DEF 14A of International Business Machines Corp
Filed Mar 10, 2025 · FY20240001104659-25-022186
Alex Gorsky Lead Director
| 2024 Grants of Plan-Based Awards Table | 51 | | 2024 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative | 52 | | 2024 Retention Plan Narrative | 55 | | 2024 Pension Benefits Narrative | 56 | | 2024 Nonqualified Deferred Compensation Narrative | 59 | | 2024 Potential Payments Upon Termination Narrative | 62 | | Pay Versus Performance | 65 | | Report of the Audit Committee of the Board of Directors | 67 | | Audit and Non-Audit Fees | 67 | | 2. Ratification of Appointment of Independent Registered Public Accounting Firm | 68 | | 3. Advisory Vote on Executive Compensation (Say on Pay) | 69 | | 4. Stockholder Proposal to Support Transparency in Lobbying | 70 | | 5. Stockholder Proposal Requesting a Report on Hiring/ Recruitment Discrimination | 72 | | Frequently Asked Questions | 74 | | Appendix A – Non-GAAP Financial Information and Reconciliations | 77 |
Director Nominees
Director Nominees IBM’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders.
Director Nominees
| Director | Age | Primary Occupation | Director Since | Committee Memberships | | | | Audit Committee Financial Expert | | Marianne C. Brown | 66 | Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. | 2023 | | | | | | | Thomas Buberl | 51 | Chief Executive Officer, AXA S.A. | 2020 | | | | | | | David N. Farr | 70 | Retired Chairman and Chief Executive Officer, Emerson Electric Co. | 2012 | | | | | | | Alex Gorsky | 64 | Former Chairman and Chief Executive Officer, Johnson & Johnson | 2014 | | | | | | | Michelle J. Howard | 64 | Retired Admiral, United States Navy | 2019 | | | | | | | Arvind Krishna | 62 | Chairman, President and Chief Executive Officer, IBM | 2020 | | | | | | | Andrew N. Liveris | 70 | Retired Chairman and Chief Executive Officer, The Dow Chemical Company | 2010 | | | | | | | F. William McNabb III | 67 | Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc. | 2019 | | | | | | | Michael Miebach | 56 | Chief Executive Officer, Mastercard Incorporated | 2023 | | | | | | | Martha E. Pollack | 66 | President Emerita, Cornell University | 2019 | | | | | | | Peter R. Voser | 66 | Retired Chief Executive Officer, Royal Dutch Shell plc, and Chairman, ABB Ltd. | 2015 | | | | | | | Frederick H. Waddell | 71 | Retired Chairman and Chief Executive Officer, Northern Trust Corporation | 2017 | | | | | | | Alfred W. Zollar | 70 | Former Executive Advisor, Siris Capital Group, LLC | 2021 | | | | | | | Number of meetings held in 2024 | | | | 10 | 4 | 5 | 0 | |
Director Nominees
| Audit: | | | Directors and Corporate Governance: | | | Executive Compensation and Management Resources: | | | Executive: | | | Audit Committee Financial Expert: | |
Director Nominees
42025 Notice of Annual Meeting & Proxy Statement | Proxy Summary
Optimal Mix of Skills and Experience of Director Nominees
Optimal Mix of Skills and Experience of Director Nominees IBM’s thirteen director nominees are industry leaders with deep executive and oversight experience. Bringing a diversity of backgrounds and experiences, they collaboratively contribute significant competencies, skills, and experience in the areas most relevant to overseeing the Company’s business and strategy. The top skills and experience of our Board include, but are not limited to:
Our compensation strategy supports IBM’s high value business model
| | What We Do | | What We Don’t 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, President and CEO, Vice Chairman and Senior Vice Presidents • Utilize noncompetition and nonsolicitation agreements for senior executives • Remove impact of share repurchase on executive incentives | | • 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 |
IBM Board of Directors – Experience and Skills of Director Nominees
IBM Board of Directors – Experience and Skills of Director Nominees The skills matrix below identifies each director’s top five strategic skills. This matrix is not intended to be an exhaustive list of director skills, and each director possesses additional strategic skills not reflected through the checkmarks, as well as other skills not listed in the matrix. We believe this approach enables you, our stockholders, to better understand the key contributions each director brings as part of the Board’s comprehensive skillset, which supports the strategic oversight of IBM. 102025 Notice of Annual Meeting & Proxy Statement | IBM Board of Directors 1. Election of Directors for a Term of One Year The Board proposes the election of the following director nominees for a term of one year. Below is information about each nominee, including biographical data for at least the past five years. If one or more of these nominees become unavailable to accept a nomination or election as a director, the individuals named as proxies on the proxy card will vote the shares that they represent for the election of such other persons as the Board may recommend, unless the Board reduces the number of directors.
IBM Board of Directors – Experience and Skills of Director Nominees
| | Marianne C. Brown | | | Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. Director since: 2023 Age: 66 Committee: | | | Directors and Corporate Governance |
IBM Board of Directors – Experience and Skills of Director Nominees
Ms. Brown, 66, served as chief operating officer of Fidelity National Information Services Inc.’s (FIS) Global Financial Solutions organization from January 2018 to June 2019. Prior to that, Ms. Brown served as chief operating officer, Institutional and Wholesale Business of FIS, when it acquired SunGard Financial Systems. In 2014, Ms. Brown was chief operating officer of SunGard Financial Systems. From 2006 to 2014, Ms. Brown was the chief executive officer and president of Omgeo LLC. Before joining Omgeo LLC, she was the chief executive officer of the Securities Industry Automation Corporation. She is a director of Northrop Grumman Corporation, The Charles Schwab Corporation, and Akamai Technologies, Inc., and served on the board of VMware, Inc. until 2023.
Key Contributions
Key Contributions • In depth knowledge of cybersecurity and emerging technologies through her various roles at financial services technology companies • Significant experience with risk oversight and management as former chief executive officer of Omgeo LLC • Global operational management experience, including mergers and acquisitions, integration and transformation, as chief operating officer, Global Financial Solutions, Fidelity National Information Services, Inc.
Key Contributions
| | Thomas Buberl | | | Chief Executive Officer, AXA S.A. Director since: 2020 Age: 51 Committee: | | | Executive Compensation and Management Resources |
Key Contributions
Mr. Buberl, 51, joined Winterthur in 2005, which became a subsidiary of AXA in 2006. In 2008, he joined Zurich Insurance Group as chief executive officer for Switzerland. Mr. Buberl 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.
Key Contributions
Key Contributions • Extensive global business leadership and risk management experience as chief executive officer of AXA S.A. • Financial, strategic and operational experience • Acknowledged leader in digital transformation
Key Contributions
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Key Contributions
| Top Strategic Skills | | |
Key Contributions
| | David N. Farr | | | Retired Chairman and Chief Executive Officer, Emerson Electric Co. Director since: 2012 Age: 70 Committee: | | | Audit |
Key Contributions
Mr. Farr, 70, 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, positions he held until his retirement in 2021. He is the former chairman of the National Association of Manufacturers and is a former director of the U.S.-China Business Council.
Key Contributions
Key Contributions • Global leadership, business and technology experience as former chairman and chief executive officer of Emerson Electric Co. • Strong understanding of regulatory and public policy issues as former director of the U.S.-China Business Council • Significant expertise in several areas including strategy, mergers and acquisitions and risk management
Key Contributions
| | Alex Gorsky | | | Former Chairman and Chief Executive Officer, Johnson & Johnson Director since: 2014 Age: 64 Committee: | | | Executive |
Key Contributions
Mr. Gorsky, 64, is the former chairman and chief executive officer 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 as a sales representative with Janssen Pharmaceutica. In 2003, he was named company group chairman of the Johnson & Johnson pharmaceutical business in Europe, the Middle East and Africa. Mr. Gorsky left Johnson & Johnson in 2004 to join the Novartis Pharmaceuticals Corporation, where he served as head of the company’s pharmaceutical business in North America. 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 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 remained chief executive officer until he transitioned to executive chairman at the end of 2021. He currently sits on the boards of Apple, JPMorgan Chase and the Travis Manion Foundation, and serves on the Board of Advisors for the Wharton School of the University of Pennsylvania.
Key Contributions
Key Contributions • Extensive global business experience and knowledge of financial and strategic issues and risk management as former executive chairman and chief executive officer of Johnson & Johnson • Deep understanding of complex operational issues facing multinational companies, including technology evolution and research and development • Public policy expertise as former Chair of the Business Roundtable’s Corporate Governance Committee and former member of the Business Council Executive Committee
Key Contributions
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Key Contributions
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Key Contributions
| | Michelle Howard | | | Retired Admiral, United States Navy Director since: 2019 Age: 64 Committee: | | | Audit |
Key Contributions
Admiral Michelle J. Howard, 64, 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 become a four-star admiral in the U.S. Navy and the first woman and African American to be appointed to the position of Vice Chief of Naval Operations, the second-highest ranking uniformed officer in the branch. Responsible for the Navy’s day-to-day operations, she focused on cyber culture and information security in the digital age, as well as gender integration, in addition to oversight of a multi-billion dollar budget and the establishment of an auditing framework. In 2016, Admiral Howard was appointed by the President to serve as commander of U.S. Naval Forces in Europe and Africa and the Allied Joint Forces Command in Naples, Italy, making her the first woman four-star admiral to command operational forces. She retired from the Navy in 2017. 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. She was appointed by the President to the Board of Visitors of the U.S. Naval Academy in 2022 and served through the end of 2024.
Key Contributions
Key Contributions • Extensive global operations and risk management expertise as the U.S. Navy’s first woman four-star admiral • Deep government relationships and public policy expertise • Technology and cybersecurity experience as Vice Chief of Naval Operations
Key Contributions
| | Arvind Krishna | | | Chairman, President and Chief Executive Officer, IBM Director since: 2020 Age: 62 Committee: | | | Executive (Chair) |
Key Contributions
Arvind Krishna, 62, 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. In 2022, he became a director of the Federal Reserve Bank of New York. He is also a director of Northrop Grumman Corporation. Mr. Krishna is also on the Board of Directors of the U.S.-India Strategic Partnership Forum and is a Vice Chair of The Economic Club of New York. 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.
Key Contributions
Key Contributions • Deep knowledge of IBM’s business, the opportunities and challenges IBM faces and its strategy as chairman, president and chief executive officer of IBM • Extensive research and technology experience as Director of IBM Research and a computer scientist with expertise in key IBM technologies such as artificial intelligence, cloud and quantum computer • Outside board experience, which provides perspectives on other industries and corporate governance matters
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| | Andrew N. Liveris | | | Retired Chairman and Chief Executive Officer, The Dow Chemical Company Director since: 2010 Age: 70 Committees: | | | Directors and Corporate Governance (Chair) | | | Executive |
Key Contributions
Mr. Liveris, 70, joined Dow in 1976 and subsequently held various executive positions before being named president and chief executive officer of Dow in 2004 and chairman in 2006. In 2016, he transitioned to the president role and continued as chairman and chief executive officer of Dow until late 2017, when he transitioned to the position of executive chairman of DowDuPont, a position he held until his retirement in July 2018. Mr. Liveris is a director of Worley, Saudi Aramco and Lucid Motors. He served as a director of NOVONIX Limited until April 2024. Additionally, Mr. Liveris is a former Executive Committee member of The Business Council, the former chairman of The Business Council and the former vice chairman of the Executive Committee of the Business Roundtable. Mr. Liveris is also a trustee of The King Abdullah University of Science and Technology (KAUST), and is a former trustee of the California Institute of Technology and the United States Council for International Business. He is also the president of the Brisbane 2032 Olympic and Paralympic Games Organizing Committee.
