center | ||||||||
One Lincoln Street | ||||||||
Boston, MA 02111 |
|
|
|
| Name and address | | | Number of Shares Beneficially Owned | | | Percent of Class | | |||
| The Vanguard Group(1) 100 Vanguard Boulevard Malvern, PA 19355 | | | | | 75,553,655 | | | | 8.42% | |
| BlackRock Inc.(2) 55 East 52nd Street New York, NY 10055 | | | | | 65,452,374 | | | | 7.3% | |
| State Street Corporation(3) State Street Financial Center One Lincoln Street Boston, MA 02111 | | | | | 53,156,014 | | | | 5.93% | |
2022 Notice of Annual Meeting & Proxy Statement | Ownership of Securities 25
Name | Common Stock(1) | | Stock-based Holdings | (2) |
| Acquirable within 60 days |
| | Value of Common Stock shares at Fiscal Year End ($) |
(5) | ||||||||||
| Options And RSUs | (3) | | Directors’ DCEAP Shares | (4) | |||||||||||||||
Michelle H. Browdy |
| 70,310 |
|
| 100,953 |
|
| 0 |
|
| N/A |
|
| 8,850,623 |
| |||||
Thomas Buberl |
| 0 |
|
| 0 |
|
| 0 |
|
| 1,805 |
|
| 227,213 |
| |||||
Michael L. Eskew |
| 0 |
|
| 0 |
|
| 0 |
|
| 41,161 |
|
| 5,181,347 |
| |||||
David N. Farr |
| 7,508 | (6) |
| 7,508 |
|
| 0 |
|
| 12,108 |
|
| 2,469,262 |
| |||||
Alex Gorsky |
| 4,232 |
|
| 4,232 |
|
| 0 |
|
| 15,987 |
|
| 2,545,168 |
| |||||
Michelle J. Howard |
| 0 |
|
| 0 |
|
| 0 |
|
| 4,367 |
|
| 549,718 |
| |||||
James J. Kavanaugh |
| 77,591 | (7) |
| 126,430 |
|
| 0 |
|
| N/A |
|
| 9,767,155 |
| |||||
John E. Kelly III |
| 73,792 | (8) |
| 131,682 |
|
| 0 |
|
| N/A |
|
| 9,288,937 |
| |||||
Arvind Krishna |
| 86,186 | (9) |
| 249,303 |
|
| 0 |
|
| N/A |
|
| 10,849,094 |
| |||||
Andrew N. Liveris |
| 2,655 |
|
| 2,655 |
|
| 0 |
|
| 24,357 |
|
| 3,400,271 |
| |||||
F. William McNabb III |
| 9,250 |
|
| 9,250 |
|
| 0 |
|
| 3,214 |
|
| 1,568,968 |
| |||||
Martha E. Pollack |
| 0 |
|
| 0 |
|
| 0 |
|
| 5,062 |
|
| 637,205 |
| |||||
Virginia M. Rometty |
| 334,817 |
|
| 448,714 |
|
| 1,500,000 |
|
| N/A |
|
| 42,146,764 |
| |||||
Joseph R. Swedish |
| 5,261 | (10) |
| 5,261 |
|
| 0 |
|
| 4,986 |
|
| 1,289,892 |
| |||||
Sidney Taurel |
| 28,798 |
|
| 28,798 |
|
| 0 |
|
| 43,763 |
|
| 9,133,979 |
| |||||
Peter R. Voser |
| 0 |
|
| 0 |
|
| 0 |
|
| 14,990 |
|
| 1,886,941 |
| |||||
Frederick H. Waddell |
| 3,763 |
|
| 3,763 |
|
| 0 |
|
| 8,448 |
|
| 1,537,121 |
| |||||
Jim Whitehurst |
| 148,606 |
|
| 436,852 |
|
| 4,990 |
|
| N/A |
|
| 18,706,523 |
| |||||
Directors and executive officers as a group |
| 891,108 | (11) |
| 1,672,661 |
|
| 1,504,990 | (11) |
| 180,248 | (11) |
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | Acquirable within 60 days | | | Value of Common Stock shares at Fiscal Year End | | ||||||||||||
| Common | | | Stock-based | | | Stock Options And | | | Directors’ DCEAP | | |||||||||||||||||||||
| Name | | | Stock | (1) | | Holdings | (2) | | RSUs | (3) | | Shares | (4) | | ($) | (5) | |||||||||||||||
| Michelle H. Browdy | | | | | 86,068 | | | | | | 119,804 | | | | | | 0 | | | | | | N/A | | | | | | 11,503,849 | | |
| Thomas Buberl | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 4,470 | | | | | | 597,460 | | |
| Gary Cohn | | | | | 14,350 | | | | | | 85,311 | | | | | | 5,112 | | | | | | N/A | | | | | | 1,918,021 | | |
| Michael L. Eskew | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 48,260 | | | | | | 6,450,432 | | |
| David N. Farr | | | | | 7,508 (6) | | | | | | 7,508 | | | | | | 0 | | | | | | 14,799 | | | | | | 2,981,554 | | |
| Alex Gorsky | | | | | 4,445 | | | | | | 4,445 | | | | | | 0 | | | | | | 20,210 | | | | | | 3,295,387 | | |
| Michelle J. Howard | | | | | 144 | | | | | | 144 | | | | | | 0 | | | | | | 7,037 | | | | | | 959,812 | | |
| James J. Kavanaugh | | | | | 94,018(7) | | | | | | 151,573 | | | | | | 0 | | | | | | N/A | | | | | | 12,566,446 | | |
| Arvind Krishna | | | | | 118,691(8) | | | | | | 278,100 | | | | | | 0 | | | | | | N/A | | | | | | 15,864,239 | | |
| Andrew N. Liveris | | | | | 2,655 | | | | | | 2,655 | | | | | | 0 | | | | | | 29,256 | | | | | | 4,265,224 | | |
| F. William McNabb III | | | | | 9,250 | | | | | | 9,250 | | | | | | 0 | | | | | | 6,018 | | | | | | 2,040,721 | | |
| Martha E. Pollack | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 8,049 | | | | | | 1,075,829 | | |
| Thomas W. Rosamilia | | | | | 17,831 | | | | | | 82,549 | | | | | | 0 | | | | | | N/A | | | | | | 2,383,291 | | |
| Joseph R. Swedish | | | | | 5,261(9) | | | | | | 5,261 | | | | | | 0 | | | | | | 7,965 | | | | | | 1,767,787 | | |
| Peter R. Voser | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 18,960 | | | | | | 2,534,194 | | |
| Frederick H. Waddell | | | | | 3,763 | | | | | | 3,763 | | | | | | 0 | | | | | | 11,923 | | | | | | 2,096,591 | | |
| Alfred W. Zollar | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 446 | | | | | | 59,612 | | |
| Directors and executive officers as a group | | | | | 385,663(10) | | | | | | 826,554 | | | | | | 5,112(10) | | | | | | 177,393(10) | | | | | | | | |
262022 Notice of Annual Meeting & Proxy Statement | Ownership of Securities
| | Corporate social responsibility has been a hallmark of IBM’s culture for over 100 years. With oversight from the Board, we lead with purpose and integrity to empower IBMers to be a force of positive change and to use technology to accelerate discovery. The trust of our stakeholders is IBM’s license to operate. | |
We encourage stockholders to read our annuallatest Corporate Responsibility Report which provides deep insight into all of our ESG initiatives, and more, including a mapping of key ESG metrics to SASB, and is available at:at
In 2021, following record progress toward
|
The COVID-19 pandemic has brought challenges unlike any seen in the modern world. Our response has been guided by four principles: (1) employee, client and community health is top priority; (2) our plan and response must be data-driven and evidence-based; (3) we will comply with all government requirements; and (4) focus on business continuity and maintaining critical operations. At the outset, IBM immediately mobilized to move nearly all of our ~350,000 employees to work remotely within two weeks and established resources for maintaining employee engagement, productivity and emotional support. We also assembled our resources and brought together the right communities of experts, including clients, governments, scientists, developers, partners, academic institutions, health agencies and IBMers, to work together and manage through the COVID-19 outbreak by doing what IBM does best: applying data, knowledge, computing power and insights to solve difficult problems.
|
|
At IBM, our global workforce is highly skilled, reflective of the work we do for our clients’ digital transformations and in support of their mission-critical operations. We are passionately dedicated to our employees’ professional growth and personal well-being, investing in resources to help IBMers develop their skills and leadership potential, and building on IBM’s legacy of leading the market in welcoming and supporting a diverse, inclusive workforce.
|
|
| ||
|
|
|
|
|
The IBM Board’s Commitment to Diversity and Inclusion
The IBM Board of Directors strongly believes that much of the future success of IBM depends on the caliber of its talent and the full engagement and inclusion of IBMers in the workplace. A diverse and inclusive workplace leads to greater innovation, agility, performance and engagement, enabling both business growth and societal impact. In furtherance of this mission, and in response to engagement with our stockholders, the IBM Board formally adopted a policy committing the Company to report annually on the effectiveness of our diversity and inclusion programs. IBM will publish a diversity and inclusion report in the second quarter of 2021. Furthermore, we have committed to publish EEO-1 data in 2022 after the completion of the Company’s spin-off of its managed infrastructure services business.
|
|
Operating with Trust and Transparency
into Practice
| IBM Trust and Transparency Principles | |
| ||||||||||||||||||||||
The Purpose of AI | | | | | | | | Data Insights and Ownership | | | | | | | | Transparency and Explainability | | | |
| | |||
The purpose of AI is to augment human intelligence. At IBM, we believe AI should make all of us better at our jobs, and that the benefits of the AI era should touch the many. | | |||
| | | | |
| | | |
| | Data and insights belong to their creator. IBM clients’ data is their data, and their insights are their insights. | |
| | | |
| | | |
| | | |
| | New technology, including AI systems, must be transparent and explainable. Technology companies must be clear about who trains their AI systems, what data was used in that training and, most importantly, what went into their algorithms’ recommendations. | |
| Environmental Highlights | |
| | | Net Zero Greenhouse Gas Emissions by 2030 | | | | | 16,900 Metric Tons of Product Waste Reused, Resold or Sent for Recycling | | |||
| | | Against Base Year 2005, Adjusted for Divestitures and Acquisitions | | | | | Procured 59.3% of from Renewable Sources |
| Ambitious Goal Setting | |
| Enabling Our Clients and Communities | |
| Enabling our Clients | | | | Enabling our Communities | |
| Last year, we launched the IBM Environmental Intelligence Suite to help clients leverage data and AI for climate risk assessment and adaptation. Using IBM’s Environmental Intelligence Suite, clients can plan for and respond to critical weather events to ensure business continuity. We are continuing to develop our portfolio of AI-enabled solutions to help our clients analyze, manage and report on environmental goals. | | | | We are also uniting our experts and technology with the purpose of supporting communities. We believe that together, we have the potential to make a lasting, scalable impact on communities that need the most help. That is why we launched the Call for Code Global Challenge, which invited the world’s software developers to combat climate change with open source-powered technology. The top prize this year went to Saaf Water, an accessible water quality sensor and analytics platform for people living in rural localities. Leveraging IBM’s Service Corps, we will work with Saaf Water to incubate, test and deploy their solution in communities relying on groundwater for domestic use. | |
282022 Notice of Annual Meeting & Proxy Statement | Environmental and Social Responsibility
| | | Diversity and Inclusion | |
| | • 9 out of 10 IBMers feel empowered to be their authentic selves at work and feel that IBM is an inclusive workplace • IBM’s industry-leading diversity hiring practices have resulted in a 20% increase in underrepresented minority hiring over the past 3 years and a 31% increase in executive minority hiring • We currently have 8 D&I Communities with over 300 Business Resource Groups globally, spanning 47 countries with over 32,000 IBMers actively participating in programs, events, and other D&I initiatives • Same-sex partner benefits have been extended in 50 countries and 6,000 IBMers are certified LGBT+ Allies • IBM has had an equal pay policy since 1935; we have conducted statistical pay equity analysis for decades, and in 2021 this included all countries where we have employees | |
| | | Community Impact Through Skilling | |
| | • IBM has pledged to skill 30 million people by 2030, preparing them for in-demand jobs • Learners participating in our skilling programs earn digital badges and certifications widely recognized by the labor market • We are collaborating with over 23 historically black colleges and universities (HBCUs) on IBM quantum centers to advance STEM-based opportunities for traditionally underrepresented communities • 900,000 college students at 10,000 universities are enrolled in specialized academic courses through our global university programs • IBM experts are matched with learners in programs like STEM for Girls and IBM SkillsBuild providing practical career advice and strategies for professional development and advancement; IBM employees volunteered over 870,000 hours in 2021 | |
| | | Talent and Culture | |
| | • IBM offers a compelling value proposition to employees: IBMers develop innovative technologies including Cloud, AI, quantum computing and cybersecurity, for clients whose businesses the world relies on • In 2021, IBMers logged an average of over 70 learning hours per person, reflecting IBM’s commitment to provide access to every IBMer to the resources to build strategic skills, grow their careers, and face the future with confidence • Training and support is provided to help every IBMer be an upstander through inclusive behaviors • Hundreds of thousands of IBMers globally participate in our annual engagement survey, and our industry-leading talent practices enable more than 8 out of 10 IBMers to be highly engaged • Every IBM manager and leader has access to their team and organization engagement levels along with actionable data-driven insights | |
IBM has never had a political action committee (PAC), makes no political donations, and has always been committed to meaningful management, oversight, and accurate reporting of our engagement with government officials. To be clear, these policies do not put IBM at a disadvantage — instead, they empower us to promote meaningful policies that are good for business, employees, and all our stakeholders. Over the past year, while America’s democratic institutions were tested and many of IBM’s corporate peers contemplated suspending financial contributions to certain elected officials, we faced no such quandary. Consistent with our long-held principles, IBM was able to stay focused on substantive policy issues.
| | | Political Contributions | |
| |||
|
| | |
| | IBM does not have a PAC and does not engage in independent expenditures or electioneering communications as defined by law. | |
| | | Lobbying | |
| |||
|
| | |
| | IBM files periodic reports with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives detailing its U.S. federal lobbying activities and expenditures, with U.S. state and municipal governments, where required, and with the European Union Transparency Register. | |
| | | Trade Associations | |
| |||
|
| ||
We perform comprehensive due diligence on all of our trade associations to confirm they are reputable and have no history of malfeasance. Company policy prohibits them from using any IBM funds to engage in political expenditures, and we implement robust procedures to ensure they comply. | | ||
| | The IBM Board of Directors, as part of its oversight function, periodically receives reports from senior management relating to IBM’s policies and practices regarding governmental relations, public policy, and any associated expenditures. | |
| | IBM’s senior management, under the leadership of IBM Government and Regulatory Affairs, closely monitors and coordinates all public policy advocacy efforts, as well as any lobbying activities. | |
| | IBM is proud to report that the Center for Political Accountability’s |
purposes | ||||||||
| ||||||||
|
|
|
|
|
IBM’s policies and practices with regard to public policy matters, including lobbying activities and expenditures, are available on its website: https://www.ibm.com/policy/government-regulatory-affairs/philosophy-governance/.
Andrew N. Liveris
2022 Notice of Annual Meeting & Proxy Statement | 2021 Executive Compensation 31
| In 2021, IBM delivered $57.4B in revenue, and generated $12.8B cash from operations.(1) | |
Executive Summary
Compensation information
| Accelerating IBM Growth | | | Optimized Portfolio, Including Kyndryl Separation | |
| Revenue growth accelerated in 2021, exiting the 4th quarter at 8.6% including approximately 3.5 points from incremental external sales to Kyndryl | | | Completed the separation of Kyndryl on November 3, 2021, and focused on Hybrid Cloud & AI strategy | |
| | | | 2021 Revenue Mix | | | ||
| | | | | Increased revenue mix to higher growth software and consulting Software revenue +4% Year-to-Year Annual Recurring Revenue* over $13B, +8% year-to-year exiting 4Q2021 Consulting revenue +8% Year-to-Year Business Transformation +13% Year-to-Year Technology Consulting +10% Year-to-Year | |
| Hybrid Cloud Revenue | | | Continued Red Hat Success | |
| Hybrid Cloud Revenue grew 19% in 2021, and now makes up 35% of IBM revenue | | | Over 3,800 clients using hybrid cloud platform, up 1,000 Year-to-Year | |
| Completed 15 acquisitions in 2021 for $3B | | | | Return $6B to stockholders through dividends in 2021 | | | | Reduced debt by $10B in 2021 and $21B since acquiring Red Hat | |
IBM’s Strategic Pivotdiscontinued operations related to Growth
Over the last several years, IBM has built the foundation to capitalize on the $1 trillion hybrid cloud market opportunity, accelerated with the 2019 acquisition of Red Hat that established IBM as the market-leading hybrid cloud platform. In 2020, IBM took further decisive action to redefine the future of the company and create value through focus. In October 2020, the Company announced the spin-off of the managed infrastructure services business, which will immediately be the market leader at twice the size of its nearest competitor.
As discussed with investors, the pending spin-off will enable IBM to focus on delivering sustainable growth as a hybrid cloud and AI company. This also represents a shift in the Company’s business model where the majority of revenue will now come from software and solutions, enabling accelerated revenue growth post separation. To realize this strategy, IBM is undertaking a number of actions associated with the spin-off and the growth of the hybrid cloud business. These include structural and transaction-related actions enabling the separation and ongoing competitiveness of the managed infrastructure services business, as well as increased reinvestment in the hybrid cloud platform. The Company plans to increase investment in innovation, skills expertise and ecosystems including targeted acquisitions to accelerate IBM’s hybrid cloud platform growth strategy.
To reinforce the strategic shift, we revamped our executive compensation programs to ensure alignment with IBM’s growth strategy and investor expectations. The following comprehensive changes have been made to support this growth prioritization:
The impacts of these significant strategic decisions on the Company’s executive compensation programs are discussed in the following Compensation Discussion and Analysis.
|
Hybrid Cloud Platform Performance
IBM Cloud Revenue
Over $25B total Cloud revenue, more than doubling since 2015, and now making up over 34% of IBM revenue.
Red Hat Growth
Red Hat continued its momentum, with strong double-digit revenue growth(1).
Year-to-Year Gross Margin
Expanded gross margin, with continued shift to higher value and improved services productivity.
Establishing two Market-Leading Companies
Announced separation of the managed infrastructure services business into a new $19B* market-leading public company.
Strong Cash Generation And Strategic Capital Allocation
|
|
|
|
|
Note: In an effort to provide additional and useful information regarding IBM’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), this Compensation Discussion and Analysis and Proxy Statement contains certain non-GAAP financial measures, on a continuing operations basis, including operating earnings per share, free cash flow including discontinued operations activity related to the separation of Kyndryl, operating cash flow including discontinued operations activity related to the separation of Kyndryl, operating net income, from continuing operations, revenue for Red Hat normalized for historical comparability, revenue growth rates adjusted for currency, and revenue adjusted for divested businesses and currency, and ROIC.currency. Amounts are presented on a continuing operations basis unless otherwise noted. For reconciliation and rationale for management’s use of this non-GAAP information, refer to Appendix A — “Non-GAAP Financial Information and Reconciliations.”
