β β 11, 2024 what lies ahead. β β β β β β β β Business: www.virtualshareholdermeeting.com/IBM2024 β Matters β Items of Business β Boardβs recommendation 1. β β β β β β β Nominees Β Β Β Β Β Β Β Β Β Β AuditΒ Committee Director Β Age Β PrimaryΒ Occupation Β DirectorΒ Since Β CommitteeΒ Memberships Β FinancialΒ Expert Kenneth I. Chenault Β 66 Β Retired Chairman and Chief Executive Officer, American Express Company Β 1998 Β Β Michael L. Eskew Presiding Director Β 68 Β Retired Chairman and Chief Executive Officer, United Parcel Service,Β Inc. Β 2005 Β Β David N. Farr Β 63 Β Chairman and Chief Executive Officer, Emerson Electric Co. Β 2012 Β Β Alex Gorsky Β 57 Β Chairman and Chief Executive Officer, JohnsonΒ & Johnson Β 2014 Β Β Shirley Ann Jackson Β 71 Β President, Rensselaer Polytechnic Institute Β 2005 Β Β Andrew N. Liveris Β 63 Β Executive Chairman, DowDuPont Inc. and Chairman and Chief Executive Officer, The Dow Chemical Company Β 2010 Β Β Hutham S. Olayan Β 64 Β Vice Chairman, The Olayan Group Β 2016 Β Β James W. Owens Β 72 Β Retired Chairman and Chief Executive Officer, Caterpillar Inc. Β 2006 Β Β Virginia M. Rometty Β 60 Β Chairman, President and Chief Executive Officer,Β IBM Β 2012 Β Β Joseph R. Swedish Β 66 Β Executive Chairman and Past President and Chief Executive Officer, Anthem,Β Inc. Β 2017 Β Β Sidney Taurel Β 69 Β Chairman Emeritus, Eli Lilly and Company Chairman, Pearson plc Β 2001 Β Β Peter R. Voser Β 59 Β Retired Chief Executive Officer, Royal Dutch Shell plc Chairman, ABB Ltd. Β 2015 Β Β Frederick H. Waddell Β 64 Β Chairman and Retired Chief Executive Officer, Northern Trust Corporation Β 2017 Β Β β β β Director Nominees β β Companyβs most important client industries and constituencies. β β companies; Chairman, ABB Ltd., a global group of power and automation companies Certain Transactions and Relationships $50,000. Β Β FeesΒ EarnedΒ or Β AllΒ Other Β Β Β Name Β PaidΒ inΒ CashΒ ($) Β CompensationΒ ($) Β TotalΒ ($) Β (a) Β (b) Β (c)(1) Β (d) Β Kenneth I. Chenault Β $ 300,000 Β $ 173,358 Β $ 473,358 Β Michael L. Eskew Β 350,000 Β 150,355 Β 500,355 Β David N. Farr Β 300,000 Β 42,668 Β 342,668 Β Mark Fields Β 300,000 Β 13,895 Β 313,895 Β Alex Gorsky Β 300,000 Β 31,621 Β 331,621 Β Shirley Ann Jackson Β 320,000 Β 139,943 Β 459,943 Β Andrew N. Liveris Β 300,000 Β 80,254 Β 380,254 Β W. James McNerney,Β Jr. Β 300,000 Β 84,755 Β 384,755 Β Hutham S. Olayan Β 300,000 Β 15,922 Β 315,922 Β James W. Owens Β 300,000 Β 109,863 Β 409,863 Β Joan E. Spero(2) Β 95,833 Β 69,861 Β 165,694 Β Joseph R. Swedish(3) Β 51,667 Β 20 Β 51,687 Β Sidney Taurel Β 320,000 Β 180,902 Β 500,902 Β Peter R. Voser Β 300,000 Β 28,418 Β 328,418 Β Frederick H. Waddell(3) Β 51,667 Β 20 Β 51,687 Β 2023. Β Β NumberΒ ofΒ Shares Β Β Β NameΒ andΒ address Β BeneficiallyΒ Owned Β PercentΒ ofΒ Class Β The Vanguard Group(1) Β 63,708,222 Β 6.88 % 100 Vanguard Boulevard Β Β Β Β Β Malvern, PA 19355 Β Β Β Β Β Β Β Β Β Β Β BlackRock, Inc.(2) Β 57,755,152 Β 6.2 % 55 East 52nd Street Β Β Β Β Β New York, NY 10022 Β Β Β Β Β Β Β Β Β Β Β State Street Corporation(3) Β 51,885,463 Β 5.60 % State Street Financial Center Β Β Β Β Β One Lincoln Street Β Β Β Β Β Boston, MA 02111 Β Β Β Β Β Β Β Β Β Β Β AcquirableΒ withinΒ 60Β days Β ValueΒ of and/orΒ Directorsβ Β Name Β CommonΒ Stock(1) Β Stock-based Β Options Β Directorsβ Β DCEAPΒ SharesΒ at Β Kenneth I. Chenault Β 8,268 (6) 8,268 Β 0 Β 31,292 Β $ 6,069,295 Β Erich Clementi Β 31,425 Β 83,064 Β 0 Β N/A Β 4,821,224 Β Michael L. Eskew Β 0 Β 0 Β 0 Β 27,503 Β 4,219,510 Β David N. Farr Β 4,908 Β 4,908 Β 0 Β 6,383 Β 1,732,265 Β Mark Fields Β 400 Β 400 Β 0 Β 3,613 Β 615,674 Β Alex Gorsky Β 0 Β 0 Β 0 Β 6,690 Β 1,026,380 Β Shirley Ann Jackson Β 0 Β 0 Β 0 Β 24,706 Β 3,790,395 Β James J. Kavanaugh Β 34,260 (7) 68,191 Β 5,320 Β N/A Β 5,256,169 Β John E. Kelly III Β 83,467 (8) 146,222 Β 0 Β N/A Β 12,805,507 Β Andrew N. Liveris Β 0 Β 0 Β 0 Β 14,263 Β 2,188,229 Β W. James McNerney,Β Jr. Β 0 Β 0 Β 0 Β 15,045 Β 2,308,204 Β Hutham S. Olayan Β 0 Β 0 Β 0 Β 3,965 Β 608,310 Β James W. Owens Β 5,000 (9) 5,000 Β 0 Β 19,403 Β 3,743,908 Β Virginia M. Rometty Β 205,858 Β 301,417 Β 0 Β N/A Β 31,582,734 Β Martin J. Schroeter Β 41,954 Β 98,724 Β 0 Β N/A Β 6,436,583 Β Joseph R. Swedish(10) Β 1,261 (9) 1,261 Β 0 Β 202 Β 224,453 Β Sidney Taurel Β 19,487 Β 19,487 Β 0 Β 30,991 Β 7,744,335 Β Peter R. Voser Β 0 Β 0 Β 0 Β 6,134 Β 941,078 Β Frederick H. Waddell(10) Β 0 Β 0 Β 0 Β 337 Β 51,703 Β Directors and executive officers as a group Β 506,027 (11) 906,384 Β 5,320 (11) 190,526 (11) Β Β 2023. For Ms.Β Browdy, Mr.Β Cohn, Mr.Β Kavanaugh, Mr.Β Krishna, and Mr.Β Thomas, shares in this column are from IBM restricted stock awards which will vest within 60Β days after DecemberΒ 31, 2023. β β β 2022, respectively. and Results β Component β Current Year Salary β β β Long-Term β Performance Share Units (PSUs) β β date of grant. β Β Β Current Approach: Multiple of Total Target Β New Approach: Multiple of Salary NEOΒ Name Β IBM Minimum Requirement Β IBM Minimum Requirement Β Median Peer Group Minimum V.M. Rometty Β 3 Β 10 Β 6 M.J. Schroeter Β 3 Β 7 Β 3β4 J.E. Kelly III Β 3 Β 7 Β 3β4 E. Clementi Β 3 Β 7 Β 3β4 J.J. Kavanaugh Β 3 Β 7 Β 3β4 β β Measures β β Revenue β β Performance adjusted by a relative Return on Invested Capital Modifier. IBM shares its financial model each year with investors in the context of its long-term strategy. rates. FinancialΒ Metrics Β 2017 Β 2017 Β Weight Β Resulting Incentive +/- Qualitative = Final Score Β Strategic Imperatives Revenue Β $ 36.5B Β 99% Β 20% Β 100 Β 0 Β 100 Β Operating Net Income** Β $ 12.9B Β 91% Β 40% Β Operating Cash Flow** Β $ 16.3B Β 101% Β 40% Β Operating Cash Flow is a non-GAAP financial metric. See AppendixΒ A for information on how we calculate this performance metric. adjusted to exclude the impact of exiting our business in Russia. Β Β Operating Β FreeΒ Cash Β 2015β2017Β PerformanceΒ Period Β EPS** Β Flow** Β 3 Year Cumulative Performance Β $ 42.31 Β $ 37.7B Β % Attainment Β 84% Β 93% Β Incentive Score Β 60 Β 83 Β Weighting Β 70% Β 30% Β Final Score Β 67 Β Results by the Compensation Committee The self-assessments of the information. Chairman and SVPs. The Committee IBM, and whose business strategy results in substantial competition for senior leadership talent. Determining Individual Compensation Ms.Β Browdy Name Β 2017Β AnnualΒ IncentiveΒ Payouts Β M.J. Schroeter Β $ 1,181,000 Β J.E. Kelly III Β 861,000 Β E. Clementi Β 869,840 Β J.J. Kavanaugh Β 919,000 Β Ms.Β Browdy Β Β 2018Β Cash(1) Β 2018Β Long-TermΒ IncentiveΒ Awards(2) Β Name Β SalaryΒ Rate Β AnnualΒ IncentiveΒ Target Β PerformanceΒ ShareΒ Units Β RestrictedΒ StockΒ Units Β M.J. Schroeter Β $ 936,000 Β $ 1,264,000 Β $ 3,900,000 Β $ 2,100,000 Β J.E. Kelly III Β 868,000 Β 1,172,000 Β 3,705,000 Β 1,995,000 Β E. Clementi Β 777,000 Β 1,048,000 Β 3,575,000 Β 1,925,000 Β J.J. Kavanaugh Β 745,000 Β 1,005,000 Β 3,412,500 Β 1,837,500 Β full value awards. award. Tax Considerations total Performance Share Units (PSUs) and Restricted Stock Amounts in this column plan. 2023. accompanying the officer on both business and non-business occasions is also included. events, such as meetings, dinners, and receptions with IBMβs clients, executive management, or board members. NameΒ and Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Nonqualified Β Β Β Β Β Β Β Β Β Β Β Β Β Β Non-Equity Β ChangeΒ in Β ChangeΒ in Β Β Β Β Β Β Β Β Β Β Β Stock Β Option Β Β Β Β Β AllΒ Other Β Β Β Β Salary Β Bonus Β Β Β Β Β Β Β Β Total(8) Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β V.M. Rometty, Chairman, President and CEO Β Β Β Β Β Β Β Β Β Β Β Β Β 2017 Β $ 1,600,000 Β $ 0 Β $ 10,428,720 Β $ 0 Β $ 5,100,000 Β $ 79,951 Β $ 494,882 Β $ 0 Β $ 891,797 Β $ 18,595,350 Β 2016 Β 1,600,000 Β 0 Β 12,822,238 Β 12,094,414 Β 4,950,000 Β 87,660 Β 300,605 Β 0 Β 840,782 Β 32,695,699 Β 2015 Β 1,550,000 Β 0 Β 12,905,329 Β 0 Β 4,500,000 Β 0 Β 0 Β 0 Β 866,621 Β 19,821,950 Β M.J. Schroeter, Senior VP and CFO(9) Β Β Β Β Β Β Β Β Β Β Β Β Β 2017 Β $ 828,500 Β $ 0 Β $ 4,312,687 Β $ 0 Β $ 1,181,000 Β N/A Β $ 11,436 Β $ 0 Β $ 138,538 Β $ 6,472,162 Β 2016 Β 754,000 Β 0 Β 4,820,379 Β 0 Β 1,046,430 Β N/A Β 6,227 Β 0 Β 173,159 Β 6,800,195 Β 2015 Β 692,500 Β 0 Β 11,425,266 Β 0 Β 881,100 Β N/A Β 1,295 Β 0 Β 112,191 Β 13,112,352 Β J.E. Kelly III, Senior VP,Β IBM Cognitive SolutionsΒ & IBM Research Β Β Β Β Β Β Β Β Β Β Β Β Β 2017 Β $ 830,500 Β $ 0 Β $ 4,312,687 Β $ 0 Β $ 861,000 Β $ 127,911 Β $ 70,056 Β $ 0 Β $ 240,339 Β $ 6,442,493 Β 2016 Β 754,500 Β 0 Β 5,302,514 Β 0 Β 927,350 Β 0 Β 66,423 Β 0 Β 240,583 Β 7,291,370 Β 2015 Β 675,500 Β 0 Β 11,887,195 Β 0 Β 850,500 Β 0 Β 42,393 Β 0 Β 184,207 Β 13,639,795 Β E. Clementi, Senior VP,Β IBM Global Markets(9)(10) Β Β Β Β Β Β Β Β Β Β Β Β Β 2017 Β $ 754,500 Β $ 0 Β $ 4,312,687 Β $ 0 Β $ 869,840 Β N/A Β N/A Β $ 0 Β $ 227,742 Β $ 6,164,769 Β 2016 Β 703,500 Β 0 Β 5,302,514 Β 0 Β 889,200 Β N/A Β N/A Β 0 Β 144,440 Β 7,039,654 Β J.J. Kavanaugh, Senior VP, Finance and Operations(9)(10) Β Β Β Β Β Β Β Β Β Β Β Β Β 2017 Β $ 649,000 Β $ 0 Β $ 3,136,575 Β $ 0 Β $ 919,000 Β $ 11,766 Β $ 33,651 Β $ 0 Β $ 119,808 Β $ 4,869,800 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β AllΒ Other Β AllΒ Other Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Stock Β Option Β Β Β Β Β Grant Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Awards: Β Awards: Β Exercise Β Closing Β Date Β Β Β Β Β Β Β Β Β Β Β Β Β EstimatedΒ FutureΒ Payouts Β NumberΒ of Β NumberΒ of Β orΒ Base Β Price Β FairΒ ValueΒ of Β Β Β Β Β Β Β EstimatedΒ FutureΒ Payouts Β UnderΒ EquityΒ Incentive Β Shares Β Securities Β PriceΒ of Β onΒ the Β StockΒ and Β Name Β Β Β Compensation Β UnderΒ Non-EquityΒ IncentiveΒ PlanΒ Awards Β PlanΒ Awards(2) Β ofΒ Stock Β Underlying Β Option Β NYSEΒ on Β Option Β (a) Β Β Β Committee Β Threshold Β Target Β Maximum Β Threshold Β TargetΒ Β Maximum Β orΒ Units(3) Β Options Β Awards Β theΒ Date Β Awards(4) Β TypeΒ of Β GrantΒ Date Β Approval Β ($) Β ($) Β ($) Β (#) Β (#) Β (#) Β (#) Β (#) Β ($/Sh) Β ofΒ Grant Β ($) Β Award(1) Β (b) Β Date Β (c) Β (d) Β (e) Β (f) Β (g) Β (h) Β (i) Β (j) Β (k) Β ($/Sh) Β (l) Β V.M. Rometty Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β AIP Β N/A Β 01/31/2017 Β 0 Β 5,000,000 Β 15,000,000 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β PSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β 12,350 Β 49,400 Β 74,100 Β Β Β Β Β Β Β Β Β 6,778,668 Β RSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β Β Β Β Β Β Β 26,600 Β Β Β Β Β Β Β 3,650,052 Β M.J. Schroeter Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β AIP Β N/A Β 01/31/2017 Β 0 Β 1,181,000 Β 3,543,000 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β PSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β 5,107 Β 20,429 Β 30,644 Β Β Β Β Β Β Β Β Β 2,803,267 Β RSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β Β Β Β Β Β Β 11,000 Β Β Β Β Β Β Β 1,509,420 Β J.E. Kelly III Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β AIP Β N/A Β 01/31/2017 Β 0 Β 1,148,000 Β 3,444,000 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β PSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β 5,107 Β 20,429 Β 30,644 Β Β Β Β Β Β Β Β Β 2,803,267 Β RSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β Β Β Β Β Β Β 11,000 Β Β Β Β Β Β Β 1,509,420 Β E. Clementi Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β AIP Β N/A Β 01/31/2017 Β 0 Β 1,048,000 Β 3,144,000 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β PSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β 5,107 Β 20,429 Β 30,644 Β Β Β Β Β Β Β Β Β 2,803,267 Β RSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β Β Β Β Β Β Β 11,000 Β Β Β Β Β Β Β 1,509,420 Β J.J. Kavanaugh Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β AIP Β N/A Β 01/31/2017 Β 0 Β 919,000 Β 2,757,000 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β PSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β 3,715 Β 14,858 Β 22,287 Β Β Β Β Β Β Β Β Β 2,038,815 Β RSU Β 06/08/2017 Β 01/31/2017 Β Β Β Β Β Β Β Β Β Β Β Β Β 8,000 Β Β Β Β Β Β Β 1,097,760 Β 2026. requirements. 2023. 2023. Name Β GrantΒ Date Β Threshold Β Target Β Maximum Β V.M. Rometty Β 06/08/2016 Β 14,905 Β 59,621 Β 89,432 Β Β Β 06/08/2017 Β 12,350 Β 49,400 Β 74,100 Β M.J. Schroeter Β 06/08/2016 Β 5,604 Β 22,414 Β 33,621 Β Β Β 06/08/2017 Β 5,107 Β 20,429 Β 30,644 Β J.E. Kelly III Β 06/08/2016 Β 6,164 Β 24,656 Β 36,984 Β Β Β 06/08/2017 Β 5,107 Β 20,429 Β 30,644 Β E. Clementi Β 06/08/2016 Β 6,164 Β 24,656 Β 36,984 Β Β Β 06/08/2017 Β 5,107 Β 20,429 Β 30,644 Β J.J. Kavanaugh Β 06/08/2016 Β 3,923 Β 15,690 Β 23,535 Β Β Β 06/08/2017 Β 3,715 Β 14,858 Β 22,287 Β Award Payout Levels Β Β Β Β Β Β VestingΒ Schedule Β Name Β TypeΒ ofΒ Award Β GrantΒ Date Β 2018 Β 2019 Β 2020 Β 2021 Β 2022 Β V.M. Rometty Β RSU Β 06/08/2016 Β 8,026 Β 8,026 Β 8,026 Β Β Β Β Β Β Β RSU Β 06/08/2017 Β 6,650 Β 6,650 Β 6,650 Β 6,650 Β Β Β M.J. Schroeter Β RRSU Β 02/02/2015 Β Β Β 25,158 Β Β Β Β Β Β Β Β Β RSU Β 06/08/2016 Β 3,017 Β 3,017 Β 3,018 Β Β Β Β Β Β Β RSU Β 06/08/2017 Β 2,750 Β 2,750 Β 2,750 Β 2,750 Β Β Β J.E. Kelly III Β RRSU Β 12/30/2015 Β 13,980 Β 13,981 Β Β Β Β Β Β Β Β Β RSU Β 06/08/2016 Β 3,319 Β 3,319 Β 3,319 Β Β Β Β Β Β Β RSU Β 06/08/2017 Β 2,750 Β 2,750 Β 2,750 Β 2,750 Β Β Β E. Clementi Β RRSU Β 02/02/2015 Β Β Β 12,579 Β Β Β Β Β Β Β Β Β RSU Β 06/08/2016 Β 3,319 Β 3,319 Β 3,319 Β Β Β Β Β Β Β RSU Β 06/08/2017 Β 2,750 Β 2,750 Β 2,750 Β 2,750 Β Β Β J.J. Kavanaugh Β RRSU Β 02/01/2013 Β 5,320 Β Β Β Β Β Β Β Β Β Β Β RRSU Β 01/02/2014 Β Β Β 8,772 Β Β Β Β Β Β Β Β Β RSU Β 06/08/2016 Β 2,112 Β 2,112 Β 2,113 Β Β Β Β Β Β Β RSU Β 06/08/2017 Β 2,000 Β 2,000 Β 2,000 Β 2,000 Β Β Β The Retention Plan is separately presented in the 2023 Retention PlanΒ Table and is not included in the 2023 Pension Benefits Table. Compensation Elements Included in Calculations Name Β AnnualΒ RetentionΒ PlanΒ BenefitΒ at Β V.M. Rometty Β $ 101,008 Β J.E. Kelly III Β 594,917 Β J.J. Kavanaugh Β 16,007 Β Β Β Β Β NumberΒ ofΒ Β Present Β Payments Β Β Β Β Β Years Β ValueΒ of Β During Β Β Β Β Β Credited Β Accumulated Β Last Β Β Β Β Β Service(1) Β Benefit(2) Β FiscalΒ Year Β Name Β PlanΒ Name Β (#) Β ($) Β ($) Β (a) Β (b) Β (c) Β (d) Β (e) Β V.M. Rometty Β Retention Plan Β 26 Β $ 1,739,925 Β $ 0 Β J.E. Kelly III Β Retention Plan Β 27 Β 9,060,974 Β 0 Β J.J. Kavanaugh Β Retention Plan Β 12 Β 202,937 Β 0 Β Narrative such formula. for that year. The interest credits are based on the annual interest rate on one-year Treasury Constant Maturities plus 1%. Further, the eligible named executive officers may 2007. Annual Meeting & Proxy StatementΒ Β Β |Β Β Β the Qualified Plan and Nonqualified Plan, as of JanuaryΒ 1, Β Β MaximumΒ LumpΒ Sum Β Name Β Qualified Β Nonqualified Β TotalΒ AvailableΒ Β V.M. Rometty Β $ 493,391 Β N/A Β $ 493,391 Β M.J. Schroeter Β 63,185 Β 21,530 Β 84,715 Β J.E. Kelly III Β 454,963 Β 989,328 Β 1,444,291 Β J.J. Kavanaugh Β 161,218 Β 69,759 Β 230,977 Β Β Β AnnualΒ PensionΒ BenefitΒ atΒ NormalΒ RetirementΒ Age Β Name Β Qualified Β Nonqualified Β TotalΒ Benefit Β V.M. Rometty Β $ 82,083 Β $ 342,761 Β $ 424,844 Β M.J. Schroeter Β 5,923 Β N/A Β 5,923 Β J.E. Kelly III Β 33,326 Β N/A Β 33,326 Β J.J. Kavanaugh Β 15,475 Β N/A Β 15,475 Β Name Β PlanΒ Name Β NumberΒ ofΒ Years Β PresentΒ ValueΒ ofΒ Β PaymentsΒ DuringΒ Β V.M. Rometty Β Qualified Plan Β 26 Β $ 1,095,989 Β $ 0 Β Β Β Nonqualified Plan Β Β Β 4,576,589 Β 0 Β Β Β Total Benefit Β Β Β $ 5,672,578 Β $ 0 Β M.J. Schroeter Β Qualified Plan Β 4 Β $ 57,325 Β $ 0 Β Β Β Nonqualified Plan Β Β Β 18,988 Β 0 Β Β Β Total Benefit Β Β Β $ 76,313 Β $ 0 Β J.E. Kelly III Β Qualified Plan Β 27 Β $ 459,385 Β $ 0 Β Β Β Nonqualified Plan Β Β Β 977,063 Β 0 Β Β Β Total Benefit Β Β Β $ 1,436,448 Β $ 0 Β J.J. Kavanaugh Β Qualified Plan Β 12 Β $ 140,390 Β $ 0 Β Β Β Nonqualified Plan Β Β Β 60,275 Β 0 Β Β Β Total Benefit Β Β Β $ 200,665 Β $ 0 Β Excess Savings Plan. Basic Account. Earnings Measures Annual Meeting & Proxy StatementΒ Β Β |Β Β Β Β Β Β Β Executive Β Β Β Registrant Β Aggregate Β Aggregate Β Aggregate Β Name Β Β Β ($) Β Β Β ($) Β ($) Β ($) Β ($) Β (a) Β Plan Β (b) Β Β Β (c) Β (d) Β (e) Β (f) Β V.M. Rometty Β Basic Account Β $ 376,800 Β Match Β $ 376,800 Β $ 592,368 Β $ 0 Β $ 13,128,950 Β Β Β Β Β Β Β Automatic Β 251,200 Β Β Β Β Β Β Β Β Β Deferred IBM Shares Β 0 Β Β Β 0 Β (350,753 ) 0 Β 4,281,032 Β Β Β Total Β $ 376,800 Β Β Β $ 628,000 Β $ 241,615 Β $ 0 Β $ 17,409,982 Β M.J. Schroeter Β Basic Account Β $ 98,996 Β Match Β $ 80,247 Β $ (57,262 ) $ 0 Β $ 2,155,717 Β Β Β Β Β Β Β Automatic Β 16,049 Β Β Β Β Β Β Β Β Β Deferred IBM Shares Β 0 Β Β Β 0 Β 0 Β 0 Β 0 Β Β Β Total Β $ 98,996 Β Β Β $ 96,296 Β $ (57,262 ) $ 0 Β $ 2,155,717 Β J.E. Kelly III Β Basic Account Β $ 497,305 Β Match Β $ 89,271 Β $ 1,144,969 Β $ 0 Β $ 12,472,472 Β Β Β Β Β Β Β Automatic Β 29,757 Β Β Β Β Β Β Β Β Β Deferred IBM Shares Β 0 Β Β Β 0 Β (40,727 ) 0 Β 497,081 Β Β Β Total Β $ 497,305 Β Β Β $ 119,028 Β $ 1,104,242 Β $ 0 Β $ 12,969,553 Β E. Clementi Β Basic Account Β $ 735,585 Β Match Β $ 68,685 Β $ (65,556 ) $ 0 Β $ 4,571,516 Β Β Β Β Β Β Β Automatic Β 13,737 Β Β Β Β Β Β Β Β Β Deferred IBM Shares Β 0 Β Β Β 0 Β 0 Β 0 Β 0 Β Β Β Supplementary Plan(5) Β 0 Β Β Β 0 Β 50,609 Β 0 Β 1,898,466 Β Β Β Total Β $ 735,585 Β Β Β $ 82,422 Β $ (14,947 ) $ 0 Β $ 6,469,982 Β J.J. Kavanaugh Β Basic Account Β $ 129,800 Β Match Β $ 72,720 Β $ 402,936 Β $ 0 Β $ 3,504,483 Β Β Β Β Β Β Β Automatic Β 24,240 Β Β Β Β Β Β Β Β Β Deferred IBM Shares Β 0 Β Β Β 0 Β (1,873 ) 0 Β 22,860 Β Β Β Total Β $ 129,800 Β Β Β $ 96,960 Β $ 401,063 Β $ 0 Β $ 3,527,343 Β Thomas; $0 for Mr.