Key Contributions
Key Contributions • Global business leadership and risk management experience as the former chairman, president and chief executive officer of The Dow Chemical Company and former executive chairman of DowDuPoint Inc. • Extensive government and public policy experience, including as former Chairman of the Business Council and of the US Government Manufacturing Council under President Trump and President Obama • Operations, strategy and corporate governance experience across various industries
Key Contributions
| | Frederick William McNabb III | | | Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc. Director since: 2019 Age: 67 Committee: | | | Audit |
Key Contributions
Mr. McNabb, 67, 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. Earlier in his career, Mr. McNabb led each of Vanguard’s client facing business divisions. Mr. McNabb served as the vice-chairman of the Investment Company Institute’s Board of Governors and served as its chairman from 2013 to 2016. He is a director of UnitedHealth Group and serves as the chair of its audit committee. He is also a director of Axiom. Mr. McNabb is the former chairman of the board of the Zoological Society of Philadelphia, chairman of the USRowing Foundation, and former chairman of Ernst & Young’s Independent Audit Quality Committee. Mr. McNabb also serves on the Wharton Leadership Advisory Board, the Advisory Board of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia University and is also a board member of CECP: The CEO Force for Good.
Key Contributions
Key Contributions • Extensive global business experience and knowledge of financial and strategic issues and risk management as former executive chairman and chief executive officer of Vanguard • Significant experience in corporate governance and risk management as a director of UnitedHealth Group and Axiom and an Advisory Board Member for the Ira M. Millstein Center for Global Markets and Corporate Ownership • Significant financial expertise and understanding of financial reporting and accounting principals
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| | Michael Miebach | | | Chief Executive Officer, Mastercard Incorporated Director since: 2023 Age: 56 Committee: | | | Executive Compensation and Management Resources |
Key Contributions
Mr. Miebach, 56, is the chief executive officer of Mastercard and a member of its board of directors. He joined Mastercard in 2010 to lead its Middle East and Africa operations, before becoming chief product officer in 2016. As Mastercard’s chief product officer he gained essential perspective into consumer insights as well as valuable experience in information security and innovation. Mr. Miebach became president in 2020 and then chief executive officer in 2021. Prior to joining Mastercard, Mr. Miebach held senior roles at Barclays Bank and CitiBank. Mr. Miebach is a member of the Business Roundtable, the Business Council, the U.S.-India CEO Forum, the U.S.-India Strategic Partnership Forum, the International Advisory Panel of the Monetary Authority of Singapore and the International Business Council of the World Economic Forum. He is also a Trustee of the United States Council for International Business. He sits on the board of directors for the Metropolitan Opera and the World Resources Institute and is a Member of the U.S. Treasury’s Advisory Committee on Racial Equity.
Key Contributions
Key Contributions • Extensive global business and risk management experience as chief executive officer of Mastercard • Deep understanding of emerging technology, digital transformation and cybersecurity • Strong understanding of public policy issues as a member of the Business Roundtable, the Business Council, and the International Business Council of the World Economic Forum
Key Contributions
| | Martha E. Pollack | | | President Emerita, Cornell University Director since: 2019 Age: 66 Committee: | | | Executive Compensation and Management Resources |
Key Contributions
Dr. Pollack, 66, is president emerita of Cornell University, where she was also professor of computer science, information science, and linguistics. She took office in 2017 and retired in June 2024. 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, and has also been president of the Association for the Advancement of Artificial Intelligence, a member of the technical staff in the Artificial Intelligence Center at SRI International, a member of the advisory committee for the National Science Foundation’s Computer and Information Science and Engineering Division, and a 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. She is a former board member of the American Association of Universities. She is currently a Trustee of ITHAKA. In 2022, Dr. Pollack was elected as a member of the American Academy of Arts & Sciences. In spring of 2025, she was named a Montgomery Fellow at Dartmouth College.
Key Contributions
Key Contributions • Organizational leadership, management and risk oversight, and management experience as president emerita of Cornell University • Research and technology experience as a computer scientist with expertise in artificial intelligence as a professor of computer science, information science, and linguistics • U.S. Government service as a former member of the advisory committee for the National Science Foundation’s Computer and Information Science and Engineering Division
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| | Peter R. Voser | | | Retired Chief Executive Officer, Royal Dutch Shell plc Director since: 2015 Age: 66 Committees: | | | Audit (Chair) | | | Executive |
Key Contributions
Mr. Voser, 66, 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) Group of Companies as chief financial officer and a member of 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 Holdings (Private) Limited, 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.
Key Contributions
Key Contributions • Significant financial expertise and understanding of financial reporting and accounting principals as former chief financial officer of Royal Dutch/Shell Group • Extensive experience with complex operational issues facing multinational companies and risk management as chairman of ABB Ltd. and chief executive officer of Royal Dutch Shell plc • Deep understanding of emerging technology, digital transformation and cybersecurity
Key Contributions
| | Frederick H. Waddell | | | Retired Chairman and Chief Executive Officer, Northern Trust Corporation Director since: 2017 Age: 71 Committees: | | | Executive Compensation and Management Resources (Chair) | | | Executive |
Key Contributions
Mr. Waddell, 71, joined Northern Trust Corporation in 1975 and served as the chairman of the board from November 2009 until his retirement in January 2019. He previously served as chief executive officer from 2008 through 2017, as president from 2006 through 2011 and again from October to December 2016, and as chief operating officer from 2006 to 2008. Additionally, Mr. Waddell is a member of the Board of Trustees of the Art Institute of Chicago, the Chicago Symphony Orchestra, and Northwestern University, and a director of AbbVie Inc.
Key Contributions
Key Contributions • Extensive executive leadership, operations and risk management experience as former chairman and chief executive officer of Northern Trust Corporation • Deep expertise in regulated industries as former chairman and chief executive officer of Northern Trust Corporation and as director of AbbVie Inc. • Significant experience with complex operational and macroeconomic issues and strategy
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| | Alfred W. Zollar | | | Former Executive Advisor, Siris Capital Group LLC Director since: 2021 Age: 70 Committee: | | | Directors and Corporate Governance |
Key Contributions
Mr. Zollar, 70, served as a former executive advisor at Siris Capital Group, a private equity group specializing in technology and telecom investments, since March 2021; previously, Mr. Zollar was an executive partner from 2014 through March 2021. While at Siris Capital Group, Mr. Zollar has worked closely with cloud-based technology providers, leading providers of enterprise security solutions and other technology and software-as-a-service companies. He served as a director of Red Hat from 2018 until 2019 and of Public Service Enterprise Group from 2012 until 2023. He is currently a director of Nasdaq Inc. and Bank of New York Mellon Corp. He is also a member of the Executive Leadership Council, a lifetime member of the National Society of Black Engineers and Harvard Fellow from the 2011 cohort of the Advanced Leadership Initiative at Harvard University. Mr. Zollar retired from IBM in 2011 following a 34-year career during which he held a variety of senior management positions in IBM’s systems and software groups.
Key Contributions
Key Contributions • Global business and leadership experience as an executive partner and former executive advisor at Siris Capital Group • Deep technology experience with more than 40 years in systems and software at IBM and as a director of Red Hat • Extensive finance, strategy and corporate governance experience as a director of Nasdaq and Bank of New York Mellon, and as a former director of Public Service Enterprise Group
Key Contributions
| Top Strategic Skills | | |
Key Contributions
| | THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED ABOVE. |
Key Contributions
Governance and the Board Committees of the Board Members of the Audit Committee, Directors and Corporate Governance Committee, and the Executive Compensation and Management Resources Committee are non-management directors who, in the opinion of the Board, satisfy the independence criteria established by the Board, and the standards of the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE).
Director Compensation under the IBM Deferred Compensation and Equity Award Plan (DCEAP)
Director Compensation under the IBM Deferred Compensation and Equity Award Plan (DCEAP)
Director Compensation under the IBM Deferred Compensation and Equity Award Plan (DCEAP)
| Additional Annual Retainers | | | Chair of the Directors and Corporate Governance Committee | $20,000 | | Chair of the Executive Compensation and Management Resources Committee | $20,000 | | Chair of the Audit Committee | $30,000 | | Lead Director | $50,000 |
Director Compensation under the IBM Deferred Compensation and Equity Award Plan (DCEAP)
Stock Ownership Guidelines: • Under the IBM Board Corporate Governance Guidelines, within five years of initial election to the Board, non-management directors are expected to have stock-based holdings in IBM equal in value to eight times the equity portion of the annual retainer initially payable to such director. • Stock-based holdings mean (i) IBM shares owned personally or by members of immediate family sharing the same household, and (ii) DCEAP PFS. Stock-based holdings do not include unexercised stock options. • Our stock ownership guidelines remain the strongest in our peer group. Payout under the DCEAP: Upon a director’s retirement or other completion of service as a director (a) all amounts deferred as PFS are payable, at the director’s choice, in cash and/or shares of IBM’s common stock, and (b) amounts deferred into the interest-bearing cash account are payable in cash. Payouts may be made in any of (a) a lump sum payment as soon as practicable after the date on which the director ceases to be a member of the Board, (b) a lump sum payment paid in February of the calendar year immediately following the calendar year in which the director ceases to be a member of the Board, or (c) between two and ten annual installments, paid beginning in February following the calendar year in which the director ceases to be a member of the Board. If a director elects to receive PFS in cash, the payout of PFS is valued using the closing price of IBM common stock on the NYSE as follows: for payouts made in an immediate lump sum, IBM common stock will be valued on the first day after the date on which the director ceases to be a member of the Board; for lump sum payments made in February of the calendar year immediately following the calendar year of separation or for installment payouts, IBM common stock will be valued on the last business day of the January preceding such February payment. IBM’s Matching Grants Program: • In 2024, non-management directors were eligible to participate in IBM’s Matching Grants Program on the same basis as IBM’s employees based in the U.S. • Under this program, IBM matched a director’s eligible contributions in cash on a 1-to-1 basis to approved educational institutions, medical facilities and cultural or environmental institutions. Each director was eligible for a Company match on total gifts up to $10,000 per calendar year. Amounts shown in the Director Compensation Table for matching grants may be in excess of $10,000 because such amounts include Company contributions on gifts that were made by directors in previous years. 2025 Notice of Annual Meeting & Proxy Statement | Director Compensation 25 Director Compensation Consultant: The Committee retains Semler Brossy to assess trends and developments in director compensation practices and to compare IBM’s practices against them. The Committee uses the analysis prepared by the consultant as part of its periodic review of IBM’s director compensation practices. Other than services provided to IBM’s Directors and Corporate Governance Committee and IBM’s Executive Compensation and Management Resources Committee, Semler Brossy does not perform any other work for IBM. The Committee determined that Semler Brossy is free of conflicts of interest.