322022 Notice of Annual Meeting & Proxy Statement | 2021 Compensation Discussion and Analysis
| ||||
For | | |
year where the company underwent significant change.
| | What We Heard | | | | Compensation Committee’s Response | | |
| | Support for our pay programs, including the updates to | | | | • Continued our Annual Incentive Program (AIP) and Performance Share Unit (PSU) metrics that were established in 2021. • Updated Compensation Peer Group to increase the • Introduced Stock Options in 2022 as part of the overall equity pay mix for executives; ensures a portion of equity does not generate value unless IBM’s stock price increases over the price when granted. | | |
| | Positive reaction to the AIP diversity modifier, as well as management’s support for the 2021 stockholder proposal calling for annual reporting on Diversity & Inclusion | | | | • IBM • IBM Board of Directors will continue to engage openly on all stockholder proposals and may support proposals in the future that align with • Disclosure of the | | |
| | Concern over the one-time grant for James Whitehurst awarded in March 2020 in connection with Mr. Whitehurst signing an IBM NCA | | | | • The circumstances of Mr. Whitehurst’s one-time award were unique and |
| ||
| | ||||||
To that end, IBM’s executive compensation practices are designed specifically to meet five key objectives: | | | |||||
| | • Align the interests of IBM’s leaders with those of our investors by varying compensation based on both long-term and annual business results and delivering a large portion of the total pay opportunity in IBM stock; • Balance rewards for both short-term results and the long-term strategic decisions needed to ensure sustained business performance over time; | | | • Attract and retain the highly qualified senior leaders needed to drive a global enterprise to succeed in today’s highly competitive marketplace; • Motivate our leaders to deliver a high degree of business performance without encouraging excessive risk taking; and • Differentiate rewards to reflect individual and team performance. | | |
| Type | | ||||
| | Component | | | Key Characteristics | |
| ||||||||||
Current Year | | | | Salary | | | Salary is a market-competitive, fixed level of compensation. | | | |
| Annual Incentive Program (AIP) | | | At target, annual incentive provides a market-competitive total cash opportunity. Actual annual incentive payments are funded by business performance against financial metrics and distributed based on annual performance scores, with top performers typically earning the greatest payouts and the lowest performers earning no incentive payouts. | | | ||||
| Long-Term Incentive | |||||||||
| | | Performance Share Units (PSUs) | | | Equity awards are typically granted annually and may consist of PSUs and For PSUs, the number of units granted can be increased or decreased at the end of the three-year performance period based on IBM’s performance against predetermined targets. In addition, a relative performance metric applies to all PSU awards. The final number of PSUs earned can be increased or decreased based on IBM’s Return on Invested Capital (ROIC) performance relative to S&P indices. | | | ||
| Restricted Stock Units (RSUs) | | | RSUs vest over time; typically ratably over four years. | | | ||||
| Stock Options (Options) | | | Will become part of the annual equity mix in 2022. Stock Options will vest over time; typically ratably over four years. The exercise price will be at least the value of the IBM stock price on the date of grant, and will be exercisable for up to 10 years from the date of grant. | | | ||||
| Retention | | | | Stock-Based Grants & Cash Awards | | | Periodically, the Compensation Committee and/or the Chairman and CEO reviews outstanding stock-based awards for key executives. Depending on individual performance and the competitive environment for senior executive leadership talent, awards may be made in the form of Retention Restricted Stock Units (RRSUs), retention PSUs (RPSUs), | | |
| ||||||||||
Other Compensation | | | | Perquisites and Other Benefits | | | Perquisites are intended to ensure safety and productivity of executives. Perquisites include such things as annual executive physicals, transportation, financial planning, and personal security. | | | |
| Post Employment | |||||||||
| | | Savings Plan | | | U.S. employees may participate in the IBM 401(k) Plus Plan by saving a portion of their pay in the plan, and eligible employees may also participate in a non-qualified deferred compensation savings plan, which enables participants to save a portion of their eligible pay in excess of IRS limits for 401(k) plans. The Company provides matching and automatic contributions for both of these plans. | | | ||
| Non-qualified Savings Plan | | ||||||||
| Pension Plans (closed) | | | Named Executive Officers (NEOs) may have legacy participation in closed retention and retirement plans, for which future accruals ceased as of December 31, 2007. | | | ||||
| Supplemental Executive Retention Plan (closed) | | | A full description of the Retention, Pension, and Non-Qualified Deferred Compensation plans is provided in this Proxy Statement, beginning with the | ||||||
|
| |||||||||
| ||||||||||
| ||||||||||
|
| |||||
|
|
| ||||
|
| |||||
|
| |||||
|
|
| ||||
|
|
To reinforce the strategic shift of the Company’s business model announced in October 2020, when IBM announced the spin-off of the Company’s managed infrastructure services business, and to support the focus on delivering sustainable revenue growth and free cash flow as a hybrid cloud and AI company, the Committee revamped the performance metrics in our executive compensation programs as follows:
2021 Metrics and Weightings
|
| |||||
|
|
| ||||
|
| |||||
|
| |||||
|
|
| ||||
|
| |||||
|
|
|
adjustment was made.
|
|
93. In addition, executive representation of women globally, and Black and Hispanic executives in the United States improved by 1.0 point, 1.5 points and 0.4 points, respectively in 2021. This improvement in executive representation for these groups resulted in the diversity modifier increasing the weighted incentive score by 5 points, to 98.
Targets are established at the beginning of each three-year performance period. Both Operating EPS and Free Cash Flow cumulative three-year targets for the 2018-2020 performance period exceeded those cumulative three-year targets for the previous performance period (2017-2019). These targets are based on IBM’s financial model, as shared with investors, and the Board-approved annual budget. The Committee’s longstanding practice is that the Company’s share repurchase activities have no effect on executive compensation. Actual operating EPS results are adjusted to remove the impact of any difference between the actual share count and the budgeted share count, while simultaneously ensuring that executive compensation targets are normalized for any planned buybacks that are incorporated into the Operating EPS target. Additionally, the scoring for the PSU Program takesmay also take into account extraordinary events. For the 2018-2020 performance period, results are adjusted to exclude the impact of the Red Hat acquisition. This approach is consistent with the adjustment made to the previous performance period (2017-2019). For 2018-2020, results were also adjusted to exclude the impact of the $2.0 billion pre-tax charges for structural actions in the fourth quarter to simplify and optimize our operating model in support of the announcement we made in our strategic update in October. While the COVID-19 global pandemic had a significant impact on the 2018-2020 results, there was no adjustment made to scoring due to COVID-19. The Committee determined that this approach best reflected the stockholder experience in 2020.
odifier
| | | The PSU score is calculated as a weighted average of results against targets for Operating EPS (70%) and Free Cash Flow (30%). The calculation for the 2019-2021 performance period is shown in the table below. For the 2019-2021 performance period, the ROIC modifier was 0%. While IBM ROIC was at the 65th percentile of the S&P 500 Index (excluding financial services), it did not exceed the median of S&P Information Technology Index. | |
|
|
|
discontinued operations less separationrelated charges. See Appendix A for GAAP to Non-GAAP reconciliation.
Cumulative three-year EPS and Cash Flow targets for the 2019-2021 and 2020-2022 Performance Share Unit (PSU) programs were set prior to the announcement of the planned 2021 spin-off of the managed infrastructure services business and related actions. IBM’s PSU programs consist of operational financial metrics that were substantially impacted by this significant unplanned event.
For the 2019-2021 and 2020-2022 PSU programs,Kyndryl, the Committee determined that the targets for these two outstanding PSU programs were no longer reflective of the company’s strategic direction and growth objectives as communicated to stockholders overprior to the past year. Theannounced plan to separate Kyndryl. In February 2021, the Committee approved an adjustment reducingto the targets for the 2019-2021 and 2020-2022 PSU programs, incorporatingto incorporate the planned 2021 spin-offimpact of the managed infrastructure services business2021 separation of Kyndryl, including one-time transaction-related cash charges associated with the spin,separation, and actions taken to enable the separation of NewCoKyndryl and IBM’s growth. Following the separation of Kyndryl on November 3, 2021 into its own publicly traded company with approximately $19 billion in revenue, a final target adjustment was made for all three open PSU programs. The final adjustment was made to incorporate the impact of separating Kyndryl, including the early separation of Kyndryl two months ahead of schedule. As a result of the adjustments made for the Kyndryl separation and actions taken to enable IBM’s growth strategy, under current market conditions. The resultingEPS and Free Cash Flow targets remain rigorous and will continue to appropriately incent management in an important period.for the 2019-2021 PSU program are lower than those for the 2018-2020 PSU program. Consistent with the Company’s long-standing practice of setting rigorous performance plans, cumulative targets for both plans remain higher than comparable metrics shared with investors on January 21,October 4, 2021.
In Mr. Whitehurst’s prior role as Chief Executive Officer2022 Notice of Red Hat, a portion of his 2020 compensation includes payments provided as a result of his participation in the following Red Hat compensation and benefit programs, as well as acquisition related agreements between IBM and Mr. Whitehurst, all of which existed prior to the close of the Red Hat acquisition on July 9, 2019.
Restricted Stock Awards
Mr. Whitehurst’s unvested Red Hat equity awards were converted into Restricted Stock Awards (RSAs) to receive IBM stock upon close of the Red Hat acquisition, at the same rate of conversion that was used to convert all of Red Hat’s outstanding stock into IBM stock.
Cash-Based Retention
As disclosed in the MergerAnnual Meeting & Proxy Statement filed by Red Hat, Inc. with the SEC on December 12, 2018, in connection with the merger agreement between Red Hat| 2021 Compensation Discussion and IBM, Mr. Whitehurst entered into a retention arrangement with IBM providing that Mr. Whitehurst shall be entitled to a $6M retention cash payment, with $2M paid on each of the 1st, 2nd, and 3rd anniversaries of the closing of the merger, respectively, subject to continued employment by IBM and accomplishment of key milestones for each of the three years.
The Committee approved the first $2M payment for Mr. Whitehurst in July 2020, in connection with the first anniversary of the closing of the merger. This payment was based on Mr. Whitehurst’s accomplishment of financial goals in delivering Red Hat revenue, pre-tax income and free cash flow, as well as increasing the number of clients utilizing IBM or Red Hat cloud container offerings, expanding Red Hat’s strategic partnerships, and successfully retaining key Red Hat talent in the first year following the closing of the merger.
Red Hat Annual Cash Bonus
Upon the close of the Red Hat acquisition, IBM adopted Red Hat’s Annual Cash Bonus Plan (ACB Plan) for Red Hat’s fiscal year 2020 (i.e., March 1, 2019 to February 29, 2020). As CEO of Red Hat, Mr. Whitehurst participated in this ACB Plan. Red Hat’s ACB Plan allowed for payouts from 0% - 200% of target incentive, based on accomplishment of Red Hat’s fiscal year financial performance (75% of payout) and performance against individual goals (25% of payout). For fiscal 2020, financial performance metrics included Red Hat’s Total Revenue, Cash from Operations, and Non-GAAP operating margin*, which were each weighted equally during this period.
Based on 166% achievement of the Plan’s financial performance metrics and 105% of Mr. Whitehurst’s individual goals, the Committee approved a payment of $2,487,375, or 150.75% of Mr. Whitehurst’s target bonus for this time period. A pro-rata portion of his total payment is included in the 2020 Summary Compensation Table, to reflect the amount earned for January and February of 2020. Effective March 1, 2020, Mr. Whitehurst became a participant of IBM’s Annual Incentive Program and was no longer a participant of Red Hat’s ACB Plan.
*Non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric.
New for 2020: Mr. Whitehurst’s retention Performance Share Unit (RPSU) AwardAnalysis
In 2020, the Committee approved an RPSU grant of $15M in planned value for Mr. Whitehurst, which was awarded on March 2, 2020, prior to undertaking his role as IBM President. The RPSU was awarded as consideration for signing an IBM Non-Competition agreement (NCA). This NCA is broader than the non-competition provisions Mr. Whitehurst agreed to in connection with the acquisition of Red Hat, which limited competition within the then-existing scope of Red Hat’s business. The IBM NCA covers the scope of IBM’s business footprint, and aligns his NCA terms and conditions with other IBM leaders.
One-third of the RPSU will vest and pay out on July 31, 2021, with no additional performance criteria. Two-thirds of the RPSU will vest and pay out on July 31, 2023; the number of units that pay out for this portion of the award is subject to the following performance criteria:
Stockholder Engagement
IBM continually reviews and enhances its corporate governance and executive compensation programs. As part of this review, it is IBM’s longstanding practice to meet with a significant number of our largest investors during both the proxy season and the off-season, to solicit their feedback on a variety of topics.
In 2020, IBM once again engaged with over 100 institutional investors. Further, our process includes outreach to hundreds of thousands of individual registered and beneficial owners, who represent a majority of our retail base. The Company continued its enhanced engagement practices in 2020. IBM’s CEO, Executive Chairman, Lead Director, and members of IBM’s senior management participated in this engagement program. Overall, the Company offered to engage with investors representing more than 50% of the shares that voted on Say on Pay at the 2020 Annual Meeting. This in-depth engagement process provides valuable feedback to the Compensation Committee on an ongoing basis.
Overall, our stockholders continue to support the Company’s compensation programs and practices. We heard from stockholders that they are strongly supportive of the overall design of the program, which focuses on long-term financial performance that drives stockholder value. Still, the Committee and the Board review and consider all of the investor feedback in making decisions relating to the design of our executive compensation programs. For example, the following changes occurred in 2020 and 2021:
Compensation Practices
| |||||
What We Do |
| ||||
| |||||
| | Tie a significant portion of pay to Company performance
| | ||
| | | Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions
| | |
| | | Require significant share ownership by the Chairman and CEO, Vice Chairman
| | |
| | | Utilize noncompetition and nonsolicitation agreements for senior executives
| | |
| | | Remove impact of share repurchase on executive incentives | | |
|
| | | |
| What We Don’t Do | | |||
| | | No individual severance or change-in-control agreements for executive officers
| | |
| | | No excise tax gross-ups for executive officers
| | |
| | | No dividend equivalents on unearned RSUs/PSUs
| | |
| | | No hedging/pledging of IBM stock
| | |
| | | No stock option repricing, exchanges or stock options granted below market value
| | |
| | | No guaranteed incentive payouts for executive officers
| | |
| | | No accelerated
| | |
| | | No above-market returns on deferred compensation plans |
Personal Stake in IBM’s Future through Stock Ownership Requirements
practice. Following the separation of Kyndryl, IBM refreshed the minimum number of IBM shares or equivalents that are required to be owned based on each senior leader’s base salary at the time of the Kyndryl separation, and the post-separation IBM stock price.
Ownership Requirements as a Multiple of Salary
| ||||||||||
NEO Name |
IBM Minimum Requirement
|
Median Peer Group Minimum Requirement
| ||||||||
A. Krishna | 10 | 6-7 | ||||||||
V.M. Rometty | 10 | 6-7 | ||||||||
J.J. Kavanaugh | 7 | 4 | ||||||||
J.M. Whitehurst | 7 | 4 | ||||||||
J.E. Kelly III | 7 | 4 | ||||||||
M.H. Browdy | 7 | 4 |
| | | | Ownership Requirements as a Multiple of Salary | | |||
| NEO Name | | | IBM Minimum Requirement | | | Median Peer Group Minimum Requirement | |
| A. Krishna | | | 10 | | | 7 | |
| J.J. Kavanaugh | | | 7 | | | 4 | |
| G. Cohn | | | 7 | | | 4 | |
| T. Rosamilia | | | 7 | | | 4 | |
| M.H. Browdy | | | 7 | | | 4 | |
salary, and are all on track to reach their ownership goal within 5 years of hire or promotion.
| | | | | |||||||||
| | ||||||||||||
| | | What Does Not Count | | | ||||||||
| | | | IBM shares owned personally or by members of the officer’s immediate family sharing the same household
| | | | | Unvested equity awards, including PSUs, RPSUs, RSUs, and RRSUs | | | ||
| | | | Holdings in the IBM Stock Fund of the 401(k) Plus Plan and the Excess 401(k) Plus Plan
| | | | | Unexercised stock options | | | ||
| | | | Shares of IBM stock deferred under the Excess 401(k) Plus Plan | |
| | | |
How Compensation Decisions are Made
| Accenture | | | Boeing | | | Johnson & Johnson | | | Raytheon | |
Alphabet |
2020 BENCHMARK GROUP:
| | Cisco Systems | | | Microsoft | | | Salesforce | | ||
| Amazon.com | | | Dow | | | Oracle | | | UPS | |
| Apple | | General Electric | |
| PepsiCo | | | Verizon | | |
| AT&T | | |||||||||
| | Hewlett Packard Enterprise | |
| Pfizer | | | | | ||
| Bank of America | | |||||||||
|
| ||||||||||
| | Intel | |
| |||||||
| Qualcomm | | |||||||||
| |
| |||||||||
|
|
| Accenture | | |||||||||
| | Boeing | | Microsoft |
| | UPS | | |||
| Adobe | | |||||||||
| | Cisco Systems | |
| |||||||
| | Oracle | |
| Verizon | | |||||
| Alphabet | | |||||||||
| | General Electric | | | PepsiCo | |
| Visa | | ||
| Amazon.com | | | Honeywell | | | Qualcomm | | | VMware | |
| AT&T | | | Hewlett Packard Enterprise | | Raytheon | | | | | |
| |||||||||||
Bank of America | | | Intel | | Salesforce | | | | |
422022 Notice of Annual Meeting & Proxy Statement | 2021 Compensation Discussion and Analysis
| | |||||
2021 Annual Incentive Decision for the Chairman and CEO | | | ||||
| ||||||
| For | | | |||
| ||||||
| In addition to overall IBM | | | |||
| | |||||
Business Results • IBM Hybrid Cloud revenue grew to over currency. (2) • Consulting grew high single digits for the year, and Software exited 4th quarter with 10% growth •
Over 3,800 clients using our Hybrid Cloud platform, up >1,000 Year-to-Year. • Reduced Debt by $10B in 2021, down $21B since the Red Hat Acquisition. Portfolio and Investment • Realigned operating model to a platform-centric approach with four new reportable segments: Consulting, Software, Infrastructure and Financing. • Completed the separation of Kyndryl on November 3, 2021, ahead of the year-end timeline. • Closed | | | Leadership in Innovation • Deployed Eagle 127-Qubit system, the first quantum chip that breaks the 100-qubit barrier. Societal Impact • Successfully deployed components of our privacy program and organizational best practices into IBM commercial offerings, including IBM Cloud Paks. Recognized by JUST Capital’s ESG ranking as first in • Significant progress toward our goal of
date. Talent Development and Leadership • Increased
four key technical areas: AI, Cloud, Quantum, and Security. • Improved executive diversity; representation of women executives globally improved by 1 point, Black executives in the US grew by 1.5 points, and Hispanic executives in the US grew by 0.4 points. • Employee engagement and inclusiveness index both continued | | |
| |||
| 2022 Compensation Decisions for the Chairman and CEO | | |
| |||
| For | | |
(1) Cash from operations is presented on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl. (2) Non-GAAP financial metrics. See Appendix A |
|
Compensation for the Executive Chairman
Mrs. Rometty’s bonus for 2020 was $4.25M, which represents 85% of her target bonus for the year and is in line with the Company incentive score. The Committee considered Mrs. Rometty’s efforts in ensuring a successful transition to Mr. Krishna throughout 2020 in recommending this bonus. Key accomplishments included:
As disclosed by the Company in December 2020, the Board approved certain arrangements in connection with Mrs. Rometty’s retirement from the Company effective December 31, 2020. The arrangements approved by the Board included a post-retirement consulting arrangement for a three-year period following her retirement for services that the Company may ask her to provide from time to time, as an independent contractor. The fee for such services would be $20,000 per day for each day she provides 4 or more hours of services, and $10,000 for each day that she provides less than four hours. To help facilitatehow we calculate these services, the Board also agreed to provide continued use of IBM office space and an IBM assistant during this three-year consulting arrangement.
20202022 Notice of Annual Meeting & Proxy Statement | 2021 Compensation Discussion and Analysis 43
| |
James J. Kavanaugh | |
| |
Senior Vice President and Chief Financial Officer | |
Achieved over $14B year-end cash balance by generating $10.8B
| Gary Cohn | |
| Vice Chairman | |
Announcedexpand brand awareness in hybrid cloud and AI. Worked with client teams on account planning and client relationship management.
| Tom Rosamilia | |
| Senior Vice President of IBM Software and Chairman, North America | |
In response to the global pandemic, transitioned IBM’s global workforce of ~350k employees to remote work, ensuring continuity of IBM business.
|
|
|
Drove portfolio optimization and expansion, with 67% of investment focused in growth offerings.
Led cross-IBM growth through ecosystem and increased ecosystem commitment with GSIs Cloud Paks.
Continued acceleration of Red Hat acquisition and synergy, delivering year-to-year revenue growth and over 2,800 Hybrid Cloud platform clients.
|
|
Achieved #1 patent position for 28th consecutive year, with over 9,100 patents in 2020.
Co-led IBM COVID-19 Task Force; ensured continuity of business while protecting all employees worldwide.
Built world class Privacy and Ethics team, and established a robust AI governance framework, including an AI Ethics Board.
Michelle H. Browdy | |
| |
Senior Vice President and General Counsel | |
Continuedyear-end timeline.