Β Cohn; and $30,300 for Ms.Β Browdy. executive officers, including each named executive officer, are subject to repayment under IBMβs recovery policy. AprilΒ 2024. ageΒ 55 with at least 15Β years of service, the following terms apply: In addition, PSU payouts to executive officers are subject to clawback as described in SectionΒ 4 of the 2023 Compensation Discussion and Analysis. AprilΒ 2024. award date of grant had not been completed. . att/pdf/auditcomcharter.pdf (DollarsΒ inΒ millions) Β 2017 Β 2016 Β Audit Fees Β $ 48.1 Β $ 49.9 Β Audit-Related Fees Β 28.5 Β 28.2 Β Tax Fees Β 4.2 Β 7.8 Β All Other Fees Β 0.5 Β 0.5 Β Total Β $ 81.3 Β $ 86.4 Β β 2023. high-value, sustainable growth. high performance culture, as well as continued best in class employee engagement. meeting, which is co-sponsored by Reynders McVeigh Capital Management: stockholder interests. making payments describedΒ above. Annual Meeting & Proxy StatementΒ Β Β |Β Β Β Congruency in China Business Operations and ESG Activities Act by Written Consent 2013. Annual Meeting? Annual Meeting? Annual Meeting? instruct your bank, broker or other intermediary how to vote in the election of directors, no votes will be cast on your behalf. It is important that you cast your vote. cast? β Proposal β β β β β Election of Directors β β β β β β β β β β Annual Meeting? materials? 2025 Annual Meeting? β The ($Β inΒ millionsΒ exceptΒ perΒ shareΒ amount) Β GAAP Β Acquisition- Β Retirement- Β Tax Β Operating Β GrossΒ Profit Β $ 36,227 Β $ 449 Β $ 799 Β β Β $ 37,475 Β GrossΒ ProfitΒ Margin Β 45.8 % 0.6 Pts 1.0 Pts β Β 47.4 % S,G&A Β 20,107 Β (509 ) (472 ) β Β 19,126 Β R,D&E Β 5,787 Β β Β (197 ) β Β 5,590 Β Other (Income)Β & Expense Β (216 ) (39 ) β Β β Β (255 ) Total ExpenseΒ & Other (Income) Β 24,827 Β (548 ) (669 ) β Β 23,609 Β Pre-tax Income from Continuing Operations Β 11,400 Β 997 Β 1,468 Β β Β 13,866 Β Pre-tax Income Margin from Continuing Operations Β 14.4 % 1.3 Pts 1.9 Pts β Β 17.5 % Provision for Income Taxes* Β 5,642 Β 279 Β 485 Β (5,475 ) 931 Β Effective Tax Rate Β 49.5 % -1.5 Pts -1.7 Pts -39.5 Pts 6.7 % Income from Continuing Operations Β 5,758 Β 718 Β 983 Β 5,475 Β 12,935 Β Income Margin from Continuing Operations Β 7.3 % 0.9 Pts 1.2 Pts 6.9 Pts 16.3 % Diluted Earnings Per Share: Continuing Operations Β $ 6.14 Β $ 0.77 Β $ 1.05 Β $ 5.84 Β $ 13.80 Β ($Β inΒ millionsΒ exceptΒ perΒ shareΒ amount) Β GAAP Β Acquisition- Β Retirement- Β Operating Β Gross Profit Β $ 38,294 Β $ 494 Β $ 316 Β $ 39,104 Β Gross Profit Margin Β 47.9 % 0.6 Pts 0.4 Pts 48.9 % S,G&A Β 21,069 Β (501 ) (253 ) 20,315 Β R,D&E Β 5,751 Β β Β (29 ) 5,722 Β Other (Income)Β & Expense Β 145 Β (7 ) β Β 138 Β Total ExpenseΒ & Other (Income) Β 25,964 Β (508 ) (282 ) 25,174 Β Pre-tax Income from Continuing Operations Β 12,330 Β 1,003 Β 598 Β 13,931 Β Pre-tax Income Margin from Continuing Operations Β 15.4 % 1.3 Pts 0.7 Pts 17.4 % Provision for Income Taxes* Β 449 Β 268 Β 183 Β 900 Β Effective Tax Rate Β 3.6 % 1.7 Pts 1.2 Pts 6.5 % Income from Continuing Operations Β 11,881 Β 735 Β 415 Β 13,031 Β Income Margin from Continuing Operations Β 14.9 % 0.9 Pts 0.5 Pts 16.3 % Diluted Earnings Per Share: Continuing Operations Β $ 12.39 Β $ 0.77 Β $ 0.43 Β $ 13.59 Β ($Β inΒ millionsΒ exceptΒ perΒ shareΒ amount) Β GAAP Β Acquisition- Β Retirement- Β Operating Β Gross Profit Β $ 40,684 Β $ 373 Β $ 469 Β $ 41,526 Β Gross Profit Margin Β 49.8 % 0.5 Pts 0.6 Pts 50.8 % S,G&A Β 20,430 Β (324 ) (533 ) 19,573 Β R,D&E Β 5,247 Β β Β (48 ) 5,200 Β Other (Income)Β & Expense Β (724 ) (5 ) β Β (729 ) Total ExpenseΒ & Other (Income) Β 24,740 Β (330 ) (581 ) 23,830 Β Pre-tax Income from Continuing Operations Β 15,945 Β 703 Β 1,050 Β 17,697 Β Pre-tax Income Margin from Continuing Operations Β 19.5 % 0.9 Pts 1.3 Pts 21.6 % Provision for Income Taxes* Β 2,581 Β 141 Β 316 Β 3,037 Β Effective Tax Rate Β 16.2 % 0.2 Pts 0.9 Pts 17.2 % Income from Continuing Operations Β 13,364 Β 562 Β 734 Β 14,659 Β Income Margin from Continuing Operations Β 16.3 % 0.7 Pts 0.9 Pts 17.9 % Diluted Earnings Per Share: Continuing Operations Β $ 13.60 Β $ 0.57 Β $ 0.75 Β $ 14.92 Β income which employs an annual effective tax rate method to the results. ($Β inΒ billions) Β 2017 Β 2016 Β 2015 Β Net Cash from Operating Activities per GAAP Β $ 16.7 Β $ 17.1 * $ 17.3 * Less: the Change in Global Financing Receivables Β 0.4 Β 1.7 Β 0.2 Β Net Cash from Operating Activities, Excluding Global Financing Receivables Β 16.3 Β 15.4 * 17.1 * Capital Expenditures, Net Β (3.3 ) (3.7 ) (3.8 ) Free Cash Flow Β 13.0 Β 11.7 * 13.3 * Acquisitions Β (0.5 ) (5.7 ) (3.3 ) Divestitures Β (0.2 ) (0.5 ) (0.4 ) Share Repurchase Β (4.3 ) (3.5 ) (4.6 ) Common Stock Repurchases for Tax Withholdings Β (0.2 ) (0.1 )* (0.2 )* Dividends Β (5.5 ) (5.3 ) (4.9 ) Non-Global Financing Debt Β 1.1 Β 1.3 Β (0.1 ) Other (includes Global Financing Receivables and Global Financing Debt) Β 0.7 Β 2.3 Β 0.0 Β Change in Cash, Cash Equivalents and Short-Term Marketable Securities Β $ 4.1 Β $ 0.3 Β $ (0.3 ) FCF as Percent of Income from Continuing Operations Β 226 %** 98 %* 100 %*
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to SectionΒ 14(a) of
the Securities Exchange Act of 1934 (Amendment No. βββ)xoooxooPursuantunder Β§240.14a-12Β§240.14a-12International Business Machines Corporation(Name of Registrant as Specified In Its Charter)(Name of Person(s)Β Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):xΒ Β No fee required.oΒ Β Fee computed on table below per Exchange Act RulesΒ 14a-6(i)(1)Β andΒ 0-11.(1)Β Β Title of each class of securities to which transaction applies:(2)Β Β Aggregate number of securities to which transaction applies:(3)Β Β Per unit price or other underlying value of transaction computed pursuant to Exchange Act RuleΒ 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):(4)Β Β Proposed maximum aggregate value of transaction:(5)Β Β Total fee paid:oFee paid previously with preliminary materials.oCheck box if any part of the fee is offset as provided by Exchange Act RuleΒ 0-11(a)(2)Β and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the FormΒ or Schedule and the date of its filing.(1)Β Β Amount Previously Paid:(2)Β Β Form, Schedule or Registration Statement No.:(3)Β Β Filing Party:(4)Β Β Date Filed:Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
10504
MarchΒ 12, 201824, 2018 at 10 a.m., at30, 2024.Hyatt Regency Milwaukee in Milwaukee, Wisconsin.Our Board islast twoΒ years, our improving trajectory, and return to shareholders over the last twelve months, make me optimistic about IBMβs future. We have an unwavering commitment to our clientsβ success. We have refined our portfolio, expanded our ecosystem of partners, and enhanced productivity throughout IBM.relationshipsinnovations we have built with stockholders.are bringing to market in AI and hybrid cloud. In 2017,2023, we launched watsonx, IBMβs flagship AI and data platform. Designed to manage the full lifecycle of AI for business, watsonx represents a leap forward in our ability to deliver end-to-end AI solutions. IBMβs industry-leading hybrid cloud platform, based on Red Hat OpenShift, helps enterprises unify their data and applications across multiple clouds, on premise, and at the edge. These platforms, alongside our consulting services, form the backbone of our strategy to enable trusted technology solutions across multiple environments.long-standing practice of engaging with stockholders to hear their perspectiveQuantum Heron processor, which improved the performance, efficiency, and feedback. Since the 2017 Annual Meeting, our Independent Presiding Director, the chairsscalability of the Executive Compensationnewly deployed IBM Quantum System Two. IBM also expanded our portfolio through strategic acquisitions, underscoring our commitment to invest in the success of our clients.Management Resources Committeefinancial momentum are enabling IBM to deliver greater value to you, our stockholders.Directorsinforms important practices and Corporate Governance Committee, as well aspolicies. This ongoing engagement is a cornerstone of our commitment to transparency and accountability.![[MISSING IMAGE: ph_arvindkrishnaletter-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_arvindkrishnaletter-bw.jpg)
management, including myself,we are aware of the profound impact technologies like AI will have meton business and society. We bear a significant responsibility to develop technologies ethically and to deploy them with investors that owntrust and transparency. Our efforts in building powerful AI governance into watsonx, advocating for smart AI regulation, and forming the AI Alliance with more than half70 other organizations, reflect our commitment to open, safe, and responsible AI.shares that voted at the Annual Meeting last year. During these meetings, we discussed IBMβs strategy, corporate governance, board composition and refreshment, executive compensation practices, and our corporate responsibility and sustainability leadership. Through these conversations with our investors, we gained invaluable insight into our investorsβ perspectives on matters of critical importance. We very much appreciate the time our investors spent with us, and the thoughtful feedback we received.The refreshed look of this yearβs Proxy reflects the feedback we took from our stockholder outreach. You will also notice that this year, in continuation of the Boardβs active refreshment practice, Joseph R. Swedish, executive chairman and past president and chief executive officer of Anthem,Β Inc. and Frederick H. Waddell, chairman and retired chief executive officer of Northern Trust Corporation, joined our Board. Mr.Β Swedish and Mr.Β Waddell bring expertise in healthcare and financial services, respectively, two industries that are importantprogress IBMers have made to advance our business and long-term strategyhelp our clients thrive. And I am even more optimistic for value creation. With these additions, our Board continues to reflect and refine the skills, as well as diversity of thought, experience and background, that are necessary to oversee and support our strategy over the long term.![[MISSING IMAGE: sg_arvindkri-bw.jpg]](/files/DEF 14A/0001104659-24-032641/sg_arvindkri-bw.jpg)
Chairman of the Board
MarchΒ 11, 2024![[MISSING IMAGE: ph_alexgorskyletter-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_alexgorskyletter-bw.jpg)
is important and I encourage you to vote your shares.
at our Annual Meeting on AprilΒ 30, 2024.Very truly yours,
Virginia M. RomettyChairman of the Board
Very truly yours,![[MISSING IMAGE: sg_alexgorsky-bw.jpg]](/files/DEF 14A/0001104659-24-032641/sg_alexgorsky-bw.jpg)
Lead Director1β β β 2 β β β Proxy Summary β β β β 3 β β β 2β β β β 6 β β β 7β β β β β β Item of Business 1.
Election of Directors for a Term of One Year9β β β 11 β β β Governance and the Board β β β β 18 β β β 1616β β β 18 β β β 1822β β β 20 β β β β β β β 21 β β 23β β β 25 β β β β β β β 26 β β β 25β β β β 26 β β β 25β β β 27 β β β IBM Impact β β β β 29 β β 2023 Executive Compensation 27β β β 32 β β β 27β β β 32 β β β 28β β β 33 β β β 44β β β 48 β β β 49β β β 51 β β β 50β β β 52 β β β 53β β β 55 β β β β β β 56 β β β β β β 59 β β β 64β β β 62 β β β β β β 65 β β 2018 Annual Meeting & Proxy Statement 1business:24, 201830, 2024 at 10 a.m., at the Hyatt Regency Milwaukee, 333 West Kilbourn Avenue, Milwaukee, Wisconsin 53203.1:00Β p.m. Eastern Time in a virtual format. The items of business are:1.Β Β Β Β Β Β Β Β Β Β Β Β Β Election of directors proposed by IBMβs Board of Directors for a term of one year, as set forth in this Proxy Statement.2.Β Β Β Β Β Β Β Β Β Β Β Β Β Ratification of the appointment of PricewaterhouseCoopers LLP as IBMβs independent registered public accounting firm.3.Β Β Β Β Β Β Β Β Β Β Β Β Β Advisory Vote on Executive Compensation.4.Β Β Β Β Β Β Β Β Β Β Β Β Β Three stockholder proposals if properly presented at the meeting.β 1. β β Election of directors proposed by IBMβs Board of Directors for a term of one year, as set forth in this Proxy Statement. β β 2. β β Ratification of the appointment of PricewaterhouseCoopers LLP as IBMβs independent registered public accounting firm. β β 3. β β Advisory vote on executive compensation. β β 4. β β Five stockholder proposals, if properly presented at the meeting. β noticeNotice of Internet availabilityAvailability of proxy materials.Proxy Materials. If you received your materials by mail, you also may vote your shares by marking your votes on the enclosed proxy card, signing and dating it, and mailing it in the enclosed envelope. If you will need special assistance atfor the meeting because of a disability, please contact the Office of the Secretary, International Business Machines Corporation, 1 New Orchard Road, Armonk, NY 10504.![[MISSING IMAGE: sg_franksedlarcik-bw.jpg]](/files/DEF 14A/0001104659-24-032641/sg_franksedlarcik-bw.jpg)
Vice President and Secretary
β β Christina M. MontgomeryDate: β β AprilΒ 30, 2024 β Vice President and SecretaryTime: β β 1:00Β p.m. Eastern Time β β Virtual
Meeting
Site:Date:AprilΒ 24, 2018Time:10 a.m.Place:Hyatt Regency Milwaukee333 West Kilbourn AvenueMilwaukee, WI 53203β
your proxy card or voting instruction form.Thisβ To express our appreciation for your participation, IBM will make a $1 charitable donation to World Food Program USA on behalf of every stockholder account that votes this year. β β ![[MISSING IMAGE: lg_worldfood-ko.gif]](/files/DEF 14A/0001104659-24-032641/lg_worldfood-ko.gif)
β β World Food Program USA proudly supports the mission of the United Nations World Food Programme by mobilizing resources and advocacy to transform food assistance into a lifeline for peace, stability, and prosperity in the aftermath of conflict, disasters, and climate change. β noticeNotice of Internet availabilityAvailability of proxy materials,Proxy Materials, as applicable, are being distributed beginning on or about MarchΒ 12, 201811, 2024 to all stockholders entitled to vote. The IBM 2017 Annual Report, which includes consolidated financial statements, is being provided with this Proxy Statement.24, 2018: The30, 2024: the Proxy Statement and the Annual Report to Stockholders are available at www.ibm.com/investor/material/.mattersBoardβsβ β Where to find details β ItemΒ ofΒ BusinessrecommendationmoreΒ information1. Election of thirteen directorsβ FOR all nominees β pp. 9β15P. 11-17 β 2. β β Ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firmIndependent Registered Public Accounting Firmβ FORFOR p. 69β P. 68 β 3. β β Advisory Vote on Executive Compensation (Say on Pay) β FORFOR pp. 70β71β P. 69 β 4. β β Stockholder Proposal Requesting a Public Report on Lobbying DisclosureActivitiesβ AGAINSTAGAINST pp. 72β73β P. 70-72 β 5. β β Stockholder Proposal Requesting a Public Report on Shareholder Ability to Call a Special Shareholder MeetingCongruency in China Business Operations and ESG Activitiesβ AGAINSTAGAINST pp. 73β74β P. 72-73 β 6. β β Stockholder Proposal Requesting a Right to Have an Independent Board ChairmanAct by Written Consentβ AGAINSTAGAINST pp. 74β75β P. 73-75 β β 7. β β Stockholder Proposal Requesting a Public Report on Climate Lobbying β β AGAINST β β P. 75-76 β β 8. β β Stockholder Proposal Requesting the Adoption of Greenhouse Gas Emissions Targets β β AGAINST β β P. 77-78 β 
ThisWhatβs new?β β Proxy Statement has been designeddisclosure regarding trade associationshelppublish our stockholders better understandannual IBM Impact Report, sharing IBMβs progress towards our Board, governancecorporate responsibility commitments and compensation practices. You will find increased graphicsperformanceheadersPerformance Share Unit metrics that were established in 2021, reflecting IBMβs continued focus on revenue and free cash flow to illuminate the content. We hope you find the new format and ourcontinued dedication to transparency helpful.align with shareholder valueβ
Governance Highlightsnominees (PAGE 7)businessacademic leaders. All of our directors are independent except for Virginia Rometty,Β IBMβs CEO.