2024 Director Compensation Table
2024 Director Compensation Table
2024 Director Compensation Table
| Name (a) | Fees Earned or Paid in Cash ($) (b) | All Other Compensation ($) (c)(1) | Total ($) (d) | | Marianne C. Brown | 350,000 | 15,553 | 365,553 | | Thomas Buberl | 350,000 | 72,771 | 422,771 | | David N. Farr | 350,000 | 134,427 | 484,427 | | Alex Gorsky | 400,000 | 194,890 | 594,890 | | Michelle J. Howard | 350,000 | 87,909 | 437,909 | | Andrew N. Liveris | 370,000 | 259,191 | 629,191 | | F. William McNabb III | 350,000 | 84,280 | 434,280 | | Michael Miebach | 350,000 | 7,201 | 357,201 | | Martha E. Pollack | 350,000 | 100,063 | 450,063 | | Joseph R. Swedish(2) | 116,667 | 23,109 | 139,776 | | Peter R. Voser | 380,000 | 183,718 | 563,718 | | Frederick H. Waddell | 370,000 | 140,516 | 510,516 | | Alfred W. Zollar | 350,000 | 42,858 | 392,858 |
2024 Director Compensation Table
(1) Amounts in this column include the following: for Ms. Brown: $5,478 of dividend equivalent payments on PFS and $10,000 contributed by the Company under Matching Grants Program; for Mr. Buberl: $72,696 of dividend equivalent payments on PFS; for Mr. Farr: $134,352 of dividend equivalent payments on PFS; for Mr. Gorsky: $194,815 of dividend equivalent payments on PFS; for Admiral Howard: $87,834 of dividend equivalent payments on PFS; for Mr. Liveris: $259,115 of dividend equivalent payments on PFS; for Mr. McNabb: $84,205 of dividend equivalent payments on PFS; for Mr. Miebach: $7,126 of dividend equivalent payments on PFS; for Dr. Pollack: $97,575 of dividend equivalent payments on PFS; for Mr. Swedish: $23,084 of dividend equivalent payments on PFS; for Mr. Voser: $183,643 of dividend equivalent payments on PFS; for Mr. Waddell: $130,441 of dividend equivalent payments on PFS and $10,000 contributed by the Company under Matching Grants Program; and for Mr. Zollar: $42,782 of dividend equivalent payments on PFS. (2) Mr. Swedish’s term on the Board ended April 2024. Fees Earned or Paid in Cash (column (b)): Amounts shown in this column reflect the annual retainer paid to each director as described above. A director receives a prorated amount of the annual retainer for service on the Board and, if applicable, as Lead Director or a committee chair, based on the portion of the year for which the director served. All Other Compensation (column (c)): Amounts shown in this column represent: • Dividend equivalent payments on PFS accounts under the DCEAP as described above. • Group life insurance premiums paid by IBM on behalf of the directors. • Value of the contributions made by IBM under IBM’s Matching Grants Program as described above. Delinquent Section 16(a) Reports: None IBM believes that all reports for IBM’s executive officers and directors that were required to be filed under Section 16 of the Securities Exchange Act of 1934 in 2024 were timely filed. 262025 Notice of Annual Meeting & Proxy Statement | Director Compensation Ownership of Securities
Frederick H. Waddell (Chair) Martha E. Pollack Michael Miebach Thomas Buberl
| For 2024 performance, the Board approved an annual incentive payment of $3,850,000 for Mr. Krishna, which was 110% of target. The payout reflects a 100% Individual Contribution Factor (ICF) and the Annual Incentive Program (AIP) pool funding at 110%. | |
Payouts in both the annual and long-term programs reflect rigorous performance goals
Payouts in both the annual and long-term programs reflect rigorous performance goals
Payouts in both the annual and long-term programs reflect rigorous performance goals
| Feedback from Our Investors Continues to Inform the Committee | | • IBM once again offered year-round robust engagement to our stockholders, reaching out to almost 75% of institutional investors and >250,000 retail investors leading up to the Annual Meeting. Following the 2024 Annual Meeting, during the off-season, we reached out to stockholders owning more than 70% of the shares that voted on Say on Pay in 2024. • Our stockholder discussions and formal 2024 Say on Pay vote reaffirmed investor support of our pay practices with 92.2% approval. |
Payouts in both the annual and long-term programs reflect rigorous performance goals
Section 1: Executive Compensation Program Design and Results Trust and personal responsibility in all relationships — relationships with clients, partners, communities, fellow IBMers, and investors — is a core value at IBM. As a part of maintaining this trust, we well understand the need for our investors — not only professional fund managers and institutional investor groups, but also millions of individual investors — to know how and why compensation decisions are made.
Payouts in both the annual and long-term programs reflect rigorous performance goals
| 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. |
Payouts in both the annual and long-term programs reflect rigorous performance goals
The specific elements of IBM’s current U.S. executive compensation programs are:
Payouts in both the annual and long-term programs reflect rigorous performance goals
| Type | Component | Key Characteristics |
Payouts in both the annual and long-term programs reflect rigorous performance goals
| Current Year Performance | 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) | Annual equity grants are based on competitive positioning and vary based on individual talent factors. 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 and a relative performance metric. | | | Restricted Stock Units (RSUs) | RSUs vest over time; typically ratably over four years. | | | Stock Options (SOs) | Stock Options vest over time; typically ratably over four years. The exercise price is 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. |
Payouts in both the annual and long-term programs reflect rigorous performance goals
Other compensation elements include perquisites, which are used on a limited basis to ensure safety and productivity of executives, and retirement benefits.
Full Career Performance: Retention, Pension, and Savings
Full Career Performance: Retention, Pension, and Savings Periodically, awards may be made in the form of Retention Restricted Stock Units (RRSUs) or cash awards to help retain certain executives. Vesting of RRSUs typically range from two to five years and cash awards have a clawback if an executive leaves IBM before it is earned. Eligible U.S. employees may participate in post-employment savings plans such as the IBM 401(k) Plan, and a non-qualified deferred compensation plan. Employer contributions in the non-qualified deferred compensation plan provides a 5% matching contribution for all eligible employees. The Company also provides a cash balance retirement benefit in the IBM Personal Pension Plan to all eligible employees equal to 5% of eligible pay.
2024 Metrics and Weightings
| Annual Incentive Program | | | | | Revenue | | Operating Cash Flow* | | | | Measures total revenue performance across the portfolio of business | | Measures our ability to reinvest and return value to shareholders | | Annual Incentive Plan Modifier: Serves as a mechanism to help attract and retain the best qualified talent available in the market, representing the industries, communities and clients we serve. | | | |
2024 Metrics and Weightings
| Performance Share Unit Program | | | | | | | Revenue | | Operating EPS* | | Free Cash Flow* | | | | Measures revenue performance over three years | | Measures operating profitability on a per share basis over three years | | Measures our ability to reinvest and return value to shareholders over three years | | Performance adjusted by a relative Return on Invested Capital Modifier. | | | | | |
2024 Annual Incentive Program
2024 Annual Incentive Program
2024 AIP Payout Results
2024 AIP Payout Results Based on full year performance of revenue and operating cash flow, the IBM pool funding score was 110. (1) Based on AIP payout table; the 2024 leveraged score resulted in 97% for Revenue and 104% for Operating Cash Flow; for Revenue, threshold attainment is 80% with a 50% payout, target attainment and payout is 100%, maximum attainment is 110% with a 200% payout; for Operating Cash Flow, threshold attainment is 70% with a 70% payout, target attainment and payout is 100%, maximum attainment is 120% with 200% payout. (2) Revenue financial target is adjusted to remove the effects of currency changes. (3) Operating Cash Flow is a non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric.
Performance Share Unit Program
Performance Share Unit Program The Performance Share Unit (PSU) financial metrics for the 2022-2024 program were Revenue, Operating EPS, and Free Cash Flow. Financial targets are established at the beginning of the three-year performance period. These targets are based on IBM’s financial model as shared with investors and the Board-approved business objectives. The PSU score is calculated as a weighted average of the results against the targets of Revenue (40%), Operating EPS (30%) and Free Cash Flow (30%). The results adjust Revenue for fluctuations in currency rates and Operating EPS for any difference between actual and targeted share count. Additionally, the scoring for the PSU Program may consider extraordinary events. For the 2022-2024 program, the results were adjusted for the impact of exiting our business in Russia in 2022. Gartner, Magic Quadrant for Container Management, 9 September 2024. Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and is not a representation of fact. Gartner Content speaks as of its original publication date (and not as of the date of this exhibit), and the opinions expressed in the Gartner Content are subject to change without notice. At the end of the three-year performance period, the Compensation Committee approves the results relative to the targets, which is leveraged up or down from 0% to 150%. The PSU Program also includes a Relative Return on Invested Capital (ROIC) modifier, which compares IBM’s performance to the median performance of the S&P 500 (excluding Financial Services) and S&P 500 Information Technology indices over the three-year program period. The modifier increases the score linearly by 20 points when IBM’s performance exceeds the median of the S&P 500 Information Technology index. The modifier reduces the score linearly by 20 points when IBM’s performance falls below the median of the S&P 500 Index. If Revenue, Operating EPS, and Free Cash Flow result in a 0% leveraged payout, the modifier does not apply. For the 2022-2024 program, the ROIC modifier was 0. The calculation for the 2022-2024 program is shown in the table below. Based on the leveraged performance and the ROIC modifier result, the final score is 93. (1) Based on PSU payout levels displayed below. (2) Non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric. (3) 2022-2024 revenue as reported, adjusted for fluctuations in foreign currency and impacts of separating business in Russia. (4) Non-GAAP financial metrics. Operating EPS includes immaterial share adjustments in all three years. For 2022-2024, both Operating EPS and Free Cash Flow were adjusted to exclude the impact of separating business in Russia. Free Cash Flow amounts are on a consolidated basis, and include immaterial activity from discontinued operations in 2022. See Appendix A for information on how we calculate these performance metrics. 2022-2024 PSUs: Threshold, Target, and Max Attainment % and Payout %:
Performance Share Unit Program
| | Threshold | Target | Max | | Financial Metrics | Attainment % / Payout % | Attainment % / Payout % | Attainment % / Payout % | | Revenue (40%) | 70% / 25% | 100% / 100% | 120% / 150% | | Operating EPS (30%)(1) | 70% / 25% | 100% / 100% | 120% / 150% | | Free Cash Flow (30%)(1) | 70% / 25% | 100% / 100% | 120% / 150% |
Performance Share Unit Program
Section 2: Compensation Program Governance
Compensation Practices
| | What We Do | | What We Don’t 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, President and CEO, Vice Chairman and Senior Vice Presidents • Utilize noncompetition and nonsolicitation agreements for senior executives • Remove impact of share repurchase on executive incentives | | • 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 |
1. Making Annual Performance Commitments
1. Making Annual Performance Commitments All IBM employees, including the Chairman and CEO, Vice Chairman and SVPs, develop goals, both qualitative and quantitative, that they seek to achieve in a particular year in support of the business. The Board of Directors reviews and approves the Chairman and CEO’s performance goals and formally reviews progress and outcomes. As part of this process, many factors are considered, including an understanding of the business risks associated with the performance goals.
2. Determining Annual Incentive Payouts
2. Determining Annual Incentive Payouts Evaluation of Chairman, President and CEO Results by the Compensation Committee The Chair of the Compensation Committee works directly with the Committee’s compensation consultant to provide a decision-making framework for use by the Committee in determining annual incentive payouts for the Chairman and CEO. This framework considers the Chairman and CEO’s self-assessment of performance against commitments in the year, both qualitative and quantitative, and also considers progress against strategic objectives, an analysis of IBM’s total performance over the year and the overall Company incentive score. The Committee considers all of this information in developing its recommendations, which are then presented to the independent members of the IBM Board of Directors for further review, discussion, and final approval. Evaluation of Vice Chairman and SVP Results by the Chairman, President and CEO and the Compensation Committee Executives work with their managers throughout the year to update their own results against their stated goals. The self-assessments of the Vice Chairman and SVPs are reviewed by the Senior Vice President of Human Resources and the Chairman and CEO, who evaluate the information. Following this in-depth review and taking into account the Company incentive score, the Chairman, President and CEO makes compensation recommendations to the Compensation Committee based on an evaluation of the Vice Chairman and each SVP’s performance for the year, and the Committee decides whether to approve or adjust the Chairman and CEO’s recommendations for the Vice Chairman and SVPs. The Committee then presents the compensation decisions for the Chief Financial Officer to the independent members of the IBM Board of Directors for ratification.