Published 30th Annual Environmental Report and continuedhelping drive deployment of best practices into commercial offerings.
better protect IBM’s innovation agenda in key technology areas going forward.
|
442022 Notice of Annual Meeting & Proxy Statement | 2021 Compensation Discussion and Analysis
| Name | ||||
| | (1) | |||
| J.J. Kavanaugh | | | $1,437,700 | |
| G. Cohn |
| | 1,548,400 | |
| T. Rosamilia | | | 1,064,000 | |
|
| ||||
|
| ||||
M.H. Browdy | |
| 1,266,300 | |
|
|
|
2021
| ||
2021 Cash(1) | 2021 Long-Term Incentive Awards(2) | |||||||||||||||||
Name | Salary Rate | Annual Incentive Target | Performance Share Units | Restricted Stock Units | ||||||||||||||
J.J. Kavanaugh |
| $968,000 |
|
| $1,307,000 |
|
| $5,362,500 |
| $2,887,500 | ||||||||
J.M. Whitehurst |
| 1,200,000 |
|
| 1,800,000 |
|
| 7,150,000 |
| 3,850,000 | ||||||||
M.H. Browdy |
| 894,000 |
|
| 1,206,000 |
|
| 3,087,500 |
| 1,662,500 |
|
|
|
| | | | 2022 Cash(1) | | | 2022 Long-Term Incentive Awards(2) | | ||||||||||||||||||||||||
| Name | | | Salary Rate | | | Annual Incentive Target | | | Performance Share Units | | | Restricted Stock Units | | | Stock Options | | |||||||||||||||
| J.J. Kavanaugh | | | | $ | 1,064,000 | | | | | $ | 1,436,000 | | | | | $ | 5,400,000 | | | | | $ | 1,800,000 | | | | | $ | 1,800,000 | | |
| G. Cohn | | | | | 1,170,000 | | | | | | 1,580,000 | | | | | | 4,350,000 | | | | | | 1,450,000 | | | | | | 1,450,000 | | |
| T. Rosamilia | | | | | 894,000 | | | | | | 1,206,000 | | | | | | 3,900,000 | | | | | | 1,300,000 | | | | | | 1,300,000 | | |
| M.H. Browdy | | | | | 936,000 | | | | | | 1,264,000 | | | | | | 3,000,000 | | | | | | 1,000,000 | | | | | | 1,000,000 | | |
grant for PSUs and RSUs. For Stock Options, the IBM stock price is further adjusted by an option valuation factor, to reflect the discounted value of Stock Options compared to full value awards.
462022 Notice of Annual Meeting & Proxy Statement | 2021 Compensation Discussion and Analysis
| To the extent permitted by governing law, IBM will seek to recoup any bonus or incentive paid to any executive officer if: (i) the amount of such payment was based on the achievement of certain financial results that were subsequently the subject of a restatement; (ii) the Board determines that such officer engaged in misconduct that resulted in the obligation to restate; and (iii) a lower payment would have been made to the officer based upon the restated financial results. | |
To the extent permitted by governing law, IBM will seek to recoup any bonus or incentive paid to any executive officer if: (i) the amount of such payment was based on the achievement of certain financial results that were subsequently the subject of a restatement; (ii) the Board determines that such officer engaged in misconduct that resulted in the obligation to restate; and (iii) a lower payment would have been made to the officer based upon the restated financial results.
Hedging and Pledging Practices
Although this tax deduction for performance-based compensation has been eliminated for awards after November 2, 2017, IBM continues to believe that a strong link between pay and performance is critical to align executive and stockholder interests. IBM and the Committee will continue to ensure that a significant portion of pay for our EVPVice Chairman and SVPs, including the Chairman and CEO, is at risk and subject to the attainment of performance goals.
2022 Notice of Annual Meeting & Proxy Statement | 2021 Compensation Discussion and Analysis 47
Salary (Column (c))2021 SUMMARY COMPENSATION TABLE
| Name and Principal Position | | | | | | | | | | | | | | | Stock | | | Option | | | Non-Equity Incentive Plan | | | Change in Retention | | | Change in Pension | | | Nonqualified Deferred Compensation | | | All Other | | | | | | | | ||||||
| (a) | | | Salary | (1) | | Bonus | (2) | | Awards | (3) | | Awards | (4) | | Compensation | (5) | | Plan Value | (6) | | Value | (7) | | Earnings | (8) | | Compensation | (9)(10) | | Total | (11) | |||||||||||||||
| Year (b) | | | ($) (c) | | | ($) (d) | | | ($) (e) | | | ($) (f) | | | ($) (g) | | | ($) (h) | | | ($) (h) | | | ($) (h) | | | ($) (i) | | | ($) (j) | | |||||||||||||||
| A. Krishna, Chairman and CEO(12) | | |||||||||||||||||||||||||||||||||||||||||||||
| 2021 | | | | $ | 1,500,000 | | | | | $ | 0 | | | | | $ | 12,605,507 | | | | $ 0 | | | $2,940,000 | | | N/A | | | | $ | 0 | | | | $ 0 | | | $505,452 | | | | $ | 17,550,959 | | |
| 2020 | | | | | 1,352,591 | | | | | | 0 | | | | | | 13,159,118 | | | | 0 | | | 2,181,000 | | | N/A | | | | | 42,806 | | | | 0 | | | 274,167 | | | | | 17,009,682 | | |
| J.J. Kavanaugh, Senior VP and CFO | | |||||||||||||||||||||||||||||||||||||||||||||
| 2021 | | | | $ | 968,000 | | | | | $ | 0 | | | | | $ | 7,563,384 | | | | $ 0 | | | $1,437,700 | | | $ 0 | | | | $ | 0 | | | | $ 0 | | | $200,534 | | | | $ | 10,169,618 | | |
| 2020 | | | | | 899,000 | | | | | | 0 | | | | | | 7,416,931 | | | | 0 | | | 1,176,300 | | | 94,229 | | | | | 0 | | | | 0 | | | 159,836 | | | | | 9,746,296 | | |
| 2019 | | | | | 787,500 | | | | | | 0 | | | | | | 5,063,127 | | | | 0 | | | 1,064,000 | | | 83,877 | | | | | 11,804 | | | | 0 | | | 129,884 | | | | | 7,140,192 | | |
| G. Cohn, Vice Chairman(12) | | |||||||||||||||||||||||||||||||||||||||||||||
| 2021 | | | | $ | 1,170,000 | | | | | $ | 1,000,000 | | | | | $ | 6,180,787 | | | | $ 0 | | | $1,548,400 | | | N/A | | | | | N/A | | | | $ 0 | | | $ 2,417 | | | | $ | 9,901,604 | | |
| T. Rosamilia, Senior VP of IBM Software and Chairman, North America(12) | | |||||||||||||||||||||||||||||||||||||||||||||
| 2021 | | | | $ | 830,000 | | | | | $ | 0 | | | | | $ | 5,959,005 | | | | $ 0 | | | $1,064,000 | | | $ 0 | | | | $ | 0 | | | | $ 0 | | | $250,119 | | | | $ | 8,103,124 | | |
| M.H. Browdy, Senior VP and General Counsel | | |||||||||||||||||||||||||||||||||||||||||||||
| 2021 | | | | $ | 894,000 | | | | | $ | 0 | | | | | $ | 4,354,627 | | | | $ 0 | | | $1,266,300 | | | N/A | | | | | N/A | | | | $ 0 | | | $135,930 | | | | $ | 6,650,857 | | |
| 2020 | | | | | 830,000 | | | | | | 0 | | | | | | 4,211,031 | | | | 0 | | | 1,109,520 | | | N/A | | | | | N/A | | | | 0 | | | 124,112 | | | | | 6,274,663 | | |
| 2019 | | | | | 744,500 | | | | | | 0 | | | | | | 3,753,766 | | | | 0 | | | 982,300 | | | N/A | | | | | N/A | | | | 0 | | | 107,504 | | | | | 5,588,070 | | |
Bonus (Column (d))
As described in Section 1 of the 2020 Compensation Discussion and Analysis, during 2020, Mr. Whitehurst received the first of three potential annual retention payments under a retention arrangement entered into between Mr. Whitehurst and IBM prior to the close of the Red Hat acquisition. No bonuses were awarded to the other named executive officers in the years shown in the 2020 Summary Compensation Table.
Restricted Stock Awards (Column (e))Units (RSUs).
The amounts shown are
Performance Share Units (PSUs)
The following describes the material terms and conditions of PSUs as reported in the column titled Stock Awards (column (e)) in the 2020 Summary Compensation Table and in the 2020 Grants of Plan-Based Awards Table under the heading Estimated Future Payouts Under Equity Incentive Plan Awards (columns (f), (g) and (h)).
General Terms
Vesting and Payout Calculations
Threshold Number (listed in column (f) of the 2020 Grants of Plan Based Awards Table):
|
| | Threshold | | | Target | | | Max* | | |
| Metrics | | | Attainment % / Payout % | | | Attainment % / Payout % | | | Attainment % / Payout % | |
| Operating EPS (70%) | | | 70% / 25% | | | 100% / 100% | | | 120% / 150% | |
| Free Cash Flow (30%) | | | 70% / 25% | | | 100% / 100% | | | 120% / 150% | |
|
|
* Note: The Target Number (listed in column (g) of the 2020 Grants of Plan-Based Awards Table):–The Target number of PSUs will be earned if 100% of the target for both business objectives are achieved.Maximum Number (listed in column (h) of the 2020 Grants of Plan-Based Awards Table):–The Maximum number of PSUs earned based on business objectives is 150% of the Target number.–The Maximum number of PSUs will be earned for achieving 120% of the target for both business objectives.relativeRelative ROIC modifier may further modify the final payout up or down by up to 20 points, based on IBM’s ROIC performance relative to broader market indices. (See the “Performance Share Unit Program” description in Section 1 of the Compensation Discussion and Analysis for additional detail on the ROIC Modifier). As a result, the total Maximummaximum number of PSUs earned could be up to 170% of the Target number.Retention Performance Share Unit Grant (RPSUs)As describedSection 1accordance with accounting guidance; these amounts reflect an adjustment for the exclusion of dividend equivalents.Compensation Discussion and Analysis, Mr. Whitehurst was awarded an RPSU grant on March 2, 2020, prior to undertaking his role as IBM President. The key RPSU terms of this award is consistent with PSU awards described above, with the exception of the following unique terms.Vesting and Payout – RPSUs that vest on July 31, 2021One-third of Mr. Whitehurst’s RPSU award will vest and pay out on July 31, 2021, with no additional performance criteria required (listed in column (i) of the 2020 Grants of Plan based awards table).
Vesting and Payout – RPSUs that vest on July 31, 2023
Restricted Stock Units (RSUs)
RSUs may include RRSUs. In 2020, no RRSUs were granted to named executive officers.
Vesting and Payout
See Section 1 of the 2020 Compensation Discussion and Analysis for more information on performance targets, vesting and payout of the AIP.
Mr. Whitehurst’s payment for January and February 2020
2021, Change in Retention Plan Value (Column (h))for the eligible named executive officers was due to their age, changes in the discount rate, interest crediting rate, and mortality table. The change in Retention Plan Value for the eligible named executive officers resulted in negative amounts in 2021 Mr. Kavanaugh ($17,604) and Mr. Rosamilia ($121,275).
Change in Pension Value, (Column (h))
Nonqualified Deferred Compensation Earnings (Column (h))and All Other Compensation.
IBM Contributions to Defined Contribution Plans
2021.
Ground Transportation
Relocation Expenses
2020 SUMMARY COMPENSATION TABLE50
Name and Principal Position (a) Year (b) | | Salary ($) (c) |
| | Bonus ($) (d) |
| | Stock Awards ($) (e) | (1)
| | Option Awards ($) (f) | (2)
| | Non-Equity Incentive Plan Compensation ($) (g) |
| | Change in Retention Plan Value ($) (h) |
(3)
| | Change in Pension Value ($) (h) |
(4)
| | Nonqualified Deferred Compensation Earnings ($) (h) |
(5)
| | All Other Compensation ($) (i) | (6)(7)
| | Total ($) (j) | (8)
| ||||||||||
| ||||||||||||||||||||||||||||||||||||||||
A. Krishna, CEO(9) |
| |||||||||||||||||||||||||||||||||||||||
2020 | $ | 1,352,591 | $0 | $ | 13,159,118 | $0 | $2,181,000 | N/A | $ | 42,806 | $0 | $274,167 | $ | 17,009,682 | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
V.M. Rometty, Executive Chairman(10) |
| |||||||||||||||||||||||||||||||||||||||
2020 | $ | 1,600,000 | $0 | $ | 12,728,348 | $0 | $4,250,000 | $100,604 | $1,500,327 | $0 | $883,314 | $ | 21,062,593 | |||||||||||||||||||||||||||
2019 | 1,600,000 | 0 | 11,610,046 | 0 | 5,000,000 | 109,106 | 967,778 | 0 | 873,935 | 20,160,865 | ||||||||||||||||||||||||||||||
2018 | 1,600,000 | 0 | 10,801,392 | 0 | 4,050,000 | 0 | 0 | 0 | 1,100,826 | 17,552,218 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
J.J. Kavanaugh, Senior VP and CFO |
| |||||||||||||||||||||||||||||||||||||||
2020 | $ | 899,000 | $0 | $ | 7,416,931 | $0 | $1,176,300 | $94,229 | $0 | $0 | $159,836 | $ | 9,746,296 | |||||||||||||||||||||||||||
2019 | 787,500 | 0 | 5,063,127 | 0 | 1,064,000 | 83,877 | 11,804 | 0 | 129,884 | 7,140,192 | ||||||||||||||||||||||||||||||
2018 | 713,000 | 0 | 4,263,851 | 0 | 814,050 | 0 | 23,343 | 0 | 82,901 | 5,897,145 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
J.M. Whitehurst, President(9)(11) |
| |||||||||||||||||||||||||||||||||||||||
2020 | $ | 1,173,864 | $2,000,000 | $ | 22,418,228 | $0 | $1,455,813 | N/A | N/A | $0 | $130,562 | $ | 27,178,467 | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
J.E. Kelly III, Executive Vice President(12) |
| |||||||||||||||||||||||||||||||||||||||
2020 | $ | 868,000 | $0 | $ | 6,029,248 | $0 | $820,400 | $376,478 | $233,063 | $0 | $129,314 | $ | 8,456,503 | |||||||||||||||||||||||||||
2019 | 868,000 | 0 | 5,237,677 | 0 | 703,200 | 677,321 | 53,005 | 0 | 184,864 | 7,724,067 | ||||||||||||||||||||||||||||||
2018 | 860,000 | 0 | 4,629,243 | 0 | 644,600 | 0 | 55,273 | 0 | 226,336 | 6,415,452 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
M.H. Browdy, Senior VP and General Counsel(9) |
| |||||||||||||||||||||||||||||||||||||||
2020 | $ | 830,000 | $0 | $ | 4,211,031 | $0 | $1,109,520 | N/A | N/A | $0 | $124,112 | $ | 6,274,663 | |||||||||||||||||||||||||||
2019 | 744,500 | 0 | 3,753,766 | 0 | 982,300 | N/A | N/A | 0 | 107,504 | 5,588,070 | ||||||||||||||||||||||||||||||
|
Note: For assumptions used in determining the fair value2022 Notice of stockAnnual Meeting & Proxy Statement | 2021 Summary Compensation Table and option awards, see Note A (Significant Accounting Policies - Stock-Based Compensation) to IBM’s 2020 Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) Type of Award(1) | | Grant Date (b) |
| | Compensation Committee Approval Date |
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan |
|
|
Estimated Future Payouts Under Equity Incentive Plan |
| | All Other Stock Awards: Number of Shares of Stock or Units (#) (i) |
(4)
| | All Other Option Awards: Number of Securities Underlying Options (#) (j) |
| | Exercise or Base Price of Option Awards ($/Sh) (k) |
| | Closing Price on the NYSE on the Date of Grant ($/Sh) |
| | Grant Date Fair Value of Stock and Option Awards ($) (l) |
(5)
| |||||||||||||||||||||||||
| Threshold ($) (c) |
| | Target ($) (d) |
| | Maximum ($) (e) |
| | Threshold (#) (f) |
| | Target (#) (g) |
| | Maximum (#) (h) |
| |||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
A. Krishna |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
AIP | N/A | 04/28/2020 | 0 | 2,566,000 | 5,488,000 | |||||||||||||||||||||||||||||||||||||||||||||||
PSU | 06/08/2020 | 04/28/2020 | 18,139 | 72,554 | 123,342 | 8,553,391 | ||||||||||||||||||||||||||||||||||||||||||||||
RSU | 06/08/2020 | 04/28/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 39,068 |
|
|
|
|
|
|
|
|
| 4,605,727 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
V.M. Rometty |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
AIP | N/A | 01/28/2020 | 0 | 5,000,000 | 10,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||
PSU | 06/08/2020 | 01/28/2020 |
|
|
|
|
|
|
|
|
| 26,992 | 107,968 | 183,546 |
|
|
|
|
|
|
|
|
|
|
|
| 12,728,348 | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
J.J. Kavanaugh |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
AIP | N/A | 01/28/2020 | 0 | 1,307,000 | 3,921,000 | |||||||||||||||||||||||||||||||||||||||||||||||
PSU | 06/08/2020 | 01/28/2020 | 10,224 | 40,894 | 69,520 | 4,820,994 | ||||||||||||||||||||||||||||||||||||||||||||||
RSU | 06/08/2020 | 01/28/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 22,020 |
|
|
|
|
|
|
|
|
| 2,595,938 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
J.M. Whitehurst |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
ACB | N/A | 05/15/2019 | 68,750 | 275,000 | 550,000 | |||||||||||||||||||||||||||||||||||||||||||||||
AIP | N/A | 02/25/2020 | 0 | 1,487,500 | 4,462,500 | |||||||||||||||||||||||||||||||||||||||||||||||
RPSU | 03/02/2020 | 02/25/2020 | 55,003 | 68,754 | 82,505 | 7,927,336 | ||||||||||||||||||||||||||||||||||||||||||||||
RPSU | 03/02/2020 | 02/25/2020 | 34,377 | 3,963,668 | ||||||||||||||||||||||||||||||||||||||||||||||||
PSU | 06/08/2020 | 01/28/2020 | 14,511 | 58,043 | 98,673 | 6,842,689 | ||||||||||||||||||||||||||||||||||||||||||||||
RSU | 06/08/2020 | 01/28/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31,254 |
|
|
|
|
|
|
|
|
| 3,684,534 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
J.E. Kelly III |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
AIP | N/A | 01/28/2020 | 0 | 1,172,000 | 3,516,000 | |||||||||||||||||||||||||||||||||||||||||||||||
PSU | 06/08/2020 | 01/28/2020 | 8,311 | 33,243 | 56,513 | 3,919,017 | ||||||||||||||||||||||||||||||||||||||||||||||
RSU | 06/08/2020 | 01/28/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,900 |
|
|
|
|
|
|
|
|
| 2,110,231 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
M.H. Browdy |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
AIP | N/A | 01/28/2020 | 0 | 1,206,000 | 3,618,000 | |||||||||||||||||||||||||||||||||||||||||||||||
PSU | 06/08/2020 | 01/28/2020 | 5,805 | 23,218 | 39,471 | 2,737,170 | ||||||||||||||||||||||||||||||||||||||||||||||
RSU | 06/08/2020 | 01/28/2020 | 12,502 | 1,473,861 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| Name (a) Type of Award(1) | | | Grant Date (b) | | | Compensation Committee Approval Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of shares of Stock | | | All Other Option Awards: Numberof Securities Underlying Options (#) (j) | | | Exercise or Base Price of Option Awards ($/Sh) (k) | | | Closing Price on the NYSE on the Date of Grant ($/Sh) | | | Grant Date Fair Value of Stock and Option | | ||||||||||||||||||||||||||||||||||||||||||
| Threshold ($) (c) | | | Target ($) (d) | | | Maximum ($) (e) | | | Threshold (#) (f) | | | Target (#) (g) | | | Maximum (#) (h) | | | or Units(3) (#) (i) | | | Awards ($) (l) | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| A. Krishna | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AIP | | | | | N/A | | | | | | 01/25/2021 | | | | | | 0 | | | | | | 3,000,000 | | | | | | 6,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | 15,980 | | | | | | 63,918 | | | | | | 108,661 | | | | | | | | | | | | | | | | | | | | | 8,193,533 | | |
| RSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 34,418 | | | | | | | | | | | | | | | 4,411,974 | | |
| J.J. Kavanaugh | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AIP | | | | | N/A | | | | | | 01/25/2021 | | | | | | 0 | | | | | | 1,307,000 | | | | | | 3,921,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | 9,588 | | | | | | 38,351 | | | | | | 65,197 | | | | | | | | | | | | | | | | | | | | | 4,916,173 | | |
| RSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,651 | | | | | | | | | | | | | | | 2,647,211 | | |
| G. Cohn | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AIP | | | | | N/A | | | | | | 12/15/2020 | | | | | | 0 | | | | | | 1,580,000 | | | | | | 4,740,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PSU | | | | | 01/04/2021 | | | | | | 12/15/2020 | | | | | | | | | | | | | | | | | | | | | | | | 1,615 | | | | | | 6,458 | | | | | | 10,979 | | | | | | | | | | | | | | | | | | | | | 683,063 | | |
| PSU | | | | | 01/04/2021 | | | | | | 12/15/2020 | | | | | | | | | | | | | | | | | | | | | | | | 3,133 | | | | | | 12,533 | | | | | | 21,306 | | | | | | | | | | | | | | | | | | | | | 1,325,688 | | |
| PSU | | | | | 01/04/2021 | | | | | | 12/15/2020 | | | | | | | | | | | | | | | | | | | | | | | | 4,748 | | | | | | 18,990 | | | | | | 32,283 | | | | | | | | | | | | | | | | | | | | | 2,008,750 | | |
| RSU | | | | | 01/04/2021 | | | | | | 12/15/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,451 | | | | | | | | | | | | | | | 2,163,286 | | |
| T. Rosamilia | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AIP | | | | | N/A | | | | | | 01/25/2021 | | | | | | 0 | | | | | | 1,120,000 | | | | | | 3,360,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | 7,554 | | | | | | 30,216 | | | | | | 51,367 | | | | | | | | | | | | | | | | | | | | | 3,873,340 | | |
| RSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,271 | | | | | | | | | | | | | | | 2,085,665 | | |
| M.H. Browdy | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AIP | | | | | N/A | | | | | | 01/25/2021 | | | | | | 0 | | | | | | 1,206,000 | | | | | | 3,618,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | 5,520 | | | | | | 22,081 | | | | | | 37,538 | | | | | | | | | | | | | | | | | | | | | 2,830,508 | | |
| RSU | | | | | 06/08/2021 | | | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,890 | | | | | | | | | | | | | | | 1,524,120 | | |
ACB = Red Hat Inc.’s Annual Cash Bonus Plan (for which Mr. Whitehurst participated in Red Hat Inc.’s Fiscal Year End February 29, 2020
RPSU = Retention Performance Share Unit
|
|
|
|
2022 Notice of Annual Meeting & Proxy Statement | 2021 GRANTS OF PLAN-BASED AWARDS TABLE51
Kyndryl, in accordance with IBM’s LTPP).
