IBM's Palmisano made $24.46 million in 2006

IBM's Palmisano made $24.46 million in 2006

Summary: IBM CEO Sam Palmisano's total compensation--including salary, bonus and stock awards--was $24.46 million in 2006 and that sum could rise if he hits performance targets.

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TOPICS: IBM
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IBM CEO Sam Palmisano's total compensation--including salary, bonus and stock awards--was $24.46 million in 2006 and that sum could rise if he hits performance targets.

That sum was outlined in excruciating detail by Big Blue in its proxy filing with the Securities and Exchange Commission. New SEC rules require companies to detail every tidbit of executive compensation--stock, pensions and perks--and offer some insight on how the company came up with its figures. The SEC's goal: Eliminate egregious perks and pay. For a company like Big Blue that's not an issue since "at IBM, 'perks' for executives are relatively few and quite basic. The value of these programs makes up less than 1% of any IBM leader’s total compensation."

Among other top execs at IBM, Mark Loughridge's total 2006 compensation was $5.95 million; Nick Donofrio, executive vice president of innovation and technology, made $6.3 million; Doug Elix, senior vice president of sales and distribution, brought home $6.06 million and Steve Mills, senior vice president of IBM's software group, made $6.01 million.

The actual figures, however, are just a sideshow to the rest of IBM's proxy. The proxy goes into a lot of detail about why those executives make what do.

IBM said it figured out what its executives should be paid by surveying compensation across a list of large companies including AIG, Altria, Boeing, Disney, Hewlett-Packard, Intel, Lockheed Martin and Wells Fargo. About 87 percent of a year's compensation is based on business performance.

Palmisano received $5 million in annual incentives for hitting financial metrics, maintaining IBM's market position in systems, middleware and services, growing emerging markets, rolling out productivity initiatives globally, creating a new leadership model, improving employee satisfaction and innovating.

Other executives also had similar themes to justify their respective compensation levels. For instance, IBM noted that Loughridge "managed IBM's portfolio" and improved or divested businesses that "sub-optimize value." Donofrio "drove process transformation and standards" across IBM, "closed 14th consecutive year of patent leadership" and "drove advances in high-performance computing."

In addition, Elix improved worldwide satisfaction ratings and Mills landed a bevy of acquisitions.

Topic: IBM

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13 comments
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  • He his making chump change compared to ..

    The former CEO of Home Depot, who got a parting gift of 210 Million.
    mrlinux
    • Ummm...last I checked...

      $24 million is not "chump change"...no matter what you compare it to!! And btw...at least ARod gives something back for his $27M.
      Techboy_z
      • $24 million is "chump change"...

        Compared to 210 Million for quiting your job that is greater than 8X
        mrlinux
  • its easy for a CEO to hit the numbers

    If something goes wrong, all a CEO has to do is sell a division and then a little bit of clever accounting to smooth out the bumps or shortfalls.

    http://www.technewsworld.com/story/42894.html
    zzz1234567890
    • Nice Link

      a little old, but informative none the less.
      John Zern
  • its easy for a CEO to hit the numbers

    If something goes wrong, all a CEO has to do is sell a division and then a little bit of clever accounting to smooth out the bumps or shortfalls.

    http://www.technewsworld.com/story/42894.html


    However building a company or running it and making decisions that benefit the company long term instead is hard.
    zzz1234567890
  • Not welcome news for IBM employees!

    This news is not going to be well received by IBM employees who are being squeezed on expenses, not getting raises, not being paid commissions, and not getting any pensions! Will be interesting to see the fallout. Morale will take a big hit - especially for those invested in IBM who have seen "basically flat" growth since Palmisano took the helm.
    lostark98
    • they fired 20,000 here in the US and hired in developing countries

      In 2003, they fired 20,000 here in the US and hired 40,000 in another lower wage country.
      code_Warrior
    • You have to remember

      CEO's work for the shareholders, not the employees.

      Unfortunately, many CEO's are lazy, miss the part about "happy employees make productive employees", which in turns help generate sales growth, which make shareholders happy.

      Nah, CEO's just take the easyway out and cut out the employee altogether, thusby saving money for the shareholders.
      John Zern
  • Setting compensation

    As the article observes, Mr. Palmisano's payments are consistent with those of CEOs at various other major companies. This is apparently supposed to make them acceptable.

    There's a concept designated "race to the bottom", in which if one company lowers wages by dumping employees with decades of experience and high performance, every other company must do the same to be price competitive.

    This is a concept called "race to the top", in which grotesque pay levels at one company encourage obscene pay levels at other companies. Because of interlocking Boards of Directors, the process works smoothly.

    So, the company employees are treated harshly in order to obtain the money necessary to let the CEO gorge at the trough.

    It's not good news that one person draining the company's assets will be gone within 5 years on average. The company will have to pay $ hundreds of millions to get rid of the old, more $ hundreds of millions as a signing bonus for the new, and $ tens of millions to reward the new for his 5 years.

    What do CEOs do for a company? See "race to the bottom" above. The question about highly paid CEOs is how many can the company afford before bankruptcy.
    Anton Philidor
    • Senior Executive Compensation

      It won't take long to get to a crisis at IBM. Right now the "results" are just "fun with numbers." The real revenue has not materialized and there's only so much that cutting can do. I don't know how Palmisano has skated by this long!

      Unfortunately, the previous citation about interlocking Boards of Directors does not give the shareholders a fair shake. It would be good for the IBM shareholders to rattle the Board's cage a bit more.
      lostark98
      • Time for some Corporate Law reforms

        NT
        mrlinux
  • Capitalistic greed in all its glory

    nt
    klumper