3. Setting Competitive Target Pay
3. Setting Competitive Target Pay Approach to Benchmarking IBM participates in several executive compensation surveys that provide general trend information and details on levels of salary, target annual incentives and long-term incentives, the relative mix of short- and long-term incentives, and mix of cash and stock-based pay. Given the battle for talent that exists in our industry, the benchmark companies that are used by the Compensation Committee to guide its decision making have included a broad range of key information technology companies, to help us identify trends in the industry. We also include companies outside our industry, with stature, size, and complexity that approximate our own, in recognition of the flow of executive talent in and out of IBM from other industries. The surveys and benchmark data are supplemented by input from the Compensation Committee’s outside consultant on factors such as recent market trends. The Committee reviews and approves this list annually. For 2024 and 2025 compensation decisions, the Committee utilized the following benchmark group criteria: • Companies in the technology industry with revenue that exceeds $10 billion, plus • Additional companies in other industries, with revenue that exceeds $30 billion, and that have a global complexity similar to IBM, and whose business strategy results in substantial competition for senior leadership talent. For 2024 and 2025 compensation decisions, the Committee approved the following benchmark group for each year using the criteria above, which achieves a balance between prominent technology competitors and large-scale companies of similar size of IBM, and accurately represents IBM’s competition for senior leadership talent. In consideration of size and complexity, IBM’s philosophy is to generally target the 50th percentile of the market for cash and total compensation. New in role executives are typically positioned below and brought up to median with sustained performance; while high performing executives may have above median target total pay opportunity driven by long-term incentives to retain executive skills for strong succession plans. To be consistent with our benchmark group criteria, for 2025 we removed VMware and General Electric, and added Broadcom and Elevance Health.
Benchmark Group
Benchmark Group
Benchmark Group
| Accenture | Boeing | Microsoft | UPS | | Adobe | Cisco Systems | Oracle | Verizon | | Alphabet | General Electric1 | PepsiCo | Visa | | Amazon.com | Hewlett Packard Enterprise | Qualcomm | VMware2 | | AT&T | Honeywell | RTX | | | Bank of America | Intel | Salesforce | |
Benchmark Group
(1) General Electric (GE) split into three companies: GE Aerospace, GE Vernova, and GE Healthcare, the split was completed on April 2, 2024. VMware was acquired by Broadcom in November 2023. Approach to Determining Individual Compensation For individual compensation decisions, the benchmark information is used together with an internal view of individual performance relative to other executives and recognizing that the skills and experience of our senior executives are highly sought after by other companies and, in particular, by IBM’s competitors. Because factors such as performance and retention, as well as size and complexity of the job role, are considered when compensation decisions are made, the cash and total compensation for an individual named executive officer may be higher or lower than the target reference point of the broader benchmark group. Evaluation of Chairman, President and CEO Target Pay by the Compensation Committee The Chair of the Compensation Committee works directly with the Committee’s compensation consultant to provide a decision-making framework for use by the Committee in setting target compensation opportunities for the Chairman and CEO. The independent members of the IBM Board of Directors review and provide final approval. Evaluation of Vice Chairman and SVP Target Pay by the Chairman, President and CEO and the Compensation Committee The Chairman, President and CEO makes compensation recommendations on the Vice Chairman and SVPs’ target compensation to the Compensation Committee. The Committee evaluates all of the factors considered by the Chairman and CEO and reviews compensation summaries that tally the dollar value of all compensation and related programs, including salary, annual incentive, long-term compensation, deferred compensation, retention payments and pension benefits. These summaries provide the Committee with an understanding of how their decisions affect other compensation elements, and the impact of separation of employment or retirement. The Committee decides whether to approve or adjust the Chairman and CEO’s recommendations for the Vice Chairman and SVPs. The Committee then presents the compensation decisions for the Chief Financial Officer to the independent members of the IBM Board of Directors for ratification. Section 3: Compensation Decisions for the Chairman, President and CEO and Named Executive Officers
2024 Annual Incentive Payment Decision for the Chairman, President and CEO
2024 Annual Incentive Payment Decision for the Chairman, President and CEO For 2024 performance, the Board approved an annual incentive payment of $3,850,000, which represented 110% of Mr. Krishna’s target opportunity and was in line with the Company incentive score. In addition to overall IBM 2024 revenue performance of $62.8 billion and $13.4 billion cash from operations, the Compensation Committee noted the following achievements for Mr. Krishna, which have positioned IBM for sustained growth going forward:
2024 Annual Incentive Payment Decision for the Chairman, President and CEO
| Business Results | • Software revenue grew 9% year-to-year and Consulting revenue grew 1% year-to-year at constant currency* • Continued shift toward higher growth revenue, with ~76% of revenue now in Software and Consulting • Free cash flow* generation of $12.7 billion (+$1.5 billion year over year) | | Portfolio And Investment | • Closed 11 strategic acquisitions in 2024 and invested $7.5 billion in Research, Development, & Engineering, focused on expanding hybrid cloud and AI capabilities • Sustainable revenue growth for third consecutive year | | Leadership In Innovation | • Significantly advanced IBM’s Generative AI capabilities through Granite 3.0 & 3.1 models, delivering state-of-the-art-inferencing performance and efficiency • Accelerated Gen AI adoption through internal use cases, client engagements, and software products • Continued Quantum leadership by delivering quantum-centric supercomputing roadmap, with Qiskit software performance far exceeding competition • Centralized governance for data, privacy and AI in a single Integrated Governance Program, creating a consolidated, company-wide view enhancing regulatory compliance and time to market | | Talent Development And Leadership | • Focused on growing expertise levels in key skills (AI and hybrid cloud) • Fostered a high-performance culture by retaining top talent • Continued best in class employee engagement |
2024 Annual Incentive Payment Decision for the Chairman, President and CEO
| 2025 Compensation Decisions for the Chairman, President and CEO | | For 2025, the independent members of the Board made no changes to Mr. Krishna’s base salary, which has not changed since he became CEO in April 2020. Mr. Krishna’s target annual incentive remained $3.5 million and he was granted an increased annual long-term incentive award valued at $25 million. Based on Mr. Krishna’s achievements over the past year and over the course of his tenure as CEO, Mr. Krishna’s target cash and total compensation are above the median of general industry peers and at the median of technology peers. Mr. Krishna’s long-term incentive grant is comprised of 60% 2025-2027 Performance Share Units, 20% Restricted Stock Units, and 20% Stock Options. For 2025, 78% of Mr. Krishna’s annual total target compensation is at risk and subject to attainment of rigorous performance goals and IBM’s stock price performance. |
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson The Compensation Committee also made decisions for the following named executive officers (NEOs), based on overall corporate performance as described in the Business Highlights and Executive Summary and an assessment of their individual contributions, some of which are summarized below:
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
| JAMES J. KAVANAUGH Senior Vice President, Finance & Operations and Chief Financial Officer | • Optimized portfolio and drove productivity initiatives generating operating pre-tax income margin expansion* of approximately 120-basis points in 2024. Achieved over $3.5 billion in annual run-rate savings, exceeding plan. • Delivered free cash flow* of $12.7 billion, up $1.5 billion year-to-year, enabling the return of more than $6 billion to stockholders through dividends and the investment of over $3 billion in 11 strategic acquisitions in 2024. • Attracted new investors to IBM through strong engagement with shareholders, resulting in a total shareholder return of approximately 40% in 2024. |
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
| ROBERT D. THOMAS Senior Vice President, Software & Chief Commercial Officer | • Delivered 9% Software revenue growth at constant currency* and grew Gen AI book of business** inception to date to approximately $1 billion across Software. • Strengthened Software portfolio through investment in talent and new product innovation, along with driving strategic M&A. • Continued transformation in go-to-market model to infuse more technical and experiential selling, and new client acquisition leveraging expanded ecosystem and strategic partnerships. |
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
| GARY COHN Vice Chairman | • Expanded IBM’s presence and brand awareness with strategic clients, partners, and the global ecosystem by deepening senior relationships. • Contributed to increased revenue and reach by leveraging expertise in public private partnerships, technology and business transformation, and policymaking on a wide range of business initiatives and external engagements to accelerate IBM’s hybrid cloud and AI strategy. • Facilitated and participated in discussions with global leaders, media, and at public events to further IBM’s point of view, public advocacy, and client relationships. |
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
| ANNE ROBINSON Senior Vice President and Chief Legal Officer | • Provided legal and regulatory support for IBM’s global growth objectives, with a particular focus on AI, Quantum, M&A, and Consulting. • Enhanced and streamlined IBM’s policies and practices to support the company’s continued technology innovation — advancing IBM’s culture and productivity goals. • Focused on optimizing the legal and regulatory affairs function and its talent to provide best-in-class legal support to business unit leaders globally — prioritizing speed-of-execution and balanced approaches to risk in service of IBM’s growth objectives. |
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
* Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics. See Appendix A for additional information on Gen AI book of business. Following the process outlined above and based on business and individual performance, the Compensation Committee approved the 2024 annual incentive payouts below for these NEOs:
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
| Name | 2024 Annual Incentive Payouts(1) | | J.J. Kavanaugh | $1,738,000 | | R.D. Thomas | 1,866,800 | | G. Cohn | 1,738,000 | | A. Robinson | 695,750(2) |
2024 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
(1) The named executive officers each had an incentive target equal to 135% of their salary for 2024. (2) Ms. Robinson’s annual incentive payout is pro-rated to reflect her performance period of July 1, 2024 through December 31, 2024.
2025 Compensation Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson
2025 Compensation Decisions for Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson The Committee also approved the following compensation elements for 2025: base salary, annual incentive target, Performance Share Unit (PSU), Restricted Stock Unit (RSU) and Stock Option grants under the Long-Term Performance Plan. For Long-Term Incentive Plan grants, the mix of equity vehicles is 60% PSUs, 20% RSUs and 20% Stock Options, which aligns with market practice. This mix provides competitive pay, while at the same time ensuring a strong link between pay and performance, and creates the right balance relative to peers with which we compete for talent. For 2024, based on the compensation decisions detailed below at target, approximately 75% of the NEOs’ (excluding the Chairman, President and CEO) pay is at risk.
NEO 2025 PAY MIX
| | 2025 Cash | | 2025 Long-Term Incentive Awards(2) | | | | Name | Salary Rate(1) | Annual Incentive Target | Performance Share Units | Restricted Stock Units | Stock Options | | J.J. Kavanaugh | $1,277,000 | $1,723,000 | $7,200,000 | $2,400,000 | $2,400,000 | | R.D. Thomas | 1,170,000 | 1,580,000 | 6,750,000 | 2,250,000 | 2,250,000 | | G. Cohn | 1,170,000 | 1,580,000 | 6,150,000 | 2,050,000 | 2,050,000 | | A. Robinson | 1,021,000 | 1,379,000 | 4,560,000 | 1,520,000 | 1,520,000 |
NEO 2025 PAY MIX
(1) Salary increases for the named executive officers, if applicable, will be effective April 1, 2025. PSUs, RSUs and Stock Options were granted on February 18, 2025 to the named executive officers, including the Chairman and the CEO. The actual number of units granted on this date are determined by dividing the value shown above by the average of IBM’s closing stock price for the 30 active trading days prior to grant reduced by the present value of expected dividends for PSUs and RSUs. The actual number of Stock Options granted on this date are determined by dividing the value shown by the product of (1) the average of IBM’s closing stock price for the 30 active trading days prior to grant reduced by the present value of expected dividends for PSUs and RSUs and (2) an option valuation factor of 0.25 (to reflect the discounted value of Stock Options compared to full value awards). The performance period for the PSUs ends December 31, 2027, and the award will pay out in February 2028. RSUs and Stock Options will vest 25% per year on each anniversary of the date of grant. Section 4: Additional Information
Compensation Program as It Relates to Risk
Compensation Program as It Relates to Risk IBM management, the Compensation Committee and the Committee’s outside consultant review IBM’s compensation policies and practices, with a focus on incentive programs, to ensure that they do not encourage excessive risk taking. This review includes the cash incentive programs and the long-term incentive plans that cover executives and employees. Based on this comprehensive review, we concluded that our compensation programs do not encourage excessive risk taking for the following reasons: • Our programs appropriately balance short- and long-term incentives, with approximately 75% of 2025 annual total target compensation provided in equity for the Chairman, President and CEO, Vice Chairman, and SVPs as a group. • Our executive compensation program pays for performance against financial targets that are set to be challenging to motivate a high degree of business performance, with an emphasis on longer-term financial success and prudent risk management. • Our incentive plans include a profit metric as a component of performance to promote disciplined progress toward financial goals. None of IBM’s incentive plans is based solely on signings or revenue targets, which mitigates the risk of employees focusing exclusively on the short term. • Qualitative factors beyond the quantitative financial metrics are a key consideration in the determination of individual executive compensation payments. How our executives achieve their financial results, integrate across lines of business and demonstrate leadership consistent with IBM values are key to individual compensation decisions. • As explained in the 2024 Potential Payments Upon Termination Narrative, we further strengthened our retirement policies on equity grants for our senior leaders beginning in 2009 to ensure that the long-term interests of IBM continue to be the focus, even as these executives approach retirement. • Our stock ownership guidelines require that the Chairman, President and CEO, Vice Chairman, and each SVP hold a significant amount of IBM equity to further align their interests with stockholders over the long term. • IBM’s policy requires a clawback of incentive-based compensation paid to an executive officer if there is a restatement of IBM’s financial results that would have affected the amount of incentive-based compensation, regardless of whether the executive officer’s conduct led to the restatement. Likewise, IBM’s equity plan has a clawback provision under which awards may be cancelled and certain gains repaid if an executive engages in activity that is detrimental to IBM. To further reinforce our commitment to ethical conduct, the IBM Excess Savings Plan allows the clawback of certain IBM contributions if a participant engages in activity that is detrimental to IBM. We are confident that our compensation program is aligned with the interests of our stockholders, rewards for performance and represents strong executive compensation governance practices.