β Director β β Age β β Primary Occupation β β Director
Sinceβ β Committee
Membershipsβ β Audit
Committee
Financial
Expertβ β Marianne C. Brown β β 65 β β Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. β β 2023 β β ![[MISSING IMAGE: ic_audit-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_audit-bw.gif)
β β ![[MISSING IMAGE: ic_corpgove-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_corpgove-pn.gif)
β β ![[MISSING IMAGE: ic_compnsa-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_compnsa-bw.gif)
β β ![[MISSING IMAGE: ic_execut-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_execut-bw.gif)
β β ![[MISSING IMAGE: ic_finaexpe-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_finaexpe-bw.gif)
β β Thomas Buberl β β 50 β β Chief Executive Officer, AXA S.A. β β 2020 β β β β ![[MISSING IMAGE: ic_corpgove-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_corpgove-bw.gif)
β β ![[MISSING IMAGE: ic_compnsat-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_compnsat-pn.gif)
β β β β β β David N. Farr β β 69 β β Retired Chairman and Chief Executive Officer, Emerson Electric Co. β β 2012 β β ![[MISSING IMAGE: ic_audit-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_audit-pn.gif)
β β β β β β β β ![[MISSING IMAGE: ic_finaexpe-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_finaexpe-pn.gif)
β β Alex Gorsky β β 63 β β Former Chairman and Chief Executive Officer, Johnson & Johnson β β 2014 β β β β β β β β ![[MISSING IMAGE: ic_execut-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_execut-pn.gif)
β β β β Michelle J. Howard β β 63 β β Retired Admiral, United States Navy β β 2019 β β β β β β β β β β β β Arvind Krishna β β 61 β β Chairman and Chief Executive Officer, IBM β β 2020 β β β β β β β β β β β β Andrew N. Liveris β β 69 β β Retired Chairman and Chief Executive Officer, The Dow Chemical Company β β 2010 β β β β β β β β β β β β F. William McNabb III β β 66 β β Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc. β β 2019 β β β β β β β β β β β β Michael Miebach β β 56 β β Chief Executive Officer, Mastercard Incorporated β β 2023 β β β β β β β β β β β β Martha E. Pollack β β 65 β β President, Cornell University β β 2019 β β β β β β β β β β β β Peter R. Voser β β 65 β β Retired Chief Executive Officer, Royal Dutch Shell plc, and Chairman, ABB Ltd. β β 2015 β β β β β β β β β β β β Frederick H. Waddell β β 70 β β Retired Chairman and Chief Executive Officer, Northern Trust Corporation β β 2017 β β β β β β β β β β β β Alfred W. Zollar β β 69 β β Executive Advisor, Siris Capital Group, LLC β β 2021 β β β β β β β β β β β β β β β β β β Number of meetings held in 2023 β β 10 β β 4 β β 8 β β 0 β β β β Audit:
β ![[MISSING IMAGE: ic_audit-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_audit-pn.jpg)
β β Directors &and Corporate Governance:
![[MISSING IMAGE: ic_corpgove-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_corpgove-pn.jpg)
β β Executive Compensation &and Management Resources:
Executive:
![[MISSING IMAGE: ic_compnsat-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_compnsat-pn.jpg)
β Executive: β β ![[MISSING IMAGE: ic_execut-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_execut-pn.jpg)
β β Audit Committee Financial Expert: 
β ![[MISSING IMAGE: ic_finaexpe-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_finaexpe-pn.jpg)
β DiversityskillsAnnual Meeting & Proxy StatementΒ Β Β |Β Β Β Proxy SummaryexperienceExperience of director nomineescollectivelycollaboratively contribute significant experience in the areas most relevant to overseeing the Companyβs business and strategy.
The skills and experience of our Board include, but are not limited to:Tenure of director nomineesΒ·![[MISSING IMAGE: tb_skills-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_skills-pn.jpg)
β 2019 β β β 2020 β β β 2021 β β β 2023 β β ![[MISSING IMAGE: ph_michellejhoward-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_michellejhoward-bwlr.jpg)
Howardβ β β ![[MISSING IMAGE: ph_fwilliammcnabb-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_fwilliammcnabb-bwlr.jpg)
McNabb IIIβ β β ![[MISSING IMAGE: ph_marthaepollack-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_marthaepollack-bwlr.jpg)
Pollackβ β β ![[MISSING IMAGE: ph_thomasbuberl-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_thomasbuberl-bwlr.jpg)
Buberlβ β β ![[MISSING IMAGE: ph_arvindkrishna-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_arvindkrishna-bw.jpg)
Krishnaβ β β ![[MISSING IMAGE: ph_alfredwzollar-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_alfredwzollar-bw.jpg)
Zollarβ β β ![[MISSING IMAGE: ph_michaelmiebach-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_michaelmiebach-bw.jpg)
Miebachβ β β ![[MISSING IMAGE: ph_mariannebrown-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_mariannebrown-bw.jpg)
Brownβ β Policy expertise and technology experience with a cybersecurity focus β β β Global business, corporate governance and technology experience β β β Research leadership and technology experience, including artificial intelligence β β β Global business experience and expertise leading digital transformations β β β Global business and organizational leadership experience and deep technology expertise β β β Deep technology experience in systems and software β β β Global business and technology experience, including digital transformation, cybersecurity and data-driven insights β β β Global business and technology experience, including financial services, systems, and software β represents a deliberate mix of membersincludes directors who have a deep understanding of our business and members who bring new skills and fresh perspectives.Β·Β Β Β Β Β Β Β Β Β Β Β Β Mix We have a deliberate mix of newage and tenured directors reflectingtenure on the Board, which reflects our commitment to ongoing and proactive Board refreshment.
Governance highlights (PAGE 18)Effective![[MISSING IMAGE: pc_independ-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_independ-pn.jpg)
β Robust Engagement and Dialogue β leadership and senior management that stockholders are afforded a chance to provide their thoughts on topics of interest. Engagement participants have included senior members of management, our Investor Relations team, and IBMβs independent oversightΒ·Lead independent Presiding Director with robustDirector.β IBMβS ONGOING ENGAGEMENT PROCESS β β β β ![[MISSING IMAGE: ic_enhancing-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_enhancing-pn.jpg)
β β β well-defined responsibilitiesΒ·Β Β Β Β Β Β Β Β Β Β Β Β Executive session led by independent Presiding Director at each Board meetingΒ·Β Β Β Β Β Β Β Β Β Β Β Β Focus on proactive Board refreshmentOverview of IBMβs corporate governanceΒ·Β Β Β Β Β Β Β Β Β Β Β Β Annual election of all directorsΒ·Β Β Β Β Β Β Β Β Β Β Β Β Majority voting for directors in uncontested electionsΒ·Β Β Β Β Β Β Β Β Β Β Β Β Stockholder special meeting rightΒ·Β Β Β Β Β Β Β Β Β Β Β Β No stockholder rights planΒ·Β Β Β Β Β Β Β Β Β Β Β Β Robust stockholder engagement processΒ·Β Β Β Β Β Β Β Β Β Β Β Β Proxy access NEW
Stockholder engagement highlightsStockholder engagement is a core IBM value that is a significant part of our ongoing review of our corporate governance and executive compensation programs. To that end, our investor outreach program is a year-round process that includes discussion of IBMβs business and long-term strategy, executive compensation programs and practices, corporate governance, and corporate responsibility and sustainability. These discussions ensure that our stockholders understand our keyhelps to inform the Boardβs decisions and that we understand their prioritiesthe Companyβs policies, practices and concerns.Β·Β Β Β Β Β Β Β Β Β Β Β Β Every year, we reach out to over 100of our largest investors, representing more than 70%of our institutional ownership.Β·Β Β Β Β Β Β Β Β Β Β Β Β Our process also includes outreach to more than 250,000registered and beneficial stockholders, which represent a majority of our retail stockholder base.Β·Β Β Β Β Β Β Β Β Β Β Β Β Since the 2017 Annual Meeting, representatives from senior management and the Board have met with investors that own, in the aggregate, more than 55%of the shares that voted on Say on Pay at the 2017 Annual Meeting.Here is a summary of what we learned during those meetings, and how we responded.![[MISSING IMAGE: color_arrowrule-pn.jpg]](/files/DEF 14A/0001104659-24-032641/color_arrowrule-pn.jpg)
What we heardHow we responded![[MISSING IMAGE: ic_boardandgovernance-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_boardandgovernance-pn.jpg)
β β ![[MISSING IMAGE: ic_executive-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_executive-pn.jpg)
β β ![[MISSING IMAGE: ic_corporate-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_corporate-pn.jpg)
β Stockholders expressed support forβproxy access by-law in linedirector overboarding policycurrent market termsΒ·Β Β Β Β Β Β Β In DecemberΒ 2017, the Company adopted a proxy access by-law allowing a stockholder, or a group of up to 20 stockholders, that has owned at least 3% of our outstanding common stock for at least three years, to nominate,3 women directors and include3 ethnically diverse directors added in the Companyβs annual meeting proxy materials, directors constituting the greater of two individuals or 20%last 5Β yearsIncreased disclosure of our robust Board oversight and other Board practicesΒ·Β Β Β Β Β Β Β This Proxy Statement includes more insight into existing Board oversight processes and practices, including, for example, the robust processesββ Board follows for succession planning and Board evaluation
Some stockholders preferred increased transparency around achievement of incentive goalsΒ·Β Β Β Β Β Β Β Included disclosure of performance against goals in both the Annual Incentive Program and Long-Term Incentive PlanPerformance Share Unit metrics that were established in 2021, reflecting IBMβs continued focus on revenue and free cash flow to provide increased transparency intoalign with shareholder valuerigoroverall equity pay mix for executives, which ensures a portion of equity does not generate value unless IBMβs common stock price increases over the price when grantedβ β the linkage of those goals to our business strategyservices, and achieve net zero operational greenhouse gas emissions by 2030β ![[MISSING IMAGE: tb_perform-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_perform-pn.jpg)
β What We Do β Some stockholders expressedβ![[MISSING IMAGE: ic_whatwedocheck-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_whatwedocheck-pn.gif)
β β Tie a preference that a relative metric, such as return on invested capital (ROIC), be included in the Long-Term Incentive Plansignificant portion of pay to Company performanceΒ·Β Β Β Β Β Β Β Adopted a relative ROIC modifier beginning with Performance Share Units (PSUs) granted in 2018, which may increase or decrease the number of shares paid out based on IBMβs relative ROIC performance
Increased information regarding our strong sustainability leadershipΒ·Β Β Β Β Β Β Β IBM publishes a comprehensive Corporate Responsibility Report, and in June,Β IBM published its 27th consecutive annual Corporate Environmental Report; we have provided links to these reports in this Proxy Statement
General preference for simplicity and clarity in our Proxy StatementΒ·Β Β Β Β Β Β Β We have included this proxy summary to provide the reader with the highlights of the entire Proxy StatementΒ·Β Β Β Β Β Β Β The rest of the Proxy Statement has been redesigned to enhance readability and clarity of disclosureBusiness highlightsIBM is at the forefront of enterprise technology market opportunities. We have laid a strong foundation for the cognitive era.2017 Performance Highlights
Returned IBM to revenue growth in fourth quarter of 2017, led by:Β·Β Β Β Β Β Β Β Sustained Systems momentum across a revitalized portfolio with the new Z14, Storage products and Power LinuxΒ·Β Β Β Β Β Β Β Cloud revenues of $17Band an as-a-service exit run-rate of $10BΒ·Β Β Β Β Β Β Β Security revenue over $3B, leveraging our leadership position in the enterpriseβ β β Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions β 
Improved trajectory in gross margins throughββ Require significant share ownership by the year, impacted on the full year by continued investment to scale the IBM Cloud, as well as services portfolio dynamicsChairman and CEO, Vice Chairman and Senior Vice Presidentsβ β β β Utilize noncompetition and nonsolicitation agreements for senior executives β 
Generated over $11Bin GAAP pre-tax income (operating non-GAAP PTIββ Remove impact of $13.9B) reflecting ongoing efficiency in operating expenses and monetization of Intellectual Property produced by our investments in research and developmentshare repurchase on executive incentivesβ β What We Donβt Do β β ![[MISSING IMAGE: ic_whatwedontdox-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_whatwedontdox-bw.gif)
β β No individual severance or change-in-control agreements for executive officers β 
GAAP cash from operationsββ No excise tax gross-ups for executive officers β β β β No dividend equivalents on unearned RSUs/PSUs β β β β No hedging/pledging of nearly $17B, down ($0.4B) year-to-year primarily driven by less cash sourced from global financing receivablesDelivered free cash flowIBM stockβ β β β No stock option repricing, exchanges or stock options granted below market value β β β β No guaranteed incentive payouts for executive officers β β β β No accelerated vesting of $13Bwith a realization rate of 116%(excluding the one-time tax charge of $5.5B), returning nearly $10Bto stockholders in the form of dividends and share repurchasesequity awards for executive officersβ β β β No above-market returns on deferred compensation plans β To assist it in carrying out its duties, the Board has delegated certain authority to several committees. Following the Annual Meeting in 2018,2024, the Board will consist of 13 directors, all of whom are independent except for Mrs.Β Rometty,Β IBMβs Chairman and CEO.directors. In the interim between Annual Meetings,annual meetings, the Board has the authority under the by-laws to increase or decrease the size of the Board and to fill vacancies.rightoptimal mix of skills, expertise, experience, and background.diversity of backgrounds. The Committee recommends candidates to the full Board for election.Β·Β Β experience as a leader![[MISSING IMAGE: tb_direct-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_direct-pn.jpg)
β β The Committee and the Board identify candidates through a variety of means, including: β β β β β β β β a business, firm or institution;Β·Β Β mature and practical judgment;Β·Β Β the ability to comprehend and analyze complex matters;Β·Β Β effective interpersonal and communication skills; andΒ·Β Β strong character and integrity.The Committee and theAnnual Meeting & Proxy StatementΒ Β Β |Β Β Β also focus on ensuring that the Board reflects a diversity of backgrounds (including gender and ethnicity), talents and perspectives.The Committee and Board identifies candidates through a variety of means, including:Β·Β Β information the Committee requests from the Secretary of IBM;Β·Β Β recommendations from members of the Committee and the Board;Β·Β Β suggestions from IBM management; andΒ·Β Β a third-party search firm, from time to time.Any formal invitation to a director candidate is authorized by the full Board. The Committee also considers candidates recommended by stockholders. Stockholders wishing to recommend director candidates for consideration by the Committee may do so by writing to the Secretary of IBM, giving the recommended candidateβs name, biographical data and qualifications.
Directorsof the current directors have leadership experience at major domestic and international companiesorganizations with operations inside and outside the United States, or at academic or research institutions, or in government. Directors also have deep industry expertise as well as experience on other companiesβ boards, which provides an understandingleaders of different business processes, challenges and strategies. Further,Β IBMβs directors have other experience that makes them valuable membersorganizations within some of the Board, such as public policy or regulatory experience that provides insight into issues faced by the Company.![[MISSING IMAGE: fc_building-pn.jpg]](/files/DEF 14A/0001104659-24-032641/fc_building-pn.jpg)
BOARDBoard of Directors9Director DirectorΒ Experienceβ Marianne C.
Brownβ β Thomas
Buberlβ β David N.
Farrβ β Alex
Gorskyβ β Michelle J.
Howardβ β Arvind
Krishnaβ β Andrew N.
Liverisβ β F. William
McNabb IIIβ β Michael
Miebachβ β Martha E.
Pollackβ β Peter R.
Voserβ β Frederick H.
Waddellβ β Alfred W.
Zollarβ CurrentΒ DirectorClient Industry Expertise CompanyΒ orAcademicLeadershipβ U.S.BusinessOperations![[MISSING IMAGE: ic_finance-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_finance-pn.gif)
β GlobalBusinessOperationsCFOβ SpecificΒ RiskOversight/RiskManagementExposure![[MISSING IMAGE: ic_manufect-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_manufect-pn.gif)
β Technology,Cybersecurity,orΒ Digital![[MISSING IMAGE: ic_health-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_health-pn.gif)
Healthcareβ Research/Academia![[MISSING IMAGE: ic_govern-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_govern-pn.gif)
β Government/Regulatory,BusinessAssociationsΒ orPublicΒ Policy![[MISSING IMAGE: ic_inform-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_inform-pn.gif)
PublicBoardβ Gender/Ethnic Diversity![[MISSING IMAGE: ic_chemical-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_chemical-pn.gif)
β β β β β β ![[MISSING IMAGE: ic_research-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_research-pn.gif)
β β ![[MISSING IMAGE: ic_energy-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_energy-pn.gif)
β β β β β Kenneth I. ChenaultOrganizational Leadership and
Management
β ![[MISSING IMAGE: ic_voteforcheck-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_voteforcheck-pn.jpg)
β β β β β β β β β β β β β β β β β β β β β Michael L. EskewGlobal Operations β β β β β β β β β β β β β β β β β β β β β David N. FarrCFO β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β Alex Gorsky
Exposureβ β β β β β β β β β β β β β β β β β β β β Shirley Ann JacksonTechnology, Cybersecurity or
Digitalβ β β β β β β β β β β β β β β β β β β β β β Andrew N. LiverisAcademia β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β Hutham S. Olayan
Regulatory, Business Associations or Public Policyβ β β β β β β β β β β β β β β β β β β β β β James W. OwensPublic Board β β β β β β β β β β β β β β β β β β β β β β Virginia M. RomettyGender Identity β β Male β β β Male β β Male β β β Male β β Male β β Female β β Male β β Male β β Male β Joseph R. SwedishRace and/or Ethnicity β β β β β β β Asian/Pacific Islander β β β β β β β β β β β β β Black/African American β Sidney TaurelBorn Outside the U.S. β β β β β β β β β β β β β β β β β β β β β β β β β β β ![[MISSING IMAGE: ic_health-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_health-pn.jpg)
β β Healthcare β β β β β ![[MISSING IMAGE: ic_manufect-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_manufect-pn.jpg)
β β Manufacturing β Peter R. Voser![[MISSING IMAGE: ic_energy-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_energy-pn.jpg)
β β β β ![[MISSING IMAGE: ic_inform-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_inform-pn.jpg)
β Information Technology β Frederick H. Waddell![[MISSING IMAGE: ic_govern-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_govern-pn.jpg)
β β β β β ![[MISSING IMAGE: ic_research-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_research-pn.jpg)
β Research & Development β ![[MISSING IMAGE: ic_finance-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_finance-pn.jpg)
β β β β β ![[MISSING IMAGE: ic_chemical-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_chemical-pn.jpg)
β β Chemicals β directors of IBMdirector nominees for a term of one year. Below is information about each nominee, including biographical data for at least the past fiveΒ 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.
Β THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED BELOW.β β β β β β Directors and Corporate Governance β β β β 
Kenneth I. ChenaultRetired Chairman and Chief Executive Officer, American Express Company, a financial services companyQUALIFICATIONSΒ· and information management experience as chairman and chief executive officer of American Express CompanyΒ·U.S. Government service (former member of the Presidentβs Council on Jobs and Competitiveness)Β·Affiliation with leading business and public policy association (member of the executive committee of the Business Roundtable)Β·Experience as a university trusteeΒ·Outside board experience as a director of The ProcterΒ & Gamble Company and Facebook,Β Inc.Mr.Β Chenault, 66, joined American Express in 1981 and was named president of the U.S. division of American Express Travel Related Services Company,Β Inc. in 1993, vice chairman of American Express Company in 1995, president and chief operating officer, Global Financial Solutions, Fidelity National Information Services, Inc.1997IT goods and chairmanservices, cybersecurity and business managementin 2001, a position he held until his retirement in early 2018. Mr.Β Chenault now serves as Chairman and Managing Directorpresident of General Catalyst Partners, a venture capital firm. HeOmgeo 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 ProcterΒ & Gamble CompanyCharles Schwab Corporation, and Facebook,Akamai Technologies, Inc.
Michael L. EskewRetired Chairman and Chief Executive Officer, United Parcel Service,Β Inc.,a provider of specialized transportation and logistics servicesCommittees:
Β Audit (chair);Β 
Β ExecutiveQUALIFICATIONSΒ·Global business and technology experience as chairman and chief executive officer of United Parcel Service,Β Inc.Β·Outside board experience as a director of Allstate Corporation, Eli Lilly and Company and 3M CompanyΒ·Chairman of a charitable organizationMr.Β Eskew, 68, is IBMβs independent Presiding Director. Mr.Β Eskew joined United Parcel Service in 1972. He was named corporate vice president for industrial engineering in 1994, group vice president for engineering in 1996, executive vice president in 1999, vice chairman in 2000, and he was chairman and chief executive officer from 2002 until his retirement at the end of 2007. Mr.Β Eskew remainedserved on the board of United Parcel ServiceVMware, Inc. from 2019 until 2023.β β β β β β β Executive Compensation and Management Resources β β β β endClimate Finance Leadership Initiative and former chair of 2014.Pan-European Insurance Forum)Allstate Corporation, Eli Lilly and Company and 3M Company. In addition, he is chairmanAXA Equitable Holdings, Inc., a former subsidiary of the Annie E. Casey Foundation.AXA S.A.
![[MISSING IMAGE: ph_davidnfarr-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_davidnfarr-bwlr.jpg)
β β Committees:β β β β Audit QUALIFICATIONSΒ·Global business and technology experience as chairman and chief executive officer of Emerson Electric Co.Β·Affiliation with leading business and public policy association (director of the US-China Business Council)Β·Outside board experience as former director of Delphi Corporationβ β β β 63,69, 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.Β Farr was named chairman, president and chief executive officer in 2005 and chairman and chief executive officer in 2010.2010, 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 US-ChinaU.S.-China Business Council.
![[MISSING IMAGE: ph_alexgorsky-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_alexgorsky-bw.jpg)
β β Committees:Β Β Β Β 
β β β β Executive CompensationΒ & Management ResourcesQUALIFICATIONSΒ·Global business and technology experience as chairman and chief executive officer of JohnsonΒ & JohnsonΒ·Affiliation with leading business and public policy associations (member of the Business Roundtable and The Business Council)Β·Experience as a university trusteeβ β β β 57,63, 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 1988.1988 as a 2001, he was appointed president of Janssen Pharmaceutical Inc., and in 2003, he was named company group chairman of the Johnson & Johnson pharmaceutical business in Europe, the Middle East and Africa. Mr.Β Gorsky left Johnson & Johnson in 2004 to join the Novartis Pharmaceuticals Corporation, where he served as head of the companyβs pharmaceutical business in North America. Mr.Β 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 SeptemberΒ 2009, he was appointed worldwide chairman of the Medical Devices and Diagnostics Group. Mr.Β GorskyGroup, and became vice chairman of the executive committee in JanuaryΒ 2011. He was named chief executive officer and joined the board of directors in AprilΒ 2012, and was named chairman of the board of directors in DecemberΒ 2012. Mr.Β Gorsky is a memberremained chief executive officer until he transitioned to executive chairman at the end of the Business Roundtableβs Board of Directors and Chairman of its Corporate Governance Committee. Mr.Β Gorsky also serves2021. He currently sits on the boards of Apple, JPMorgan Chase and the Travis Manion Foundation, Congressional Medaland serves on the Wharton School of Honor Foundation, the National Academy FoundationUniversity of Pennsylvania Board of Advisors.β β β β β β β Audit β β β β Wharton BoardfirstOverseers.
