IBM says it is 'absolutely not' looking for a new CEO despite swirling rumors that other candidates are being approached by top recruiting firms

• IBM is absolutely not looking for a new CEO, the company tells Business Insider.
• Still, people are talking about a search going on now.
• IBM's current CEO Ginni Rometty is bucking a long-standing tradition at IBM by not retiring at age 60, and her reign has been controversial.
• But she seems to be turning the company around and some new employees feel good about the direction, one tells us.

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IBM is absolutely not looking for a new CEO, an IBM spokesperson tells Business Insider.

That said, we've heard several top executive recruiting firms have been approaching people about throwing their names in the hat, including at least two outsiders and one IBM insider, according to someone knowledgeable of the situation.

Despite these rumblings, IBM spokesman Ed Barbini tells Business Insider that an active CEO search is not happening. "IBM is not looking for a new CEO, and any information to the contrary is absolutely and unequivocally false," he said.

However, it's not surprising that people are talking about the search for IBM's next CEO.

IBM had a long-standing tradition of retiring its CEOs at age 60. Current CEO Ginni Rometty, who is the first woman to hold the job in the company's 106 years, is 61.

Her predecessor, Sam Palmisano, was universally admired as an excellent CEO. In the run-up to his birthday, many speculated the board would break with tradition and keep him on past 60.

At one point, Palmisano said he was "not going anywhere" and that there was no formal policy at IBM that forced a CEO to retire. And so, when he turned 60 and did indeed announce his retirement, many people were surprised.

Since then about half of IBM's directors (not including herself) have joined the board under her tenure. So it's not the same board that oversaw Palmisano's retirement.

The fact that CEO candidates are being approached does not mean IBM is involved in an active search. Recruiting firms and others could be acting pro-actively, putting together short lists to give themselves an edge should Rometty decide to retire.

A controversial performance

Rometty's performance has been a controversial subject since she took over as CEO. IBM's traditional business has been hurt badly by the shift to cloud computing. This shift has caused companies to buy less hardware and software from companies like IBM.

Global revenue at IBM was nearly $107 billion in 2011, the year before Rometty took over. It has steadily declined each year and now hovers around $79 billion, partly because Rometty has sold off poorly performing hardware businesses.

In the meantime, she has invested in and vastly grown IBM's presence in hot up-and-coming areas, including cloud computing, digital marketing and Watson, IBM's machine learning/AI services. But that hasn't been enough to offset the revenue declines in the fading, older businesses. Rometty has spent her whole tenure talking about the company's painful turnaround, even as she's shared a hopeful vision for IBM's leadership in areas like AI and blockchain.

She seems to have finally turned IBM in the right direction, too. When the company reported its second quarter earnings in April, it showed revenue growth for the second consecutive quarter after nearly six years of decline.

Happy new workers

The company's revenue problems have also meant that, under Rometty, IBM has laid off thousands of workers.

The pink slips have impacted many long-time and older workers, ProPublica recently reported, giving the company's work culture a mixed reputation.

Some 67% of employees approve of Rometty's leadership, according to those rating her on job hunting site Glassdoor.

But IBM has also hired thousands of new workers. Some of them have told Business Insider that they like IBM's current direction.

"I feel confident on the leadership's ability to lead the organization to prioritize our clients and deliver the best services in the industry," one new hire, not authorized to speak to the press, told us. "I have resources to polish my skills and mentors to enhance my leadership abilities to continue my growth as an individual."

Then again, investors are wary of any sign that Rometty can't maintain IBM's growth.One high-profile, long-time bull gave up on the company completely: Oracle of Omaha Warren Buffett. Buffett sold off his enormous stake. Earlier this month he confirmed that his company, Berkshire Hathaway, no longer owns any IBM shares.

Buffett's views don't represent everyone. IBM still has many faithful institutional investors with firms like Vanguard and BlackRock recently increasing their holdings.

Not happy about pay

In 2017, there was also a public flap about Rometty's pay package when the board agreed to increase her salary more than 60 percent to $33 million.

Proxy advisors Institutional Shareholders Services (ISS) and Glass Lewis both recommended shareholders vote against the increase. ISS calculated that it was really worth $50 million using its own estimate for the value of her stock options, Bloomberg reported.

The advisory pay-for-pay vote narrowly passed at the annual shareholder's meeting, with an unusually-high 46 percent of shareholders voting against it. Shareholders typically tend to vote in accordance with the board's recommendations.

Some shareholders, such as CalSTRS complained about the high pay in relation to Rometty's performance. In 2018, IBM scaled back her pay a bit, reducing her target bonus from 3X her salary to 2X and also tying more of her stock awards to performance goals.

While CalSTRS declined to comment on her performance directly, a spokesperson told us that they voted against her pay package originally but, once it was trimmed, voted for it.

Glass Lewis' Julian Hamud also explained there is nothing in Rometty's pay package that indicates the board is getting ready to ask her to retire.

"IBM doesn't seem to have any employment agreements with predefined termination dates or other things that could help provide a sense of possible timelines," he said, adding that IBM "uses an annual granting cycle" meaning that the board decides pay year-by-year.

Those talking about the search for the next CEO didn't have any definitive information on a timeline, either. But one thing is for certain: given the history of IBM and Rometty's reign at the company, people will continue to talk about who the next CEO could be.

Are you an insider with knowledge about IBM? We'd love to hear your insights, too. jbort@businessinsider.com or @Julie188 on Twitter.

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