2021 (adjusted on November 4, following the separation of Kyndryl, in accordance with IBM’s LTPP).
Name | Grant Date | Threshold | Target | Maximum | ||||||||||||
A. Krishna |
| 06/07/2019 |
|
| 7,226 |
|
| 28,905 |
|
| 49,139 |
| ||||
| 12/17/2019 |
|
| 207,898 |
|
| 259,872 |
|
| 311,846 |
| |||||
| 06/08/2020 |
|
| 18,139 |
|
| 72,554 |
|
| 123,342 |
| |||||
V.M. Rometty |
| 06/07/2019 |
|
| 16,018 |
|
| 64,073 |
|
| 108,924 |
| ||||
| 06/08/2020 |
|
| 26,992 |
|
| 107,968 |
|
| 183,546 |
| |||||
J.J. Kavanaugh |
| 06/07/2019 |
|
| 6,986 |
|
| 27,942 |
|
| 47,501 |
| ||||
| 06/08/2020 |
|
| 10,224 |
|
| 40,894 |
|
| 69,520 |
| |||||
J.M. Whitehurst |
| 03/02/2020 |
|
| 55,003 |
|
| 68,754 |
|
| 82,505 |
| ||||
| 06/08/2020 |
|
| 14,511 |
|
| 58,043 |
|
| 98,673 |
| |||||
J.E. Kelly III |
| 06/07/2019 |
|
| 7,226 |
|
| 28,905 |
|
| 49,139 |
| ||||
| 06/08/2020 |
|
| 8,311 |
|
| 33,243 |
|
| 56,513 |
| |||||
M.H. Browdy |
| 06/07/2019 |
|
| 5,179 |
|
| 20,716 |
|
| 35,217 |
| ||||
| 06/08/2020 |
|
| 5,805 |
|
| 23,218 |
|
| 39,471 |
|
| Name | | | Grant Date | | | Threshold | | | Target | | | Maximum | | ||||||||||||
| A. Krishna | | | | | 12/17/2019 | | | | | | 143,910 | | | | | | 179,888 | | | | | | 215,866 | | |
| | | | | | 06/08/2020 | | | | | | 18,740 | | | | | | 74,960 | | | | | | 127,432 | | |
| | | | | | 06/08/2021 | | | | | | 15,980 | | | | | | 63,918 | | | | | | 108,661 | | |
| J.J. Kavanaugh | | | | | 06/08/2020 | | | | | | 10,563 | | | | | | 42,250 | | | | | | 71,825 | | |
| | | | | | 06/08/2021 | | | | | | 9,588 | | | | | | 38,351 | | | | | | 65,197 | | |
| G. Cohn | | | | | 01/04/2021 | | | | | | 3,133 | | | | | | 12,533 | | | | | | 21,306 | | |
| | | | | | 01/04/2021 | | | | | | 4,748 | | | | | | 18,990 | | | | | | 32,283 | | |
| T. Rosamilia | | | | | 06/08/2020 | | | | | | 8,178 | | | | | | 32,710 | | | | | | 55,607 | | |
| | | | | | 06/08/2021 | | | | | | 7,554 | | | | | | 30,216 | | | | | | 51,367 | | |
| M.H. Browdy | | | | | 06/08/2020 | | | | | | 5,997 | | | | | | 23,988 | | | | | | 40,780 | | |
| | | | | | 06/08/2021 | | | | | | 5,520 | | | | | | 22,081 | | | | | | 37,538 | | |
2020522022 Notice of Annual Meeting & Proxy Statement | 2021 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
Name (a) Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable (b) |
| | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) |
| | Equity Incentive Plan Number of Securities Underlying Unexercised Unearned Options (#) (d) |
| | Option Exercise Price ($) (e) |
| | Option Expiration Date (f) |
| | Type of Award |
| | Grant Date |
| | Number of Shares or Units of Stock That Have (#) (g) |
| | Market Value of Shares or Units of Stock That Have Not Vested ($) (h) |
(2)
| | Type of Award |
| | Grant Date |
| | Equity Incentive Plan Awards: Number of Unearned Shares, or Other Rights (#) (i) |
| | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) |
(2)
| |||||||||||||
A. Krishna |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/17 |
|
| 2,250 |
| $ | 283,230 |
|
| PSU |
|
| 06/07/19 |
|
| 28,905 |
| $ | 3,638,561 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/08/18 |
|
| 6,016 |
|
| 757,294 |
|
| RPSU |
|
| 12/17/19 |
|
| 259,872 |
|
| 32,712,687 |
| |||||||||||||||||||||||||||||
| RRSU |
|
| 12/11/18 |
|
| 88,710 |
|
| 11,166,815 |
|
| PSU |
|
| 06/08/20 |
|
| 72,554 |
|
| 9,133,098 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/07/19 |
|
| 11,674 |
|
| 1,469,523 |
| |||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/20 |
|
| 39,068 |
|
| 4,917,880 |
| |||||||||||||||||||||||||||||||||||||||||
| 147,718 |
|
| 18,594,742 |
|
| 361,331 |
|
| 45,484,346 |
| |||||||||||||||||||||||||||||||||||||||||
V.M. Rometty |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
01/26/16 |
| 375,000 |
|
| 0 |
|
| N/A |
| $ | 129.08 |
|
| 01/25/26 |
|
| RSU |
|
| 06/08/17 |
|
| 6,650 |
|
| 837,102 |
|
| PSU |
|
| 06/07/19 |
|
| 64,073 |
|
| 8,065,509 |
| |||||||||||||
01/26/16 |
| 375,000 |
|
| 0 |
|
| N/A |
|
| 135.22 |
|
| 01/25/26 |
|
| RSU |
|
| 06/08/18 |
|
| 14,548 |
|
| 1,831,302 |
|
| PSU |
|
| 06/08/20 |
|
| 107,968 |
|
| 13,591,012 |
| |||||||||||||
01/26/16 |
| 375,000 |
|
| 0 |
|
| N/A |
|
| 141.37 |
|
| 01/25/26 |
|
| RSU |
|
| 06/07/19 |
|
| 25,876 |
|
| 3,257,271 |
| |||||||||||||||||||||||||
01/26/16 |
| 375,000 |
|
| 0 |
|
| N/A |
|
| 153.66 |
|
| 01/25/26 |
| |||||||||||||||||||||||||||||||||||||
Total |
| 1,500,000 |
|
| 0 |
|
| 47,074 |
|
| 5,925,675 |
|
| 172,041 |
|
| 21,656,521 |
| ||||||||||||||||||||||||||||||||||
J.J. Kavanaugh |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/17 |
|
| 2,000 |
|
| 251,760 |
|
| PSU |
|
| 06/07/19 |
|
| 27,942 |
|
| 3,517,339 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/08/18 |
|
| 5,743 |
|
| 722,929 |
|
| PSU |
|
| 06/08/20 |
|
| 40,894 |
|
| 5,147,737 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/07/19 |
|
| 11,285 |
|
| 1,420,556 |
| |||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/20 |
|
| 22,020 |
|
| 2,771,878 |
| |||||||||||||||||||||||||||||||||||||||||
Total |
| 0 |
|
| 0 |
|
| 41,048 |
|
| 5,167,123 |
|
| 68,836 |
|
| 8,665,076 |
| ||||||||||||||||||||||||||||||||||
J.M. Whitehurst |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| RSA |
|
| 07/09/19 |
|
| 111,944 |
|
| 14,091,511 |
|
| RPSU |
|
| 03/02/20 |
|
| 68,754 |
|
| 8,654,754 |
| |||||||||||||||||||||||||||||
| RRSU |
|
| 07/09/19 |
|
| 110,671 |
|
| 13,931,265 |
|
| PSU |
|
| 06/08/20 |
|
| 58,043 |
|
| 7,306,453 |
| |||||||||||||||||||||||||||||
| RPSU |
|
| 03/02/20 |
|
| 34,377 |
|
| 4,327,377 |
| |||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/20 |
|
| 31,254 |
|
| 3,934,254 |
| |||||||||||||||||||||||||||||||||||||||||
Total |
| 0 |
|
| 0 |
|
| 288,246 |
|
| 36,284,406 |
|
| 126,797 |
|
| 15,961,206 |
| ||||||||||||||||||||||||||||||||||
J.E. Kelly III |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/17 |
|
| 2,750 |
|
| 346,170 |
|
| PSU |
|
| 06/07/19 |
|
| 28,905 |
|
| 3,638,561 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/08/18 |
|
| 6,235 |
|
| 784,862 |
|
| PSU |
|
| 06/08/20 |
|
| 33,243 |
|
| 4,184,629 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/07/19 |
|
| 11,674 |
|
| 1,469,523 |
| |||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/20 |
|
| 17,900 |
|
| 2,253,252 |
| |||||||||||||||||||||||||||||||||||||||||
Total |
| 0 |
|
| 0 |
|
| 38,559 |
|
| 4,853,807 |
|
| 62,148 |
|
| 7,823,190 |
| ||||||||||||||||||||||||||||||||||
M.H. Browdy |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/17 |
|
| 1,750 |
|
| 220,290 |
|
| PSU |
|
| 06/07/19 |
|
| 20,716 |
|
| 2,607,730 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/08/18 |
|
| 4,157 |
|
| 523,283 |
|
| PSU |
|
| 06/08/20 |
|
| 23,218 |
|
| 2,922,682 |
| |||||||||||||||||||||||||||||
| RSU |
|
| 06/07/19 |
|
| 8,367 |
|
| 1,053,238 |
| |||||||||||||||||||||||||||||||||||||||||
| RSU |
|
| 06/08/20 |
|
| 12,502 |
|
| 1,573,752 |
| |||||||||||||||||||||||||||||||||||||||||
Total |
| 0 |
|
| 0 |
|
| 26,776 |
|
| 3,370,563 |
|
| 43,934 |
|
| 5,530,412 |
|
| | | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | Number of Securities Underlying Unexercised Options | | | Number of Securities Underlying Unexercised Options | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned | | | Option Exercise | | | Option | | | | | | | | | | | | | | | Number of Shares or Units of Stock That Have | | | Market Value of Shares or Units of Stock That Have | | | | | | | | | | | | | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have | | |||||||||||||||
| Name | | | (#) | | | (#) | | | Options | | | Price | | | Expiration | | | | | | | | | | | | | | | Not Vested | (1) | | Not Vested | (2) | | | | | | | | | | | | | | Not Vested | (3) | | Not Vested | (2) | |||||||||||||||
| (a) Grant Date | | | Exercisable (b) | | | Unexercisable (c) | | | (#) (d) | | | ($) (e) | | | Date (f) | | | Type of Award | | | Grant Date | | | (#) (g) | | | ($) (h) | | | Type of Award | | | Grant Date | | | (#) (i) | | | ($) (j) | | |||||||||||||||||||||||||||
| A. Krishna | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/18 | | | | 3,108 | | | | $ | 415,415 | | | | | | RPSU | | | | | | 12/17/19 | | | | | | 88,602 | | | | | $ | 11,842,543 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RRSU | | | | | | 12/11/18 | | | | 66,656 | | | | | 8,909,241 | | | | | | RPSU | | | | | | 12/17/19 | | | | | | 91,286 | | | | | | 12,201,287 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/07/19 | | | | 8,042 | | | | | 1,074,894 | | | | | | PSU | | | | | | 06/08/20 | | | | | | 74,960 | | | | | | 10,019,154 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/20 | | | | 30,273 | | | | | 4,046,289 | | | | | | PSU | | | | | | 06/08/21 | | | | | | 63,918 | | | | | | 8,543,280 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/21 | | | | 34,418 | | | | | 4,600,310 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | 0 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | 142,497 | | | | $ | 19,046,149 | | | | | | | | | | | | | | | | | | 318,766 | | | | | $ | 42,606,264 | | |
| J.J. Kavanaugh | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/18 | | | | 2,968 | | | | $ | 396,703 | | | | | | PSU | | | | | | 06/08/20 | | | | | | 42,250 | | | | | $ | 5,647,135 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/07/19 | | | | 7,774 | | | | | 1,039,073 | | | | | | PSU | | | | | | 06/08/21 | | | | | | 38,351 | | | | | | 5,125,995 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/20 | | | | 17,063 | | | | | 2,280,641 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/21 | | | | 20,651 | | | | | 2,760,213 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | 0 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | 48,456 | | | | $ | 6,476,630 | | | | | | | | | | | | | | | | | | 80,601 | | | | | $ | 10,773,130 | | |
| G. Cohn | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | RRSU | | | | | | 12/28/20 | | | | 50,510 | | | | $ | 6,751,167 | | | | | | PSU | | | | | | 01/04/21 | | | | | | 12,533 | | | | | $ | 1,675,161 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 01/04/21 | | | | 20,451 | | | | | 2,733,481 | | | | | | PSU | | | | | | 01/04/21 | | | | | | 18,990 | | | | | | 2,538,203 | | |
| Total | | | | | 0 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | 70,961 | | | | $ | 9,484,648 | | | | | | | | | | | | | | | | | | 31,523 | | | | | $ | 4,213,364 | | |
| T. Rosamilia | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/18 | | | | 3,108 | | | | $ | 415,415 | | | | | | PSU | | | | | | 06/08/20 | | | | | | 32,710 | | | | | $ | 4,372,019 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/07/19 | | | | 7,774 | | | | | 1,039,073 | | | | | | PSU | | | | | | 06/08/21 | | | | | | 30,216 | | | | | | 4,038,671 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/20 | | | | 13,210 | | | | | 1,765,649 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/21 | | | | 16,271 | | | | | 2,174,782 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | 0 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | 40,363 | | | | $ | 5,394,919 | | | | | | | | | | | | | | | | | | 62,926 | | | | | $ | 8,410,690 | | |
| M.H. Browdy | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/18 | | | | 2,148 | | | | $ | 287,102 | | | | | | PSU | | | | | | 06/08/20 | | | | | | 23,988 | | | | | $ | 3,206,236 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/07/19 | | | | 5,764 | | | | | 770,416 | | | | | | PSU | | | | | | 06/08/21 | | | | | | 22,081 | | | | | | 2,951,346 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/20 | | | | 9,688 | | | | | 1,294,898 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | 06/08/21 | | | | 11,890 | | | | | 1,589,217 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | 0 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | 29,490 | | | | $ | 3,941,633 | | | | | | | | | | | | | | | | | | 46,069 | | | | | $ | 6,157,582 | | |
RSA = Restricted Stock Award
|
|
|
2022 Notice of Annual Meeting & Proxy Statement | 2021 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative 53
|
|
| Vesting Schedule | |||||||||||||||||||||
Name |
Type of Award |
Grant Date |
2021 |
2022 |
2023 |
2024 | ||||||||||||||||||
| ||||||||||||||||||||||||
A. Krishna | RSU | 06/08/2017 | 2,250 | |||||||||||||||||||||
RSU | 06/08/2018 | 3,008 | 3,008 | |||||||||||||||||||||
RRSU | 12/11/2018 | 24,194 | 32,258 | 32,258 | ||||||||||||||||||||
RSU | 06/07/2019 | 3,891 | 3,891 | 3,892 | ||||||||||||||||||||
RSU | 06/08/2020 | 9,767 | 9,767 | 9,767 | 9,767 | |||||||||||||||||||
| ||||||||||||||||||||||||
V.M. Rometty | RSU | 06/08/2017 | 6,650 | |||||||||||||||||||||
RSU | 06/08/2018 | 7,273 | 7,275 | |||||||||||||||||||||
RSU | 06/07/2019 | 8,625 | 8,625 | 8,626 | ||||||||||||||||||||
| ||||||||||||||||||||||||
J.J. Kavanaugh | RSU | 06/08/2017 | 2,000 | |||||||||||||||||||||
RSU | 06/08/2018 | 2,871 | 2,872 | |||||||||||||||||||||
RSU | 06/07/2019 | 3,761 | 3,761 | 3,763 | ||||||||||||||||||||
RSU | 06/08/2020 | 5,505 | 5,505 | 5,505 | 5,505 | |||||||||||||||||||
| ||||||||||||||||||||||||
J.M. Whitehurst | RSA | 07/09/2019 | 79,553 | 32,391 | ||||||||||||||||||||
RRSU | 07/09/2019 | 36,890 | 73,781 | |||||||||||||||||||||
RPSU | 03/02/2020 | 34,377 | ||||||||||||||||||||||
RSU | 06/08/2020 | 7,813 | 7,813 | 7,813 | 7,815 | |||||||||||||||||||
| ||||||||||||||||||||||||
J.E. Kelly III | RSU | 06/08/2017 | 2,750 | |||||||||||||||||||||
RSU | 06/08/2018 | 3,117 | 3,118 | |||||||||||||||||||||
RSU | 06/07/2019 | 3,891 | 3,891 | 3,892 | ||||||||||||||||||||
| ||||||||||||||||||||||||
M.H. Browdy | RSU | 06/08/2017 | 1,750 | |||||||||||||||||||||
RSU | 06/08/2018 | 2,078 | 2,079 | |||||||||||||||||||||
RSU | 06/07/2019 | 2,788 | 2,788 | 2,791 | ||||||||||||||||||||
RSU | 06/08/2020 | 3,125 | 3,125 | 3,125 | 3,127 | |||||||||||||||||||
|
| | | | | | | | | | | | | | | | Vesting Schedule | | |||||||||||||||||||||
| Name | | | Type of Award | | | Grant Date | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | ||||||||||||||||||
| A. Krishna | | | | | RSU | | | | | | 06/08/2018 | | | | | | 3,108 | | | | | | | | | | | | | | | | | | | | |
| | | | | | RRSU | | | | | | 12/11/2018 | | | | | | 33,328 | | | | | | 33,328 | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/07/2019 | | | | | | 4,020 | | | | | | 4,022 | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2020 | | | | | | 10,091 | | | | | | 10,091 | | | | | | 10,091 | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2021 | | | | | | 8,604 | | | | | | 8,604 | | | | | | 8,604 | | | | | | 8,606 | | |
| J.J. Kavanaugh | | | | | RSU | | | | | | 06/08/2018 | | | | | | 2,968 | | | | | | | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/07/2019 | | | | | | 3,885 | | | | | | 3,889 | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2020 | | | | | | 5,687 | | | | | | 5,688 | | | | | | 5,688 | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2021 | | | | | | 5,162 | | | | | | 5,163 | | | | | | 5,163 | | | | | | 5,163 | | |
| G. Cohn | | | | | RRSU | | | | | | 12/28/2020 | | | | | | 27,359 | | | | | | 23,151 | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 01/04/2021 | | | | | | 5,112 | | | | | | 5,113 | | | | | | 5,112 | | | | | | 5,114 | | |
| T. Rosamilia | | | | | RSU | | | | | | 06/08/2018 | | | | | | 3,108 | | | | | | | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/07/2019 | | | | | | 3,885 | | | | | | 3,889 | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2020 | | | | | | 4,403 | | | | | | 4,403 | | | | | | 4,404 | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2021 | | | | | | 4,067 | | | | | | 4,068 | | | | | | 4,068 | | | | | | 4,068 | | |
| M.H. Browdy | | | | | RSU | | | | | | 06/08/2018 | | | | | | 2,148 | | | | | | | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/07/2019 | | | | | | 2,880 | | | | | | 2,884 | | | | | | | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2020 | | | | | | 3,228 | | | | | | 3,229 | | | | | | 3,231 | | | | | | | | |
| | | | | | RSU | | | | | | 06/08/2021 | | | | | | 2,972 | | | | | | 2,973 | | | | | | 2,972 | | | | | | 2,973 | | |
| | | | | | | | | ||||||||||||||||||||
| Vesting Schedule | | ||||||||||||||||||||||||||
| Name | | | Grant Date | | |
| | |
|
|
| | |||||||||||||||
| ||||||||||||||||||||||||||||
A. Krishna | | | ||||||||||||||||||||||||||
| 12/17/2019 | | | | | 88,602 | | | | | | | | | ||||||||||||||
| | | | | | 12/17/2019 | | | | | | | | | | | 91,286 | | | |||||||||
| | | | |||||||||||||||||||||||||
| 06/08/2020 | | | | | | 74,960 | | | | | | | | ||||||||||||||
| | | | | | 06/08/2021 | | | | | | | | | | | | 63,918 | | | ||||||||
| J.J. Kavanaugh | | | | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| 06/08/2020 | | | | | | 42,250 | | | | | | | | ||||||||||||||
| | | | | | 06/08/2021 | | | | | | | | | | | | 38,351 | | | ||||||||
| G. Cohn | | | | | 01/04/2021 | | | | | | 12,533 | | | | | | | | | ||||||||
| | | | | 01/04/2021 | | | | | | | | | | | 18,990 | | | ||||||||||
| T. Rosamilia | | | | | 06/08/2020 | | | | | | 32,710 | | | | | | | | |||||||||
| | | | | | 06/08/2021 | | | | | | | | | | | | 30,216 | | | ||||||||
| M.H. Browdy | | | | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| 06/08/2020 | | | | | 23,988 | | | | | | | | | ||||||||||||||
| | | | | | 06/08/ | | | | | | | | | | | 22,081 | | ||||||||||
| ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
|
Option Awards | Stock Awards(1) | |||||||||||||||
Name (a) |
Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) |
Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | ||||||||||||
| ||||||||||||||||
A. Krishna | 0 | $0 | 43,255 | 5,511,619 | ||||||||||||
| ||||||||||||||||
V.M. Rometty | 0 | 0 | 68,937 | 8,918,942 | ||||||||||||
| ||||||||||||||||
J.J. Kavanaugh | 0 | 0 | 25,889 | 3,342,863 | ||||||||||||
| ||||||||||||||||
J.M. Whitehurst | 0 | 0 | 147,091 | 17,819,509 | ||||||||||||
| ||||||||||||||||
J.E. Kelly III | 0 | 0 | 29,518 | 3,818,651 | ||||||||||||
| ||||||||||||||||
M.H. Browdy | 0 | 0 | 19,570 | 2,530,983 | ||||||||||||
|
|
| | | | Option Awards | | | Stock Awards(1) | | ||||||||||||||||||
| Name (a) | | | Number of Shares Acquired on Exercise (#) (b) | | | Value Realized on Exercise ($) (c) | | | Number of Shares Acquired on Vesting (#) (d) | | | Value Realized on Vesting ($) (e) | | ||||||||||||
| A. Krishna | | | | | 0 | | | | | $ | 0 | | | | | | 151,030 | | | | | $ | 20,242,361 | | |
| J.J. Kavanaugh | | | | | 0 | | | | | | 0 | | | | | | 32,036 | | | | | | 4,496,542 | | |
| G. Cohn | | | | | 0 | | | | | | 0 | | | | | | 37,676 | | | | | | 4,993,179 | | |
| T. Rosamilia | | | | | 0 | | | | | | 0 | | | | | | 31,430 | | | | | | 4,406,151 | | |
| M.H. Browdy | | | | | 0 | | | | | | 0 | | | | | | 23,011 | | | | | | 3,223,290 | | |
Because its original purpose had been met, the
Paymentsdate, and payments accrue based on age and service and are typically payable only after age 60, as a way to encourage senior leaders to continue working for IBM past the age when many others at IBM choose to retire.