Equity Award Practices
Equity Award Practices Under IBM’s long-standing practices and policies, all equity awards are approved before or on the date of grant. The exercise price of at-the-money Stock Options is the average of the high and low market price of IBM common stock on the New York Stock Exchange on the date of grant or as specified by the Compensation Committee. The equity award approval process specifies the individual receiving the grant, the number of units or the value of the award, the exercise price or formula for determining the exercise price, if different from the average of the high and low market price of IBM common stock on the New York Stock Exchange on the grant date, and the date of grant. In the case of planned grant value, the number of shares granted are determined by dividing the planned value by the average of IBM’s closing stock price for the 30 active trading days prior to grant reduced by the present value of expected dividends for PSUs and RSUs. For Stock Options, the average IBM closing stock price is further adjusted by an option valuation factor to reflect the discounted value of Stock Options compared to full value awards. As with all compensation decisions, the independent members of the Board approve all equity awards for the Chairman, President and CEO, and ratify all equity awards for the Chief Financial Officer. In addition, all equity awards for the Vice Chairman and each SVP are approved by the Compensation Committee. All equity awards for employees other than the Chairman and CEO, Vice Chairman and SVPs are approved by the Chairman and CEO, Vice Chairman and SVPs pursuant to a series of delegations that were approved by the Compensation Committee, and the grants made pursuant to these delegations are reviewed periodically with the Committee. Equity awards granted as part of annual total compensation for senior leaders and other employees are made on specific cycle dates scheduled in advance, typically February 18th or the previous business day (if the 18th does not fall on a business day). For Officers, the February grant date is scheduled within one month of the Compensation Committee’s approval of any applicable equity awards (at the end of January). IBM’s policy for new hires and promotions requires approval of any awards before or on the grant date of the award. IBM does not have any plans, programs or agreements that would provide any payments to any of the named executive officers upon a change in control of IBM, a change in the named executive officer’s responsibilities or a constructive termination of the named executive officer.
Hedging and Pledging Practices
Hedging and Pledging Practices IBM has multiple corporate leadership teams, which includes senior executives in client facing roles, technical innovation roles or key leadership positions. An example is the Performance Team, which consists of approximately 85 of our most senior leaders who run IBM business units and geographies and includes the Chairman, President and CEO, Vice Chairman, and each SVP. The team is accountable for business performance and the development of cross-unit strategies. As provided in its insider trading policy, IBM does not allow any member of the IBM Board of Directors or any member of its corporate leadership teams, including any named executive officer, to hedge the economic risk of their ownership of any IBM securities, which includes entering into any derivative transaction on IBM stock (e.g., any short-sale, prepaid variable forward contract, equity swap, collars, exchange funds) or to pledge any IBM securities at any time, which includes having IBM stock in a margin account or using IBM stock as collateral for a loan. Further, IBM does not allow any employee granted equity awards through the IBM Long-Term Incentive Plan to hedge or pledge those securities.
Tax Considerations
| Name and Principal Position (a) Year (b) | Salary(1) ($) (c) | Bonus(2) ($) (d) | Stock Awards(3) ($) (e) | Option Awards(4) ($) (f) | Non-Equity Incentive Plan Compensation(5) ($) (g) | Change in Retention Plan Value(6) ($) (h) | Change in Pension Value(7) ($) (h) | Nonqualified Deferred Compensation Earnings(8) ($) (h) | All Other Compensation (9)(10) ($) (i) | Total(11) ($) (j) | | A. Krishna, Chairman, President and CEO | | | | | | | | | | | | 2024 | $1,500,000 | $0 | $14,827,724 | $4,499,742 | $3,850,000 | $N/A | $34,056 | $0 | $432,161 | $25,143,682 | | 2023 | 1,500,000 | 0 | 11,483,809 | 3,339,560 | 3,510,000 | N/A | 23,183 | 0 | 541,874 | 20,398,426 | | 2022 | 1,500,000 | 0 | 8,927,701 | 2,033,636 | 3,480,000 | N/A | 0 | 0 | 638,738 | 16,580,075 | | J.J. Kavanaugh, Senior VP, F&O and CFO | | | | | | | | | | | | 2024 | $1,151,500 | $0 | $7,599,258 | $2,306,123 | $1,738,000 | $14,178 | $29,909 | $0 | $170,435 | $13,009,403 | | 2023 | 1,088,000 | 0 | 6,704,515 | 1,949,711 | 1,730,430 | 0 | 15,264 | 0 | 203,369 | 11,691,289 | | 2022 | 1,040,000 | 0 | 5,843,669 | 1,331,106 | 1,665,760 | 0 | 19,187 | 0 | 233,263 | 10,132,985 | | R.D. Thomas, Senior VP and Software Chief Commercial Officer(12) | | | | | | | | | | | | 2024 | $1,048,000 | $0 | $7,043,235 | $2,137,386 | $1,866,800 | $N/A | $19,461 | $0 | $168,516 | $11,852,598 | | 2023 | 994,750 | 0 | 5,843,417 | 1,699,249 | 1,552,500 | N/A | 3,170 | 0 | 241,228 | 10,334,314 | | G. Cohn, Vice Chairman | | | | | | | | | | | | 2024 | $1,170,000 | $0 | $5,931,188 | $1,799,913 | $1,738,000 | $N/A | $18,032 | $0 | $154,388 | $10,811,521 | | 2023 | 1,170,000 | 0 | 4,897,686 | 1,424,239 | 1,848,600 | N/A | N/A | 0 | 196,565 | 9,537,090 | | 2022 | 1,170,000 | 0 | 4,707,418 | 1,072,289 | 1,832,800 | N/A | N/A | 0 | 169,418 | 8,951,925 | | A. Robinson, Senior VP, Chief Legal Officer(13) | | | | | | | | | | | | 2024 | $467,500 | $750,000 | $6,841,641 | $1,090,629 | $695,750 | $N/A | $N/A | $0 | $31,840 | $9,877,360 |
2024 Outstanding Equity Awards at Fiscal Year-End Table
2024 Outstanding Equity Awards at Fiscal Year-End Table
2024 Outstanding Equity Awards at Fiscal Year-End Table
| | Option Awards | | | | | Stock Awards | | | | | | | | | Name (a) Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Options (#) Unexercisable(1) (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price(2) ($) (e) | Option Expiration Date (f) | Type of Award | Grant Date | Number of Shares or Units That Have Not Vested(3) (#) (g) | Market Value of Shares or Units That Have Not Vested(4) ($) (h) | Type of Award | Grant Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4) ($) (j) | | A. Krishna | | | | | | | | | | | | | | | 02/21/22 | 72,268 | 72,269 | N/A | $124.51 | 02/20/32 | RSU | 06/08/21 | 8,606 | $1,891,857 | PSU | 02/21/23 | 73,476 | $16,152,229 | | 02/21/23 | 36,730 | 110,193 | N/A | 133.00 | 02/20/33 | RSU | 06/21/22 | 10,329 | 2,270,624 | PSU | 02/21/24 | 67,362 | 14,808,188 | | 02/21/24 | 0 | 112,269 | N/A | 180.87 | 02/20/34 | RSU | 02/21/23 | 18,369 | 4,038,057 | | | | | | | | | | | | RSU | 02/21/24 | 22,454 | 4,936,063 | | | | | | Total | 108,998 | 294,731 | | | | | | 59,758 | $13,136,601 | | | 140,838 | $30,960,418 | | J.J. Kavanaugh | | | | | | | | | | | | | | | 02/21/22 | 47,303 | 47,303 | N/A | $124.51 | 02/20/32 | RSU | 06/08/21 | 5,163 | $1,134,982 | PSU | 02/21/23 | 42,897 | $9,430,048 | | 02/21/23 | 21,444 | 64,333 | N/A | 133.00 | 02/20/33 | RSU | 02/21/22 | 6,760 | 1,486,051 | PSU | 02/21/24 | 34,523 | 7,589,191 | | 02/21/24 | 0 | 57,538 | N/A | 180.87 | 02/20/34 | RSU | 02/21/23 | 10,725 | 2,357,677 | | | | | | | | | | | | RSU | 02/21/24 | 11,508 | 2,529,804 | | | | | | Total | 68,747 | 169,174 | | | | | | 34,156 | $7,508,513 | | | 77,420 | $17,019,239 | | R.D. Thomas | | | | | | | | | | | | | | | 02/21/22 | 36,791 | 36,792 | N/A | $124.51 | 02/20/32 | RRSU | 02/11/20 | 14,714 | $3,234,579 | PSU | 02/21/23 | 37,387 | $8,218,784 | | 02/21/23 | 18,689 | 56,069 | N/A | 133.00 | 02/20/33 | RSU | 06/08/21 | 3,443 | 756,875 | PSU | 02/21/24 | 31,997 | 7,033,901 | | 02/21/24 | 0 | 53,328 | N/A | 180.87 | 02/20/34 | RSU | 02/21/22 | 5,259 | 1,156,086 | | | | | | | | | | | | RSU | 02/21/23 | 9,348 | 2,054,971 | | | | | | | | | | | | RSU | 02/21/24 | 10,666 | 2,344,707 | | | | | | Total | 55,480 | 146,189 | | | | | | 43,430 | $9,547,217 | | | 69,384 | $15,252,685 | | G. Cohn | | | | | | | | | | | | | | | 02/21/22 | 38,105 | 38,106 | N/A | $124.51 | 02/20/32 | RSU | 01/04/21 | 5,114 | $1,124,211 | PSU | 02/21/23 | 31,336 | $6,888,593 | | 02/21/23 | 15,664 | 46,995 | N/A | 133.00 | 02/20/33 | RSU | 02/21/22 | 5,447 | 1,197,414 | PSU | 02/21/24 | 26,945 | 5,923,319 | | 02/21/24 | 0 | 44,908 | N/A | 180.87 | 02/20/34 | RSU | 02/21/23 | 7,835 | 1,722,368 | | | | | | | | | | | | RSU | 02/21/24 | 8,982 | 1,974,513 | | | | | | Total | 53,769 | 130,009 | | | | | | 27,378 | $6,018,506 | | | 58,281 | $12,811,912 | | A. Robinson | | | | | | | | | | | | | | | 07/01/24 | 0 | 28,240 | N/A | $174.94 | 06/30/34 | RSU | 07/01/24 | 5,648 | $1,241,600 | PSU | 02/21/23 | 5,591 | $1,229,070 | | | | | | | | RRSU | 07/01/24 | 20,592 | 4,526,739 | PSU | 02/21/24 | 8,472 | 1,862,400 | | Total | 0 | 28,240 | | | | | | 26,240 | $5,768,339 | | | 14,063 | $3,091,469 |
2024 Outstanding Equity Awards at Fiscal Year-End Table
Type of Award: PSU = Performance Share Unit RSU = Restricted Stock Unit RRSU = Retention Restricted Stock Unit SO = Stock Option (1) The stock option awards granted vest 25% per year on the first through fourth anniversaries of the respective grant dates, provided the individual remains employed through each vesting date, unless they meet certain requirements to be eligible for continued vesting. (2) The exercise prices shown in this column are equal to the high and low prices of IBM common stock on the New York Stock Exchange as of the grant date. (3) The amounts shown in column (g) of the 2024 Outstanding Equity Awards at Fiscal Year-End Table are unvested RSU and RRSU awards. See the 2024 Compensation Discussion and Analysis and the 2024 Summary Compensation Table for additional information on these types of awards. Mr. Thomas’ RRSU award vests on the anniversary of the grant date in 2024 and 2025 provided he is an employee of IBM on each vesting date. In 2021, 2022, 2023 and 2024 each named executive officer other than Ms. Robinson received RSU awards that vest 25% per year on the first through the fourth anniversaries of the grant date. Ms. Robinson was hired July 1, 2024, and her RRSU award vests 42% on the first anniversary of the grant date, and 29% vest on each of the second and third anniversaries of the grant date. Ms. Robinson’s RSUs vest 25% per year on the first through the fourth anniversaries of the date of grant. (4) Values in these columns are calculated by multiplying the number of units by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 2024 fiscal year ($219.83). The amounts shown in column (i) of the 2024 Outstanding Equity Awards at Fiscal Year-End Table are PSU awards that have not yet vested. See the 2024 Compensation Discussion and Analysis and the Summary Compensation Table Narrative for additional information on PSU awards. PSUs for all Named Executive Officers are paid out in February following the end of the respective performance period. 2025 Notice of Annual Meeting & Proxy Statement | 2024 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative53
2024 Option Exercises and Stock Vested Table
2024 Option Exercises and Stock Vested Table
2024 Option Exercises and Stock Vested Table
| | Option Awards | | Stock Awards(1) | | | Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | | A. Krishna | 0 | $0 | $87,607 | $17,881,951 | | J.J. Kavanaugh | 0 | 0 | 55,524 | 11,391,061 | | R.D. Thomas | 0 | 0 | 64,263 | 12,789,321 | | G. Cohn | 0 | 0 | 40,830 | 8,467,197 | | A. Robinson | 0 | 0 | 2,679 | 588,925 |
2024 Option Exercises and Stock Vested Table
(1) Amounts shown in these columns reflect PSU, RSU, and RRSU awards that vested during 2024. The PSU award for the 2022-2024 performance period vested on December 31, 2024, and paid out to each named executive officer on February 1, 2025; the value of this PSU award was determined by multiplying the number of shares by the closing price of IBM common stock on the vesting date ($219.83). See the Compensation Discussion and Analysis and the 2024 Summary Compensation Table for details on these types of awards.