Shirley Ann JacksonPresident, Rensselaer Polytechnic Institute, a leading science and technology university that brings technological innovation to the marketplaceCommittees:Β Β Β Β 
DirectorsΒ & Corporate Governance (chair);Β 
Β ExecutiveQUALIFICATIONSΒ·Leadership and technology experience as president of Rensselaer Polytechnic InstituteΒ·Industry and research experience as a theoretical physicist at the former AT&T Bell LaboratoriesΒ·U.S. Government service (former chairman of the U.S. Nuclear Regulatory Commission and co-chair of the Presidentβs Intelligence Advisory Board, former member of the International Security Advisory Board to the United States Secretary of State, and the Presidentβs Council of Advisors on Science and Technology)Β·Regulatory experience (former member of the board of governors of the Financial Industry Regulatory Authority (FINRA))Β·Affiliation with leading business and public policy associations (member of the Council on Foreign Relations and former university vice chair of the Council on Competitiveness)Β·Outside board experience as a director of FedEx Corporation, Medtronic plc and Public Service Enterprise Group IncorporatedΒ·Leadership and teaching positions at a research universityDr.Β Jackson, 71,Vice Chief of Naval Operations, the second-highest ranking uniformed officer in the branch. Responsible for the Navyβs 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 Howardβs 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 theoretical physicist at the former AT&T Bell Laboratories from 1976 to 1991, professor of theoretical physicsat Rutgers University from 1991 to 1995, and chairmangraduate of the U.S. Nuclear Regulatory CommissionNaval 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 1995 until2018 to 2020, where she assumed her current positiontaught in the areas of presidentcybersecurity and international policy. In 2022, she was appointed by the President to the Board of Rensselaer Polytechnic InstituteVisitors of the U.S. Naval Academy.β β β β β β β Executive (Chair) β β β β 1999. Dr.Β Jackson iskey IBM technologies such as artificial intelligence, cloud and quantum computingFedEx Corporation, Medtronic plc, and Public Service Enterprise Group Incorporated. She has been co-chairthe Federal Reserve Bank of New YorkPresidentβs Intelligence Advisory Boardchief executive officer of IBM, and a member of the International Security Advisory Board to the United States Secretary of State. Dr.Β Jackson is a fellow of the Royal Academy of Engineering (U.K.), the American Academy of Arts and Sciences, and a member of the National Academy of Engineering and the American Philosophical Society. Dr.Β Jackson is a recipient of the National Medal of Science, the highest awardDirectors, in science and engineering awarded by the U.S. Government. Dr.Β Jackson is a board member of the Council on Foreign Relations. She is a Regent Emerita and former Vice-ChairAprilΒ 2020. He was elected chairman of the Board of RegentsDirectors in DecemberΒ 2020. Mr.Β Krishna joined IBM in 1990. Mr.Β Krishna led the IBM Cloud and Cognitive Software business unit from 2017 to AprilΒ 2020 and was a principal architect of the Smithsonian Institution, a past presidentacquisition of Red Hat, the American Association forlargest acquisition in the Advancement of Sciences, and an honorary trustee of the Brookings Institution. Additionally, during the past five years, sheCompanyβs history. Mr.Β Krishna also served as the director of IBMβs Research division from 2015 to 2020. Previously, he was general manager of IBMβs Systems and Technology Group, IBMβs development and manufacturing organization. Prior to that, he built and led many of IBMβs data-related businesses. In 2022, he became a director of Marathon Oilthe Federal Reserve Bank of New York. He is also a director of Northrop Grumman Corporation.
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.
![[MISSING IMAGE: ph_andrewnliveris-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ph_andrewnliveris-bw.jpg)
β β Executive Chairman, DowDuPont Inc. and Β Β Β Β Β Β Β Executive CompensationΒ & Management ResourcesQUALIFICATIONSΒ·Global businessβ β β β Directors and technology experience as chairman, president and chief executive officer of The Dow Chemical Company and executive chairman of DowDuPont Inc.Β·U.S. and international government service (former chairman of the Presidentβs American Manufacturing Committee, member of the Presidentβs Task Force on Apprenticeship Expansion, member of the Australian governmentβs Industry Growth Centres Advisory Committee and Thailandβs Board of Investment)Β·Affiliation with leading business and public policy associations (vice chairman of the executive committee of the Business Roundtable and executive committee member and former chairman of The Business Council)Β·Experience as a university trusteeβ β β β Executive β 63,69, joined Dow in 1976 and subsequently held various executive positions including vice president of specialty chemicals from 1998 to 2000, business group president for performance chemicals from 2000 to 2003, and president and chief operating officer from 2003 to 2004. Mr.Β Liveris wasbefore being named president and chief executive officer of Dow in 2004 and chairman in 2006.DowDuPont.DowDuPont, a position he held until his retirement in JulyΒ 2018. Mr.Β Liveris served as chairmanis a director of the Presidentβs American Manufacturing CommitteeWorley, Saudi Aramco and nowLucid Motors. He serves as a director of NOVONIX Limited, which has announced that he will not stand for re-election at its Annual Meeting on AprilΒ 17, 2024. Additionally, Mr.Β Liveris is a former Executive Committee member of The Business Council, the Presidentβs Task Force on Apprenticeship Expansion. Mr.Β Liveris also serves asformer chairman of The Business Council and the former vice chairman of the Executive Committee of the Business Roundtable, and as an Executive Committee member and former chairman of The Business Council.Roundtable. Mr.Β Liveris is also a trustee of the Minderoo Foundation of Australia, and 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 (USCIB).
Hutham S. OlayanVice Chairman, The Olayan Group, a private family-owned multinational enterprise that is a diversified global investor and an operator of industrial and commercial businesses in the Middle EastCommittees:Β Β Β Β Β Β 
DirectorsΒ & Corporate GovernanceQUALIFICATIONSΒ·Global business experience as vice chairman, The Olayan Group and President and Chief Executive Officer, Olayan AmericaΒ·Affiliation with leading business and public policy associations (member of the Council on Foreign Relations, the Peterson Institute for International Economics and the Carnegie Middle East Center)Β·Outside board experience as a director of Morgan StanleyΒ·Experience as a university trusteeMs.Β Olayan, 64, has been a principal and director of Olayan Investments Company Establishment, the parent company of The Olayan Group, since 1981. Prior to assuming the role of vice chairman in JanuaryΒ 2018, she served as president and chief executive officer of Olayan America, heading The Olayan Groupβs investment activities in the Americas for more than thirty years. Ms.Β Olayan is a director of Morgan Stanley. She has previously served as a director of Thermo Electron Corporation. SheBusiness. He is also a memberthe president of the Executive Advisory Board of General Atlantic. She serves on the boards of the MasterCard Foundation, the Memorial Sloan-Kettering Cancer CenterBrisbane 2032 Olympic and the Peterson Institute for International Economics. Ms.Β Olayan is also a member of the Council on Foreign Relations and international advisory bodies affiliated with the Belfer Center for Science and International Affairs of Harvard University and the Carnegie Middle East Center.
Paralympic Games Organizing Committee.
James W. Owensβ β CaterpillarThe Vanguard Group, Inc., a manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbinesCommittees:Β Β AuditQUALIFICATIONSΒ·Global business experience as chairman and chief executive officer of Caterpillar Inc.Β·Experience as a former senior advisor at KKRΒ & Co. L.P., a global asset management companyΒ·U.S. Government service (former memberone of the Presidentβs Economic Recovery Advisory Board)Β·Affiliation with leading business and public policy associations (chairman of the executive committee of the Peterson Institute for International Economics, former director of the Council on Foreign Relations and former chairman of The Business Council)Β·Outside board experience as a director of Alcoa Inc. and Morgan StanleyΒ·Experience as a university trusteeβ β β β Audit β β β β Mr.Β Owens, 72, joined Caterpillar in 1972 as a corporate economistsubsequently held various management positions, including chief financial officer. He was named group president in 1995 and vice chairman in 2003. Mr.Β Owens servedtechnology experience as chairman and chief executive officer of CaterpillarThe Vanguard Group, Inc.20042008 until his retirement in 2010.2018 and served as chief executive officer from 2008 to 2017. He joined Vanguard in 1986. In 2010, he became chairman of the board of directorsAlcoa Inc.UnitedHealth Group and Morgan Stanley.serves as the chair of its audit committee. He is also a director of Axiom. Mr.Β OwensMcNabb is chairman of the executive committee of the Peterson Institute for International Economics, former chairman of the board of trusteesthe Zoological Society of Philadelphia, chairman of the USRowing Foundation, and former chairman of Ernst & Youngβs Independent Audit Quality Committee. Mr.Β 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 North Carolina StateColumbia University and was a memberis also Co-Chair of the Presidentβs Economic Recovery Advisory Board.Board of Directors of CECP: The CEO Force for Good.
Virginia M. RomettyChairman, President and β β IBMCommittees:Β Executive (chair)QUALIFICATIONSΒ·Mastercard Incorporatedβ β β β Directors and Corporate Governance β β β β chairman, president and chief executive officer of IBMΒ·Affiliation with leading business and public policy associations (member of the Business Roundtable, the Council on Foreign Relations and the Peterson Institute for International Economics)Β·U.S. Government service (former member of the Presidentβs Export Council)Β·Experience as a university trusteeMrs.Β Rometty, 60, joined IBM in 1981. She was elected senior vice president of Global Business Services in 2005, senior vice president of Sales and Distribution in 2009, senior vice president and group executive of Sales, Marketing and Strategy in 2010, president and chief executive officer of IBMMastercard early 2012chairmanAfrica operations, before becoming chief product officer in late 2012. She2016. As Mastercardβs chief product officer he gained essential perspective into consumer insights as well as valuable experience in information security and innovation. Mr.Β Miebach became president in 2020 and then chief executive officer in 2021. Prior to joining Mastercard, Mr.Β Miebach held senior roles at Barclays Bank and CitiBank. Mr.Β 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, the International Business Council of the World Economic Forum, and the United States Council for International Business. He sits on Foreign Relations,the board of directors for the Metropolitan Opera, and the World Resources Institute.β β β β β β β Executive Compensation and Management Resources β β β β TrusteesDirectors of Northwesternthe University of Michigan Hospitals and Health Center, and as a member (ex officio) of the board of overseers of Weill Cornell MedicineBoardUniversity of OverseersMichigan with increasing responsibility, including dean of the School of Information, vice provost for academic and Managersbudgetary affairs, and finally, provost and executive vice president for academic affairs. Dr.Β Pollack is a fellow of Memorial Sloan-Kettering Cancerthe American Association for the Advancement of Science, the Association for Computing Machinery and the Association for the Advancement of Artificial Intelligence. Dr.Β Pollack has served as editor-in-chief of the Journal of Artificial Intelligence Research, a former president of the Association for the Advancement of Artificial Intelligence, a former member of the technical staff in the Artificial Intelligence Center at SRI International, a former member of the advisory committee for the National Science Foundationβs Computer and formerlyInformation Science and Engineering Division, and a former member of the board of directors of the Computing Research Association. Dr.Β Pollack also served on the Presidentβs Export Council.
Joseph R. SwedishExecutive Chairman and Past President and Chief Executive Officer, Anthem,Β Inc., a leading health benefits providerCommittees:Β 
DirectorsΒ & Corporate GovernanceQUALIFICATIONSΒ·Global business and technology experience as executive chairman, president and chief executive officer of Anthem,Β Inc.Β·Affiliation with leading business and public policy associations (former member of the Business Roundtable and graduate member of The Business Council)Β·Outside board and technology experience as a director of CDW CorporationΒ·Experience as the chairman of a university oversight boardMr.Β Swedish, 66, joined Anthem in 2013 as chief executive officer and was named chairman of Anthemβs board in 2015. He was the chairman, chief executive officer and president until late 2017 when he retired and became the executive chairman. Prior to joining Anthem, he was president and chief executive officer of Centura Health from 1999 to 2004 and then served as president and chief executive officer of Trinity Health Corporation from 2004 to 2013. He also served as a directorSteering Committee of the Blue Cross Blue ShieldJacobs Technion-Cornell Institute, the academic partnership between Cornell and Technion-Israel Institute of Technology at Cornell Tech. She is currently a board member of the American Association the National Institute for Health Care Management, the Central Indiana Corporate Partnership,Β Inc.of Universities, and a Trustee of ITHAKA. In 2022, Dr.Β Pollack was elected as a member of the Business Roundtable. Mr.Β Swedish currently serves as chairmanAmerican Academy of the BoardArts & Sciences.VisitorsAnnual Meeting & Proxy StatementΒ Β Β |Β Β Β Election of Duke Universityβs Fuqua School of Business and as a director of Americaβs Health Insurance Plans (past chairman). He is a graduate member of The Business Council and a member of the Duke Margolis External Advisory Board. He is also a director of CDW Corporation and Proteus Digital Health,Β Inc.Directors15
Sidney TaurelChairman Emeritus, Eli Lilly and Company, a pharmaceutical companyChairman, Pearson plc, a provider of digital education products and servicesCommittees:Β 
Executive CompensationΒ & Management Resources (chair);Β 
Β ExecutiveQUALIFICATIONSΒ·Global business experience as chairman of Pearson plc and chairman and chief executive officer of Eli Lilly and CompanyΒ·Private equity management and investment banking experience as former senior advisor of Capital Royalty L.P. and senior advisor of MoelisΒ & CompanyΒ·U.S. Government service (former member of the Homeland Security Advisory Council, the Presidentβs Export Council and the Advisory Committee for Trade Policy and Negotiations)Β·Affiliation with leading business association (graduate member of The Business Council)Β·Outside board experience as a director of McGraw Hill Financial,Β Inc.Β·Member of a university oversight boardMr.Β Taurel, 69, joined Eli Lilly in 1971 and held management positions in the companyβs operations in South America and Europe. He was named president of Eli Lilly International Corporation in 1986, executive vice president of the Pharmaceutical Division in 1991, executive vice president of Eli Lilly and Company in 1993, and president and chief operating officer in 1996. He was named chief executive officer of Eli Lilly and Company in 1998 and chairman in 1999. Mr.Β Taurel retired as chief executive officer in early 2008 and as chairman in late 2008. He became chairman of Pearson plc in 2016. He is also a member of the Board of Overseers of the Columbia Business School, a graduate member of The Business Council and a trustee of the Indianapolis Museum of Art. Additionally, during the past five years, he was a director of McGraw Hill Financial,Β Inc.![[MISSING IMAGE: ph_peterrvoser-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_peterrvoser-bwlr.jpg)
β companiesΒ β β β β Audit QUALIFICATIONSΒ·Global business and technology experience as chairman of ABB Ltd. and chief executive officer of Royal Dutch Shell plcΒ·Affiliation with leading business and public policy associations (former member of the European Round Table of Industrialists and a former member of The Business Council)Β·Outside board experience as a director of Roche Holding Limited and Temasekβ β β β Executive β 59,65, joined Shell in 1982 and held a variety of finance and business roles including chief financial officer of Oil2015.2015 and was the interim chief executive officer from AprilΒ 2019 until FebruaryΒ 2020. He is a director of Roche HoldingTemasek Holdings (Private) Limited, and Temasek.as well as Group Chairman of the Board of PSA International Pte Ltd, Singapore, a Temasek subsidiary. Mr.Β 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.
![[MISSING IMAGE: ph_frederickhwaddell-bwlr.jpg]](/files/DEF 14A/0001104659-24-032641/ph_frederickhwaddell-bwlr.jpg)
β β Retired Chief Executive Officer, Northern Trust Corporation, a financial services companyDirectorsΒ & Corporate GovernanceQUALIFICATIONSΒ·Global businessβ β β β Executive Compensation and technology experience as chairman and chief executive officer of the Northern Trust CorporationΒ·Outside board experience as a director of AbbVie Inc.Β·Experience as a university trusteeβ β β β Executive β 64,70, joined Northern Trust Corporation in 1975 and has served as the chairman of the board sincefrom NovemberΒ 2009.2009Mark Fieldsβ β β β β β β Directors and Corporate Governance β β β β W. James McNerney,Β Jr. are not nominees for election,leadership experience as an executive partner and their terms onexecutive advisor at Siris Capital GroupBoard will endExecutive Leadership Council and a lifetime member of the National Society of Black Engineers. Mr.Β Zollar retired from IBM in AprilΒ 2018.
2011 following a 34-year career during which he held a variety of senior management positions in IBMβs systems and software groups.Boardββ ![[MISSING IMAGE: ic_voteforcheck-pn.gif]](/files/DEF 14A/0001104659-24-032641/ic_voteforcheck-pn.gif)
β β β Director
Audit
DirectorsΒ &CorporateΒ Governance
ExecutiveΒ CompensationΒ &ManagementΒ Resources
ExecutiveMichael L. EskewChair
David N. FarrMark Fields*Alex GorskyShirley Ann JacksonChairAndrew N. LiverisW. James McNerney,Β Jr.*Hutham S. OlayanJames W. OwensVirginia M. RomettyChairJoseph R. SwedishSidney TaurelChairPeter R. VoserFrederick H. Waddell*As noted above, Mr.Β Fields and Mr.Β McNerney are not nominees for election, and their terms on the Board will end in AprilΒ 2018.Audit CommitteeMEMBERS: Michael Eskew (Chair), David Farr, James Owens and Peter VoserNUMBER OF MEETINGS IN 2017: 6AUDIT COMMITTEE FINANCIAL EXPERTS: Michael Eskew, David Farr, James Owens and Peter VoserCharter: http://www.ibm.com/investor/governance/audit-committee-charter.htmlThe Audit Committee is responsible for reviewing reports of IBMβs financial results, audit results, internal controls and adherence to IBMβs Business Conduct Guidelines in compliance with applicable laws and regulations, including federal procurement requirements. Concurrent with that responsibility, set out more fully in the Charter, the Audit Committee performs many other functions, including:Β·selecting the independent registered public accounting firm and reviewing its selection with the Board;Β·annually preapproving the proposed services to be provided by the accounting firm during the year; andΒ·reviewing the procedures of the independent registered public accounting firm for ensuring its independence with respect to the services performed for IBM.The Audit Committee chair, pursuant to authority delegated by the Audit Committee, may approve engagements with the independent registered public accounting firm that are outside the scope of the services and fees approved by the Committee, which are later presented to the Committee.The Board has determined that each member of the Committee qualifies asRefreshmentDirectors and Corporate Governance CommitteeMEMBERS: Shirley Ann Jackson (Chair), Mark Fields, Hutham Olayan, Joseph Swedish, Frederick WaddellNUMBER OF MEETINGS IN 2017: 5Charter: http://www.ibm.com/investor/governance/director-and-corporate-governance.htmlThe Directors and Corporate Governance Committee is devoted primarily to the continuing review and articulation of the governance structure of the Board. Concurrent with that responsibility, set out more fully in the Charter,annual basis, the Directors and Corporate Governance Committee performs many other functions, including:Β·recommending qualified candidatesreviews committee assignments and discusses whether rotation of committee members and committee chairs is appropriate to introduce fresh perspectives and to broaden and diversify the Board for election as directors of IBM, including the slate of directors that the Board proposes for annual election by stockholders at the Annual Meeting;Β·advisingviews and making recommendations to the Board on all matters concerning directorship practices, andexperiences represented on the functionBoardβs committees. In 2023, Mr.Β Miebach and duties ofMs.Β Brown joined the committees ofDirectors and Corporate Governance Committee, and Mr.Β Buberl rotated from the Board;Β·making recommendationsDirectors and Corporate Governance Committee to the Board on compensation for non-management directors;Β·reviewing and considering IBMβs position and practices on significant issues of corporate public responsibility, such as workforce diversity, protection of the environment, and philanthropic contributions; andΒ·reviewing and considering stockholder proposals, including those dealing with issues of public and social interest.As discussed above, the Committee is responsible for recommending qualified candidates to the Board for election as directors of IBM. The Committee recommends candidates based on their business or professional experience, the diversity of their background (including gender and ethnic diversity), and their talents and perspectives.Executive Compensation and Management Resources CommitteeMEMBERS: Sidney Taurel (Chair), Alex Gorsky, Andrew Liveris, James McNerneyNUMBER OF MEETINGS IN 2017: 5Charter: http://www.ibm.com/investor/governance/executive-compensation-and-management-resources.htmlThe Executive Compensation and Management Resources Committee has responsibility for defining and articulating IBMβs overall executive compensation philosophy, and administering and approving all elements of compensation for elected corporate officers. Concurrent with that responsibility, set out more fully in the Charter, the Compensation Committee performs many other functions, including:Β·reviewing and approving the corporate goals and objectives relevant to the Chairman and CEOβs compensation, evaluating her performance in light of those goals and objectives, and, together with the other independent directors, determining and approving the Chairman and CEOβs compensation based on this evaluation;Β·reviewing IBMβs management resources programs, including overseeing, along with the full Board, the succession-planning process of the CEO and other senior management positions;Β·approving, by direct action or through delegation, participation in and all awards, grants, and related actions under IBMβs various equity plans;Β·reviewing changes in IBMβs pension plans primarily affecting corporate officers;Β·managing the operation and administration of the IBM Supplemental Executive Retention Plan;Β·reviewing the compensation structure for IBMβs officers and providing oversight of managementβs decisions regarding performance and compensation of other employees; andΒ·monitoring compliance with stock ownership guidelines.The Committee reports to stockholders as required by the SEC (see 2017 Report of the Executive Compensation and Management Resources Committee.β β β β β The Executive Committee is empowered to act for the full Board in intervals between Board meetings, with the exception of certain matters that by law may not be delegated. The Committee meets as necessary, and all actions by the Committee are reported at the next Board of Directors meeting. The Committee did not meet in 2023. β β Members: β β β β β β β β
(Chair)
David N. Farr
Michelle J. Howard
F. William McNabb III
Financial Experts:
Michelle J. Howard
F. William McNabb III
Peter R. Voserβ β β β β β
Trust and Compliance Officer.β β β β β β
(Chair)
Marianne C. Brown
Michael Miebach
Alfred W. Zollar
2023: 4β β β β β β β β
https://www.ibm.com/investor/att/pdf/IBM-Directors-and-Corporate-Governance-Committee-Charter.pdfβ β β β
(Chair)
Thomas Buberl
Martha E. Pollackβ β β β β β β β β of Directors below).Members of the Committee are not eligible to participate in any of the plans or programs that the Committee administers.