Even though the Retention Plan provides for the payment of specified benefits after retirement, given the nature of this program as a retention vehicle, the
Plan.
|
|
|
| ||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||
|
|
Present Value of Accumulated Benefit
2021 |
2020 RETENTION PLAN TABLE
Name (a) | Plan Name (b) | | Number of Years Credited Service (#) (c) |
(1)
| | Present Value of Accumulated Benefit ($) (d) |
(2)
| | Payments During Last Fiscal Year ($) (e) |
| ||||
V.M. Rometty | Retention Plan | 26 | $1,750,517 | $0 | ||||||||||
J.J. Kavanaugh | Retention Plan | 12 | 327,190 | 0 | ||||||||||
J.E. Kelly III | Retention Plan | 27 | 9,205,327 | 0 |
|
(1) Reflects years of credited service as of December 31, 2007, which was the date accruals under the Retention Plan stopped. Each of the eligible named executive officers in this table has 14 additional years of service with IBM after that date. (2) While the accruals under the Retention Plan stopped on December 31, 2007, the value of the Retention Plan benefit for the eligible named executive officers will continue to change based on their ages, the assumptions used to calculate the present value of the accumulated benefit, and the benefit that would be provided |
Assumptions to determine present value for each eligible named executive officer, as of December 31, 2020:
|
|
|
|
|
Assumptions“Assumptions used to determine present value as of December 31, 2019:
|
|
2021 |
Material Terms and Conditions: Pension Credit Formula under the Qualified Plan
|
|
|
|
Compensation Elements Included in Calculations
|
|
|
Pension Credit Formula
Personal Pension Account
Maximum Lump Sum | ||||||||||
Name | Qualified Plan | Nonqualified Plan | Total Available Lump Sum | |||||||
A. Krishna | $ | 258,008 | $ | 81,934 | $ 339,942 | |||||
V.M. Rometty | 652,731 | N/A | 652,731 | |||||||
J.J. Kavanaugh | 175,478 | 75,930 | 251,408 | |||||||
J.E. Kelly III | 678,225 | 1,076,841 | 1,755,066 |
| Name | | | Maximum Lump Sum | | |||||||||||||||
| Qualified Plan | | | Nonqualified Plan | | | Total Available Lump Sum | | ||||||||||||
| A. Krishna | | | | $ | 262,694 | | | | | $ | 82,835 | | | | | $ | 345,529 | | |
| J.J. Kavanaugh | | | | | 177,408 | | | | | | 76,765 | | | | | | 254,173 | | |
| T. Rosamilia | | | | | 467,847 | | | | | | 146,543 | | | | | | 614,390 | | |
|
Annual Pension Benefit at Normal Retirement Age | ||||||||||
Name | Qualified Plan | Nonqualified Plan | Total Benefit | |||||||
A. Krishna | $ | 20,769 | N/A | $ 20,769 | ||||||
V.M. Rometty | 81,365 | $ | 340,058 | 421,423 | ||||||
J.J. Kavanaugh | 12,351 | N/A | 12,351 | |||||||
J.E. Kelly III | 45,165 | N/A | 45,165 |
| Name | | | Annual Pension Benefit at Normal Retirement Age | | |||||||||||||||
| Qualified Plan | | | Nonqualified Plan | | | Total Benefit | | ||||||||||||
| A. Krishna | | | | $ | 20,769 | | | | | | N/A | | | | | $ | 20,769 | | |
| J.J. Kavanaugh | | | | | 12,546 | | | | | | N/A | | | | | | 12,546 | | |
| T. Rosamilia | | | | | 34,552 | | | | | | N/A | | | | | | 34,552 | | |
Name (a) | Plan Name (b) | Number of Years Credited Service(1) (#) (c) | Present Value of Accumulated Benefit(2) ($) (d) | Payments During Last Fiscal Year ($) (e) | ||||||||
A. Krishna | Qualified Plan | 17 | $289,653 | $0 | ||||||||
Nonqualified Plan | 76,025 | 0 | ||||||||||
Total Benefit | $365,678 | $0 | ||||||||||
V.M. Rometty | Qualified Plan | 26 | 1,504,329 | $0 | ||||||||
Nonqualified Plan | 6,287,173 | 0 | ||||||||||
Total Benefit | 7,791,502 | $0 | ||||||||||
J.J. Kavanaugh | Qualified Plan | 12 | 158,880 | $0 | ||||||||
Nonqualified Plan | 67,651 | 0 | ||||||||||
Total Benefit | 226,531 | $0 | ||||||||||
J.E. Kelly III | Qualified Plan | 27 | 700,948 | $0 | ||||||||
Nonqualified Plan | 1,076,841 | 0 | ||||||||||
Total Benefit | 1,777,789 | $0 |
|
|
| | | | | | | Number of Years | | | Present Value of | | | Payments During | | ||||||
| | | | | | | Credited Service | (1) | | Accumulated Benefit | (2) | | Last Fiscal Year | | ||||||
| Name (a) | | | Plan Name (b) | | | (#) (c) | | | ($) (d) | | | ($) (e) | | ||||||
| A. Krishna | | | Qualified Plan | | | | | 17 | | | | $283,895 | | | | $ | 0 | | |
| | | | Nonqualified Plan | | | | | | | | | 75,922 | | | | | 0 | | |
| | | | Total Benefit | | | | | | | | | $359,817 | | | | $ | 0 | | |
| J.J. Kavanaugh | | | Qualified Plan | | | | | 12 | | | | $155,881 | | | | $ | 0 | | |
| | | | Nonqualified Plan | | | | | | | | | 66,578 | | | | | 0 | | |
| | | | Total Benefit | | | | | | | | | $222,459 | | | | $ | 0 | | |
| T. Rosamilia | | | Qualified Plan | | | | | 25 | | | | $499,374 | | | | $ | 0 | | |
| | | | Nonqualified Plan | | | | | | | | | 137,990 | | | | | 0 | | |
| | | | Total Benefit | | | | | | | | | $637,364 | | | | $ | 0 | | |
|
|
|
|
|
|
|
|
|
2022 Notice of Annual Meeting & Proxy Statement | 2021 Pension Benefits Narrative 59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— Target Retirement 2020 Fund (7.62%) — Target Retirement 2025 Fund (9.64%) — Target Retirement 2030 Fund (11.75%) — Target Retirement 2035 Fund (13.76%) — Target Retirement 2040 Fund (15.79%) — Target Retirement 2045 Fund (17.05%) — Target Retirement 2050 Fund (17.20%) — Target Retirement 2055 Fund (17.23%) — Target Retirement 2060 Fund (17.23%) — Target Retirement 2065 Fund (17.28%) — Income Plus Fund (6.07%) — Conservative Fund (8.98%) — Moderate Fund (12.13%) — Aggressive Fund (16.58%) — Interest Income Fund (2.21%) — Inflation Protected Bond Fund (5.88%) — Total Bond Market Fund (-1.69%) — High Yield & Emerging Markets Bond Fund (-.35%) — Total Stock Market Index Fund (25.66%) — Total International Stock Market Index Fund (8.52%) — Global Real Estate Stock Index Fund (29.51%) — Long-Term Corporate Bond Fund (-1.18%) — Large Company Index Fund (28.69%) — Large-Cap Value Index Fund (25.16%) — Large-Cap Growth Index Fund (27.58%) — Small/Mid-Cap Stock Index Fund (12.83%) — Small-Cap Value Index Fund (28.28%) — Small-Cap Growth Index Fund (2.90%) — European Stock Index Fund (16.63%) — Pacific Stock Index Fund (2.85%) — Emerging Markets Stock Index Fund (.93%) — Real Estate Investment Trust Index Fund (43.66%) — International Real Estate Index Fund (10.54%) — IBM Stock Fund (16.63%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
2020622022 Notice of Annual Meeting & Proxy Statement | 2021 Nonqualified Deferred Compensation Narrative
Name (a) | Plan | | Executive Contributions in Last FY ($) (b) |
(1)
| | Registrant Contributions in Last FY ($) (c) |
(2)
| | Aggregate Earnings in Last FY ($) (d) |
(3)
| | Aggregate Withdrawal/ Distributions ($) (e) |
| | Aggregate Balance at Last FYE ($) (f) |
(4)
| ||||||||||
A. Krishna | Basic Account |
| $151,271 |
|
| Match |
|
| $151,271 |
| $ | (264,353 | ) |
| $0 |
| $ | 5,176,894 |
| |||||||
| Automatic |
|
| 50,424 |
| |||||||||||||||||||||
Deferred IBM Shares |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
| |||||||||||
Total |
| $151,271 |
|
| $201,695 |
| $ | (264,353 | ) |
| $0 |
| $ | 5,176,894 |
| |||||||||||
V.M. Rometty | Basic Account |
| $378,900 |
|
| Match |
|
| $378,900 |
| $ | 965,856 |
|
| $0 |
| $ | 18,509,083 |
| |||||||
| Automatic |
|
| 252,600 |
| |||||||||||||||||||||
Deferred IBM Shares |
| 0 |
|
| 0 |
|
| (227,697 | ) |
| 0 |
|
| 3,512,556 |
| |||||||||||
Total |
| $378,900 |
|
| $631,500 |
| $ | 738,159 |
|
| $0 |
| $ | 22,021,639 |
| |||||||||||
J.J. Kavanaugh | Basic Account |
| $179,800 |
|
| Match |
|
| $100,680 |
| $ | 808,744 |
|
| $0 |
| $ | 5,466,727 |
| |||||||
| Automatic |
|
| 33,560 |
| |||||||||||||||||||||
Deferred IBM Shares |
| 0 |
|
| 0 |
|
| (1,216 | ) |
| 0 |
|
| 18,756 |
| |||||||||||
Total |
| $179,800 |
|
| $134,240 |
| $ | 807,528 |
|
| $0 |
| $ | 5,485,483 |
| |||||||||||
J.M. Whitehurst | Basic Account |
| $469,546 |
|
| Match |
|
| $44,443 |
| $ | 98,862 |
|
| $0 |
| $ | 621,739 |
| |||||||
| Automatic |
|
| 8,889 |
| |||||||||||||||||||||
Deferred IBM Shares |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
| |||||||||||
Total |
| $469,546 |
|
| $53,332 |
| $ | 98,862 |
|
| $0 |
| $ | 621,739 |
| |||||||||||
J.E. Kelly III | Basic Account |
| $113,100 |
|
| Match |
|
| $77,172 |
| $ | 516,887 |
|
| $0 |
| $ | 15,372,692 |
| |||||||
| Automatic |
|
| 25,724 |
| |||||||||||||||||||||
Deferred IBM Shares |
| 0 |
|
| 0 |
|
| (26,438 | ) |
| 0 |
|
| 407,851 |
| |||||||||||
Total |
| $113,100 |
|
| $102,896 |
| $ | 490,449 |
|
| $0 |
| $ | 15,780,543 |
| |||||||||||
M.H. Browdy | Basic Account |
| $76,365 |
|
| Match |
|
| $76,365 |
| $ | 18,669 |
|
| $0 |
| $ | 1,501,713 |
| |||||||
| Automatic |
|
| 15,273 |
| |||||||||||||||||||||
Deferred IBM Shares |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
| |||||||||||
Total |
| $76,365 |
|
| $91,638 |
| $ | 18,669 |
|
| $0 |
| $ | 1,501,713 |
|
|
|
|
|
| | | | | | | Executive Contributions | | | | | | Registrant Contributions | | | Aggregate Earnings in | | | Aggregate Withdrawal/ | | | Aggregate Balance at | | |||||||||||||||
| | | | | | | in Last FY | (1) | | | | | in Last FY | (2) | | Last FY | (3) | | Distributions | | | Last FYE | (4) | |||||||||||||||
| Name (a) | | | Plan | | | ($) (b) | | | | | | ($) (c) | | | ($) (d) | | | ($) (e) | | | ($) (f) | | |||||||||||||||
| A. Krishna | | | Basic Account | | | | $ | 203,460 | | | | Match | | | | $ | 203,460 | | | | | $ | 525,047 | | | | | $ | 0 | | | | | $ | 6,176,682 | | |
| | | | | | | | | | | | | Automatic | | | | | 67,820 | | | | | | | | | | | | | | | | | | | | |
| | | | Deferred IBM Shares | | | | | 0 | | | | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| | | | Total | | | | $ | 203,460 | | | | | | | | $ | 271,280 | | | | | $ | 525,047 | | | | | $ | 0 | | | | | $ | 6,176,682 | | |
| J.J. Kavanaugh | | | Basic Account | | | | $ | 242,000 | | | | Match | | | | $ | 111,258 | | | | | $ | 1,049,138 | | | | | $ | 0 | | | | | $ | 6,906,210 | | |
| | | | | | | | | | | | | Automatic | | | | | 37,086 | | | | | | | | | | | | | | | | | | | | |
| | | | Deferred IBM Shares | | | | | 0 | | | | | | | | | 0 | | | | | | 1,159 | | | | | | 0 | | | | | | 19,915 | | |
| | | | Total | | | | $ | 242,000 | | | | | | | | $ | 148,344 | | | | | $ | 1,050,297 | | | | | $ | 0 | | | | | $ | 6,926,125 | | |
| G. Cohn | | | Basic Account | | | | $ | 0 | | | | Match | | | | $ | 0 | | | | | $ | (8) | | | | | $ | 0 | | | | | $ | 480 | | |
| | | | | | | | | | | | | Automatic | | | | | 488 | | | | | | | | | | | | | | | | | | | | |
| | | | Deferred IBM Shares | | | | | 0 | | | | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| | | | Total | | | | $ | 0 | | | | | | | | $ | 488 | | | | | $ | (8) | | | | | $ | 0 | | | | | $ | 480 | | |
| T. Rosamilia | | | Basic Account | | | | $ | 92,880 | | | | Match | | | | $ | 92,880 | | | | | $ | 483,034 | | | | | $ | 0 | | | | | $ | 4,296,187 | | ��� |
| | | | | | | | | | | | | Automatic | | | | | 30,960 | | | | | | | | | | | | | | | | | | | | |
| | | | Deferred IBM Shares | | | | | 0 | | | | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| | | | Total | | | | $ | 92,880 | | | | | | | | $ | 123,840 | | | | | $ | 483,034 | | | | | $ | 0 | | | | | $ | 4,296,187 | | |
| M.H. Browdy | | | Basic Account | | | | $ | 85,676 | | | | Match | | | | $ | 85,676 | | | | | $ | 104,557 | | | | | $ | 0 | | | | | $ | 1,794,757 | | |
| | | | | | | | | | | | | Automatic | | | | | 17,135 | | | | | | | | | | | | | | | | | | | | |
| | | | Deferred IBM Shares | | | | | 0 | | | | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| | | | Total | | | | $ | 85,676 | | | | | | | | $ | 102,811 | | | | | $ | 104,557 | | | | | $ | 0 | | | | | $ | 1,794,757 | | |
officer
paid as an annuity, not a lump sum. Therefore, a total column would not provide any meaningful disclosure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Retention Award for Mr. Whitehurst
IBM Supplemental Executive Retention Plan (Retention Plan)
|
|
|
|
|
|
|
|
|
|
|
|
Arrangements for Dr. Kelly - Consulting Agreement
20202021 POTENTIAL PAYMENTS UPON TERMINATION TABLE
LTPP
| Nonqualified Deferred Compensation Excess 401(k)(6)
| |||||||||||||||||||||||||||||
Name | Termination Scenario | | Annual Incentive Program ($) | (2)
| | Stock Options ($) | (3)
| | Stock Awards ($) | (4)
| | Retention Plan ($) | (5)
| | Basic Account ($) |
| | Deferred IBM Shares ($) |
| | Other Retention ($) |
| ||||||||
A. Krishna | Termination(1) |
| $2,181,000 |
|
| $0 |
| $ | 1,996,960 |
|
| N/A |
| $ | 5,176,894 | (7) |
| $ 0 | (7) | |||||||||||
For Cause |
| 0 |
|
| 0 |
|
| 0 |
|
| N/A |
|
| 4,975,199 | (7) |
| 0 | (7) | ||||||||||||
V.M. Rometty | Termination(1) |
| 4,250,000 |
|
| 0 |
|
| 10,754,810 |
|
| 94,681 |
|
| 1,850,908 | (8) |
| 351,256 | (8) | |||||||||||
For Cause |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 1,787,758 | (8) |
| 351,256 | (8) | ||||||||||||
J.J. Kavanaugh | Termination(1) |
| 1,176,300 |
|
| 0 |
|
| 1,906,327 |
|
| 0 |
|
| 5,070,060 | (9) |
| 18,756 | (9) | |||||||||||
For Cause |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 4,935,820 | (9) |
| 18,756 | (9) | ||||||||||||
J.M. Whitehurst | Termination(1) |
| 1,041,250 |
|
| 0 |
|
| 0 |
|
| N/A |
|
| 62,174 | (8) |
| 0 |
|
| 2,000,000 | (12) | ||||||||
For Cause |
| 0 |
|
| 0 |
|
| 0 |
|
| N/A |
|
| 56,841 | (8) |
| 0 |
|
| 0 | (12) | |||||||||
J.E. Kelly III | Termination(1) |
| 820,400 |
|
| 0 |
|
| 4,670,148 |
|
| 583,528 |
|
| 5,879,793 | (10) |
| 407,851 | (10) | |||||||||||
For Cause |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 5,869,503 | (10) |
| 407,851 | (10) | ||||||||||||
M.H. Browdy | Termination(1) |
| 1,109,520 |
|
| 0 |
|
| 1,379,771 |
|
| N/A |
|
| 1,501,713 | (11) |
| 0 |
| |||||||||||
For Cause |
| 0 |
|
| 0 |
|
| 0 |
|
| N/A |
|
| 1,410,075 | (11) |
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | LTPP | | | | | | | | | Nonqualified Deferred Compensation Excess 401(k)(6) | | |||||||||||||||
| | | | | | | Annual Incentive | | | Stock | | | Stock | | | Retention | | | Basic | | | Deferred IBM | | |||||||||||||||
| | | | Termination | | | Program | (2) | | Options | (3) | | Awards | (4) | | Plan | (5) | | Account | | | Shares | | |||||||||||||||
| Name | | | Scenario | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | |||||||||||||||
| A. Krishna | | | Termination(1) | | | | $ | 2,940,000 | | | | $0 | | | | $ | 14,317,392 | | | | | | N/A | | | | | $ | 6,176,682(7) | | | | | $ | 0(7) | | |
| | | | For Cause | | | | | 0 | | | | 0 | | | | | 0 | | | | | | N/A | | | | | | 5,905,402(7) | | | | | | 0(7) | | |
| J.J. Kavanaugh | | | Termination(1) | | | | | 1,437,700 | | | | 0 | | | | | 6,108,797 | | | | | | 14,678 | | | | | | 6,446,735(8) | | | | | | 19,915(8) | | |
| | | | For Cause | | | | | 0 | | | | 0 | | | | | 0 | | | | | | 0 | | | | | | 6,298,390(8) | | | | | | 19,915(8) | | |
| G. Cohn | | | Termination(1) | | | | | 1,548,400 | | | | 0 | | | | | 535,175 | | | | | | N/A | | | | | | 488(9) | | | | | | 0 | | |
| | | | For Cause | | | | | 0 | | | | 0 | | | | | 0 | | | | | | N/A | | | | | | 0(9) | | | | | | 0 | | |
| T. Rosamilia | | | Termination(1) | | | | | 1,064,000 | | | | 0 | | | | | 5,612,517 | | | | | | 87,795 | | | | | | 4,296,187(10) | | | | | | 0 | | |
| | | | For Cause | | | | | 0 | | | | 0 | | | | | 0 | | | | | | 0 | | | | | | 4,172,347(10) | | | | | | 0 | | |
| M.H. Browdy | | | Termination(1) | | | | | 1,266,300 | | | | 0 | | | | | 4,126,084 | | | | | | N/A | | | | | | 1,794,757(11) | | | | | | 0 | | |
| | | | For Cause | | | | | 0 | | | | 0 | | | | | 0 | | | | | | N/A | | | | | | 1,691,946(11) | | | | | | 0 | | |
|
|
|
1. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal accounting controls. The Audit Committee, in its oversight role, has reviewed and discussed the audited financial statements with IBM’s management. 2. The Audit Committee has discussed with IBM’s internal auditors and IBM’s independent registered public accounting firm the overall scope of, and plans for, their respective audits. The Audit Committee has met with the internal auditors and independent registered public accounting firm, separately and together, with and without management present, to discuss IBM’s financial reporting process and internal accounting controls in addition to other matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB). 3. The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP (PwC) required by applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence. 4. The Audit Committee has an established charter outlining the practices it follows. The charter is available on IBM’s website at http://www.ibm.com/investor/att/pdf/auditcomcharter.pdf. 5. IBM’s Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, IBM’s independent registered public accounting firm. At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type, and scope of service contemplated and the related fees, to be rendered by the firm during the year. In addition, pursuant to authority delegated by the Audit Committee, the Audit Committee chair may approve engagements that are outside the scope of the services and fees approved by the Audit Committee, which are later presented to the Committee. For each category of proposed service, the independent registered public accounting firm is required to confirm that the provision of such services does not impair its independence. Pursuant to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted in the table below were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described herein. 6. Based on the review and discussions referred to in paragraphs (1) through (5) above, the Audit Committee recommended to the Board of Directors of IBM, and the Board has approved, that the audited financial statements be included in IBM’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the Securities and Exchange Commission. P.R. Voser (chair) |
|
|
M.L. Eskew (chair)
D.N. Farr
P.R. Voser
(Dollars in millions) | 2020 | 2019 | ||||||
Audit Fees | $ | 52.6 |
| $ | 54.7 |
| ||
Audit Related Fees |
| 43.1 |
|
| 30.8 |
| ||
Tax Fees |
| 2.5 |
|
| 2.1 |
| ||
All Other Fees |
| 0.6 |
|
| 0.4 |
| ||
Total | $ | 98.8 |
| $ | 88.0 |
|
| (Dollars in millions) | | | 2021 | | | 2020 | | ||||||
| Audit Fees | | | | $ | 53.7 | | | | | $ | 52.8 | | |
| Audit Related Fees | | | | | 48.8 | | | | | | 42.6 | | |
| Tax Fees | | | | | 1.2 | | | | | | 1.3 | | |
| All Other Fees | | | | | 0.7 | | | | | | 0.5 | | |
| Total | | | | $ | 104.4 | | | | | $ | 97.2 | | |