542025 Notice of Annual Meeting & Proxy Statement | 2024 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative
542025 Notice of Annual Meeting & Proxy Statement | 2024 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative 2024 Retention Plan Narrative
Material Terms and Conditions: 1995 Retention Plan
erial Terms and Conditions: 1995 Retention Plan • The Retention Plan benefit for Mr. Kavanaugh is determined under the Retention Plan formula in effect prior to the July 1, 1999 amendment (1995 Retention Plan). • Benefits are available under the 1995 Retention Plan if at the time a participant separates from service they meet the early retirement age and service requirement, holds an executive-level position immediately prior to separation from service, and has final average pay of at least $160,000. • While Mr. Kavanaugh’s benefit is determined under the 1995 Retention Plan, he was partially grandfathered under this formula which means that his accruals stopped December 31, 2003 and the threshold to determine his benefit is $233,400 instead of $311,400 for fully grandfathered participants. If Mr. Kavanaugh terminates employment on or after age 60, his Retention Plan benefit expressed as an annual single life annuity is equal to: • If the participant terminates employment before age 60, the annual single life annuity resulting from the sum of the amounts specified in (1) through (4) is reduced as specified in the Retention Plan. C
Annual Pension Benefits
Annual Pension Benefits • The annual pension benefit that was earned as of December 31, 2007, under the Prior Plan, and as of December 31, 2024 under the RBA, and that is payable as a single life annuity beginning at normal retirement age for each of the eligible named executive officers is below. Because Messrs. Krishna, Kavanaugh, and Thomas will receive a lump sum payment for their Nonqualified Plan benefits, no amount is represented for them in the Nonqualified Plan column below:
Annual Pension Benefits
| Name | Annual Pension Benefit at Normal Retirement Age | | | | | Qualified Plan | Nonqualified Plan | Total Benefit | | A. Krishna | $25,478 | N/A | $25,478 | | J.J. Kavanaugh | 23,336 | N/A | 23,336 | | R.D. Thomas | 17,558 | N/A | 17,558 | | G. Cohn | 1,478 | N/A | 1,478 |
2024 Pension Benefits Table
2024 Pension Benefits Table As noted in the General Description and Purpose to the 2024 Retention Plan Narrative, the 2024 Pension Benefits Table does not include amounts reflected in the 2024 Retention Plan Table.
2024 Pension Benefits Table
| Name (a) | Plan Name (b) | Number of Years Credited Service(1) (#) (c) | Present Value of Accumulated Benefit ($) (d) | Payments During Last Fiscal Year ($) (e) | | A. Krishna | Prior Plan | 17 | $256,442 | $0 | | | RBA | 1 | 18,112 | 0 | | | Nonqualified Plan | 17 | 91,185 | 0 | | | Total Benefit | | $365,739 | $0 | | J.J. Kavanaugh | Prior Plan | 12 | $188,545 | $0 | | | RBA | 1 | 17,318 | 0 | | | Nonqualified Plan | 12 | 80,956 | 0 | | | Total Benefit | | $286,819 | $0 | | R.D. Thomas | Prior Plan | 9 | $83,967 | $0 | | | RBA | 1 | 15,773 | 0 | | | Nonqualified Plan | 9 | 246 | 0 | | | Total Benefit | | $99,986 | $0 | | G. Cohn | Prior Plan | N/A | N/A | $0 | | | RBA | 1 | 18,032 | 0 | | | Nonqualified Plan | N/A | N/A | 0 | | | Total Benefit | | $18,032 | $0 |
2024 Pension Benefits Table
(1) For the Prior Plan, reflects years of credited service as of December 31, 2007 and each of the named executive officers with a Prior Plan benefit above has 17 additional years of service with IBM after that date. Assumptions to determine present value as of December 31, 2024 for each eligible named executive officer: • Measurement date: December 31, 2024 • Interest rate for present value: 5.50% • To determine Personal Pension Account benefit: — Interest crediting rate: 5.20% for 2025 and 4.300% for 2026 and after — Interest rate to convert Personal Pension Account balance to single life annuity: 4.3633% for years 1-5, 4.9200% for years 6-20, and 5.3700% for year 21 and after — Mortality table to convert Personal Pension Account balance to single life annuity is 2025 Pension Protection Act Optional Combined Unisex Table • To determine RBA benefit: — Interest crediting rate: 6.0% for 2025 and 2026 and 4.30% for 2027 and after — Interest rate to convert Retirement Benefit Account balance to single life annuity: 4.3350% for years 1-5, 4.8600% for years 6-20, and 5.3250% for year 21 and after • Mortality (pre-commencement): None • Mortality (post-commencement): — Modified PRI-2012 White Collar sex-distinct tables for retirees, with applicable adjustments • Withdrawal rates: None • Retirement rates: None prior to Assumed Retirement Age • Normal Retirement Age: Age 60 for Retention Plan, Age 65 for IBM Personal Pension Plan • Assumed Retirement Age: Later of Age 60 for Retention Plan, Age 65 for IBM Personal Pension Plan, or current age • Accumulated benefit for (i) the Prior Plan is calculated based on credited service and compensation history as of December 31, 2007; and (ii) the RBA is calculated based on credited service and pay as of December 31, 2024. • In the case of the qualified Personal Pension Account formula, the benefit is payable as a 90% lump sum/10% annuity for Messrs. Krishna, Kavanaugh, and Thomas beginning on the first day of the month following a separation from service from IBM. The Excess Plan’s Personal Pension Plan Account formula benefit for Messrs. Krishna, Kavanaugh and Thomas is payable as a lump sum. The six-month delay under the Nonqualified Plan for “specified employees” as required under Section 409A of the Internal Revenue Code was disregarded for this purpose • In the case of the RBA formula, the benefit is payable as a 90% lump sum/10% annuity for all Named Executive Officers beginning on the first day of the month following a separation from service from IBM. The Retirement Benefit Account formula benefit for the Named Executive Officers is payable as a lump sum • All results shown are estimates only; actual benefits will be based on precise credited service and compensation history, which will be determined at separation from service from IBM Assumptions to determine present value as of December 31, 2023: • The column titled Change in Pension Value in the 2024 Summary Compensation Table quantifies the change in the present value of the pension benefit from December 31, 2023 to December 31, 2024 • To determine the present value of the pension benefit as of December 31, 2023, the same assumptions that are described above to determine the present value as of December 31, 2024 were used, except (1) a 5.0% interest rate, (2) to determine the Personal Pension Account benefit, the following were used: — Interest crediting rate: 6.40% for 2024 and 3.80% for 2025 after — Interest rate to convert Personal Pension Account balance to single life annuity: 5.6000% for years 1-5, 5.7733% for years 6-20, and 5.7267% for year 21 and after Mortality table for Personal Pension Account balance conversion: 2024 Pension Protection Act Optional Combined Unisex Table 582025 Notice of Annual Meeting & Proxy Statement | 2024 Pension Benefits Narrative 2024 Nonqualified Deferred Compensation Narrative IBM Excess Savings Plan — U.S.
