Steve Marcus/Reuters
IBM CEO Ginni Rometty
- The day before IBM formally announced that CEO Ginni Rometty would step down in April, the company released some information about her 2019 pay package.
- Rometty received her full cash bonus of $5 million for the year - something that hasn't always happened during her tenure, during which she's overseen a difficult period of transition for IBM.
- The filing also showed that in 2019, she was granted $13.3 million in stock, which was slated to be paid out as a performance-based reward through 2021.
- It's not clear if or how Rometty will get that money, given that she's leaving in the first part of 2020, though the company may speed up the process as part of a retirement package.
- Investors may get more clarity when IBM releases its next proxy statement, which it typically does in March.
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The day before IBM formally announced that it had selected a successor for CEO Ginni Rometty, the company released some information about her 2019 pay package.
Notably, Rometty earned her full 2019 performance bonus of $5 million in cash. That's in addition to her annual salary of $1.6 million, also in cash. She hasn't earned that $5 million every year, by the way - last year, her bonus was just over $4 million, well below the target.
In a proxy statement released in March 2019, IBM said that for 2019 it had made "no change to Mrs. Rometty's base salary or target annual incentive. She was granted an annual long-term incentive award valued at $13.3 million."
It was to be comprised of shares dependent on her hitting performance goals (65%) between the years 2019-2021, with the remaining as restricted stock units, not tied to performance (35%).
However, on Tuesday, days before the company announced her planned retirement, IBM disclosed via an SEC form, "The Long-Term Incentive Awards will be granted on June 8, 2020" and that 100% of this grant was performance-based as RSUs.
It's not entirely clear from the filing if this is the same $13.3 million stock grant discussed in the 2019 proxy. This tranche was scheduled to be granted in June of this year.
It is also not clear yet if IBM will accelerate any portion of Rometty's unearned long-term grants as part of her retirement package. Rometty will be staying on as CEO for one more quarter, through April, and then continue on as chairman through 2020.
This form promised more information about pay in its 2020 proxy, which it usually files in March.
A rough run
But for now, she finished 2019 with her full $5 million, which has got to feel good.
Rometty had a rough run at IBM overseeing the company through a major transformation as the IT world stopped buying so much hardware and software from legacy players like IBM and turned to cloud services, often from companies like Amazon Web Services and Microsoft.
IBM's revenue was $104.5 billion in 2012, the year she took over, it said. Revenues shrunk to $77.2 billion in 2018 and returned to growth at $79.6 billion in 2019, the company said. Rometty also purposefully sold off poor performing units, shedding $2 billion worth of lackluster businesses, she told CNBC.
With the happy news that the company had returned to growth in 2019, Rometty also promised that IBM would continue to grow, not just in revenue but profit margins, too.
The share price bounced for a few days after the earnings report, but investor confidence didn't hold and the stock declined to its pre-earnings price by the day before her retirement announcement.
With news that she's turning over the keys to 29-year company veteran Arvind Krishna, the exec that orchestrated IBM's $34 billion Red Hat acquisition, the stock is on the rise again.
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Get the latest IBM stock price here.