$12$10 million associated with the spin-off of IBM’s managed infrastructure services business. For 2019, these services included approximately $22 million for independent assessments for service organization control reports.
2022 Notice of Annual Meeting & Proxy Statement | Audit and Non-Audit Fees69
| |||
| |
| |
702022 Notice of Annual Meeting & Proxy Statement | 2. Ratification of Appointment of Independent Registered Public Accounting Firm
In a challenging 2020 environment,
In October 2020, IBM announced to investors the planned spin-off of IBM’s managed infrastructure services business, which will immediately be the market leader at twice the size of its nearest competitor. The pending spin-off will enable IBM to focus on delivering sustainable revenue growth as aits hybrid cloud and AI Company.
growth strategy. Revenue growth at constant currency
(2) accelerated in 2021, exiting the 4th quarter at 8.6% including approximately 3.5 points from incremental external sales to Kyndryl. Hybrid Cloud Revenue grew 19% at constant currency,(2) and now makes up 35% of IBM revenue. The company also returned $6B to stockholders through dividends, and reduced debt $10B in 2021 ($21B since acquiring Red Hat).growth.
no one-time awards were provided to any named executive officers in 2021.
In addition, theThe Company’s performance metrics for thethat were revamped in 2021 Annual Incentive Program and the 2021-2023 Performance Share Unit program have been revamped to reinforce the strategic focus on sustainable revenue growth and strong cash generation were maintained for the 2022 Annual Incentive Program and the 2022-2024
portion of their equity does not generate value unless IBM’s stock price increases.
year of significant change.
|
| |||
|
| |
2022 Notice of Annual Meeting & Proxy Statement | 3. Management Proposal on Advisory Vote on Executive Compensation (Say on Pay) 71
on Stockholder Special Meeting Right
| YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |
| The Board believes that the adoption of this proposal is unnecessary because of its existing special meeting by-law provision. The current provision, which allows stockholders owning at least 25% of IBM’s shares to call a special meeting, can be found in Article II, Section 3 of IBM’s by-laws at https://www.ibm.com/investor/att/pdf/IBM_Bylaws.pdf. | |
| The current 25% threshold is consistent with market practice and already accurately reflects the preference of IBM’s stockholders. At IBM’s 2010, 2017 and 2018 Annual Meetings, the same proponent presented this same proposal seeking to lower the 25% threshold to 10%. On each occasion, a majority of the votes cast voted against lowering the threshold, clearly demonstrating the stockholders’ support for the 25% threshold. | |
| The Board believes that maintaining the 25% ownership threshold strikes an appropriate balance between allowing shareholders the right to call a special meeting and avoiding unnecessary financial burdens and corporate disruptions associated with a minority of shareholders calling a special meeting. Lowering the threshold to 10% would allow special interest groups with small minority ownership interests to potentially cause disruption and substantial costs to be incurred by the other 90% of stockholders. Reducing the ownership threshold to 10% could enable a small minority of shareholders (currently, as few as two) to call a special meeting at any time on any topic, constrained by no fiduciary obligations. IBM’s current 25% threshold helps to ensure that any special meeting will be in the interests of more than just a few stockholders. Further, a lower threshold is not necessary in light of IBM’s history of strong governance practices and shareholder rights, including its independent Lead Director and existing procedures giving stockholders the ability to communicate with the Board. | |
| Therefore, the Board believes that the proponent’s proposal is counterproductive to IBM’s already well-respected corporate governance practices. Additionally, this same proposal has already been reviewed and rejected by a majority of the votes cast at three prior annual meetings. As IBM has an existing by-law permitting stockholders to call special meetings, and this same proposal to lower the threshold failed to receive majority support each time it has been presented, the Board believes that this proposal is unnecessary. | |
| THEREFORE, THE IBM BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |
Ifof Directors is to provide independent oversight of management and the CEO.
This proposal topic won impressive 40%-support at the 2019 IBM annual meeting even though it was not a fair election. IBM management put is hand on the scale and spent shareholder money on advertisements to oppose this proposal topic. For a fair election shareholders would have had to take money from their own pockets to match the money IBM took from shareholders to advertise for the management position.
Support for proposals to appointcan only occur with an independent Board chair received 17% higher support at U.S. companies in 2020. Since management performance setbacks often result in higher supportChairman. A lead director is no substitute for this proposal topic, the mere submission of this proposal may be an incentive for the Chairman of the Board to perform better leading up to the 2021 annual meeting.
It is also important to have an independent board chairmanchairman. A lead director cannot call a special shareholder meeting and cannot even call a special meeting of the board.
With tightly controlled online shareholder meetings everything is optional. For instance company status reporting is optional. Also answers to questions are optional even if management misleadingly asks for questions to be typed on a computer screen.
Goodyear management even hit the mute button right in the middle of a formal shareholder proposal presentation at its 2020 shareholder meeting to bar constructive criticism.
Plus AT&T management would not even allow the proponents of shareholder proposals to read their proposals by telephone at the 2020 AT&T onlineLowe’s annual meeting duringproxy said Lowe’s independent directors determined that having a separate Chairman and Chief Executive Officers affords the pandemic.
Please see: AT&T investors deniedCEO the opportunity to focus his time and energy on managing the business and allows the Chairman to devote his time and attention to Board oversight and governance.
https://whbl.com/2020/04/17/att-investors-denied-a-dial-in-as-annual-meeting-goes-online/1007928/
Online shareholder meetings also give management a blank checkhole compared to make false statements. For instance management at scores of 2020 online annual meetings falsely stated that there were no more shareholder questions. Shareholders were powerless to point out that their questions were not answered.
Please see: Scwartz-Ziv, Miriam, How Shifting from In-Person to Virtual Shareholder Meetings Affects Shareholders’ Voice (August 16, 2020)
Available at SSRN: https://ssrn.com/abstract=367998 or http://dx.doi.org/10.2139/ssrn.3674998
its $180 price in 2017.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTEAGAINSTTHIS PROPOSAL. | | |
| The Board’s flexibility to determine the appropriate Board leadership structure is essential. | |
| One of the most important tasks undertaken by a board is to select the leadership of the board and the company. In order to execute this critical function most effectively and in the best interests of the stockholders, a board must maintain the flexibility to determine the appropriate leadership in light of the circumstances at a given time. Because one size does not fit all situations, your Board has altered its structure at various times in response to the particular circumstances at that time. For example, | |
| The Company’s Lead Director role is robust and | |
| An essential part of
position. The Company’s Lead Director role is robust and ensures effective independent oversight at all times. After a rigorous review by the Directors and Corporate Governance Committee and the Board, the Lead Director is elected by the independent members of the Board on an annual basis. The Lead Director has the following robust and meaningful responsibilities serving to ensure a strong, independent, and active Board by enhancing the contributions of IBM’s independent directors. In particular, the Lead Director: • presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, which are held at every meeting of the Board; • serves as liaison between the Chairman and the independent directors; • approves information sent to the Board; • in collaboration with the Chairman, creates and approves meeting agendas for the Board; • approves meeting schedules to assure that there is sufficient time for discussion of all agenda items; • has authority to call meetings of the independent directors; and • if requested by major stockholders, ensures that he or she is available, as necessary after discussions with the Chairman, for consultation and direct communication. | |
| In addition to these core responsibilities, the Lead Director engages in other regular activities including: • one-on-one debriefs with the Chairman after each meeting; • spending time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of the Company; and • occasionally attending | |
| IBM’s current leadership structure is optimal for the Company at this time. | |
| The Directors and Corporate Governance Committee and the Board continuously evaluate the appropriate leadership structure for IBM. After its most recent review, in consideration of the strength of its independent Board and corporate governance practices, the full Board has determined that the existing board leadership structure of having a management director serve as Chairman, alongside a robust and independent Lead Director, best serves the needs of the Company and the stockholders at this time. Among other • the importance of consistent, unified leadership to execute and oversee the • the strength of Mr. Krishna’s vision for the Company and the quality of his leadership; • the strong and highly independent composition of the Board; • the views and feedback heard from our investors through our ongoing engagement program throughout the years expressing support for IBM’s leadership structure; and • the meaningful and robust responsibilities of the independent Lead Director, as discussed above. | |
| The Board strongly believes that this current structure strikes the right balance of allowing our Chairman to promote a clear, unified vision for the Company’s strategy and to provide the leadership critical for effectively and efficiently implementing the actions needed to ensure strong performance over the long term, while ensuring robust, independent oversight by the Board and Lead Director. | |
| IBM’s strong, independent Board and commitment to good corporate governance adds further support to the Board leadership structure. | |
| Continued enhancement of the Lead Director position is just one example of IBM’s ongoing commitment to strong corporate governance. Independent directors comprise roughly 90% of the Board and 100% of the Audit, Directors and Corporate Governance, and Executive Compensation and Management Resources Committees. After each regularly scheduled Board meeting, both the full Board and the independent directors of the Board meet in executive session, with the independent directors’ session chaired by the Lead Director. | |
| In contrast to the exemplary performance and quality of the IBM Board over the years, the proponent provides no evidence demonstrating that the proposal would result in enhanced oversight, let alone increased value for IBM stockholders. Additionally, this proposal has been rejected by a majority of shareholder votes each time it has been voted on by IBM stockholders, most recently last year. In light of this | |
| We believe that stockholders benefit when the Board can select the best candidates to run IBM at a given time. | |
| THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |
762022 Notice of Annual Meeting & Proxy Statement | Stockholder Proposals
Use of Concealment Clauses
Proposal 5 – Shareholder Right
Shareholders requestthe company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts. The report should be prepared at reasonable cost and omit proprietary and personal information.
IBM now requires 40% of sharesworkplace culture post a return to shareholders 60 percent higher than median companies and 200 percent higher than organizations in the bottom quartile.
Our higher 40% threshold for shareholders to call a special meeting is one more reason that we should have the right to act by written consent. Plus our higher 40% threshold has bureaucratic pitfalls that trigger minor shareholder errors that could mean that 60%patchwork of shares would need to ask for a special meeting in order to be sure of obtaining the threshold of 40% of requests without errors.
This proposal topic won 42% support at our 2020 annual meeting in spite of misleading management opposition to it. This was not exactly a fair election because of the misleading IBM management statement nextstate laws related to the 2020 proposal. IBM management said written consent could enable shareholders to initiate written consent without giving notice to all shareholders. To the contrary written consent can be adopted with the safeguard that all shareholders are to be given notice.
In 2020 IBM management said it preferred a special shareholder meeting to written consent. With the widespread use of online shareholder meetings in 2020 shareholders no longer have the right to discuss concerns with other shareholdersconcealment clauses and with the directors at a special shareholder meeting which can now be a stilted formalities online meeting.
Shareholders are also severely restricted in making their views known at an online special shareholder meeting becausemay benefit from consistent practices across all their questionsemployees and comments can be arbitrarily screened out. For instance Goodyear management became a leader in this shareholder disenfranchisement by hitting the mute button right in the middlecontractors
Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director.
This is important to consider after our Lead Director, Michael Eskew, receive the highest negative votes of any director in 2019 and 2020 – 92 million negative votes. With long-tenure of 15-years Mr. Eskew can hardly be considered impendent. Shirley Jackson, who received the second highest negative votes in 2019 is no longer on the Board. IBM stock has fallen from $210 since 2013.
Please vote yes:
Right to Act by Written Consent – Proposal 5
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | | |
| IBM has been a leader in corporate diversity and inclusion for decades and is deeply committed to fostering a healthy, safe, and productive work environment for all IBMers. We do not believe this proposal is necessary for the reasons stated below. | |
| IBM DOES NOT PREVENT EMPLOYEES FROM DISCUSSING THE TERMS AND CONDITIONS OF THEIR EMPLOYMENT AND DOES NOT REQUIRE EMPLOYEES TO AGREE TO ARBITRATION AS A CONDITION OF EMPLOYMENT | |
| IBM does not require employees to sign any documents agreeing to arbitration as a condition of | |
| IBM also does not preclude employees from discussing the terms and conditions of their employment. While IBM does require its employees to enter into a confidentiality agreement to protect its proprietary and confidential information and intellectual property, this agreement does not prevent employees from discussing their own experiences with non-inclusive behavior. | |
| Where mutually agreed by | |
| IBM DOES NOT TOLERATE DISCRIMINATION OR HARASSMENT AND HAS IN PLACE CLEAR POLICIES, PROCEDURES AND PRACTICES TO PROTECT AND SUPPORT THE IBMER | |
| Safe and Productive Work Environment | |
| IBM’s Business Conduct Guidelines, which apply to all | |
| Global Mandatory Training | |
| On an annual basis, IBM conducts global mandatory trainings on the Business Conduct Guidelines, sexual harassment, and bullying prevention. IBM has also significantly bolstered employee education programs that strengthen IBMer advocacy for women and minorities by addressing sexism, racism, bias mitigation, allyship, covering, leading with inclusivity, and other related topics. These offerings are regularly refreshed. | |
| Communication Channels and Resources | |
| IBM provides several communication channels for employees to express concerns regarding non-inclusive behaviors (such as bullying, harassment, or discrimination). An employee is free to choose the communication channel that works best for them — their manager, senior management, human resources, or they can utilize IBM’s Open-Door policy, the Talk It Over@IBM team, or Employee Concerns. Employees are also able to report their complaints externally to the U.S. Equal Employment Opportunity Commission or other state agencies. IBM also uses a companywide instant messaging system, with several channels dedicated to diversity, inclusion, and workplace culture to facilitate communications. The goal of these channels is to foster engagement and encourage reporting of concern over non-inclusive behaviors. | |
| IBM promptly and thoroughly reviews reports of non-inclusive behavior and will not | |
| THE BOARD AND ITS COMMITTEES MAINTAIN STRONG OVERSIGHT OF IBM’S CULTURE AND WORK ENVIRONMENT | |
| IBM’s Audit Committee oversees implementation of and compliance with the | |
| CONCLUSION | |
| IBM does not tolerate discrimination or harassment. Given the strength of IBM’s culture, policies, practices, and
| |
| THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. |
6. Stockholder Proposal Requesting the Company Publish Annually a Report Assessing its Diversity, Equity and Inclusion Efforts
Management has been advised that Nia Impact Capital, 1212 Preservation Parkway, Suite 200, Oakland, CA 94612, the owner of at least 11,508 shares of IBM stock, intends to submit the following proposal at the meeting:
Resolved:
Shareholders request International Business Machines Corporation (“IBM”) publish annually a report assessing IBM’s diversity, equity and inclusion efforts, at reasonable expense and excluding proprietary information. The report should include:
Whereas:
Investors seek quantitative, comparable data to understand the effectiveness of IBM’s diversity, equity and inclusion efforts.