Payouts, Withdrawals, and Other Distributions
Payouts, Withdrawals, and Other Distributions • No payouts, withdrawals or other distributions from the Basic Account are permitted prior to a separation from service from IBM. • At termination, the balance in an eligible executive’s Basic Account that was deferred prior to January 1, 2005, is paid to the executive in an immediate lump sum unless: (a) the balance exceeds $25,000; and (b) the executive satisfies the following age and service criteria: — At least age 55 with 15 years of service; — At least age 62 with 5 years of service; — At least age 65 with 1 year of service; — Any age with at least 30 years of service, provided that, as of June 30, 1999, the executive had at least 25 years of service or was at least age 40 with 10 years of service; or — Commencing benefits under the IBM Long-Term Disability Plan. • As of December 31, 2024, Messrs. Krishna and Kavanaugh had satisfied the age and service criteria. • If the participant has satisfied the age, service, and account balance criteria at termination, but has not made a valid advance election of another form of distribution, the amount of the participant’s Basic Account that was deferred prior to January 1, 2005, is paid in a lump sum in February of the year following separation. • If the participant has satisfied the age, service, and account balance criteria at termination and has made a valid advance election, the amount of the participant’s Basic Account that was deferred prior to January 1, 2005, is paid as elected by the participant from among the following choices: 1. Lump sum upon termination; 2. Lump sum in February of the year following termination; or 3. Annual installments (beginning February 1 of the year following termination) for a number of years (between two and ten) elected by the participant. • The participant’s Basic Account with respect to amounts deferred on or after January 1, 2005, may be distributed in the following forms as elected by the participant: 1. Lump sum upon separation; 2. Lump sum in February of the year following separation; or 3. Annual installments (beginning February 1 of the year following separation) for a number of years (between two and ten) elected by the participant. However, if the participant has elected annual installments and the total balance of the participant’s Basic Account upon a separation from service from IBM is less than 50% of the applicable Internal Revenue Code compensation limit (in 2024, 50% of this limit was $172,500), the amounts deferred on or after January 1, 2005 are distributed in a lump sum on the date installments would have otherwise begun. • Distribution elections may be changed in advance of separation, in accordance with Internal Revenue Code rules. • Distribution elections apply to both the Basic Account and the Deferred Shares Account. Further, within the Basic Account and the Deferred Shares Account, different distribution elections are permitted to be made for the amounts that were deferred before January 1, 2005, and the amounts that were deferred on or after January 1, 2005. These distribution rules are subject to Section 409A of the Internal Revenue Code, including, for example, the rule that a “specified employee” may not receive a distribution of post-2004 deferrals until at least six months following a separation from service from IBM. All named executive officers were “specified employees” under Section 409A at the end of the last fiscal year. 602025 Notice of Annual Meeting & Proxy Statement | 2024 Nonqualified Deferred Compensation Narrative
2024 Nonqualified Deferred Compensation Table
2024 Nonqualified Deferred Compensation Table
2024 Nonqualified Deferred Compensation Table
| Name (a) | Plan | Executive Contributions in Last FY(1) ($) (b) | | Registrant Contributions in Last FY(2) ($) (c) | Aggregate Earnings in Last FY(3) ($) (d) | Aggregate Withdrawal/ Distributions ($) (e) | Aggregate Balance at Last FYE(4) ($) (f) | | A. Krishna | Basic Account | $285,600 | Match | $235,356 | $1,609,197 | $0 | $10,062,428 | | | | | Automatic | 4,212 | | | | | | Deferred IBM Shares | 0 | | 0 | 0 | 0 | 0 | | | Total | $285,600 | | $239,568 | $1,609,197 | $0 | $10,062,428 | | J.J. Kavanaugh | Basic Account | $57,575 | Match | $57,575 | $1,987,076 | $0 | $10,067,506 | | | | | Automatic | 0 | | | | | | Deferred IBM Shares | 0 | | 0 | 8,386 | 0 | 32,755 | | | Total | $57,575 | | $57,575 | $1,995,462 | $0 | $10,100,261 | | R.D. Thomas | Basic Account | $67,535 | Match | $67,434 | $199,754 | | $1,586,417 | | | | | Automatic | 932 | 0 | 0 | 0 | | | Deferred IBM Shares | 0 | | 0 | 0 | 0 | 0 | | | Total | $67,535 | | $68,366 | $199,754 | $0 | $1,586,417 | | G. Cohn | Basic Account | $936,000 | Match | $133,680 | $480,422 | $0 | $4,635,886 | | | | | Automatic | 0 | | | | | | Deferred IBM Shares | 0 | | 0 | 0 | 0 | 0 | | | Total | $936,000 | | $133,680 | $480,422 | $0 | $4,635,886 |
2024 Nonqualified Deferred Compensation Table
(1) A portion of the amount reported in this column (b) for each named executive officer’s Basic Account is included within the amount reported as salary for that officer in column (c) of the 2024 Summary Compensation Table. These amounts are: $75,000 for Mr. Krishna; $57,575 for Mr. Kavanaugh; $20,960 for Mr. Thomas; and $936,000 for Mr. Cohn. (2) For each of the named executive officers, the entire amount reported in this column (c) is included within the amount reported in column (i) of the 2024 Summary Compensation Table. (3) None of the amounts reported in this column (d) are reported in column (h) of the 2024 Summary Compensation Table because IBM does not pay above-market or preferential earnings on deferred compensation. Amounts reported in this column (f) for each named executive officer include amounts previously reported in IBM’s Summary Compensation Table in previous years when earned if that officer’s compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, salary, and incentive and IBM contributions. This total reflects the cumulative value of each named executive officer’s deferrals, IBM contributions and investment experience, including an $8 quarterly administrative fee. 2025 Notice of Annual Meeting & Proxy Statement | 2024 Nonqualified Deferred Compensation Narrative 61 2024 Potential Payments Upon Termination Narrative
IBM Long-Term Performance Plans (LTPP)
Long-Term Performance Plans (LTPP) • The named executive officers have certain outstanding equity grants under the LTPP including: — Stock Options; — Restricted Stock Units (RSUs); — Retention Restricted Stock Units (RRSUs); and/or — Performance Share Units (PSUs) • The LTPP and/or the named executive officers’ equity award agreements contain the following terms: — Generally, unvested Stock Options, RSUs, RRSUs, and PSUs are cancelled upon termination; and — Vested Stock Options may be exercised only for 90 days following termination. • Payment of these awards is not triggered by termination of employment (because the awards would become payable under the terms of the LTPP if the named executive officer continued employment), but if he or she resigns, retires or is involuntarily terminated without cause after attaining age 55 with at least 15 years of service (for Ms. Robinson, pursuant to her offer letter, she must be employed through December 31, 2027, regardless of age and service at termination), the following terms apply: — Vested Stock Options continue to be exercisable for the remainder of their ten-year term; and — IBM prorates a portion of unvested PSU awards to continue to vest under their original vesting schedules. • If an executive dies, outstanding Stock Options, RSU awards and RRSU awards would vest immediately, and outstanding PSU awards would remain outstanding and continue to vest under their original vesting schedules. • If an executive becomes disabled, outstanding Stock Options, RSUs and RRSUs would continue to vest under their original vesting schedules, and outstanding PSUs would remain outstanding and continue to vest under their original vesting schedules. • In cases other than death or disability, certain executives may be eligible for continued vesting of these awards after separation. — To ensure that the interests of the members of the Performance Team are aligned with IBM’s long-term interests as these leaders approach retirement, these executives, including the named executive officers, may be eligible to receive payouts of their full unvested PSU and RSU awards upon termination, and effective for Stock Options granted after 2021, unvested Stock Options may continue to vest upon termination, if the following criteria are met: • The executive is on the Performance Team at the time of departure; For RSU awards and Stock Options, at least one year has passed since the award grant date; and for PSU awards, at least one year has passed in the performance period; 622025 Notice of Annual Meeting & Proxy Statement | 2024 Potential Payments Upon Termination Narrative The executive has reached age 55 with 15 years of service at the time of departure (for Ms. Robinson, pursuant to her offer letter, she must be employed through December 31, 2027, regardless of age and service at termination); and • The payout has been approved by appropriate senior management, the Compensation Committee, or the Board, in their discretion. — The Chairman, President and CEO is also eligible for the payouts described upon termination, but instead must reach age 60 with 15 years of service, and the payout must be approved by the Board, in its discretion. — Payouts of PSU awards after termination as described above will be made in February after the end of the three-year performance period based on the final program score. Payouts of RSU awards after termination, as described above, will be made in accordance with the original vesting schedule. Unvested Stock Options will continue to vest and vested Stock Options (including those that vest after termination of employment) will be exercisable for the remainder of the original contractual term of the Stock Option. • The 2024 Potential Payments Upon Termination Table assumes the following: — Amounts shown include the payout of the 2022 PSU awards calculated using the actual performance achieved for the 2022-2024 performance period and the 2024 fiscal year-end closing price of $219.83 or IBM common stock; and — Outstanding 2023 and 2024 PSU awards were not included because there is no guarantee of payment on these awards as they are subject to meeting threshold performance criteria. — Amounts shown include the value of 2021, 2022 and 2023 RSU awards and 2022 and 2023 Stock Options, if the required retirement criteria is met, at the fiscal year-end closing price of $219.83 for IBM common stock because the one-year service requirement from grant has been completed; and — Outstanding 2024 RSU awards and Stock Options are not included because the required service of at least one year since the award date of grant has not been completed. • LTPP awards for executive officers are subject to forfeiture and rescission if an executive is terminated for cause or engages in activity that is detrimental to IBM prior to or within 12 months following release, exercise, or payment (or within 36 months for RRSU awards). LTPP awards for executive officers also contain a covenant that the recipient will not solicit IBM clients for a period of one year or employees for a period of two years following termination of employment. In addition, PSU payouts to executive officers are subject to clawback as described in Section 4 of the 2024 Compensation Discussion and Analysis. I
2024 Potential Payments Upon Termination Table
2024 Potential Payments Upon Termination Table
2024 Potential Payments Upon Termination Table
| | | | LTPP | | | Nonqualified Deferred Compensation Excess Savings(6) | | | Name | Termination Scenario | Annual Incentive Program(2) ($) | Stock Options(3) ($) | Stock Awards(4) ($) | Retention Plan(5) ($) | Basic Account ($) | Deferred IBM Shares ($) | | A. Krishna | Termination(1) | $3,850,000 | $26,534,591 | $20,868,462 | N/A | $10,062,428(7) | $N/A | | | For Cause | 0 | 0 | 0 | N/A | 9,822,860(7) | N/A | | J.J. Kavanaugh | Termination(1) | 1,738,000 | 16,465,861 | 13,270,478 | $11,711 | 10,100,261(8) | 32,755(8) | | | For Cause | 0 | 0 | 0 | 0 | 10,042,686(8) | 32,755(8) | | R.D. Thomas | Termination(1) | 1,866,800 | 5,129,684 | 6,449,153 | N/A | 1,586,417(9) | N/A | | | For Cause | 0 | 0 | 0 | N/A | 1,517,950(9) | N/A | | G. Cohn | Termination(1) | 1,738,000 | 4,992,274 | 6,679,535 | N/A | 463,589(10) | N/A | | | For Cause | 0 | 0 | 0 | N/A | 329,909(10) | N/A | | A. Robinson | Termination(1) | 695,750 | 0 | 588,925 | N/A | N/A(11) | N/A | | | For Cause | 0 | 0 | 0 | N/A | N/A(11) | N/A |
2024 Potential Payments Upon Termination Table
(1) Termination generally includes the following separation scenarios: resignation, retirement, and involuntary termination without cause (in all cases, assuming the executive is not entering into competitive or other activity detrimental to IBM). (2) Assumes that the AIP payment made to each named executive officer following termination of employment on the last business day of the fiscal year end would have been the same as the actual payment made in April 2025. (3) While unvested 2022 and 2023 Stock Options are included if required retirement criteria are met and assuming exercise at $219.83, unvested 2024 Stock Options are not included because the required service of at least one year since the award date of grant had not been completed. (4) Assumes IBM released each named executive officer’s PSU award, granted in 2022 according to its policy, for the three-year performance period ending December 31, 2024. PSU awards are adjusted for performance and released in shares of IBM common stock (with any fractional shares rounded to the nearest whole share) in February in the year following the end of the performance period. While outstanding 2021, 2022 and 2023 RSU awards are included if required retirement criteria is met, 2024 RSU awards are not included because the required service of at least one year since the award date of grant had not been completed. (5) Reflects the Retention Plan benefit payable for eligible named executive officers as an immediate annual single life annuity. See the IBM Supplemental Executive Retention Plan section above for more details. (6) Estimated payments to each named executive officer were calculated using the aggregate account balance as of the last business day of the fiscal year end, and are based on their distribution elections under the plan. See the IBM Excess Savings Plan section above for more details. (7) The amount deferred prior to January 1, 2005 is payable in a lump sum in February 2025. The amount deferred on or after January 1, 2005 is payable in a lump sum immediately following separation. For Cause, the termination payment from the Basic Account is reduced to reflect forfeiture of Match and Automatic Contribution made during the last 12 months under plan terms. See column (c) in 2024 Nonqualified Deferred Compensation Table. (8) Sum of the approximate annual amount of Basic Account deferred prior to January 1, 2005 payable for 2 years starting in February 2025 ($660,852) and the amount of the Basic Account deferred on or after January 1, 2005 payable in a lump sum in February 2025 ($8,778,558). Deferred shares are paid as shares of IBM common stock. For Cause, the termination payment from the Basic Account is reduced to reflect forfeiture of Match and Automatic Contribution made during the last 12 months under plan terms. See column (c) in 2024 Nonqualified Deferred Compensation Table. (9) Payable in a lump sum in February 2025. For Cause, the termination payment from the Basic Account is reduced to reflect forfeiture of Match and Automatic Contribution made during the last 12 months under plan terms. See column (c) in 2024 Nonqualified Deferred Compensation Table. (10) Payable in 10 annual installments starting in February 2025. For Cause, the termination payment from the Basic Account is reduced to reflect forfeiture of Match and Automatic Contribution made during the last 12 months under plan terms. See column (c) in 2024 Nonqualified Deferred Compensation Table. (11) The Excess Savings Plan does not permit mid-year enrollments, and as Ms. Robinson was hired July 1, 2024, she was not a participant in the plan in 2024.