19Liveris, McNerneySwedish, and TaurelWaddell and Dr.Β Pollack each served as members of the Executive Compensation and Management Resources Committee in 2017.2023. All members of the Committee were independent directors, and no member was an employee or former employee of IBM. During 2017,2023, none of our executive officers served on the compensation committee or board of directors of another entity whose executive officer served on our Executive Compensation and Management Resources Committee or Board. Therefore, there is no relationship that requires disclosure as a Compensation Committeecompensation committee interlock.Executive CommitteeMEMBERS: Virginia M. Rometty (Chair), Michael L. Eskew, Shirley Ann Jackson, Sidney TaurelNUMBER OF MEETINGS IN 2017: 0The Executive Committee is empowered to act for the full Board in intervals between Board meetings, with the exception of certain matters that by law may not be delegated. The Committee meets as necessary, and all actions by the Committee are reported at the next Board of Directors meeting. The Committee did not meet in 2017.IBMβs Corporate Governance PrinciplesIBMβs Board of Directors has long adhered to governance principles designed to assure the continued vitality of the Board and excellence in the execution of its duties. Since 1994, the Board has had in place a set of governance guidelines reflecting these principles, including the Boardβs policy of requiring a majority of the Board to be comprised of independent directors, the importance of equity compensation to align the interests of directors and stockholders, and regularly scheduled executive sessions, including sessions of non-management directors without members of management. The IBM Board Corporate Governance Guidelines reflect IBMβs principles on corporate governance matters. These guidelines are available at https://www.ibm.com/investor/governance/corporate-governance-guidelines.html.IBM also has a code of ethics for directors, executive officers, and employees. The Business Conduct Guidelines are available on our website at https://www.ibm.com/investor/att/pdf/BCG_English_Accessible_2018.pdf. Any amendment to, or waiver of, the Business Conduct Guidelines that applies to one of our directors or executive officers may be made only by the Board or a Board committee, and would be disclosed on IBMβs website.The process by which stockholders and other interested parties may communicate with the Board or non-management directors of IBM is available at http://www.ibm.com/investor/governance/contact-the-board.html.Independent BoardUnder the IBM Board Corporate Governance Guidelines, the Directors and Corporate Governance Committee and the full Board annually review the financial and other relationships between the non-management directors and IBM as part of the annual assessment of director independence. The Directors and Corporate Governance Committee makes recommendations to the Board about the independence of non-management directors, and the Board determines whether those directors are independent. Although there is an annual assessment of director independence, independence is monitored by the Directors and Corporate Governance Committee and the full Board on an ongoing basis.The independence criteria established by the Board in accordance with New York Stock Exchange (NYSE) requirements and used by the Directors and Corporate Governance Committee and the Board in their assessment of the independence of directors is available at http://www.ibm.com/investor/governance/director-independence-standards.html.Applying those standards for the non-management directors in 2017, including those not standing for election, the Committee and the Board have determined that each of the following directors has met the independence standards: K.I. Chenault, M.L. Eskew, D.N. Farr, M. Fields, A. Gorsky, S.A. Jackson, A.N. Liveris, W.J. McNerney,Β Jr., H.S. Olayan, J.W. Owens, J.E. Spero, J.R. Swedish, S. Taurel, P.R. Voser and F.H. Waddell. Mr.Β Eskewβs son is employed by IBM and is not an executive officer. He was hired over a year before Mr.Β Eskew joined IBMβs Board, and his compensation and other terms of employment are determined on a basis consistent with IBMβs human resources policies. Based on the foregoing, the Board has determined that this relationship does not preclude a finding of independence for Mr.Β Eskew.Independent Leadership StructureThe Directors and Corporate Governance Committee is responsible for the continuing review of the governance structure of the Board, and for recommending to the Board those structures and practices best suited to IBM and its stockholders. The Committee and the Board recognize that different structures may be appropriate under different circumstances. Mrs.Β Rometty serves as IBMβs Chairman and CEO and Mr.Β Eskew serves as Presiding Director,Β IBMβs lead independent director, a structure that the Directors and Corporate Governance Committee and the full Board believe is currently in the best interests of IBM and its stockholders. A strong, independent Presiding Director with clearly defined duties and responsibilities further enhances the contributions of IBMβs independent directors, which have been and continue to be substantial. Mr.Β Eskew, the Presiding Director, has significant global business, technology, leadership and oversight experience as the former chairman and chief executive officer of United Parcel Service,Β Inc.The Presiding Director has the following responsibilities:Β·preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;Β·serve as liaison between the Chairman and the independent directors;Β·approve information sent to the Board;Β·approve meeting agendas for the Board;Β·approve meeting schedules to assure that there is sufficient time for discussion of all agenda items;Β·have authority to call meetings of the independent directors; andΒ·if requested by major stockholders, ensure that he is available, as necessary after discussions with the Chairman and Chief Executive Officer, for consultation and direct communication.In addition to these core responsibilities, the Presiding Director engages in other regular activities, including:Β·one-on-one debriefs with the Chairman after each meeting;Β·spending time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of the Company; andΒ·attending certain other committee meetings in addition to the committee he chairs.In 2018, following each of their self-assessments and annual reviews, the Directors and Corporate Governance Committee and the Board as a whole continue to believe that this leadership structure provides IBM with the benefits of combining the leadership role of Chairman and CEO, while also recognizing the unique strengths and capabilities of IBMβs Board members, and that Mr.Β Eskew should continue to serve as the Presiding Director.Director AttendanceIn 2017, the Board held nine meetings and the committees collectively met 16 times. The Board and the Directors and Corporate Governance Committee recognize the importance of director attendance at Board and committee meetings. In 2017:Β·Overall attendance at Board and committee meetings was over 96%; andΒ·Attendance was at least 75% for each director.Information about Board attendance at IBMβs 2017 Annual Meeting of Stockholders and IBMβs policy with regard to Board membersβ attendance at annual meetings of stockholders is available at http://www.ibm.com/investor/governance/director-attendance-at-annual-meeting.html.Executive SessionRegularly scheduled executive sessions, including sessions of non-management directors without members of management, chaired by the Presiding Director, are held at each Board meeting. Additionally, executive sessions of the non-management directors are led by the Chairs of the Directors and Corporate Governance and Executive CompensationΒ & Resources Committees, respectively, at least once per year.Board Evaluation ProcessIBMβs Board utilizes a comprehensive, multi-part process for its ongoing self-evaluation to ensure that the Board is operating effectively and that its processes reflect best practices.1The Board conducts an annual self-evaluation to review the effectiveness of the Board and its committees. In this comprehensive review, the self-evaluation focuses on:Β·The composition and performance of the Board, including the size, mix of skills and director refreshment practices;Β·The quality and scope of the materials distributed in advance of meetings;Β·The Boardβs access to Company executives and operations;Β·The promotion of rigorous decision making by the Board and the committees; andΒ·The overall functioning of the Board and its committees.2Each committee also performs a self-evaluation in executive session on an annual basis.Β·The Audit Committeeβs evaluation, for example, includes individual, one-on-one interviews with IBMβs internal General Auditor and each member of the Committee.3Each year, the Chairman and CEO holds individual, one-on-one interviews with each IBM director to obtain his or her candid assessment of director performance, Board dynamics and the effectiveness of the Board and its committees.4The Chairman shares insights from these meetings with the Presiding Director and the full Board.5Self-evaluation items requiring follow-up and execution are monitored on an ongoing basis by the Board, each of the committees, and by IBM management. While this formal self-evaluation is conducted on an annual basis, directors share perspectives, feedback, and suggestions continuously throughout the year.Succession PlanningIBM has long been recognized for its leadership development. As part of this, one of the Boardβs most important responsibilities is to ensure that IBM has the appropriate management to execute the Companyβs long-term strategy. To fulfill this responsibility, the full Board meets at least annually to actively review and plan the succession of the CEO and other senior management positions.During these reviews, at least annually, the Board discusses:Β·Succession process and timeline;Β·Profile and candidate assessments, both internal and external, as appropriate, for CEO and other senior leadership positions;Β·Leadership pipeline and development plans for the next generation of senior leadership; andΒ·Diversity, inclusion and Company culture.The Executive Compensation and Management Resources Committee also regularly reviews succession planning and the Companyβs management resources programs.Stockholder Rights and AccountabilityAt IBM, we routinely evaluate our governance practices to maintain strong Board and management accountability, and to promote stockholder rights through transparent policies that enhance investor and public trust. We believe that sound corporate governance is critical to achieving business success and serves the best interests of our stockholders.Highlights of our commitment to stockholder rights include:Β·Annual election of all DirectorsΒ·Majority voting for DirectorsΒ·Stockholder ability to call Special MeetingsΒ·Proxy access rights to stockholders owning at least 3% of outstanding shares for 3 years NEWΒ·Robust stockholder engagement programΒ·No stockholder rights plan or poison pill provisionsΒ·No supermajority voting provisionsΒ·Confidential votingStrategy OversightThe Board actively oversees IBMβs long-term business strategy, and is continuously engaged with management on this topic. For example, each year, the Board holds a two-day strategy session, which includes presentations from many senior executives across the Companyβs business units. Additionally, at Board meetings, the Board routinely receives presentations from senior management on critical business matters that tie to the Companyβs overall strategy. In addition, the Board periodically travels to key IBM facilities, both domestically and internationally, to obtain a first-hand look at the Companyβs operations in strategically important business units and geographic areas. Furthermore, the Board regularly meets with IBMers who represent the next generation of leadership at the Company to ensure that the Companyβs leadership pipeline remains diverse and inclusive, and is linked to its long-term strategy.Risk OversightIn recent years, much attention has been given to the subject of risk and how companies assess and manage risks acrossthe enterprise. At IBM, we believe that innovation and leadership are impossible without taking risks. We also recognize that imprudent acceptance of risk or the failure to appropriately identify and mitigate risks could be destructive to stockholder value.In addition, an overall review of risk is inherent in the Boardβs consideration of IBMβs long-term strategies and in the transactions and other matters presented to the Board, including capital expenditures, acquisitions and divestitures, and financial matters. The Boardβs role in risk oversight of IBM is consistent with IBMβs leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing IBMβs risk exposure, and the Board and its committees providing oversight in connection with those efforts.The Board is responsible for overseeing management in the execution of its responsibilities and for assessing IBMβs approach to risk management. The Board exercises these responsibilities periodically as part of its meetings and also through the Boardβs three committees, each of which examines various components of enterprise risk as part of their responsibilities.The Audit Committee periodically reviews IBMβs enterprise management framework, including IBMβs enterprise risk management processes.The Executive Compensation and Management Resources Committee is responsible for assessing risks relating to IBMβs compensation programs, as well as IBMβs evolving demands for skilled workers.The Directors and Corporate Governance Committee oversees risks associated with government and industry regulations, as well as environmental and other societal and governance matters.Senior management is responsible for assessing and managing IBMβs various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. IBM has developed a consistent, systemic and integrated approach to risk management, including the enterprise risk management framework, to help determine how best to identify, manage and mitigate significant risks throughout IBM. Management regularly reports to the Board and the committees on a variety of risks.CybersecurityCybersecurity is a critical part of risk management at IBM. The Boardβs cybersecurity oversight includes reporting from senior management and cybersecurity experts in areas such as rapidly evolving cybersecurity threats, cybersecurity technologies and solutions deployed internally and with IBM clients, major cyber risk areas and policies and procedures to address those risks, cybersecurity incidents, and updates from the IBM Security business. The Board and Audit Committee each receive regular updates.Political Contributions and LobbyingIBM is committed to meaningful management, oversight, and accurate reporting with respect to our engagement with government officials, and we consistently seek to provide our stockholders with relevant data regarding our public policy engagement.Further,Β IBM:
does not have a PAC (Political Action Committee),does not engage in independent or electioneering communications as defined by law, anddoes not provide any financial support to political parties or candidates, directly or indirectly.The IBM Board of Directors, as part of its oversight function, periodically receives reports from senior management relating to IBMβs policies and practices regarding governmental relations, public policy and any associated expenditures.IBMβs Senior Management, specifically the IBM Office of Government and Regulatory Affairs, closely monitors all public policy advocacy efforts, as well as any lobbying activities.IBMβs policies and practices with regard to public policy matters, including lobbying activities and expenditures, are available on its website: http://www.ibm.com/investor/governance/public-policy-matters.html.Insurance and IndemnificationIBM has renewed its directors and officers indemnification insurance coverage. This insurance covers directors and officers individually where exposures exist other than those for which IBM is able to provide indemnification. This coverage runs from JuneΒ 30, 2017 through JuneΒ 30, 2018, at a total cost of approximately $4.9 million. The primary carrier is XL Specialty Insurance Company.β Under the IBM Board Corporate Governance Guidelines, the Directors and Corporate Governance Committee and the full Board annually review the financial and other relationships between the independent directors and IBM as part of the assessment of director independence. The Directors and Corporate Governance Committee makes recommendations to the Board about the independence of non-management directors, and the Board determines whether those directors are independent. In addition to this annual assessment, director independence is monitored by the Directors and Corporate Governance Committee and the full Board on an ongoing basis. β β ![[MISSING IMAGE: pc_director-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_director-pn.jpg)
β β The Board strongly believes that each companyβs circumstances dictate its optimal leadership structure, and the current leadership structure strikes the right balance of allowing our Chairman and CEO to promote a clear, unified vision for the Companyβs strategy, providing the leadership critical for effectively and efficiently implementing the actions needed to ensure strong performance over the long term, while ensuring robust, independent oversight by the Board and Lead Director. β β β β β Responsibilities and Actions of the Lead Directorβ β β β β β β β β β β β β β β β β β β β β β The Board reviews our leadership structure at least annually to ensure the optimal structure for the strategy and oversight of the Company. Regularly scheduled executive sessions, including sessions of independent directors without members of management, chaired by the independent Lead Director, are held at each Board meeting. β β ![[MISSING IMAGE: ic_one-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_one-pn.jpg)
β β Full Board Self-Evaluation β β ![[MISSING IMAGE: ic_two-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_two-pn.jpg)
β β Each Individual Committee has Self-Evaluation β β ![[MISSING IMAGE: ic_three-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_three-pn.jpg)
β β Individual Interviews with the Chairman of the Board and Lead Director β may have employees who are relateddirector individually to our executive officersobtain his or directors. As noted in the discussion above on βCorporate Governance β Independenther candid assessment of director performance, Boardβ Mr.Β Eskewβs son is employed by IBM. He is an executive of IBM (not an executive officer). In addition, a brother-in-law of Mrs.Β V.M. Rometty (Chairman and CEO) dynamics and the wife of Mr.Β R.F. Del Bene (Vice President and Controller) are employed as executives of IBM. A daughter of Mr.Β Del Bene and a brother of Dr.Β J.E. Kelly III (Senior Vice President,Β IBM Cognitive Solutions and IBM Research) are also employed by IBM in non-executive positions. Noneeffectiveness of the above-referenced family member employeesBoard and its committees.β ![[MISSING IMAGE: ic_four-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_four-pn.jpg)
β β Presentation of Feedback β β ![[MISSING IMAGE: ic_five-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_five-pn.jpg)
β β Results Discussion β β ![[MISSING IMAGE: ic_six-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_six-pn.jpg)
β β Follow-ups β executive officers of IBM. Each employee mentioned above received compensation in 2017 between $120,000 and $900,000. Additionally, in 2017,monitored on an ongoing basis by the above-referenced family members of Mrs.Β Rometty and Mr.Β Eskew, as well as the wife of Mr.Β Del Bene, each received equity grants. The compensation, equity grants and other terms of employment ofBoard, each of the family member employees noted abovecommittees, and by IBM management. While this formal self-evaluation is conducted on an annual basis, the evaluation process is an ongoing process throughout the year. At each meeting, the Chairman actively solicits feedback from each individual director and directors continuously share their perspectives, feedback, and suggestions throughout the year.β β In succession planning, the Board discusses: β β β β β β β β β β The Executive Compensation and Management Resources Committee also regularly reviews succession planning and the Companyβs management resources programs, overseeing a broad range of human capital management topics, including diversity and inclusion. β β ![[MISSING IMAGE: tb_strategy-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_strategy-pn.jpg)
determinedimpossible without taking risks. We also recognize that imprudent acceptance of risk or the failure to appropriately identify and mitigate risk could be destructive to stockholder value. Our risk professionals rigorously analyze both enterprise and emerging risks, incorporating both internal and external perspectives and data analytics into a comprehensive annual enterprise risk review. This approach is leveraged by management in monthly emerging risk reviews, to proactively identify and respond to changes in the business environment. IBMβs comprehensive annual enterprise risk review is also discussed with both the Audit Committee and full Board.basisprivate session with members of the Audit Committee at every meeting.human resources policies.leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing IBMβs risk exposure, and the Board and its committees providing oversight in connection with those efforts. Our risk oversight framework also aligns with our disclosure controls and procedures. For example, IBMβs quarterly and annual financial statements and related disclosures are reviewed by its disclosure committee, comprised of senior management including IBMβs Controller, Chief Auditor, General Counsel, Chief Trust and Compliance Officer, and others, all of whom participate in the risk assessment practices described above. The CEO and CFO then receive a report from the disclosure committee and external auditor before the financial statements are reviewed with the Audit Committee and Board, approved, and then filed.![[MISSING IMAGE: tb_risk-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_risk-pn.jpg)
2017 β ![[MISSING IMAGE: ic_cyber-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ic_cyber-bw.jpg)
β β β β ![[MISSING IMAGE: ic_climate-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ic_climate-bw.jpg)
β β β 2017,2023, non-management directors received an annual retainer of $300,000.$350,000. Chairs of each of the Directors and Corporate Governance Committee and the Executive Compensation and Management Resources Committee received an additional annual retainer of $20,000 and the chair of the Audit Committee received an additional annual retainer of $25,000.$30,000. The additional retainer for the PresidingLead Director position is a total of $50,000, inclusive of any committee chair retainer received. For 2017, Mr.Β Eskew, the Presiding Director and the chair of the Audit Committee, received $25,000 for the Presiding Director role and $25,000 for the Audit Committee chair role.60%63% of the total annual retainer is required to be deferred and paid in Promised Fee Shares (PFS). Each PFS is equal in value to one share of IBMβs common stock. When a cash dividend is paid on IBMβs common stock, each directorβs PFS account is credited with additional PFS reflecting a dividend equivalent payment. With respect to the payment of the remaining 40%37% of the annual retainer, directors may elect one or any combination of the following: (a)Β deferral into PFS, (b)Β deferral into an interest-bearing cash account, and/or (c)Β receipt of cash payments on a quarterly basis during service as a Board member. IBM does not pay above-market or preferential earnings on compensation deferred by directors.For 2017, under 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 five times the annual retainer initially payable to such director. Stock-based holdings mean (i)Β IBM shares owned personally or by members of the immediate family sharing the same household, and (ii)Β DCEAP PFS. Stock-based holdings do not include unexercised options.Beginning in 2018, within fiveΒ 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. The overall threshold remains consistentStock-based holdings mean (i)Β IBM shares owned personally or by members of immediate family sharing the same household, and with this change, our(ii)Β DCEAP PFS. Stock-based holdings do not include unexercised stock options. will remain the strongest in our peer group.eitherany of (a)Β a lump sum payment as soon as practicable after the date on which the director ceases to be a member of the Board, (b)Β 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)Β 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.Non-management In 2023, non-management directors arewere eligible to participate in IBMβs Matching Grants Program on the same basis as IBMβs employees based in the United States.U.S. Under this program, IBM will matchmatched a directorβs eligible contributions in cash on a 1-to-1 basis to approved educational institutions, medical facilities and cultural or environmental institutions. Each director iswas 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 $10,000 because such amounts include Company contributions on gifts that were made by directors in previousΒ years.retainedretains Semler Brossy Consulting Group, LLC (Semler Brossy) in JulyΒ 2017 to assess trends and developments in director compensation practices and to compare IBMβs practices against them. The Committee uses the analysis prepared by the consultant as part of its periodic review of IBMβs director compensation practices. Other than services provided to IBMβs Directors and Corporate Governance Committee and IBMβs Executive Compensation and Management Resources Committee, Semler Brossy does not perform any other work for IBM. The Committee determined that Semler Brossy is free of conflicts of interest. The Committee previously retained Frederic W. Cook2017β Name β β Fees Earned or
Paid in Cash ($)β β All Other
Compensation ($)β β Total ($) β β (a) β β (b) β β (c) (1) β (d) β β β β β β 19,444 β β β β β 6 β β β β β 19,450 β β β Thomas Buberl β β β β 350,000 β β β β β 55,278 β β β β β 405,278 β β β David N. Farr β β β β 350,000 β β β β β 119,333 β β β β β 469,333 β β β Alex Gorsky β β β β 400,000 β β β β β 169,758 β β β β β 569,758 β β β Michelle J. Howard β β β β 350,000 β β β β β 71,134 β β β β β 421,134 β β β Andrew N. Liveris β β β β 370,000 β β β β β 232,313 β β β β β 602,313 β β β F. William McNabb III β β β β 350,000 β β β β β 66,257 β β β β β 416,257 β β β β β β β 59,306 β β β β β 13 β β β β β 59,319 β β β Martha E. Pollack β β β β 350,000 β β β β β 80,662 β β β β β 430,662 β β β Joseph R. Swedish β β β β 350,000 β β β β β 80,069 β β β β β 430,069 β β β Peter R. Voser β β β β 380,000 β β β β β 159,908 β β β β β 539,908 β β β Frederick H. Waddell β β β β 370,000 β β β β β 117,058 β β β β β 487,058 β β β Alfred W. Zollar β β β β 350,000 β β β β β 26,740 β β β β β 376,740 β β
βChenault: $173,236 of dividend equivalent payments on PFS; for Mr.Β Eskew: $150,234Buberl: $55,203 of dividend equivalent payments on PFS; for Mr.Β Farr: $32,547 of dividend equivalent payments on PFS and $10,000 contributed by the Company under the Matching Grants Program; for Mr.Β Fields: $13,773$119,258 of dividend equivalent payments on PFS; for Mr.Β Gorsky: $31,499$169,683 of dividend equivalent payments on PFS; for Dr.Β Jackson: $134,821Admiral Howard: $71,059 of dividend equivalent payments on PFS; for Mr.Β Liveris: $75,132$232,238 of dividend equivalent payments on PFS; for Mr.Β McNerney: $79,633McNabb: $66,182 of dividend equivalent payments on PFS; for Ms.Β Olayan: $15,800Dr.Β Pollack: $80,587 of dividend equivalent payments on PFS; for Mr.Β Owens: $104,741Swedish: $79,994 of dividend equivalent payments on PFS; for Ms.Β Spero: $59,780Mr.Β Voser: $159,833 of dividend equivalent payments on PFS; for Mr.Β Waddell: $109,483 of dividend equivalent payments on PFS and $10,000$7,500 contributed by the Company under the Matching Grants Program; and for Mr.Β Taurel: $171,030Zollar: $26,665 of dividend equivalent payments on PFS; and for Mr.Β Voser: $28,296 of dividend equivalent payments on PFS.After SperoβsBrownβs term on the Board ended in AprilΒ 2017, Ms.Β Spero was paid $2,914,625 of earned compensation and dividend reinvestments which had been previously deferred under the DCEAP since her election tobegan DecemberΒ 2023.in 2004. Ms.Β Spero elected to defer payment of 6,089 shares.(3)Mr.Β Swedish and Mr.Β Waddell joined the Board inbegan OctoberΒ 2017.pro-ratedprorated amount of the annual retainer for service on the Board and, if applicable, as PresidingLead Director or a committee chair, based on the portion of the year for which the director served.Β·Β·Life Insurancelife insurance premiums paid by IBM on behalf of the directors.Β·
β2017.β Name and address β β Number of Shares
Beneficially Ownedβ β Percent of Class β β
100 Vanguard Boulevard
Malvern, PA 19355β β β β 82,604,056 β β β 9.05% β β
50 Hudson Yards
New York, NY 10001β β β β 75,479,656 β β β 8.3% β β
State Street Financial Center
1 Congress Street, Suite 1
Boston, MA 02114β β β β 55,035,821 β β β 6.03% β
β9, 201813, 2024 by The Vanguard Group and certain subsidiaries (Vanguard). Vanguard reported that it haddoes not have sole voting power over 1,228,539any shares, has shared voting power over 203,5271,120,906 shares, sole dispositive power over 62,307,27078,726,445 shares, and shared dispositive power over 1,400,9523,877,611 shares. The ScheduleΒ 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The ScheduleΒ 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of IBM.FebruaryΒ 8, 2018JanuaryΒ 25, 2024 by BlackRock, Inc. and certain subsidiaries (BlackRock). BlackRock reported that it hadhas sole voting power over 49,564,81868,491,656 shares, does not have shared voting power over any shares, and sole dispositive power over all shares beneficially owned. The ScheduleΒ 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The ScheduleΒ 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of IBM.FebruaryΒ 14, 2018JanuaryΒ 30, 2024 by State Street Corporation and certain subsidiaries (State Street). State Street reported that it haddoes not have sole voting power over any shares, has shared voting andpower over 32,946,835 shares, has shared dispositive power over all54,961,927 shares, beneficially owned.and does not have sole dispositive power over any shares. The ScheduleΒ 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The ScheduleΒ 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of IBM.