Numerous studies have pointed to the corporate benefits of a diverse workforce. These include:
Yet, significant barriers exist for diverse employees advancing within their careers. Women enter the workforce in almost equal numbers as men (48%). However, the only comprise 22% of the executive suite. Similarly, people of color comprise 33% of entry level workers, yet only 13% of the c-suite.3
IBM’s 2019 Corporate Responsibility Report states, “IBM is an innovation company that solves the hardest problems in business and society. This work requires a highly skilled, truly diverse workforce and an inclusive culture that enables people from all backgrounds to thrive.” It also states, “We are committed to continuously and sustainably improving diversity within our global leadership team and at all levels in our organization.” In addition, IBM sells Emb(race) and “Be Equal” merchandise from its website, calling on customers to “proudly promote equality.”
However, IBM has not released meaningful information that allows investors to determine the effectiveness of its workplace diversity programs. Stakeholders may become concerned that IBM’s statements are corporate puffery, language described by the United States Federal Trade Commission as marketing exaggerations intended to “puff up” products and not able to be relied upon by consumers and investors.
Investor desire for information on this issue is significant. As of October 2020, $1.9 trillion in represented assets released an Investor Statement on the importance of increased corporate transparency on workplace equity data. It stated:
It is essential that investors have access to the most up-to-date and accurate information related to its diverse workplace policies, practices and outcomes.4
|
|
|
|
|
|
|
|
1. What is a “stockholder of record”? |
A stockholder of record or registered stockholder (“record owner”) is a stockholder whose ownership of IBM stock is reflected directly on the books and records of our transfer agent, Computershare Trust Company, N.A. If you hold IBM stock through a bank, broker or other intermediary, you are not a stockholder of record. Instead, you hold your stock in “street name,” and the record owner of your shares is usually your bank, broker or other intermediary. If you are not a record owner, please understand that IBM does not know that you are a stockholder, or how many shares you own.
2. I want to attend the 2022 Annual Meeting. What procedures must I follow? |
The Annual Meeting will be conducted virtually. All stockholders will be able to attend the Annual Meeting via webcast by entering the 16-digit control number included on the Notice of Internet Availability of Proxy Materials, on your proxy card, or on the instructions that accompanied your proxy materials at www.virtualshareholdermeeting.com/IBM2021IBM2022 (“Annual Meeting Website”). If you do not have a control number, you will be able to register as a guest; however, you will not be able to vote or submit questions before or during the meeting.
3. What can I do if I need technical assistance during the Annual Meeting? |
If you encounter any difficulties accessing the Annual Meeting webcast, please call the technical support number that will be posted on the Annual Meeting Website log-in page.
4. Are there rules of conduct for the Annual Meeting? |
Yes, the rules of conduct for the Annual Meeting will be available on the Annual Meeting Website on the date of the Annual Meeting. The Rules of Conduct will provide information on regarding the rules and procedures for participating in the Annual Meeting.
5. What is the “record date” for the Annual Meeting? |
February 26, 2021.
25, 2022. 6. Which IBM shares will be entitled to vote at the Annual Meeting? |
IBM’s common stock ($0.20 par value capital stock) is the only class of security entitled to vote at the Annual Meeting. Each record owner and each stockholder who holds stock in street name at the close of business as of the record date is entitled to one vote for each share held at the meeting, or any adjournment or postponement.
7. Which IBM shares are included in the proxy card? |
For record owners:
The proxy card covers the number of shares to be voted in your account as of the record date, including any shares held for participants in the Computershare CIP (the Direct Stock Purchase and Dividend Reinvestment Plan) and the IBM Employees Stock Purchase Plans.For holders in street name:You will receive a voting instruction form directly from your bank, broker or other intermediary containing instructions on how you can direct your record holder to vote your shares. Contact your bank, broker or other intermediary if you have any questions regarding your IBM stock holdings as of the record date.
8. May I vote my shares in person at the Annual Meeting? |
Yes. However, we encourage you to vote by proxy card, the Internet or by telephone even if you plan to attend the meeting. To vote during the Annual Meeting, log into the Annual Meeting Website with your 16-digit control number (found on your Notice of Internet Availability of Proxy Materials, your proxy card, or your instructions that accompanied your proxy materials).
9. Can I vote my shares without attending the Annual Meeting? |
Yes. Whether or not you attend the meeting, we encourage you to vote your shares promptly.
intermediary, following the specific instructions that have been provided to you by your bank, broker or other intermediary.
10. May I change or revoke my proxy? |
For record owners:Yes. A proxy may be revoked at any time prior to the voting at the meeting by submitting a later-dated proxy (including a proxy via the Internet or by telephone) or by giving timely written notice of revocation to the Secretary of IBM.
11. How can I contact IBM’s transfer agent? |
Contact our transfer agent either by writing Computershare Trust Company, N.A., P.O. Box 505005, Louisville, KY 40233-5005, or by telephoning 888-IBM-6700 (outside the United States, Canada, and Puerto Rico 781-575-2727).
12. Other than the items in the proxy statement, what other items of business will be addressed at the Annual Meeting? |
Management knows of no other matters that may be properly presented at the meeting. If other proper matters are introduced at the meeting, the individuals named as proxies on the proxy card are also authorized to vote upon those matters utilizing their own discretion.
13. During the question period at the Annual Meeting, what topics will be discussed? |
This part of the meeting is for stockholders to ask questions to the Chairman about Company matters. It is not the appropriate forum to raise personal grievances.
14. How can I ask questions during the Annual Meeting? |
Stockholders of record may submit questions either before (by going to
www.proxyvote.com) or during the meeting (by going to the Annual Meeting Website) and logging in using your 16-digit control number and following the instructions to submit a question. Additionally, each year IBM provides a portal through which stockholders may submit questions in advance of the Annual Meeting. To submit a question via the IBM portal, please15. Who tabulates the votes? |
Votes are counted by employees of Broadridge Corporate Issuer Solutions, Inc., IBM’s tabulator, and certified by the Inspectors of Election (who are employees of First Coast Results, Inc.).
16. I understand that a “quorum” of stockholders is required in order for IBM to transact business at the Annual Meeting. What constitutes a quorum? |
A majority of all “outstanding” shares of common stock having voting power, in person or represented by proxy and entitled to vote, constitutes a quorum for the transaction of business at the meeting.
17. How many shares of IBM stock are “outstanding”? |
As of February 10, 2021,11, 2022, there were 893,594,090899,309,986 shares of common stock outstanding and entitled to be voted.
18. What is the voting requirement for electing IBM’s directors? |
To be elected in an uncontested election, each director must receive a majority of the votes cast. In a contested election, a nominee receiving a plurality of the votes cast at such election shall be elected.
19. What is “broker discretionary voting”? |
This refers to the NYSE rule allowing brokers to vote their customers’ shares on certain “routine” matters in the Proxy Statement at the brokers’ discretion when they have not received timely voting instructions from their customers. The NYSE rules on broker discretionary voting prohibit banks, brokers, and other intermediaries from voting uninstructed shares on certain matters, including the election of directors. Therefore, if you hold your stock in street name and you do not instruct your bank, broker or other intermediary how to vote in the election of directors, no votes will be cast on your behalf. It is important that you cast your vote.
20. Are abstentions and broker non-votes counted as votes cast? |
No. Under the laws of New York State, IBM’s state of incorporation, “votes cast” at a meeting of stockholders by the holders of shares entitled to vote are determinative of the outcome of the matter subject to vote. Abstentions and broker non-votes will not be considered “votes cast” based on current New York State law requirements and IBM’s certificate of incorporation and by-laws.
21. Assuming there is a proper quorum of shares represented at the Annual Meeting, how many shares are required to approve the proposals being voted upon in this proxy statement? |
The table below reflects the vote required in accordance with the laws of New York State:
| Proposal | | | Vote Required | | | Do abstentions count as votes cast? | | | Is broker discretionary voting allowed? | | |
|
| |||||||||||
Election of Directors | | | Majority of votes cast | | | No | | | No | | ||
| ||||||||||||
Ratification of Appointment of | | | Majority of votes cast | | | No | | | Yes | | ||
| ||||||||||||
Management Proposal of Advisory Vote on Executive Compensation* | | | Majority of votes cast | | | No | | | No | | ||
| ||||||||||||
Stockholder Proposals* | | | Majority of votes cast | | | No | | | No | |
|
* Advisory and non-binding 22. Where can I find the voting results of the Annual Meeting? |
IBM intends to publish the final voting results on its website and will disclose the final voting results on a Form 8-K shortly after the Annual Meeting.
are not available for examination. In addition, the identity or the vote of any stockholder is not disclosed except as required by law.
24. I received my proxy materials in hard copy. How may I arrange to receive them electronically? |
To enroll for electronic delivery, go to our Investor Relations website at https://www.ibm.com/investor/help/consent-for-materials-online, and select “Help,” click on “Consent for materials online” and follow the instructions to enroll.
25. How do I submit a proposal for inclusion in IBM’s 2023 proxy material? |
Stockholder proposals may be submitted for IBM’s 20222023 proxy material after the 20212022 Annual Meeting and must be received at our corporate headquarters no later than November 8, 2021.7, 2022. Proposals should be sent via registered, certified or express mail to: Office of the Secretary, International Business Machines Corporation, 1 New Orchard Road, Mail Drop 301, Armonk, NY 10504.
26. How do I submit an item of business for the 2023 Annual Meeting? |
Stockholders who intend to present an item of business at the 20222023 Annual Meeting of Stockholders (other than a proposal submitted for inclusion in IBM’s Proxy Statement), including nominations for election to the Board of Directors pursuant to the Company’s proxy access by-law provision, must provide notice of such business to IBM’s Secretary no earlier than October 9, 20218, 2022 and no later than November 8, 2021,7, 2022, as set forth more fully in, and in compliance with, IBM’s by-laws.
27. I did not receive a copy of the Annual Report. How can I get one? |
Stockholders of record who did not receive an IBM Annual Report or who previously elected not to receive one for a specific account may request that IBM mail its Annual Report to that account by writing to our transfer agent, Computershare Trust Company, N.A. (address and phone number in Question 11 above). If you are not a stockholder of record and did not receive an Annual Report from your bank, broker or other intermediary, you must contact your bank, broker or other intermediary directly.
intermediary, unless one or more of these stockholders notifies
29. If I am a holder in street name, how may I obtain a separate set of proxy materials? |
If you hold shares in street name, your bank, broker or other intermediary may be delivering only one copy of our Proxy Statement and the IBM Annual Report to multiple stockholders of the same household who share the same address, and may continue to do so, unless your bank, broker or other intermediary has received contrary instructions from one or more of the affected stockholders in the household. If you are such a beneficial holder, contact your bank, broker or other intermediary directly in order to receive a separate set of our proxy materials.
30. Members of our household own IBM shares through a number of different brokerage firms. Will we continue to receive multiple sets of materials? |
Yes. If you and others sharing a single address hold IBM shares through multiple brokers, you will continue to receive at least one set of proxy materials from each broker.
31. I received a notice of internet availability of proxy materials. What does this mean? |
Consistent with common practice and in accordance with SEC rules, IBM is distributing proxy materials to some stockholders over the Internet by sending a Notice of Internet Availability of Proxy Materials that explains how to access our proxy materials and vote online. If you received a notice and would like a printed copy of the proxy materials (including the Annual Report, Proxy Statement and a proxy card in the case of record owners, or a voting instruction form in the case of stockholders holding shares in street name), please follow the instructions included in your notice.
32. I previously consented to receive electronic delivery of my proxy materials. Can you send me a hard copy of these proxy materials? |
For record owners:
We will deliver promptly, upon written or oral request, a separate copy of these proxy materials. Contact our transfer agent, Computershare Trust Company, N.A. (address and phone number in Question 11 above).822022 Notice of Annual Meeting & Proxy Statement | Frequently Asked Questions
receivables.
period activity in local currency using the comparable prior year period’s currency conversion rate. This approach is used for countries where the functional currency is the local currency. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.
To provide better transparency on83
Revenue for Red Hat, normalized for historical comparability
On July 9, 2019, the Company completed the acquisition of Red Hat, Inc. (Red Hat)period and began including Red Hat’s financial results in the Company’s consolidated results. As part of the accounting for this acquisition, the Company recorded certain adjustments, including a purchase accounting deferredtherefore is not intended to represent current period revenue fair value adjustment and intercompany eliminations, each of which impact IBM’s post-acquisition revenue. To help investors better understand the underlying performance of Red Hat, management presents a non-GAAP growth rate of Red Hat’s revenue performance year to year, normalized for historical comparability. The normalized (non-GAAP) growth rate of Red Hat’s revenue includes adjustments to reverse the purchase accounting deferred revenue fair value adjustment and adjustments to add back revenue which was eliminated for post-acquisition sales between Red Hat and IBM, and adjustments to reverse the Red Hat standalone pre-acquisition revenue for January 1 – July 8, 2019. The deferred revenue adjustment representsor revenue that would have beenwill be recognized by Red Hat under GAAP if the acquisition had not occurred, but was not recognized by IBM due to purchase accounting. The sales between Red Hat and IBM, which were eliminated post-acquisition, are added back in this presentation to provide a comparative view of Red Hat on a pre-acquisition basis. This information is included to provide additional transparency and for comparative purposes only.
Non-GAAP Operating Margin for Red Hat
Upon close of the Red Hat acquisition, IBM adopted Red Hat’s Annual Cash Bonus Plan for Red Hat’s fiscal year 2020 (i.e, March 1, 2019 to February 29, 2020). The plan uses non-GAAP operating margin as a financial performance metric, adjusting GAAP operating margin for the impact of expenses related to share-based payment arrangements and amortization of intangible assets. Management uses this metrics as a component of internal reporting to evaluate performance of the Red Hat business and therefore believes it demonstrates how efficiently management runs the business and controls costs. As mentioned above, amortization expense related to intangible assets result primarily from business combinations which cannot be changed or influenced by management after the acquisitions. Share-based compensation expense is a non-cash expense, which may vary significantly from period to period as a result of changes which management believes is not directly or immediately related to the particular period’s operational performance. Management also believes that non-GAAP measures of profitability that exclude these expense are used by a number of financial analysts in the software industry to compare current performance to prior periods and to forecast future performance.
Return on Invested Capital (ROIC)periods.
The Company presents a computation of ROIC excluding current period U.S. tax reform charges and goodwill associated with the Red Hat acquisition. Due to the unique, non-recurring nature of the enactment of the U.S. tax reform, the Company characterizes the one-time provisional charge recorded in the fourth quarter of 2017 and adjustments to that charge as non-operating. In addition, due to the significant nature of the Red Hat acquisition and to help investors better understand the underlying performance of the ongoing business, the Company presents a computation of ROIC excluding goodwill associated with the Red Hat acquisition. The goodwill that was generated is primarily attributable to the assembled workforce of Red Hat and the increased synergies expected to be achieved over time from the integration of Red Hat products into the Company’s various integrated solutions.
GAAP Reconciliation
The tables below provide reconciliations of the Company’s income statement results as reported under GAAP to its operating earnings presentation, which is a non-GAAP measure.
