IBM: Employees React to Rometty, Exec Bonuses as Layoffs Reach 5K
Could IBM’s (IBM) awarding chief executive Ginni Rometty a $3.6 million bonus for her performance in 2014—a year in which the vendor suffered its 11th straight quarter of declining revenue—possibly been more ill-timed, arriving amid a seemingly widescale layoff?
In fact, IBM documents show Rometty actually has realized nearly $6 million in incentives and stock sales since last August.
Two items may make Rometty’s haul feel like a sore thumb to newly-fired employees:
First, IBM 8-K SEC filings on Aug. 28 show Rometty (or her proxies) executed 32 sales of IBM stock on Aug. 27, selling some 26,113 shares at an average value of $191.74 for a $5 million gain. On the same day, Rometty purchased 27,678 shares of IBM stock at an average cost of $96.73, making her net take on the day about $2.3 million.
Of course, under SEC rule 10b5-1, the timing of Rometty’s trades had to have been pre-arranged, but still, if you do the math, her total take is nearly $6 million in bonuses and stock sales.
In mid-day trading on Monday, Feb. 2, IBM shares were changing hands at $152.55.
Second, amid reports that IBM so far has laid off about 5,000 employees, a sampling of worker posts at the watchdog Alliance@IBM forum leaves the immediate impression the vendor has its work cut out to shore up employee morale if it intends to do so. With the fur flying that IBM intentionally rated employee performances low to avoid paying full severance packages along with charges that it tagged older workers to cut from its rolls, it may be quite some time until it’s able to mollify what appears to be an unhappy workforce.
Here’s a sampling of what’s being said at Alliance@IBM about Rometty’s bonus payout. Of course, these comments aren’t representative of all IBM employees and shouldn’t be seen in that light. But they do provide some insight into the aftermath of IBM’s layoffs and Rometty’s 2014 incentive package.
This one invokes the company’s storied history:
So let me get this straight, [IBM} said Chief Executive Virginia Rometty will receive a $3.6 million bonus for her performance in 2014, despite annual declines in profit and revenue…The last three CEOs and executives and manager have done a great job running this once great company right into the ground. Rometty needs to read the history of IBM and the founder TJ Watson. If he knew that a CEO had not made a profit in any quarter since she had been CEO and received a $3.6 million [bonus] for one year, he would be rolling over in his grave.
This is outrageous. The same week thousands are being essentially fired, the IBM Board of Directors awards Ms. Rometty substantial salary and bonus incentives. Either the BOD is insensitive as to the timing or they are sending everyone a message that they approve of her leadership. In any case, both may be correct.
…The news that Ginni is receiving an enormous bonus and raise after driving this company into its current sorry state was the last straw.
And, still another:
IBM executive management needs to know and understand that what IBMers do matters to the world. They provide their skills, effort, and talent in service of humankind, to the benefit of the whole community—not to fill the pockets of a select few.
We’ll keep you posted.