βStock-BasedStock-based Holdings of Directors and Executive Officers20172023, by IBMβs current directors and nominees, the executive officers named in the 20172023 Summary Compensation Table, and such directors and all of IBMβs executive officers as of DecemberΒ 31, 20172023, as a group. Also shown are shares over which the named person could have acquired voting power or investment power within 60Β days after DecemberΒ 31, 2017.2023. Voting power includes the power to direct the voting of shares held, and investment power includes the power to direct the disposition of shares held. and nominees had beneficial ownership of a total of 229,851232,726 shares andof common stock of IBM and DCEAP shares as of DecemberΒ 31, 2017.2023. In the aggregate, these shares were valued at more than $35$38Β million as of DecemberΒ 31, 2017,2023, or an average of more than $2.5$2.9Β million for each of IBMβs non-management directors.
CommonΒ Stock
Holdings(2)
andΒ RSUs(3)
DCEAPΒ Shares(4)
FiscalΒ YearΒ EndΒ ($)(5)β β β β β β β β β β β β β β β β Acquirable within 60Β days β β Value of
Common Stock
shares at
Fiscal Year Endβ β β β β Common β β Stock-based β β Options And β β Directorsβ
DCEAPβ β Name β β Stock (1) β Holdings (2) β RSUs (3) β Shares (4) β ($) (5) β Michelle H. Browdy β β β β 119,442 β β β β β 147,997 β β β β β 30,898 β β β β β N/A β β β β β 19,534,739 β β β β β β β 440(7) β β β β β 440 β β β β β 0 β β β β β 119 β β β β β 91,424 β β β Thomas Buberl β β β β 0 β β β β β 0 β β β β β 0 β β β β β 10,062 β β β β β 1,645,640 β β β Gary D. Cohn β β β β 52,958 β β β β β 81,799 β β β β β 45,162 β β β β β N/A β β β β β 8,661,281 β β β David N. Farr β β β β 8,508(8) β β β β β 8,508 β β β β β 0 β β β β β 19,438 β β β β β 4,570,568 β β β Alex Gorsky β β β β 4,444 β β β β β 4,444 β β β β β 0 β β β β β 28,028 β β β β β 5,310,796 β β β Michelle J. Howard β β β β 144 β β β β β 144 β β β β β 0 β β β β β 12,370 β β β β β 2,046,665 β β β James J. Kavanaugh β β β β 98,395(9) β β β β β 148,834 β β β β β 52,050 β β β β β N/A β β β β β 16,092,502 β β β Arvind Krishna β β β β 307,431(10) β β β β β 393,302 β β β β β 84,150 β β β β β N/A β β β β β 50,280,340 β β β Andrew N. Liveris β β β β 2,655 β β β β β 2,655 β β β β β 0 β β β β β 37,598 β β β β β 6,583,378 β β β F. William McNabb III β β β β 9,250 β β β β β 9,250 β β β β β 0 β β β β β 11,764 β β β β β 3,436,840 β β β β β β β 0 β β β β β 0 β β β β β 0 β β β β β 363 β β β β β 59,369 β β β Martha E. Pollack β β β β 0 β β β β β 0 β β β β β 0 β β β β β 13,998 β β β β β 2,289,373 β β β Joseph R. Swedish β β β β 5,261(11) β β β β β 5,261 β β β β β 0 β β β β β 13,906 β β β β β 3,134,763 β β β Robert D. Thomas β β β β 33,482(12) β β β β β 101,177 β β β β β 64,896 β β β β β N/A β β β β β 5,475,981 β β β Peter R. Voser β β β β 0 β β β β β 0 β β β β β 0 β β β β β 26,414 β β β β β 4,320,010 β β β Frederick H. Waddell β β β β 3,763 β β β β β 3,763 β β β β β 0 β β β β β 18,564 β β β β β 3,651,581 β β β Alfred W. Zollar β β β β 0 β β β β β 0 β β β β β 0 β β β β β 5,637 β β β β β 921,931 β β β Directors and executive officers as a group β β β β 674,703(13) β β β β β 961,796 β β β β β 302,662(13) β β β β β 198,261(13) β β β β β 142,773,263 β β
β55,629186,396 shares in which voting and investment power are shared. The directors and officers included in the table disclaim beneficial ownership of shares beneficially owned by family members who reside in their households. The shares are reported in such cases on the presumption that the individual may share voting and/or investment power because of the family relationship. The shares reported in this column do not include 93,2276,807 shares held by the IBM Personal Pension PlanΒ Trust Fund, over which the members of the IBM Retirement Plans Committee, a management committee presently consisting of certain executive officers of IBM,the Company, have voting power, as well as the right to acquire investment power by withdrawing authority now delegated to various investment managers.401(k)Β PlusSavings Plan, and Company contributions into the IBM Stock Fund under the Excess 401(k)Β PlusSavings Plan. Some of these restricted stockΒ units may have been deferred under the Excess 401(k)Β PlusSavings Plan in accordance with elections made prior to JanuaryΒ 1, 2008, and they will be distributed to the executive officers after termination of employment as described in the 20172023 Nonqualified Deferred Compensation Narrative.2017.2017,2023, including dividend equivalents credited with respect to such shares. Upon a directorβs retirement, these shares are payable in cash or stock at the directorβs choice (see 2017 Director Compensation Narrativesection for additional information).20172023 fiscal year ($153.42)163.55).1,619450 shares in which voting and investment power are shared.(7)15,17411,061 shares in which voting and investment power are shared.(8)25,639169,145 shares in which voting and investment power are shared.(9)(10)Mr.Β SwedishMr.Β Waddell joined the Board in OctoberΒ 2017.(11)investment power are shared.1020 of 1% of IBMβs outstanding shares.
β2017β ![[MISSING IMAGE: ic_ethicalimpact-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_ethicalimpact-pn.jpg)
β β ![[MISSING IMAGE: ic_equitableimpact-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_equitableimpact-pn.jpg)
β β ![[MISSING IMAGE: ic_environmentalimpact-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_environmentalimpact-pn.jpg)
β β Creating innovations, policies and practices that prioritize ethics, trust, transparency, and above allΒ β accountability β β Creating spaces and opportunities for everyone by focusing on diversity, equity, and inclusivity within IBM as well as globally β β Creating better pathways to conserve natural resources, reduce pollution, and minimize climate-related risks β ![[MISSING IMAGE: ic_impacttwo-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_impacttwo-pn.jpg)
β ![[MISSING IMAGE: ic_politic-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_politic-pn.jpg)
β β Political Contributions β β β IBM engages in policy, not politics. In 1968, former IBM CEO Thomas Watson Jr. said a company βshould not try to function as a political organization in any way.β IBM continues to live by this philosophy to this day. We have a long-standing policy not to make contributions of any kind (money, employee time, goods or services), directly or indirectly, to political parties or candidates, including through intermediary organizations, such as PACs, campaign funds, or trade or industry associations. This policy applies equally in all countries and across all levels of government. Our approach to advocacy is also grounded in a commitment to preserve and strengthen trust in civic institutions and, to that end, we have partnered with other leading companies and the University of Michiganβs Erb Institute to build and advance a set of principles to promote Corporate Political Responsibility (CPR). By sharing the merit of our non-giving advocacy strategy and deepening business engagement with the CPR principles, we work to increase transparency in the ways that corporations advocate on public policy issues. These principles are focused on strengthening trust in civic institutions and their interactions with business, and providing a framework for how business can responsibly influence public policy without giving a dime to political candidates or campaigns. β β ![[MISSING IMAGE: ic_lobbying-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_lobbying-pn.jpg)
β β Lobbying β β β IBMβs Government and Regulatory Affairs team is committed to advancing common sense public policies that benefit our business and communities. We seek to build trust in technology through precision regulation, a modernized digital infrastructure, promoting justice and equality for all citizens, and leveraging science and technology for good. All IBM lobbying activities, including by third parties on behalf of IBM, require the prior approval of the IBM Office of Government and Regulatory Affairs and must comply with applicable law and IBMβs Business Conduct Guidelines. IBM files periodic reports with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives detailing its U.S. federal lobbying activities and expenditures, with U.S. state and municipal governments, where required, and with the European Union Transparency Register. β β ![[MISSING IMAGE: ic_trade-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_trade-pn.jpg)
β β Trade Associations β β β β β β β β β β β β IBM is proud to report that the Center for Political Accountabilityβs 2023 Report on Corporate Political Disclosure and Accountability gave IBM a score of 98.6 out of 100, naming IBM as one of only 20 companies that fully prohibit the use of corporate assets to influence elections and as one of only 38 companies that prohibit both trade associations and non-profits from using Company contributions for election-related purposes. β policiesprograms and programs,policies, the Committee participated in the preparation of the Compensation Discussion and Analysis, reviewing successive drafts of the document and discussing those with management. The Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.Alex GorskyAndrew N. LiverisW. James McNerney,Β Jr.Sidney Taurel 2017Executive SummaryIBMβs financial model is designed to deliver profitable growth through the creation of compelling value for our clients. Over the last several years, the Company has embarked on a multi-year transformation to ensure this financial model delivers for our investors. By prioritizing investments with strong returns, we continue to focus on generating high value for our shareholders, employees and clients while aggressively investing to accelerate our transformation.In 2017,Β IBM delivered $79.1B in revenue with a 46% gross profit margin, and generated $16.7B cash from operations.Since 2015, we invested $37B, reshaping our business profile with nearly 60% directed toward highβ
delivered $61.9B in revenue, $11.2B of free cash flow, and
generated $13.9B in cash from operations.β β β β β ![[MISSING IMAGE: bc_yearoveryearrevgrowth-pn.jpg]](/files/DEF 14A/0001104659-24-032641/bc_yearoveryearrevgrowth-pn.jpg)
Strategic Imperatives.figures at constant currency.(1)
Revenue from our Strategic Imperatives of cloud, analytics, mobile, social and security has reached a critical mass in 2017, growing to $36.5B, led by growth in cloud and security.STRATEGIC IMPERATIVES REVENUEGrew 14% compounded, increasing from 27%Optimized Portfolio Positioned to 46% Deliver High Valueβ β β β β Recurring Revenue Acceleration β IBM continues to strengthen and reinforce its position in delivering high-value, differentiated technology to its clients β β β β β About 50% of IBM Revenuerevenue is recurring, with a high-value mixβ CLOUD REVENUEGrew 34% compounded, more than doubling in sizeSECURITY REVENUEGrew 23% compounded, nearly doubling in size2023 Recurring Revenue Mix β 
![[MISSING IMAGE: pc_revenuemix2022-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_revenuemix2022-pn.jpg)
β β ![[MISSING IMAGE: pc_recurringrevmix2022-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_recurringrevmix2022-pn.jpg)
β β β Over the past three years,β Completed 9 acquisitions
in 2023 for $5B, and invested nearly $7B in RD&Eβ β β Returned $6B to stockholders
through dividends in 2023β β β Ended 2023 with $13.5B in cash and marketable securities, up over
$4.6B year-to-yearβ have worked to aggressively transform, while returning nearly 75% of free cash flow to shareholders.FREE CASH FLOW USE
* Based on GAAP from continuing operations, ROIC equals net operating profits after tax (net income plus after tax interest expense) divided by the sum of the average debt and average total stockholdersβ equity.Our compensation strategy supports IBMβs high value business modelFor 2017, at target, 69%of Mrs.Β Romettyβs pay was at risk and subject to attainment of specificcalculate these performance goals:
For 2017 performance, the Board approved an annual incentive payment of $5.1 million for Mrs.Β Rometty, 102% of target. The payout level reflects a successful multi-year transformation with a return tometrics.in 4Q 2017, a remix% includes incremental sales to Kyndryl (post-separation, through OctoberΒ 2022) of the business portfolio,~1 point and recognition of the Company as the enterprise leader in artificial intelligence solutions, cloud services, security, blockchain,~4 points for 2021 and quantum computing. The Executive Compensation and Management Resources Committee (the Compensation Committee) also noted significant personal leadership of the CEO in infusing new executive talent into the Company and developing next generation leaders. In addition, she set the standards for workplace inclusion, for responsible stewardship of data and artificial intelligence, and for βnew collarβ work and training programs on a global basis. Taking into consideration the actual salary, annual incentive payout, vested restricted stock units and long-term incentive award for the period 2015β2017, Mrs.Β Rometty earned 81% of her annual total target compensation in 2017.The tables below illustrate how Mrs.Β Romettyβs pay at risk has affected her realized pay, compared to her target pay, in each of the past 3 years. These payouts reflect the multi-year business transformation, rigorous target setting and the strong link between pay and performance.CEO TOTAL ACTUAL VS. TARGET COMPENSATIONValues in Millions ($)
For 2018, the independent members of the Board made no change to Mrs.Β Romettyβs base salary, target annual incentive or annual long-term incentive award value, relative to 2017.containcontains certain non-GAAP financial measures, on a continuing operations basis, including operating earnings per share, free cash flow, consolidated operating pre-tax income fromcash flow, and revenue growth rates adjusted for currency. Amounts are presented on a continuing operations and operating income from continuing operations.basis unless otherwise noted. For reconciliation and rationale for managementβs use of this non-GAAP information, refer to AppendixΒ AββββNon-GAAPNon-GAAP Financial Information and Reconciliationsβ.
Reconciliations.Stockholder EngagementIBM continually reviewsenhances its corporate governance and executiveAnalysis 33programs. As part of this review, it is IBMβs longstanding practice to meetstrategy, with a significant number of our largest investors during each proxy season, to solicit their feedback on a variety of topics. In 2017,Β IBM once again engaged with over 100 institutional investors. Further, our process includes outreach to hundreds of thousands of individual retail and registered stockholders, which represent a majority of our retail base.In addition to our normal, extensive outreach,pay at risk, supports the Company enhanced its engagement practices in 2017. We engaged in a robust program to gather feedback from investors following the 2017 annual advisory vote on executive compensation (Say on Pay). IBMβs Presiding Director, the Chair of the Executive Compensation and Management Resources Committee, and membersdrivers of IBMβs senior management participated in a significant portionhigh value business model.this engagement program. Overall, the Company met with investors representing more than 55%Mr.Β Krishnaβs pay remained at risk and subject to attainment of the shares that voted on Say on Pay at the 2017 Annual Meeting.This enhanced, in-depth engagement process provided valuable feedback to the Compensation Committee. Overall, our stockholders continue to be supportive of the Companyβs compensation program and practices. Specifically, our stockholders are strongly supportive of the overall design of the program, which focuses on long-term financialrigorous performance that drives stockholder value. Still, the Committee and the Board reviewed and considered all of the feedback heard from investors in making decisions relating to the executive compensation programs. The following table summarizes the items raised by our investors and the changes we made to our executive compensation program in response.![[MISSING IMAGE: bc_ceotargepaymix-pn.jpg]](/files/DEF 14A/0001104659-24-032641/bc_ceotargepaymix-pn.jpg)
WhatΒ weΒ heardCompensationΒ CommitteeβsΒ ResponseOn Disclosure TransparencyΒ·Β Β Β Β Β Β Β General preferenceFor 2023 performance, the Board approved an annual incentive payment of $3,510,000 for simplicityMr.Β Krishna, which was 117% of target. The payout reflects a 100% Individual Contribution Factor (ICF) and clarity in the disclosure of the executive compensation programΒ·Β Β Β Β Β Β Β Redesigned the proxy to enhance readability and clarity of the disclosureΒ·Β Β Β Β Β Β Β Some preferred increased transparency around achievement of incentive goalsΒ·Β Β Β Β Β Β Β Provided additional context on the linkage between our business strategy and executive compensation programΒ·Β Β Β Β Β Β Β Included disclosure of performance against goals in both the Annual Incentive Program (AIP) pool funding at 117%.β β ![[MISSING IMAGE: fc_indicon-pn.jpg]](/files/DEF 14A/0001104659-24-032641/fc_indicon-pn.jpg)
β ![[MISSING IMAGE: bc_annual-pn.jpg]](/files/DEF 14A/0001104659-24-032641/bc_annual-pn.jpg)
β β β Long-Term Incentive Planhundreds of thousands of individual registered and beneficial owners leading up to provide increased transparency into the rigor2023 Annual Meeting and then offering off-season engagement to stockholders owning more than 57% of the shares that voted on Say on Pay in 2023.goals and the linkage of those goals to our business strategypay practices. On One-Time GrantsΒ·Β Β Β Β Β Β Β Many disfavored IBMβs one-time grant in 2016Β·Β Β Β Β Β Β Β The Board granted the 2016 CEO premium-priced stock option grant during a critical juncture in the Companyβs transformationΒ·Β Β Β Β Β Β Β The options, which are priced in four tranches up to 25% above the grant price, are not exercisable until 2019Β·Β Β Β Β Β Β Β No one-time awards have been granted to the Chairman and CEO or other Named Executive Officers (NEOs) in more than 2 yearsOn Pay Program DesignΒ·Β Β Β Β Β Β Β Overall, supportive of IBMβs rigorous pay program and did not want to see any major changes to the fundamental designΒ·Β Β Β Β Β Β Β Reduced Annual Incentive Program maximum opportunity for the Chairman and CEO to two times target to align with market practiceΒ·Β Β Β Β Β Β Β The maximum Annual Incentive Program payout opportunity of three times target is at the high end of market practice for the CEOΒ·Β Β Β Β Β Β Β Included a relative ROIC modifier, beginning with PSUs granted in 2018, which may add or subtract the number of shares paid out based on IBMβs relative ROIC performanceΒ·Β Β Β Β Β Β Β Some preferred that a relative metric, such as Return on Invested Capital (ROIC), be included in the long-term compensation planΒ·Β Β Β Β Β Β Β Described stock ownership guidelines as a multiple of base salary. IBMβs ownership requirements themselves have not changed and remain at the high end of its peer groupΒ·Β Β Β Β Β Β Β Some requested increased clarity around stock ownership guidelinesβ To that end, IBMβs executive compensation practices are designed specifically to meet five key objectives:Β·EnsureβTo that end, IBMβs executive compensation practices are designed specifically to meet five key objectives: β β β β are closely aligned 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;Β·Β·β Β·Β·β β TypeType Componentβ β β Key Characteristics β β
Performanceβ Salaryβ β β Salary is a market-competitive, fixed level of compensationcompensation.β β β At target, annual incentive provides a market-competitive total cash opportunity. Actual annual incentive payments are drivenfunded by business performance against financial metrics and individualdistributed based on annual performance scores, with top performers typically earning the greatest payouts and the lowest performers earning no incentive payouts. Beginning in 2018, the Committee reduced the maximum payout opportunity for the Chairman and CEO to 2X salary, while the individual maximum payout opportunity remains at 3X salary for all other executives.β β β
Incentiveβ β Long-Term Incentiveβ β Stock-Based GrantsEquity awards are typically made annually and may be made in PSUs, RSUs or a combination thereof. Equityequity grants are based on the level of the executivecompetitive positioning and thevary based on individual performance. Lower performers do not receive equity grants. talent factors.is adjustedcan be increased or decreased at the end of the three-year performance period based on IBMβs performance against predetermined targets for operating earnings per share and free cash flow. Beginning with the 2018 to 2020a relative performance period, the Committee added a modifier that could adjust the final number of PSUs earned based on IBMβs relative Return on Invested Capital (ROIC) performance. metric.β β β Restricted Stock Units (RSUs) β β RSUs vest over time; typically ratably over one to fourΒ years.β β Stock Options β RetentionStock-Based Grants & Cash AwardsPeriodically,Stock Options vest over time; typically ratably over fourΒ years. The exercise price is at least the Compensation Committee and/or the Chairman and CEO reviews outstanding stock-based awards for key executives. Depending on individual performance and the competitive environment for senior executive leadership talent, awards may be made in the form of restricted stock units, premium-priced stock options or cash for certain executives. Retention Restricted Stock Unit (RRSU) vesting periods typically range from two to five years. Cash awards have a clawback if an executive leaves IBM before a specified date. Premium-priced stock options may have varying exercise prices.Supplemental Executive Retention Plan(closed)In 1995,Β IBM created a plan to help retain, for their full careers, the caliber of senior leaders needed to turn IBM around, preserve its long-term viability, and position it for growth in the future. To discourage these leaders from joining competitors, their benefits under this retention plan would be forfeited if they left IBM prior to age 60. Because its original purpose had been met, the plan was closed to new participants in 2004. Future accruals under the plan stopped on DecemberΒ 31, 2007.PensionΒ & Savings PlansPension Plans(closed)In the U.S., future accruals under the pension plans stopped on DecemberΒ 31, 2007. The amountvalue of the pension benefit under these plans is basedIBM stock price on paythe date of grant, and service and is determined bywill be exercisable for up to 10Β years from the same formulas for executives and non-executives.Savings PlanThe money that U.S. executives save through the IBM 401(k)Β Plus Plan, as for all U.S. employees, is eligible for Company matching and automatic contributions. The 401(k) Plus Plan is the only tax-qualified retirement program available to IBMβs U.S. employees for future deferrals and employer contributions.Deferred SavingsΒ PlanIBM has a nonqualified deferred compensation plan established in accordance with U.S. Department of Labor and Internal Revenue Service guidelines to enable employees to defer compensation in excess of limits applicable to 401(k) plans. Employees are eligible for Company matching and automatic contributions similar to the 401(k) Plus Plan.Other CompensationPerquisites and Other BenefitsPerquisites are intended to ensure safety and productivity of executives. Perquisites include such things as annual physicals, transportation, financial planning, and personal security.