($ in millions except per share amount) For the year ended December 31, 2020 | GAAP | | Acquisition- Related | | | Retirement- Related | | | Tax Reform Impacts |
| | Spin-off- Related | | | Operating (Non-GAAP) |
| ||||||||
Gross Profit |
| $35,575 |
|
| $732 |
|
| $— |
|
| $— |
|
| $1 |
|
| $36,308 |
| ||||||
Gross Profit Margin |
| 48.3 | % |
| 1.0 | Pts |
| — | Pts |
| — | Pts |
| 0.0 | Pts |
| 49.3 | % | ||||||
S,G&A |
| $23,082 |
|
| $(1,137) |
|
| — |
|
| — |
|
| (28) |
|
| $21,917 |
| ||||||
R,D&E |
| 6,333 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 6,333 |
| ||||||
Other (Income) & Expense |
| 861 |
|
| (2) |
|
| (1,123) |
|
| — |
|
| — |
|
| (265) |
| ||||||
Interest Expense |
| 1,288 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,288 |
| ||||||
Total Expense & Other (Income) |
| 30,937 |
|
| (1,139) |
|
| (1,123) |
|
| — |
|
| (28) |
|
| 28,648 |
| ||||||
Pre-tax Income from Continuing Operations |
| 4,637 |
|
| 1,871 |
|
| 1,123 |
|
| — |
|
| 28 |
|
| 7,660 |
| ||||||
Pre-tax Income Margin from Continuing Operations |
| 6.3 | % |
| 2.5 | Pts |
| 1.5 | Pts |
| — | Pts |
| 0.0 | Pts |
| 10.4 | % | ||||||
Provision for Income Taxes* |
| $(864) |
|
| $418 |
|
| $215 |
|
| $110 |
|
| 7 |
|
| $(114) |
| ||||||
Effective Tax Rate |
| (18.6) | % |
| 10.0 | Pts |
| 5.5 | Pts |
| 1.4 | Pts |
| 0.2 | Pts |
| (1.5) | % | ||||||
Income from Continuing Operations |
| $5,501 |
|
| $1,454 |
|
| $908 |
|
| $(110) |
|
| 21 |
|
| $7,774 |
| ||||||
Income Margin from Continuing Operations |
| 7.5 | % |
| 2.0 | Pts |
| 1.2 | Pts |
| (0.1) | Pts |
| 0.0 | Pts |
| 10.6 | % | ||||||
Diluted Earnings Per Share: Continuing Operations |
| $6.13 |
|
| $1.63 |
|
| $1.01 |
|
| $(0.12) |
|
| 0.02 |
|
| $8.67 |
|
|
|
($ in millions except per share amount) For the year ended December 31, 2019 | GAAP | | Acquisition- Related | | | Retirement- Related | | | Tax Reform Impacts |
| | Spin-off- Related | | | Operating (Non-GAAP) |
| ||||||||
Gross Profit |
| $36,488 |
|
| $547 |
|
| $— |
|
| $— |
|
| $— |
|
| $37,035 |
| ||||||
Gross Profit Margin |
| 47.3 | % |
| 0.7 | Pts |
| — | Pts |
| — | Pts |
| — | Pts |
| 48.0 | % | ||||||
S,G&A |
| $20,604 |
|
| $(1,044) |
|
| $— |
|
| $— |
|
| $— |
|
| $19,560 |
| ||||||
R,D&E |
| 5,989 |
|
| (53) |
|
| — |
|
| — |
|
| — |
|
| 5,936 |
| ||||||
Other (Income) & Expense |
| (968) |
|
| 152 |
|
| (615) |
|
| — |
|
| — |
|
| (1,431) |
| ||||||
Interest Expense |
| 1,344 |
|
| (228) |
|
| — |
|
| — |
|
| — |
|
| 1,116 |
| ||||||
Total Expense & Other (Income) |
| 26,322 |
|
| (1,173) |
|
| (615) |
|
| — |
|
| — |
|
| 24,533 |
| ||||||
Pre-tax Income from Continuing Operations |
| 10,166 |
|
| 1,721 |
|
| 615 |
|
| — |
|
| — |
|
| 12,503 |
| ||||||
Pre-tax Income Margin from Continuing Operations |
| 13.2 | % |
| 2.2 | Pts |
| 0.8 | Pts |
| — | Pts |
| — | Pts |
| 16.2 | % | ||||||
Provision for Income Taxes* |
| 731 |
|
| 378 |
|
| 103 |
|
| (146) |
|
| — |
|
| 1,067 |
| ||||||
Effective Tax Rate |
| 7.2 | % |
| 2.0 | Pts |
| 0.5 | Pts |
| (1.2) | Pts |
| — | Pts |
| 8.5 | % | ||||||
Income from Continuing Operations |
| 9,435 |
|
| 1,343 |
|
| 512 |
|
| 146 |
|
| — |
|
| 11,436 |
| ||||||
Income Margin from Continuing Operations |
| 12.2 | % |
| 1.7 | Pts |
| 0.7 | Pts |
| 0.2 | Pts |
| — | Pts |
| 14.8 | % | ||||||
Diluted Earnings Per Share: Continuing Operations |
| $10.57 |
|
| $1.50 |
|
| $0.58 |
|
| $0.16 |
|
| $— |
|
| $12.81 |
|
|
|
| ($ in millions except per share amount) For the year ended December 31, 2021 | | | GAAP | | | Acquisition- Related Adjustments | | | Retirement- Related Adjustments | | | Tax Reform Impacts | | | Kyndryl Related Impacts | | | Operating (Non-GAAP) | | ||||||||||||||||||
| Gross Profit | | | | $ | 31,486 | | | | | $ | 719 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 32,205 | | |
| Gross Profit Margin | | | | | 54.9% | | | | | | 1.3Pts | | | | | | —Pts | | | | | | —Pts | | | | | | —Pts | | | | | | 56.2% | | |
| S,G&A | | | | $ | 18,745 | | | | | $ | (1.160) | | | | | $ | — | | | | | $ | — | | | | | $ | (8) | | | | | $ | 17,577 | | |
| R,D&E | | | | | 6,488 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,488 | | |
| Other (Income) & Expense | | | | | 873 | | | | | | (2) | | | | | | (1,282) | | | | | | — | | | | | | 126 | | | | | | (285) | | |
| Total Expense & Other (Income) | | | | | 26,649 | | | | | | (1,162) | | | | | | (1,282) | | | | | | — | | | | | | 118 | | | | | | 24,324 | | |
| Pre-tax Income from Continuing Operations | | | | | 4,837 | | | | | | 1,881 | | | | | | 1,282 | | | | | | — | | | | | | (118) | | | | | | 7,881 | | |
| Pre-tax Income Margin from Continuing Operations | | | | | 8.4% | | | | | | 3.3Pts | | | | | | 2.2Pts | | | | | | —Pts | | | | | | (0.2)Pts | | | | | | 13.7% | | |
| Provision for Income Taxes* | | | | $ | 124 | | | | | $ | 457 | | | | | $ | 251 | | | | | $ | (89) | | | | | $ | (37) | | | | | $ | 706 | | |
| Effective Tax Rate | | | | | 2.6% | | | | | | 5.2Pts | | | | | | 2.8Pts | | | | | | (1.1)Pts | | | | | | (0.4)Pts | | | | | | 9.0% | | |
| Income from Continuing Operations | | | | $ | 4,712 | | | | | $ | 1,424 | | | | | $ | 1,031 | | | | | $ | 89 | | | | | $ | (81) | | | | | $ | 7,174 | | |
| Income Margin from Continuing Operations | | | | | 8.2% | | | | | | 2.5Pts | | | | | | 1.8Pts | | | | | | 0.2Pts | | | | | | (0.1)Pts | | | | | | 12.5% | | |
| Diluted Earnings Per Share: Continuing Operations | | | | $ | 5.21 | | | | | $ | 1.57 | | | | | $ | 1.14 | | | | | $ | 0.10 | | | | | $ | (0.09) | | | | | $ | 7.93 | | |
| ($ in millions except per share amount) For the year ended December 31, 2020 | | | GAAP | | | Acquisition- Related Adjustments | | | Retirement- Related Adjustments | | | Tax Reform Impacts | | | Kyndryl Related Impacts | | | Operating (Non-GAAP) | | ||||||||||||||||||
| Gross Profit | | | | $ | 30,865 | | | | | $ | 726 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 31,591 | | |
| Gross Profit Margin | | | | | 55.9% | | | | | | 1.3Pts | | | | | | —Pts | | | | | | —Pts | | | | | | —Pts | | | | | | 57.3% | | |
| S,G&A | | | | $ | 20,561* | | | | | $ | (1,117) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | 19,445* | | |
| R,D&E | | | | | 6,262 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,262 | | |
| Other (Income) & Expense | | | | | 802 | | | | | | (2) | | | | | | (1,073) | | | | | | — | | | | | | — | | | | | | (273) | | |
| Total Expense & Other (Income) | | | | | 28,293* | | | | | | (1,119) | | | | | | (1,073) | | | | | | — | | | | | | — | | | | | | 26,101* | | |
| Pre-tax Income from Continuing Operations | | | | | 2,572* | | | | | | 1,845 | | | | | | 1,073 | | | | | | — | | | | | | — | | | | | | 5,490* | | |
| Pre-tax Income Margin from Continuing Operations | | | | | 4.7% | | | | | | 3.3Pts | | | | | | 1.9Pts | | | | | | —Pts | | | | | | —Pts | | | | | | 9.9% | | |
| Provision for Income Taxes** | | | | $ | (1,360) | | | | | $ | 411 | | | | | $ | 208 | | | | | $ | 110 | | | | | $ | — | | | | | $ | (630) | | |
| Effective Tax Rate | | | | | (52.9)% | | | | | | 25.3Pts | | | | | | 14.1Pts | | | | | | 2.0Pts | | | | | | —Pts | | | | | | (11.5)% | | |
| Income from Continuing Operations | | | | $ | 3,932* | | | | | $ | 1,434 | | | | | $ | 864 | | | | | $ | (110) | | | | | $ | — | | | | | $ | 6,120* | | |
| Income Margin from Continuing Operations | | | | | 7.1% | | | | | | 2.6Pts | | | | | | 1.6Pts | | | | | | (0.2)Pts | | | | | | —Pts | | | | | | 11.1% | | |
| Diluted Earnings Per Share: Continuing Operations | | | | $ | 4.38* | | | | | $ | 1.60 | | | | | $ | 0.96 | | | | | $ | (0.12) | | | | | $ | — | | | | | $ | 6.82* | | |
($ in millions except per share amount) For the year ended December 31, 2018 | GAAP | | Acquisition- Related | | | Retirement- Related | | | Tax Reform Impacts |
| | Spin-off- Related | | | Operating (Non-GAAP) |
| ||||||||
Gross Profit |
| $36,936 |
|
| $372 |
|
| $— |
|
| $— |
|
| $— |
|
| $37,307 |
| ||||||
Gross Profit Margin |
| 46.4 | % |
| 0.5 | Pts |
| — | Pts |
| — | Pts |
| — | Pts |
| 46.9 | % | ||||||
S,G&A |
| $19,366 |
|
| $(451) |
|
| $— |
|
| $— |
|
| $— |
|
| $18,915 |
| ||||||
R,D&E |
| 5,379 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,379 |
| ||||||
Other (Income) & Expense |
| 1,152 |
|
| (2) |
|
| (1,572) |
|
| — |
|
| — |
|
| (422) |
| ||||||
Interest Expense |
| 723 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 723 |
| ||||||
Total Expense & Other (Income) |
| 25,594 |
|
| (453) |
|
| (1,572) |
|
| — |
|
| — |
|
| 23,569 |
| ||||||
Pre-tax Income from Continuing Operations |
| 11,342 |
|
| 824 |
|
| 1,572 |
|
| — |
|
| — |
|
| 13,739 |
| ||||||
Pre-tax Income Margin from Continuing Operations |
| 14.3 | % |
| 1.0 | Pts |
| 2.0 | Pts |
| — | Pts |
| — | Pts |
| 17.3 | % | ||||||
Provision for Income Taxes* |
| $2,619 |
|
| $176 |
|
| $324 |
|
| $(2,037) |
|
| — |
|
| $1,082 |
| ||||||
Effective Tax Rate |
| 23.1 | % |
| (0.1) | Pts |
| (0.3) | Pts |
| (14.8) | Pts |
| — | Pts |
| 7.9 | % | ||||||
Income from Continuing Operations |
| $8,723 |
|
| $649 |
|
| $1,248 |
|
| $2,037 |
|
| — |
|
| $12,657 |
| ||||||
Income Margin from Continuing Operations |
| 11.0 | % |
| 0.8 | Pts |
| 1.6 | Pts |
| 2.6 | Pts |
| — | Pts |
| 15.9 | % | ||||||
Diluted Earnings Per Share: Continuing Operations |
| $9.51 |
|
| $0.71 |
|
| $1.36 |
|
| $2.23 |
|
| $— |
|
| $13.81 |
|
|
|
842022 Notice of Annual Meeting & Proxy Statement | Appendix A — Non-GAAP Financial Information and Reconciliations
| ($ in millions except per share amount) For the year ended December 31, 2019 | | | GAAP | | | Acquisition- Related Adjustments | | | Retirement- Related Adjustments | | | Tax Reform Impacts | | | Kyndryl Related Impacts | | | Operating (Non-GAAP) | | ||||||||||||||||||
| Gross Profit | | | | $ | 31,533 | | | | | $ | 540 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 32,073 | | |
| Gross Profit Margin | | | | | 54.6% | | | | | | 0.9Pts | | | | | | —Pts | | | | | | —Pts | | | | | | —Pts | | | | | | 55.6% | | |
| S,G&A | | | | $ | 18,724 | | | | | $ | (1,024) | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 17,700 | | |
| R,D&E | | | | | 5,910 | | | | | | (53) | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,857 | | |
| Other (Income) & Expense | | | | | (1,012) | | | | | | 152 | | | | | | (576) | | | | | | — | | | | | | — | | | | | | (1,436) | | |
| Interest Expense | | | | | 1,344 | | | | | | (228) | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,116 | | |
| Total Expense & Other (Income) | | | | | 24,327 | | | | | | (1,154) | | | | | | (576) | | | | | | — | | | | | | — | | | | | | 22,598 | | |
| Pre-tax Income from Continuing Operations | | | | | 7,206 | | | | | | 1,693 | | | | | | 576 | | | | | | — | | | | | | — | | | | | | 9,475 | | |
| Pre-tax Income Margin from Continuing Operations | | | | | 12.5% | | | | | | 2.9Pts | | | | | | 1.0Pts | | | | | | —Pts | | | | | | —Pts | | | | | | 16.4% | | |
| Provision for Income Taxes* | | | | $ | 60 | | | | | $ | 358 | | | | | $ | 110 | | | | | $ | (146) | | | | | $ | — | | | | | $ | 382 | | |
| Effective Tax Rate | | | | | 0.8% | | | | | | 3.6Pts | | | | | | 1.1Pts | | | | | | (1.5)Pts | | | | | | —Pts | | | | | | 4.0% | | |
| Income from Continuing Operations | | | | $ | 7,146 | | | | | $ | 1,335 | | | | | $ | 466 | | | | | $ | 146 | | | | | $ | — | | | | | $ | 9,093 | | |
| Income Margin from Continuing Operations | | | | | 12.4% | | | | | | 2.3Pts | | | | | | 0.8Pts | | | | | | 0.3Pts | | | | | | —Pts | | | | | | 15.8% | | |
| Diluted Earnings Per Share: Continuing Operations | | | | $ | 8.00 | | | | | $ | 1.50 | | | | | $ | 0.52 | | | | | $ | 0.16 | | | | | $ | — | | | | | $ | 10.18 | | |
($ in billions) For the year ended December 31: | 2020 | 2019 | 2018 | |||||||||
Net cash from operating activities per GAAP | $ | 18.2 |
| $ | 14.8 |
| $ | 15.2 |
| |||
Less: the change in Global Financing receivables |
| 4.3 |
|
| 0.5 |
|
| (0.3 | ) | |||
Net cash from operating activities, excluding Global Financing receivables |
| 13.8 |
|
| 14.3 |
|
| 15.6 |
| |||
Capital expenditures, net |
| (3.0 | ) |
| (2.4 | ) |
| (3.7 | ) | |||
Free Cash Flow |
| 10.8 |
|
| 11.9 |
|
| 11.9 |
| |||
Acquisitions |
| (0.3 | ) |
| (32.6 | ) |
| (0.1 | ) | |||
Divestitures |
| 0.5 |
|
| 1.1 |
|
| — |
| |||
Share Repurchase |
| — |
|
| (1.4 | ) |
| (4.4 | ) | |||
Common stock repurchases for tax withholdings |
| (0.3 | ) |
| (0.3 | ) |
| (0.2 | ) | |||
Dividends |
| (5.8 | ) |
| (5.7 | ) |
| (5.7 | ) | |||
Non-Global Financing Debt |
| 0.2 |
|
| 22.8 |
|
| (0.5 | ) | |||
Other (includes Global Financing receivables and Global Financing debt) |
| 0.2 |
|
| 1.0 |
|
| (1.6 | ) | |||
Change in cash, cash equivalents and short-term marketable securities | $ | 5.3 |
| $ | (3.2 | ) | $ | (0.6 | ) | |||
FCF as percent of Income from Continuing Operations |
| 196 | %* |
| 126 | % |
| 136 | %** |
|
|
measures.
| ($ in billions) For the year ended December 31: | | | 2021 | | | 2020 | | | 2019 | | |||||||||
| Net cash from operating activities per GAAP* | | | | $ | 12.8 | | | | | $ | 18.2 | | | | | $ | 14.8 | | |
| Less: the change in Financing receivables | | | | | 3.9 | | | | | | 4.3 | | | | | | 0.5 | | |
| Net cash from operating activities, excluding Financing receivables | | | | | 8.9 | | | | | | 13.8 | | | | | | 14.3 | | |
| Capital expenditures, net | | | | | (2.4) | | | | | | (3.0) | | | | | | (2.4) | | |
| Free Cash Flow | | | | | 6.5** | | | | | | 10.8 | | | | | | 11.9 | | |
| Acquisitions | | | | | (3.3) | | | | | | (0.3) | | | | | | (32.6) | | |
| Divestitures | | | | | 0.1 | | | | | | 0.5 | | | | | | 1.1 | | |
| Share Repurchase | | | | | — | | | | | | — | | | | | | (1.4) | | |
| Common stock repurchases for tax withholdings | | | | | (0.3) | | | | | | (0.3) | | | | | | (0.3) | | |
| Dividends | | | | | (5.9) | | | | | | (5.8) | | | | | | (5.7) | | |
| Non-Financing Debt | | | | | (1.2) | | | | | | 0.2 | | | | | | 22.8 | | |
| Other (includes Financing receivables and Financing debt) | | | | | (2.7) | | | | | | 0.2 | | | | | | 1.0 | | |
| Change in cash, cash equivalents and short-term marketable securities | | | | $ | (6.7)+ | | | | | $ | 5.3 | | | | | $ | (3.2) | | |
2020 | ||||||||||
GAAP | @CC | |||||||||
Reconciliation of Revenue Growth Rates: | ||||||||||
IBM Z |
| 2% |
|
| 1% |
|
| | | | 2021 | | |||||||||
| | | | GAAP | | | @CC | | ||||||
| Reconciliation of Revenue Growth Rates: | | | | | | | | | | | | | |
| Software | | | | | 5% | | | | | | 4% | | |
| Consulting | | | | | 10% | | | | | | 8% | | |
| Business Transformation | | | | | 15% | | | | | | 13% | | |
| Technology Consulting | | | | | 11% | | | | | | 10% | | |
| Hybrid Cloud | | | | | 20% | | | | | | 19% | | |
| | | | GAAP | | | @CC | | ||||||
| Reconciliation of IBM Revenue Growth Rates: | | | | | | | | | | | | | |
| 1Q 2021 | | | | | 1.8% | | | | | | (1.3)% | | |
| 2Q 2021 | | | | | 4.5% | | | | | | 0.7% | | |
| 3Q 2021 | | | | | 2.4% | | | | | | 1.8% | | |
| 4Q 2021 | | | | | 6.5% | | | | | | 8.6% | | |
| | | | 4Q 2021 | | |||||||||
| | | | GAAP | | | @CC | | ||||||
| Reconciliation of IBM Revenue Growth Rates: | | | | | | | | | | | | | |
| Software | | | | | 8% | | | | | | 10% | | |
| | | | | |
| | | |||
| | | | |
The tables below provide reconciliations of the Red Hat revenue as reported under GAAP to normalized revenue for historical comparability, which is a non-GAAP measure.
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
|
|
|
|
The table below provides reconciliation of the year-to-year change in the Company’s revenue as reported under GAAP to revenue adjusted for divested businesses and currency, which is a non-GAAP measure.
Year Ended Change Year to Year | ||||||||
Revenue Adjusted for Divested Businesses and Currency | Total IBM | Cloud | ||||||
Revenue as reported |
| (4.6)% |
|
| 18.6% |
| ||
Excluding other divested businesses |
| 1.1Pts |
|
| 1.4Pts |
| ||
Currency impact |
| (0.1)Pts |
|
| (0.4)Pts |
| ||
Revenue adjusting for divested businesses and currency (non-GAAP) |
| (3.5)% |
|
| 19.6% |
|
The table below provides reconciliation of Return on Invested Capital (ROIC) GAAP to a non-GAAP measure.
Reconciliation of ROIC - 2020 | GAAP* | Non-GAAP* | ||||||
Return on Invested Capital (ROIC) |
| 11.7% |
|
| 14.5% |
|
|
SCAN TOVIEW MATERIALS & VOTE INTERNATIONAL BUSINESS MACHINES CORPORATION 1 NEW ORCHARD ROAD,RD, MD 325 ARMONK,325ARMONK, NY 10504 VOTE BY INTERNET BeforeINTERNETBefore The Meeting-Meeting - Go to www.proxyvote.com Useor scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 26, 2021,25, 2022, for shares held directly and by 11:59 p.m. Eastern Time on April 25, 2021,24, 2022, for shares held in the 401(k) Plus Plan. Have your proxy card in hand when you access the web sitewebsite and follow the instructions to obtain your records and to create an electronic Voting Instruction Form. DuringForm.During The Meeting - Go to www.virtualshareholdermeeting.com/IBM2021 YouIBM2022You may attend the meeting via the Internet.Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTEinstructions.VOTE BY PHONE - 1-800-690-6903 Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 26, 2021,25, 2022, for shares held directly and by 11:59 p.m. Eastern Time on April 25, 2021,24, 2022, for shares held in the 401 (k)401(k) Plus Plan. Have your proxy card in hand when you call, and then follow the instructions. VOTEinstructions.VOTE BY MAIL Mark,MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote by telephone or Internet, please DO NOT mail back this Proxy Card. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D30499-P47772D66478-P64849 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. INTERNATIONAL BUSINESS MACHINES CORPORATION IBM' sDETACH AND RETURN THIS PORTION ONLY IBM's Directors recommend a vote FOR each director (please mark your vote for each director separately). 1. Election.1.Election of Directors for a Term of One Year Nominees: For Against Abstain 1a.YearNominees:ForAgainstAbstain1a. Thomas Buberl For Against Abstain lb. Michael L. Eskew 1k. Peter R. Voser 1c.Buberl!!!1b. David N. Farr 1l. Frederick H. Waddell 1d. Alex Gorsky Farr!!!IBM's Directors recommend a vote FOR proposals 2 and 3. For Against Abstain 1e. Michelle J. Howard 2. Ratification3.ForAgainstAbstain1c. Alex Gorsky!!!2.Ratification of Appointment of Independent Registered Public Accounting Firm. 1f. Arvind Krishna 3. AdvisoryRegistered!!!1d. Michelle J. Howard!!!3.Advisory Vote on Executive Compensation.!!!1e. Arvind Krishna!!!IBM's Directors recommend a vote AGAINST proposals 4 and 5. For Against Abstain 1g.proposalsForAgainstAbstain1f. Andrew N. Liveris 4. StockholderLiveris!!!4.Stockholder Proposal to Lower Special Meeting Right!!!1g.F. William McNabb III!!!5.Stockholder Proposal to Have an Independent BoardAn IndependentBoard Chairman. 1h. F. William McNabb III 5. Stockholder!!!1h.Martha E. Pollack!!!6.Stockholder Proposal Requesting Public Report on the Right to Act by Written Consent. 1i . Martha E. Pollack IBM's Directors recommend a vote FOR proposal 6. For Against Abstain 1j. Josephuse of Concealment Clauses.!!!1i.Joseph R. Swedish 6. Stockholder Proposal Requesting the Company Publish Annually a Report Assessing its Diversity, Equity and Inclusion Efforts. Please sign exactly as your name appears hereon, date, and return in the enclosed envelope. If acting as executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please sign the full corporate name by duly authorized officer. If shares are held jointly, each stockholder named should sign. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateSwedish!!!1j.Peter R. Voser!!!1k.Frederick H. Waddell!!!1l.Alfred W. Zollar!!!