Pay Ratio
Pay Ratio The ratio of the CEO’s annual total compensation to that of the median employee’s annual total compensation is 518:1. This ratio is based on annual total compensation of $25,143,682 for the CEO (as reported in the Summary Compensation Table) and $48,582 for the median employee. The base salary for the median employee was $43,069. The median employee used for the pay ratio disclosure was determined as of October 1, 2024 using annual base pay for IBM employees on that date; all foreign currencies were converted to U.S. dollars. 642025 Notice of Annual Meeting & Proxy Statement | 2024 Potential Payments Upon Termination Narrative Pay Versus Performance
Pay Ratio
| Year (a) | Summary Compensation Total for the Principal Executive Officer (“PEO”) (b)(1) | Compensation Actually Paid to the PEO (c)(1)(7) | Summary Compensation Total for the Principal Executive Officer (“PEO”) (b)(2) | Compensation Actually Paid to the PEO (c)(2)(7) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“Non-PEO NEOs”) (d)(3) | Average Compensation Actually Paid to Non-PEO NEOs (e)(3)(7) | Value of Initial Fixed $100 Investment Based on: | | Net Income (in $M) (h)(5) | Revenue (in $M) (i)(6) | | | | | | | | | Total Shareholder Return (f) | Peer Group Total Shareholder Return (g)(4) | | | | 2024 | $25,143,682 | $44,688,180 | N/A | N/A | $11,495,421 | $19,997,366 | $217 | $204 | $6,023 | $62,753 | | 2023 | 20,398,426 | 32,769,352 | N/A | N/A | 9,916,713 | 14,444,039 | 156 | 167 | 7,502 | 61,860 | | 2022 | 16,580,075 | 23,935,007 | N/A | N/A | 8,318,193 | 10,496,901 | 128 | 115 | 1,639 | 60,530 | | 2021 | 17,550,959 | 23,798,901 | N/A | N/A | 8,706,301 | 9,116,435 | 115 | 179 | 5,743 | 57,350 | | 2020 | 17,009,682 | 13,997,217 | $21,062,593 | $15,778,831 | 12,913,982 | 10,795,062 | 99 | 132 | 5,590 | 55,179 |
Pay Ratio
(1) Mr. Krishna was the PEO for all five years in the table. For 2024, amounts deducted from the PEO’s Summary Compensation Table (“SCT”) total to calculate Compensation Actually Paid (“CAP”) to the PEO include ($19,327,466) for the date of grant fair value of stock awards and stock options, as well as ($34,056) for Change in Pension Value in 2024. Amounts added to (or subtracted from) the PEO’s SCT total for 2024 also include: $24,967,042 for the fair value of stock awards and stock options that were granted in 2024 and which remained outstanding at the end of 2024; $9,102,543 for the change in fair value of stock awards and stock options that were granted in prior years and which remained outstanding at the end of 2024; and $4,820,807 for the change in fair value of stock awards and stock options that were granted in prior years and vested in 2024; and $15,627 for Retirement Benefit Account service cost. (2) Ms. Rometty was the PEO from April 5, 2020 (when she became Executive Chairman) through her retirement from IBM on December 31, 2020. (3) The Non-PEO NEOs were, for 2024, Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Robinson; for 2023, Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Michelle Browdy; for 2021 and 2022, Mr. Kavanaugh, Mr. Cohn, Mr. Thomas Rosamilia, and Ms. Michelle Browdy; and for 2020, Mr. Kavanaugh, Ms. Michelle Browdy, Mr. James Whitehurst, and Dr. John Kelly. Amounts subtracted from the average SCT totals for the Non-PEO NEOs (“Average Non-PEO SCT”) to calculate Average CAP to the Non-PEO NEOs (“Average Non-PEO CAP”) for 2024 include ($8,687,343) for the average value at the date of grant of stock awards and stock options granted in 2024 as well as ($20,395) for the average Change in Pension and Retention Plan Values in 2024. Amounts added to (or subtracted from) the Average Non-PEO SCT to calculate Average Non-PEO CAP for 2024 also include: $11,189,702 for the average fair value of stock awards and stock options that were granted in 2024 and which remained outstanding at the end of 2024; $3,744,988 for the average change in fair value of stock awards that were granted in prior years and which remained outstanding at the end of 2024; and $2,263,466 for the average change in fair value of stock awards that were granted in prior years and vested during 2024, except Ms. Robinson’s 2022-2024 PSU, which was both granted and vested in 2024 for $588,783; and $11,529 for the Retirement Benefit Account service cost. (4) Peer Group Total Shareholder return is calculated based on IBM’s Proxy Peer Group that was disclosed in the Compensation Discussion & Analysis section of IBM’s Proxy Statement for each respective year shown in the table, weighted based on the Peer Group’s Market Capitalization as of December 31, 2019. Due to Broadcom’s acquisition of VMware in November 2023, Total Shareholder Return for VMware is as of November 2023. Due to General Electric (GE)’s split into 3 companies: GE Aerospace, GE Vernova, and GE Healthcare (which was completed on April 2, 2024), Total Shareholder Return for General Electric was modeled assuming the return of a $100 investment as of 12/31/24 was invested in GE on 1/1/24, based on the value of the three companies created by the separation. As disclosed in IBM’s 2022 Proxy Statement, the Company updated its Peer Group in 2022 to increase the weighting of peers in the technology industry, to reflect IBM’s increased orientation as a hybrid cloud and AI company, and align the 2022 Peer Group with the size and scope of IBM following the separation of Kyndryl on November 3, 2021. If IBM used the 2021 Peer Group in 2022, the cumulative Total Shareholder Return from 12/31/2019 to 12/31/2022 would have been $129 (compared to $115 for the 2022 Peer Group) and if the 2021 Peer Group was used in 2023, the cumulative Total Shareholder Return from 12/31/2019 to 12/31/2023 would have been $182 (compared to $167 for the 2023 Peer Group). If the 2021 Peer Group was used in 2024, the cumulative Total Shareholder Return from 12/31/2019 to 12/31/2024 would have been $226 (compared to $204 for the 2024 Peer Group). (5) Net Income in 2021 and 2020 includes the Managed Infrastructure business, which separated from IBM on November 3, 2021 as Kyndryl. Net Income from Continuing Operations, which would have excluded the Managed Infrastructure business, would have been $4,712 million and $3,932 million for 2021 and 2020, respectively. Net Income in 2024 includes the impacts of one-time, non-cash, U.S. and non-U.S. pension settlement charges of $3.1 billion ($2.4 billion net of tax). Net Income in 2022 included a one-time, non-cash pension settlement charge of approximately $4.4 billion, net of tax. (6) Revenue metric reflects Revenue from Continuing Operations to provide for consistent comparison before and after the separation of the Managed Infrastructure business as Kyndryl on November 3, 2021. The fair value of stock awards and stock options included in CAP to the PEO and Average Non-PEO CAP are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in IBM’s Annual Report. Any changes to stock award fair values from the grant date (for current year grants) and from prior year-end (for prior year grants) are based on IBM’s stock price at the respective measurement dates (less the present value of foregone dividends), and the performance metric scoring projections (if applicable) at the respective measurement dates. Changes to stock option fair values are based on IBM’s stock price at the respective measurement dates, in addition to an updated expected option term, volatility of the company’s stock over the updated expected option term, expected dividend yield, and risk-free rate assumptions. For each of 2022, 2023, and 2024, the year-end stock option fair value increased meaningfully from the fair value on the grant date, primarily driven by an increase in IBM’s stock price, and, for 2022, an increase in the risk-free interest rate to approximately 4% at year-end from approximately 2% on the grant date. 2025 Notice of Annual Meeting & Proxy Statement | Pay Versus Performance 65
Relationship between Compensation Actually Paid disclosed in the Pay Versus Performance table, and other table elements
Relationship between Compensation Actually Paid disclosed in the Pay Versus Performance table, and other table elements Both CAP to Mr. Krishna and cumulative total shareholder return increased over the prior year in each of 2024, 2023, 2022 and 2021. As there were no changes to Mr. Krishna’s base salary, target annual incentive, or target equity grant planned value since Mr. Krishna became CEO in April 2020 through 2022, the increase in PEO CAP was largely the result of the increase in IBM’s stock price over that same time period. In addition to IBM’s stock price increase from 2022 to 2023, the PEO CAP increase in 2023 also resulted from the increase in Mr. Krishna’s 2023 target equity grant, which was in line with the median of the 2023 benchmark group. The average Non-PEO NEO increases in each of 2022, 2023, and 2024 is also largely the result of IBM’s increased stock price in each of those years. The average Non-PEO CAP decreased in 2021, primarily because of the change in Non-PEO NEOs compared to 2020. The increase in IBM’s stock price that largely contributed to the increased PEO CAP also drove the increase in IBM’s Total Shareholder Return (“TSR”) in 2024, 2023, 2022 and 2021. While the TSR increased over the five-year period, the average non-PEO NEO CAP decreased in 2021 for the reasons noted above. The five-year cumulative total shareholder return for IBM was 116.7%. An initial fixed investment value of $100 at the beginning of 2019 would have been valued at $216.70 at the end of 2024. While IBM’s cumulative five-year total shareholder return is approximately 117%. IBM’s Peer Group five-year cumulative total shareholder return was 103.6% which means IBM return was approximately 13% above its Peer Group. IBM’s Revenue from Continuing Operations increased in 2024, 2023, 2022 and 2021 and was directionally aligned with PEO CAP for the reported period. Net Income in 2024 includes the impacts of one-time, non-cash, U.S. and non-U.S. pension settlement charges of $3.1 billion ($2.4 billion net of tax). Without this charge, 2024 Net Income would have increased from 2023, following increases from 2023 and 2021, directionally in line with the PEO CAP. Net Income in 2022, which included a one-time non-cash pension settlement charge of $4.4 billion (net of tax), decreased in 2022. Without this charge, 2022 Net Income would have increased from 2021 to 2022 as well.
Tabular List of IBM’s most important metrics that link Compensation Actually Paid to the PEO and other NEOs
Tabular List of IBM’s most important metrics that link Compensation Actually Paid to the PEO and other NEOs We consider the list below to be IBM’s most important metrics that link CAP to our Named Executive Officers to IBM’s performance, as they are the key metrics that determine the payout of IBM’s Annual Incentive Program and Performance Stock Units.
Tabular List of IBM’s most important metrics that link Compensation Actually Paid to the PEO and other NEOs
| Revenue | | Operating Cash Flow | | Operating EPS | | Free Cash Flow |
Tabular List of IBM’s most important metrics that link Compensation Actually Paid to the PEO and other NEOs
662025 Notice of Annual Meeting & Proxy Statement | Pay Versus Performance Report of the Audit Committee of the Board of Directors The Audit Committee hereby reports as follows: 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 https://www.ibm.com/auditcommcharter. 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, 2024, for filing with the Securities and Exchange Commission.