2023; and effective JanuaryΒ 1, 2024 employer contributions in the non-qualified deferred compensation savings plan moved to a consistent 5% matching contribution for all eligible employees.Compensation GovernanceOverall,Β IBMβs compensation policies and decisions, explained in detail in thiscontinue35be focused onIBMβs performance through the annual and long-term financial performance to drive stockholder value.The table below highlights practicesincentive programs. Each year, the Committee ensures that IBM embraces in support of our pay-for-performance philosophy:What We DoWhat We Donβt Do
Β Β Β Β Β Β Β Β Tie a significant portion of pay to Company performanceΒ Β Β Β Β Β Β Β Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisionsΒ Β Β Β Β Β Β Β Require significant share ownership by the Chairman and CEO and Senior Vice PresidentsΒ Β Β Β Β Β Β Β Utilize noncompetition and nonsolicitation agreements
Β Β Β Β Β Β Β Β No individual severance or change-in-control agreements for executive officersΒ Β Β Β Β Β Β Β No excise tax gross-upsΒ Β Β Β Β Β Β Β No dividend equivalents on unearned RSUs/PSUsΒ Β Β Β Β Β Β Β No hedging/pledging of IBM stockΒ Β Β Β Β Β Β Β No stock option repricing, exchanges or options granted below market valueΒ Β Β Β Β Β Β Β No guaranteed incentive payoutsΒ Β Β Β Β Β Β Β No accelerated vesting of equity awards for executive officersΒ Β Β Β Β Β Β Β No above-market returns on deferred compensation plansSenior Leadership Team β Personal Stake in IBMβs Future through Stock Ownership RequirementsInvestors want the leaders of their companies to act like owners. That alignment, we believe, works best when senior leaders have meaningful portions of their personal holdings invested in the stock of their company. This is why IBM sets significant stock ownership requirements for IBMβs Chairman and CEO and Senior Vice Presidents. The following table illustrates which equity holdings count towards stock ownership requirements:What CountsWhat Does Not CountΒ Β IBM shares owned personally or by members of the immediate family sharing the same householdΒ Β Holdings in the IBM Stock Fund of the 401(k)Β Plus Plan and the Excess 401(k)Β Plus PlanΒ Β Unvested equity awards, including PSUs, RSUs and RRSUsΒ Β Unexercised stock optionsΒ Β Shares of IBM stock deferred under the Excess 401(k) Plus PlanStock Ownership RequirementsThe Chairman and CEO and Senior Vice Presidents are all required to own IBM shares or equivalents in excess of standard market practice within 5 years of hire or promotion. While we have historically expressed our stock ownership requirements as a multiple of target total cash compensation, we are now describing them as a multiple of salary to align with market practice. This does not change the amount of shares required to be held, but we believe it will clarify the stock ownership requirements we have for our NEOs.
Salary and Non-Stock Compensation
RequirementMrs.Β Rometty owns common stock and stock-based holdings equal in value to 24 times her base salary, more than 2 times the required holdings, based on both the current and new approach to disclosure as of DecemberΒ 31, 2017. More information on Mrs.Β Romettyβs holdings can be found in Common Stock and Stock-Based Holdings of Directors and Executive Officers. As a group, the Chairman and CEO and Senior Vice Presidents owned shares or equivalents valued at over $120 million as of DecemberΒ 31, 2017; in fact, as of that date, this group held, on average, more than 10 times their base salary.Stock Ownership Continues Beyond RetirementFinally, ourthese programs are designedclosely aligned to ensure alignment with IBMβs long-term interests past the retirement date for our Chairman and CEO and Senior Vice Presidents. Share price performance and long-term goal achievement continue to impact the Long-Term Incentive Plan for these retired executives for at least two and a half years post retirement. Shares for Mrs.Β Rometty that remain restricted and subject to post-retirement performance of IBM represent 1.6 times her share ownership requirement as of DecemberΒ 31, 2017, and assuming future performance at target.Setting Performance Targets for Incentive CompensationCompensation of our senior leaders is linked with IBMβs performance against core business metrics. These metrics and their weightings are aligned with IBMβsCompanyβs financial and strategic objectives and are designed to appropriately balance short- and long-term goals.balanced. Targets are set for both the annual and long-term incentive programs at aggressivechallenging levels each year. These targets, individually and together, are designed to be challenging to attain and are consistent with ourIBMβs financial model shared with investors eachfor that year. As part of IBMβs ongoing management system, targets are evaluated to ensure they do not encourage an inappropriate amount of risk taking.For 2017,Β IBM continued to measure five key financial metrics:AIPβ Strategic ImperativesRevenueβ Supports portfolio shift into a cognitive solutions and cloud platform company that will deliver the highest value opportunities for our clients and stockholdersβ Revenue β β β Operating Cash Flow* β β β ![[MISSING IMAGE: pc_ibmrevenue-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_ibmrevenue-pn.jpg)
β Operating Net Incomeβ our profit and operational successtotal revenue performance across the portfolio of business β β ![[MISSING IMAGE: pc_operatingcashflow-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_operatingcashflow-pn.jpg)
β β Operating Cash Flow*Important measure ofMeasures our ability to reinvest and return value to stockholdersβ β β β β β β β β β β β β β Operating EPS* β β β Free Cash Flow* β β PSUProgramβ Operating EPS![[MISSING IMAGE: pc_revenue-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_revenue-pn.jpg)
β β Measures revenue performance over threeΒ years β β β ![[MISSING IMAGE: pc_operatingeps-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_operatingeps-pn.jpg)
β β β Measures operating profitability on a per share basis over threeΒ years β β ![[MISSING IMAGE: pc_freecashflow-pn.jpg]](/files/DEF 14A/0001104659-24-032641/pc_freecashflow-pn.jpg)
β β Free Cash FlowImportant measure ofMeasures our ability to reinvest and return value to stockholdersshareholdersΒ overΒ multiplethreeΒ yearsβ β β β β β Netfrom Operating Activities, excluding Global Financing receivables.Flow at 30%, and the ROIC Modifier.
βBased on feedback from recent meetings with our investors, and to increase ourTo provide further transparency, further, beginning this year,Β IBM is disclosingdiscloses the performance attainment against financial targets for the most recent performance period, for both the Annual Incentive Program and the Performance Share Unit Program.to reflect current business priorities.(AIP). These objectives translate to financial targets for IBM and for each business unit for purposes of determining the target funding of the Annual Incentive Program. AIP.business objectivesthe targets determines the actual total funding pool for the year, which can vary from 0% to 200% of total target incentives for all executives. At the end of the year, performance for IBM is assessed against these predetermined financial targets, which are updated to remove any impact of currency movement or the change in effective tax rate compared to plan. The metrics and weightings for 2017 and 2018, along with IBMβs results compared to financial targets for 2017, are listed below.This adjustment can be either up or down. For example, adjustments are usually made for large divestituresacquisitions and acquisitions.divestitures.addition,2023, the modifier was based on our progress in creating and developing a diverse executive population. Executive representation of women globally, as well as Black and Hispanic executives in the United States, changed by +1.1 points, -0.2 points and +0.6 points, respectively for the year. In 2023, these results mean that the modifier did not increase or decrease the AIP scoring.performance,performance; this includes, for example, client experience, market share, growthresearch and workforce development.innovation, and culture and engagement. Taking such matters into account for 2017, no such2023, the Compensation Committee approved an upward adjustment was made. to the score of ten points reflecting progress in AI and quantum computing, IBMβs high performance culture, and employee engagement.Annual Incentive Programfinal AIP funding level.
Results
%Β Attainment
Score*
Adjustment* Based on AIP payout table.** Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.incentive (payoutsincentive. Payouts at this level are rare and only possible when IBMβs performance has also been exceptional).exceptional. The Annual Incentive Program,AIP, which covers approximately 5,0004,000 IBM executives, includes this individual cap at three times the individual target to ensureallow for differentiated pay for performance. The Compensation Committee reviewed this plan featureFor the Chairman and determined common market practice forCEO, the CEOcap is a cap of two times target. Therefore, beginningAn executive generally must be employed by IBM at the end of the performance period in 2018,order to be eligible to receive an AIP payout. At the discretion of appropriate senior management, the Compensation Committee, has setor the ChairmanBoard, an executive may receive a prorated payout of AIP upon retirement. AIP payouts earned during the performance period are generally paid on or before AprilΒ 15 of the year following the end of such period.CEOβsoperating cash flow, the IBM pool funding score was 117.![[MISSING IMAGE: tb_aippayout23-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_aippayout23-pn.jpg)
incentive payment to two times theattainment is 110% with a 200% payout; for Operating Cash Flow, threshold attainment is 70% with a 70% payout, target amount. Since becoming CEO, Mrs.Β Romettyβs incentive payments have ranged from 0% to 108% of target.attainment and payout is 100%, maximum attainment is 120% with a 200% payout.
β2015β20172021-2023 performance period were Revenue, Operating EPS, and Free Cash Flow, unchanged from previous years.TargetsFlow.budget. business objectives.To formalize this practice, for Performance Share awards starting in 2016Actual Operating EPS results and thereafter, actual operating EPS resultsthe target are adjusted to remove the impact of any difference between the actual share count and the budgetedtargeted share count, while simultaneously ensuring that executive compensation targets are normalizedcount. Revenue is adjusted for any planned buybacks that are incorporated into the Operating EPS target.fluctuations in foreign currency rates in all threeΒ years. Additionally, the scoring for the Performance Share UnitPSU Program takes into accountmay consider extraordinary events. For the 2015β20172021-2023 performance period, there2022 and 2023 results were no such events.Performance Share Units isPSUs are adjusted up or down from 0% to 150%, of targets, based on the approved actual performance. There is no discretionary adjustment toprogram score.The PSU score is calculated as a weighted average of results against targets for Operating EPS (70%) and Free Cash Flow (30%). The calculation is demonstrated in the table below, using the 2015β2017 performance period.** Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics. 2015β2016 free cash flow results as originally reported, prior to restatement for adoption of FASB guidance on stock-based compensation in 2017.The graph below, which provides PSU payout history since 2014, demonstrates the rigor of our long-term performance goals.PERFORMANCE SHARE UNIT PAYOUTS
Starting with the 2018β2020 PSU Program has a Relative Return on Invested Capital (ROIC) modifier has been added to the program design.modifier. The modifier is based on IBMβs ROIC performance over the three-year performance period, relative to the S&P 500 Index (excluding financial services companies due to lack of comparability) and the S&P Information Technology Index. This modifier reduces the score up to 20 points when performance falls below the S&P 500 Index median and increases the score up to 20 points when IBM exceeds the median performance of both the S&P 500 Index and the S&P Information Technology Index. The modifier has no impact when IBMβs ROIC performance falls between the S&P 500 Index median and the S&P Information Technology Index median. The following graph illustrates how the modifier can affectThere is no qualitative adjustment to the PSU program score. Inevent2021-2023 performance period is shown in the weighted final scoretable below. For the 2021-2023 performance period, the ROIC modifier was 0%. While IBM ROIC exceeded the median of the S&P 500 Index (excluding financial services), it did not exceed the median of the S&P Information Technology Index.![[MISSING IMAGE: tb_perfperi23-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_perfperi23-pn.jpg)
is 0,were adjusted to exclude the impact of separating business in Russia. Free Cash Flow amounts are on a consolidated basis, which includes activity from discontinued operations. See AppendixΒ A for GAAP to non-GAAP reconciliation.β β β β Threshold β β Target β β Max β β Financial Metrics β β Attainment % / Payout % β β Attainment % / Payout % β β Attainment % / Payout % β β Revenue (40%) β β 70% / 25% β β 100% / 100% β β 120% / 150% β β β β 70% / 25% β β 100% / 100% β β 120% / 150% β β β β 70% / 25% β β 100% / 100% β β 120% / 150% β modifier would not apply.RELATIVE ROIC MODIFIER
Modifier.HowCompensation Program GovernanceWhyenhances its corporate governance and executive compensation programs. As part of this review, it is IBMβs longstanding practice to meet with a significant number of our largest investors during both the proxy season and the off-season, to solicit their feedback on a variety of topics.β Which Stockholders were Engaged β β Who Engaged from IBM β β In 2023, IBM once again offered year-round robust engagement to our stockholders, reaching out to over 125 institutions and hundreds of thousands of individual registered and beneficial owners leading up to the 2023 Annual Meeting and then offering off-season engagement to stockholders owning more than 57% of the shares that voted on Say on Pay in 2023. β β The Company continued its enhanced engagement practices in 2023. IBMβs Chairman and CEO, Lead Director, and members of IBMβs senior management participated in this engagement program. β ![[MISSING IMAGE: ic_whatwedocheck-pn.jpg]](/files/DEF 14A/0001104659-24-032641/ic_whatwedocheck-pn.jpg)
β β What We Do β β ![[MISSING IMAGE: ic_whatwedontdox-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ic_whatwedontdox-bw.jpg)
β β What We Donβt Do β β β β β β β β β β β β β β β β β β β β β β β β Ownership Requirements as a Multiple of Salary β β β β β IBM Minimum Requirement β β Median Peer Group Minimum Requirement β β CEO β β 10 β β 7 β β Other NEOs β β 7 β β 4 β β β What Counts β β β β What Does Not Count β β β β β β β β β β β β β β β β β β β β Areare MadeSenior Vice Presidents,SVPs, develop goals, both qualitative and quantitative, that they seek to achieve in a particular year in support of the business. Beginning in 2016,Β IBM adopted a more nimbleThe Board of Directors reviews and real-time approach to managing employee performance. Employeeβs performance goals are discussed with each individualβs manager regularly and updated as necessary throughoutapproves the year. The Chairman and CEOβs performance goals are reviewed directly by the Board of Directors.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.Compensation for theAnnual Incentive Payoutsβ Research, Recommendations and Reviewplan payouts and setting target compensation opportunities for the Chairman and CEO. This framework considers the Chairman and CEOβs self-assessment of performance against commitments in the year, both qualitative and quantitative, and also considers progress against strategic objectives, an analysis of IBMβs total performance over a multi-year period, a competitive benchmark analysis,the year and other relevant information.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.3. Determining Compensation for SeniorPresidentsEvaluation ofChairman and SVP Results by the Chairman and CEOEmployees at all levels, including executives, and the Compensation Committeeevaluateupdate their own results against their stated goals.Senior Vice PresidentsChairman and SVPs are reviewed by the Senior Vice President of Human Resources (SVP HR) and the Chairman and CEO, who evaluate the information, along with the following:Β·Β Β Β Β Β Β Β Comparisons to market compensation levels for cash compensation and total direct compensation;Β·Β Β Β Β Β Β Β Potential for future roles within IBM; andΒ·Β Β Β Β Β Β Β Total compensation levels relative to internal peers before and after any recommendations.in consultation withtaking into account the SVP HR,Company incentive score, the Chairman and CEO makes compensation recommendations to the Compensation Committee based on an evaluation of the Vice Chairman and each Senior Vice PresidentβsSVPβs performance and expectations for the coming year.Evaluation of Results byyear, and the Compensation CommitteeThe Compensation Committee decides whether to approve or adjust the Chairman and CEOβs recommendations for the Senior Vice Presidents.evaluates allthen presents the compensation decisions for the Chief Financial Officer to the independent members of the factors considered by the Chairman and CEO and reviews compensation summaries that tally the dollar valueIBM Board 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 that separation of employment or retirement will have.4. EnsuringDirectors for ratification. β fact that competition for senior managementflow of executive talent is not limited to our industry.in and out of IBM from other industries. The surveys and benchmark data are supplemented by input from the Compensation Committeeβs outside consultant on factors such as recent market trends. The Committee reviews and approves this list annually.The CompensationFor 2023 and 2024 compensation decisions, the Committee re-examinedutilized the following benchmark group for 2017 and determined that companies which meet the following criteria should be included in the 2017 benchmark group:Β·criteria:$15$10Β billion, plusΒ·(up to two per industry if available) in industries other than technology,industries, with revenue that exceeds $40$30Β billion, and that have a global complexity similar to IBM.2017both 2023 and 2024 compensation decisions, the Committee approved the following benchmark group using the criteria above, which achieves a balance between prominent technology competitors and reflecting changes in the corporate structurelarge-scale companies of certain competitors.2017 BENCHMARK GROUP:AccentureDow ChemicalOracleAlphabetExxonMobilPepsiCoAmazon.comFordPfizerAppleGeneral ElectricUnited TechnologiesAT&THewlett Packard EnterpriseUPSBoeingHP Inc.VerizonCaterpillarIntelXerox (removed from 2018 group)ChevronJohnsonΒ & JohnsonCisco SystemsMicrosoftFor 2018 compensation decisions, the Committee approved the same benchmark group with one change. Xerox was removed from the 2018 benchmark group given recent changes in its corporate structure.The data from compensation surveyssimilar size of IBM, and related sources form the primary external view of the market.accurately represents IBMβs competition for senior leadership talent. In consideration of size and complexity, IBMβs philosophy is to generally target the 50th50 Owingβ Accenture β β Boeing β β Microsoft β β UPS β β Adobe β β Cisco Systems β β Oracle β β Verizon β β Alphabet β β General Electric β β PepsiCo β β Visa β β Amazon.com β β Hewlett Packard Enterprise β β Qualcomm β β β β AT&T β β Honeywell β β Raytheon β β β β β Bank of America β β Intel β β Salesforce β β β β the size and scope of our business overall, some roles are compared to a size-adjusted market rate.relevantbroader benchmark group.5. Consultantenters into a consulting agreementworks directly with its outside compensation consultant on an annual basis. In JulyΒ 2017, the Committee retained Semler Brossy Consulting Group, LLC (Semler Brossy) as itsCommitteeβs compensation consultant to adviseprovide a decision-making framework for use by the Committee on market practices and specific IBM policies and programs. Semler Brossy reports directly to the Compensation Committee Chairman and takes direction from the Committee. The consultantβs work for the Committee includes data analyses, market assessments and preparation of related reports. From time to time, the Committee seeks the views of the consultant on items such as incentive program design and market practices. The work done by Semler Brossy for the Committee is documented in a formal agreement which is executed by the consultant and the Committee. Semler Brossy does not perform any other work for IBM, other than services provided to IBMβs Directors and Corporate Governance Committee. The Committee previously retained Frederic W. Cook & Co.,Β Inc. (FW Cook). The Committee determined that there is no conflict of interest with regard to either Semler Brossy or FW Cook.The Compensation Committee made recommendations for Mrs.Β Romettyβs 2017 and 2018setting target compensation following the process and using the pay components described above.2017 Annual Incentive Decisionopportunities for the Chairman and CEOFor 2017 performance,CEO. The independent members of the IBM Board approved anof Directors review and provide final approval.paymentlong-term compensation, deferred compensation, retention payments and pension benefits. These summaries provide the Committee with an understanding of $5.1 millionhow 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 CEOβs recommendations for Mrs. Rometty, which represented 102% of her target opportunity.In additionthe Vice Chairman and SVPs. The Committee then presents the compensation decisions for the Chief Financial Officer to overall IBM 2017 revenue performance of $79.1B and pre-tax income of $11.4B, the Compensation Committee noted the following achievements for Mrs.Β Rometty, all of which are clear sign postsindependent members of the successful business portfolio shift:Β· Achieved critical mass with IBMβs Strategic Imperativesβ cloud, analytics, mobile, socialIBM Board of Directors for ratification.security. Grew revenue to $36.5 billion and represented 46% of IBMβs total revenue.Β· Strengthened Watson as the premier AI platform for business.Continued to extend the reach of Watson on the IBM Cloud to clients, developers, partners and users, touching one billion people in 2017.Β· Solidified the IBM Cloud as a global leader for enterprise,with $17 billion in revenue and exited the fourth quarter with an as-a-service annual run rate of more than $10 billion.Β· Continued to modernize our enduring Systems platforms.IBM Z delivered the highest shipped MIPS (millions of instructions per second) in history, demonstrating strong demand for the worldβs first system capable of pervasive encryption with no performance degradation. Storage revenue grew every quarter in 2017 for the first time since 2010 and Power systems returned to growth in 4Q with the introduction of Power 9.Β· Established IBM as the clear leader in quantum computing.Created the worldβs first 50 qubit system and launched Q Network on the IBM Cloud which made quantum capabilities available to more than 70,000 users for experimentation and testing.Β· Achieved global leadership in blockchain.Established blockchain projects with hundreds of clients, including collaborating on 35 active blockchain networks with clients such as Walmart, Maersk and The Depository Trust & Clearing Corporation (DTCC).Β· Repositioned IBM Services to capitalize on market trends.Returned consulting business to growth in the second half of 2017, but fell short of growth objectives for the year. Grew total services backlog for the year, with an improved trajectory entering into 2018.Β· Led the world for the 25th consecutive year in U.S. patents earned,set a new record with more than 9,000 patents. Nearly half of those patents were in new areas such as AI, cloud, security, blockchain, and quantum computing that will power the business for years to come.Β· Drove significant business productivitythrough continued global support transformation, automation and the deployment of cognitive solutions across IBM. Positioned IBM for future growth by realigning workforce skills with the new portfolio and strengthening all levels of management.Β· Continued to enhance the all inclusive culture of IBM.Improved executive representation in both female and under represented minorities.Finally, the payout took into consideration Mrs.Β Romettyβs outstanding personal leadership in infusing new executive talent across the Company, developing the next generation of leaders, and assuming industry leadership on several key issues, including setting new global standards for data responsibility and stewardship and preparing the future workforce for βnew collarβ work.2018AnalysisFor 2018, and Named Executive Officersβ For 2023 performance, the Board approved an annual incentive payment of $3,510,000, which represented 117% of Mr.Β Krishnaβs target opportunity and was in line with the Company incentive score. β β β In addition to overall IBM 2023 revenue performance of $61.9Β billion and $13.9Β billion cash from operations, the Compensation Committee noted the following achievements for Mr.Β Krishna, which have positioned IBM for sustained growth going forward: β ![[MISSING IMAGE: ic_business-ko.gif]](/files/DEF 14A/0001104659-24-032641/ic_business-ko.gif)
β β β ![[MISSING IMAGE: ic_portfolio-ko.gif]](/files/DEF 14A/0001104659-24-032641/ic_portfolio-ko.gif)
β β β β β ![[MISSING IMAGE: ic_leadership-ko.gif]](/files/DEF 14A/0001104659-24-032641/ic_leadership-ko.gif)
βINNOVATIONβ β β ![[MISSING IMAGE: ic_societalimpact-ko.gif]](/files/DEF 14A/0001104659-24-032641/ic_societalimpact-ko.gif)
Β Β Β β β β ![[MISSING IMAGE: ic_talent-ko.gif]](/files/DEF 14A/0001104659-24-032641/ic_talent-ko.gif)
ββAND LEADERSHIPβ β β β β β β β β β 2024 Compensation Decisions for the Chairman and CEO β β β β For 2024, the independent members of the Board made no changes to Mr.Β Krishnaβs base salary, which has not changed since he became CEO in AprilΒ 2020. Mr.Β Krishnaβs target annual incentive increased to $3.5Β million and he was granted an annual long-term incentive award valued at $20Β million. Mr.Β Krishnaβs target cash and total compensation are in line with the median of the 2024 benchmark group. Mr.Β Krishnaβs long-term incentive grant is comprised of 60% 2024-2026 Performance Share Units, 20% Restricted Stock Units, and 20% Stock Options. For 2024, 78% of Mr.Β Krishnaβs annual total target compensation is at risk and subject to attainment of rigorous performance goals and IBMβs stock price performance. β β the Board made no change to Mrs.Β Romettyβs base salary or target annual incentive,Annual Meeting & Proxy StatementΒ Β Β |Β Β Β 2023 Compensation Discussion and reduced the maximum potential payout for her annual incentive from 3X target to 2X target, to align more closely with common market practice. She was granted an annual long-term incentive award valued at $13.3 million, flat compared to the prior two years. This grant is comprised 65% of 2018β2020 Performance Share Units and 35% of Restricted Stock Units. For 2018, 69% of Mrs.Β Romettyβs annual total target compensation is tied to performance-based incentives.
Analysis 432017Schroeter, Dr.Β Kelly,Kavanaugh, Mr.Β ClementiThomas, Mr.Β Cohn, and Mr.Β Kavanaughnoting(NEOs), based on overall corporate performance as described in the Business Highlights and Executive Summary and the following key points:Martin J. SchroeterSenior Vice President and Chief Financial Officer*Β·Β Β Β Β Β Β Β Drove continued transformation and strong return to shareholders, expanded Operating PTI margins**, grew free cash flow (excluding Global Financing receivables)** and maintained strong ROIC.Β·Β Β Β Β Β Β Β Returned $9.8 billion β about 75%an assessment of free cash flow β to shareholders, including an increase to the dividend for the 22nd consecutive year.Β·Β Β Β Β Β Β Β Grew IBM Global Financing assets by double digits year to year, while increasing return on equity to 33%.John E. Kelly IIISenior Vice President,Β IBM Cognitive SolutionsΒ & IBM ResearchΒ·Β Β Β Β Β Β Β Strengthened Watson as the premier AI platform for business, touching one billion people in 2017.Β·Β Β Β Β Β Β Β Grew IBM Security to over $3Btheir individual contributions, some of revenue, up 55% YTY.Β·Β Β Β Β Β Β Β Achieved #1 in patents for the 25th consecutive year, setting a new record of more than 9,000 patents. Nearly half of those patents were in new areas such as AI, cloud, security, blockchain and quantum computing that will power the business for years to come.Β·Β Β Β Β Β Β Β Missed full year profit objective for Cognitive Solutions.Erich ClementiSenior Vice President,Β IBM Global Markets*Β·Β Β Β Β Β Β Β Maintained IBMβs global leadership in enterprise cloud with all of the top ten global banks, nine of the top ten retailers and eight of the top ten airlines as IBM Cloud as-a-Service clients.Β·Β Β Β Β Β Β Β Enabled IBM to deliver $36.5 billion of Strategic Imperatives revenue, up 11%, with strong contributions from IBMβs two biggest geographic markets.Β·Β Β Β Β Β Β Β Returned North America,Β IBMβs biggest geographic market, to revenue growth in 4Q, but missed full year growth objective.James J. KavanaughSenior Vice President, Finance and Operations*Β·Β Β Β Β Β Β Β Drove significant productivity savings through work redesign and the deployment of cognitive solutions across IBMβs internal operations.Β·Β Β Β Β Β Β Β Strengthened IBM as a top-tier IT provider through initiatives to transform and enhance the client experience.Β·Β Β Β Β Β Β Β Drove cognitive throughout IBMβs internal operations, making IBM the showcase of a cognitive enterprise.β JAMES J. KAVANAUGH β β Senior Vice President, Finance & Operations and Chief Financial Officer β β β β β β β β ROBERT D. THOMAS β β Senior Vice President, Software & Chief Commercial Officer β β β β β β β β GARY COHN β β Vice Chairman β β β β β β β β MICHELLE H. BROWDY β β Senior Vice President and General Counsel β β β β β β β
β In JanuaryΒ 2018, Mr.Β Schroeter became Senior Vice President,Β IBM Global Markets, Mr.Β Clementi became Senior Vice President, IBM Global Integrated Accounts, and Mr.Β Kavanaugh became Senior Vice President and Chief Financial Officer.** metrics.metric. See AppendixΒ A for information on how we calculate these performance metrics.
β20172023 annual incentive payouts below for these named executive officers:Taking into consideration the actual salary, annual incentive payout, vested restricted stock units and long-term incentive award for the period 2015β2017, theseNEOs:β Name β β β β J.J. Kavanaugh β β $1,730,430 β β R.D. Thomas β β 1,552,500 β β G. Cohn β β 1,848,600 β β M.H. Browdy β β 1,516,800 β earned from 76%β81%each had an incentive target equal to 135% of their annual total target compensation in 2017.2018salary for 2023.Schroeter, Dr.Β Kelly,Kavanaugh, Mr.Β ClementiThomas, Mr.Β Cohn, and Mr.Β Kavanaugh2018:2024: base salary, annual incentive target, Performance Share Unit (PSU) and, Restricted Stock Unit (RSU) and Stock Option grants under the Long-Term Performance Plan. For Long-Term Incentive Plan grants, beginning in 2016, the mix of equity vehicles is now set at 65%60% PSUs, 20% RSUs and 35% RSUs, to align better20% 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 a betterthe right balance relative to peers with which we compete for talent. For 2018,2024, based on the compensation decisions detailed below at target, 63%approximately 75% of the NEOsβ (excluding the Chairman and CEO) pay is at risk.
63% of the NEOsβ, excluding the Chairman and CEO, annual total target compensation is at risk.
NEO 2024 PAY MIX(1)Mr.Β Schroeter, Dr.Β Kelly, Mr.Β Clementi2024, 75% of the NEOsβ (excluding the Chairman and Mr.Β KavanaughCEO) annual total target compensation is at risk.![[MISSING IMAGE: bc_neotargepaymix-pn.jpg]](/files/DEF 14A/0001104659-24-032641/bc_neotargepaymix-pn.jpg)
β β β β 2024 Cash β β β β Name β β β β Annual Incentive
Targetβ β Performance
Share Unitsβ β Restricted
Stock Unitsβ β Stock Options β β J.J. Kavanaugh β β $1,170,000 β β β $ 1,580,000 β β β β $ 6,150,000 β β β β $ 2,050,000 β β β β $ 2,050,000 β β β R.D. Thomas β β 1,064,000 β β β β 1,436,000 β β β β β 5,700,000 β β β β β 1,900,000 β β β β β 1,900,000 β β β G. Cohn β β 1,170,000 β β β β 1,580,000 β β β β β 4,800,000 β β β β β 1,600,000 β β β β β 1,600,000 β β β M.H. Browdy β β 936,000 β β β β 1,264,000 β β β β β 3,780,000 β β β β β 1,260,000 β β β β β 1,260,000 β β 2018 salary ratesNamed Executive Officers, if applicable, will be effective JulyAprilΒ 1, 20182024.the 2018 annual incentive targetsStock Options were effective JanuaryΒ 1, 2018.(2)Β Β Β PSUs and RSUs will be granted on JuneΒ 8, 2018FebruaryΒ 21, 2024 to the named executive officers, including the Chairman and the CEO. The actual number ofΒ units granted on this date will beare determined by dividing the value shown above by a predetermined, formulaic planningthe average of IBMβs closing stock price for the second quarter 2018.30 active trading days prior to the date of grant. The actual number of Stock Options granted on this date are determined by dividing the value shown by the product of (1)Β the average of IBMβs closing stock price for the 30 active trading days prior to the date of grant and (2)Β an option valuation factor of 0.20 (to reflect the discounted value of Stock Options compared to full value awards). The performance period for the PSUs ends DecemberΒ 31, 2020,2026, and the award will pay out in FebruaryΒ 2021. The restricted stock units2027. RSUs and Stock Options will vest 25% per year on each anniversary of the date of grant.
β3:4: Additional InformationitIt Relates to Riskall executives and employees. Based on this comprehensive review, we concluded that our compensation program doesprograms do not encourage excessive risk taking for the following reasons:Β·71%75% of 20182024 annual total target compensation provided in equity for the Chairman and CEO, Vice Chairman, and Senior Vice PresidentsSVPs as a group provided in equity.Β·group.Β· significant component of performance to promote disciplined progress toward financial goals. None of IBMβs incentive plans areis based solely on signings or revenue targets, which mitigates the risk of employees focusing exclusively on the short term.Β·Β·20172023 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.Β·Senior Vice PresidentSVP hold a significant amount of IBM equity to further align their interests with stockholders over the long term.Β·cash incentive payments in the event thatincentive-based compensation paid to an executive officerβs conduct leads toofficer if there is a restatement of IBMβs financial results.results that would have affected the amount of incentive-based compensation, regardless of whether the executive officerβs conduct lead to the restatement. Likewise, IBMβs equity plan has a clawback provision under which states that awards may be cancelled and certain gains repaid if an employeeexecutive engages in activity that is detrimental to IBM. To further reinforce our commitment to ethical conduct, the IBM Excess 401(k) Plus Plan allows the clawback of certain IBM contributions if a participant engages in activity that is detrimental to IBM.stock optionsStock 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, in the case of premium-priced stock options, for example, 10% above that average, or as specified by the Compensation Committee.predetermined, formulaic planningaverage of IBMβs closing stock price in effect for the quarter. IBMβs planning30 active trading days prior to the date of grant for PSUs and RSUs. For Stock Options, the average IBM closing stock price is computed each quarter using a consistent statistical forecasting procedure based on historical IBM stock price data. IBM usesfurther adjusted by an option valuation factor to reflect the quarterly planning pricediscounted value of Stock Options compared to aid in establishing the overall size of the equity plan and to give more consistency across equity grants made at different points in the quarter.Seniorthe Vice PresidentsChairman and each SVP are approved by the Compensation Committee. All equity awards for employees other than the Chairman and CEO, Vice Chairman and Senior Vice PresidentsSVPs are approved by the Chairman and CEO, Vice Chairman and Senior Vice PresidentsSVPs 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.advance.advance, typically FebruaryΒ 21st or the previous business day (if the 21st does not fall on a business day). For Officers, the February grant date is scheduled within one month of the Compensation Committeeβs approval of any applicable equity awards (at the end of January). IBMβs policy for new hires and promotions requires approval of any awards before or on the grant date which is typically the date of the promotion or hire.allAll Relationships,β and IBMβs Business Conduct Guidelines. This responsibility is reflected in each executiveβs performance goals, and is reinforced through each executiveβs annual certification to the IBM Business Conduct Guidelines.employeeexecutive engages in activity that is detrimental to IBM, such as violating IBMβs Business Conduct Guidelines, disclosing confidential information or performing services for a competitor. To further reinforce our commitment to ethical conduct, the Excess 401(k) Plus Plan allows the clawback of certain IBM contributions if a participant engages in activity that is detrimental to IBM.2,0001,500 of our key executives (including each of the named executive officers) have agreed to a noncompetition, nonsolicitation agreement that prevents them from working for certain competitors within 12Β months of leaving IBM or soliciting employees within two years ofafter leaving IBM.implemented the followingadopted, in accordance with SEC and NYSE requirements, a policy for the clawback of cash incentive paymentsto claw back incentive-based compensation from executive officers in the event an executive officerβs conduct leads toof a restatement of IBMβs financial results:To the extent permitted by governing law,Β IBM will seek to recoup any bonus or incentive paid to any executive officer if: (i)Β the amount of such payment was based on the achievement of certain financial results that were subsequently the subject of a restatement; (ii)Β the Board determines that such officer engaged in misconduct that resulted in the obligation to restate, and (iii)Β a lower payment would have been made to the officer based upon the restated financial results.two seniormultiple corporate leadership teams:teams, including the Performance Team and the Acceleration Team, formerly the Growth and Transformation Team. The Performance Team consists of approximately 7085 of our most senior leaders who run IBM businessΒ units and geographies and includes the Chairman and CEO, Vice Chairman, and each Senior Vice President.SVP. The team is accountable for business performance and the development of cross-unit strategies. The Acceleration Team, which includes all members of the Performance Team, consists of a select group of approximately 350 executives. This team is charged with accelerating IBMβs growth through leadership initiatives to engage their teams and promote innovation, speed and simplicity in service of our clients.Acceleration Team,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 option, collar). Further,Β IBM does not allow any member of the Acceleration Teamcontract, 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.Until the Tax Cut and Jobs Act was signed into law on DecemberΒ 22, 2017, performance-based compensation was deductible, even if it caused the coveredA βcovered employee, to have compensation in excess of $1 million. The Tax Cut and Jobs Act eliminated this performance-based compensation deduction going forward, but provided limited transition relief for compensation paid pursuant to a contract in effect as of NovemberΒ 2, 2017 that is not materially modified after such date. This means that certain outstanding performance-based compensation may continue to be deductibleβ under SectionΒ 162(m), but that all compensation after NovemberΒ 2, 2017, will be subject to the $1 million cap on deductibility. IBM will seek deductions for compensation under the transition relief consistent with applicable law. The Tax Cut and Jobs Act also expanded who a covered employee is under SectionΒ 162(m). Effective for 2017, a covered employee under SectionΒ 162(m) as amended, is the CEO, the CFO, (who previouslythe three highest paid executive officers, and any other individual who was not included) and eacha covered employee of the other three highest-paid executive officers.Based on applicable tax regulations in effect prior to the Tax Cut and Jobs Act,Company for the performance-based compensation exception, taxable compensation derived from certain stock appreciation rights and frompreceding taxΒ years beginning after DecemberΒ 31, 2016. exercise of stock options by Senior Vice Presidents under IBMβs Long-Term Performance Plans should qualify as performance-based. The IBM Excess 401(k)Β Plus Plan permits an executive officer who is subject to SectionΒ 162(m)Β and whose salary and incentive compensation is above $1 million to defer payment of a sufficient amount of the salary and incentive compensation to bring it below the SectionΒ 162(m)Β limit. In 1999,Β IBMβs stockholders approved the terms under which IBMβs annual and long-term performance incentive awards should qualify as performance-based. In 2014, as required by the Internal Revenue Code, the stockholders approved the material terms of the performance criteria under which long-term performance incentive awards should qualify as performance-based. These terms did not preclude the Committee from making any payments or granting any awards, whether or not such payments or awards qualify for tax deductibility under SectionΒ 162(m), which may have been appropriate to retain and motivate key executives.Although this tax deduction for performance-based compensation has been eliminated for awards after NovemberΒ 2, 2017, IBM believescontinues to believe that a strong link between pay and performance is critical to align executive and shareholderstockholder interests. Going forward, IBM and the Committee will continue to ensure that a significant portion of pay for our Senior Vice Presidents,Chairman and SVPs, including the Chairman and CEO, is at risk and subject to the attainment of performance goals.2017β β β β β β β β β β β β β β β Stock β β Option β β β β β β β β All Other β β β (a) β β Salary (1) β Bonus (2) β Awards (3) β Awards (4) β Compensation (5) β Value (6) β Earnings (7) β Compensation (8)(9) β Total (10) β β β β β β β β β β β β β β β β β β β β β β β 2023 β β β $ 1,500,000 β β β β $ 0 β β β β $ 11,483,809 β β β $3,339,560 β β $3,510,000 β β β $ 23,183 β β β β $ 0 β β β $541,874 β β β $ 20,398,426 β β β 2022 β β β β 1,500,000 β β β β β 0 β β β β β 8,927,701 β β β 2,033,636 β β 3,480,000 β β β β 0 β β β β β 0 β β β 638,738 β β β β 16,580,075 β β β 2021 β β β β 1,500,000 β β β β β 0 β β β β β 12,605,507 β β β 0 β β 2,940,000 β β β β 0 β β β β β 0 β β β 505,452 β β β β 17,550,959 β β β β β 2023 β β β $ 1,088,000 β β β β $ βββββ0 β β β β $ 6,704,515 β β β $1,949,711 β β $1,730,430 β β β $ 15,264 β β β β $ 0 β β β $203,369 β β β $ 11,691,289 β β β 2022 β β β β 1,040,000 β β β β β 0 β β β β β 5,843,669 β β β 1,331,106 β β 1,665,760 β β β β 19,187 β β β β β 0 β β β 233,263 β β β β 10,132,985 β β β 2021 β β β β 968,000 β β β β β 0 β β β β β 7,563,384 β β β 0 β β 1,437,700 β β β β 0 β β β β β 0 β β β 200,534 β β β β 10,169,618 β β β β β 2023 β β β $ 994,750 β β β β $ 0 β β β β $ 5,843,417 β β β $1,699,249 β β $1,552,500 β β β $ 3,170 β β β β $ 0 β β β $241,228 β β β $ 10,334,314 β β β G. Cohn, Vice Chairman β β 2023 β β β $ 1,170,000 β β β β $ 0 β β β β $ 4,897,686 β β β $1,424,239 β β $1,848,600 β β β β N/A β β β β $ 0 β β β $196,565 β β β $ 9,537,090 β β β 2022 β β β β 1,170,000 β β β β β 0 β β β β β 4,707,418 β β β 1,072,289 β β 1,832,800 β β β β N/A β β β β β 0 β β β 169,418 β β β β 8,951,925 β β β 2021 β β β β 1,170,000 β β β β β 1,000,000 β β β β β 6,180,787 β β β 0 β β 1,548,400 β β β β N/A β β β β β 0 β β β 2,417 β β β β 9,901,604 β β β M.H. Browdy, Senior VP and General Counsel β β 2023 β β β $ 936,000 β β β β $ 0 β β β β $ 4,255,907 β β β $1,237,603 β β $1,516,800 β β β β N/A β β β β $ 0 β β β $157,847 β β β $ 8,104,157 β β β 2022 β β β β 925,500 β β β β β 0 β β β β β 3,246,447 β β β 739,505 β β 1,466,240 β β β β N/A β β β β β 0 β β β 147,753 β β β β 6,525,445 β β β 2021 β β β β 894,000 β β β β β 0 β β β β β 4,354,627 β β β 0 β β 1,266,300 β β β β N/A β β β β β 0 β β β 135,930 β β β β 6,650,857 β β shown in the salarythis column reflect the actual salary amount paid to each named executive officer during 2017.Β·Β Β Β Β Β Β Β Β Β IBM reviews salaries for each named executive officer annually during2023.common review cycle. Mrs.Β Romettyβs salary ratecash sign-on payment; $1,000,000 of that was effective JulyΒ 1, 2016. The salary rates forpaid on DecemberΒ 31, 2021.other named executive officers took effect on JulyΒ 1, 2017.Bonus (Column (d))No bonuses were awarded to the named executive officers in the years shown in the 2017 Summary Compensation Table. Payments under the IBM Annual Incentive Program are included under column (g)Β (Non-Equity Incentive Plan Compensation).Awards (Column (e))The amounts shown areUnits (RSUs).Performance Share Units (PSUs), Restricted Stock Units (RSUs) and Retention Restricted Stock Units (RRSUs) granted in each fiscal year shown, computed in accordance with accounting guidance (excluding any risk of forfeiture as per SEC regulations). The values shown for the PSUs are calculated at the Target number as described below. The values shown for the PSUs, RSUs and RRSUsbelow, calculated in accordance with accounting guidance; these amounts reflect an adjustment for the exclusion of dividend equivalents.Performance Share Units (PSUs)The following describesmaterial terms and conditionsMaximum number, these values for Mr.Β Krishna would be: 2023: $14,641,833; 2022: $11,382,727; 2021: $13,928,980; for Mr.Β Kavanaugh: 2023: $8,548,269; 2022: $7,450,586; 2021: $8,357,494; for Mr.Β Thomas: 2023: $7,450,269; for Mr.Β Cohn: 2023: $6,244,427; 2022: $6,001,912; 2021: $6,829,751; for Ms.Β Browdy: 2023: $5,426,231; 2022: $4,139,173; 2021: $4,811,810.PSUs as reportedRSU grants, if applicable, calculated in the column titled Stock Awards (column (e)) in the 2017 Summary Compensation Table and in the 2017 Grants of Plan-Based Awards Table under the heading Estimated Future Payouts Under Equity Incentive Plan Awards (columns (f), (g)Β and (h)).General TermsΒ·Β Β Β Β Β Β Β One PSU is equivalent in value to one share of IBM common stock.Β·Β Β Β Β Β Β Β Executive officers are awarded a number of PSUs during the first year of the three-year performance period. PSUs are generally paid out in IBM common stock after the three-year performance period.Β·Β Β Β Β Β Β Β Performance targets are set at the beginning of the three-year performance period and approved by the Compensation Committee (for example, targetsaccordance with accounting guidance; these amounts reflect an adjustment for the 2015β2017 performance period were set for cumulative three-year attainmentexclusion of dividend equivalents.operating earnings per share and free cash flow in the beginning of 2015).Β·Β Β Β Β Β Β Β At the end of the three-year performance period, the Compensation Committee approves the determination of actual performance relative to pre-established targets, and the number of PSUs is adjusted up or down based on the approved actual performance. Beginningaccordance with the 2018β2020 performance period, the number of PSUs that pay out may be modified further based on IBMβs ROIC performance relative to broader market indices. For more information about this ROIC modifier, please refer to the description of our Performance Share Unit Program in SectionΒ 1 of the 2017 Compensation Discussion and Analysis.Β·Β Β Β Β Β Β Β PSUs granted to U.S. executives vest on DecemberΒ 31 of the end of the performance period. Payout for all PSUs is in the February following the end of the performance period.Β·Β Β Β Β Β Β Β There are no dividends or dividend equivalents paid on PSUs.Vesting and Payout CalculationsΒ·Β Β Β Β Β Β Β The performance period for the awards granted in 2017 is JanuaryΒ 1, 2017 through DecemberΒ 31, 2019, and the awards will pay out in FebruaryΒ 2020. PSU awards granted in 2017 will be adjusted for performance, as described below.Β·Β Β Β Β Β Β Β Outstanding PSUs are typically cancelled if the executiveβs employment is terminated. See the 2017 Potential Payments Upon Termination Narrative for information on payout of unvested PSUs upon certain terminations.Β·Β Β Β Β Β Β Β Payout will not be made for performance below the thresholds, as described below.Β·Β Β Β Β Β Β Β See SectionΒ 1 of the 2017 Compensation Discussion and Analysis for information on performance targets for the PSU program.Threshold Number (listed in column (f)Β of the 2017 Grants of Plan Based Awards Table):βΒ Β Β Β Β Β The Threshold number of PSUs is 25% of the Target number.βΒ Β Β Β Β Β The Threshold number of PSUs will be earned for achievement of 70% of both business objectives (operating earnings per share and free cash flow).βΒ Β Β Β Β Β If only the cumulative operating earnings per share target is met at the Threshold level (and the free cash flow target is not met), the number of PSUs earned would be 70% of the Threshold number.βΒ Β Β Β Β Β If only the cumulative free cash flow target is met at the Threshold level (and the operating earnings per share target is not met), the number of PSUs earned would be 30% of the Threshold number.Target Number (listed in column (g)Β of the 2017 Grants of Plan-Based Awards Table):βΒ Β Β Β Β Β The Target number of PSUs will be earned if 100% of the objectives are achieved.Maximum Number (listed in column (h)Β of the 2017 Grants of Plan-Based Awards Table):βΒ Β Β Β Β Β The Maximum number of PSUs is 150% of the Target number.βΒ Β Β Β Β Β The Maximum number of PSUs will be earned for achieving 120% of both business objectives.Restricted Stock Units (RSUs)RSUs may include RRSUs. In 2017, RSUs, but not RRSUs, were granted to all named executive officers. RRSUs granted in
βprevious years to any named executive officer and outstanding at the end of 2017 are included in the 2017 Outstanding Equity Awards at Fiscal Year-End Table.General TermsΒ·One RSU or RRSU is equivalent in value to one share of IBM common stock. RSUs and RRSUs are generally paid out in IBM common stock at vesting.Β·Dividend equivalents are not paid on RSUs or RRSUs granted on or after JanuaryΒ 1, 2008.Vesting and PayoutΒ·RSUs typically fully vest in four years, with 25% vesting each year.Β·RRSUs typically fully vest in a two to five year period. These awards are typically given to select senior executives for the purpose of providing additional value to retain the executive through the vesting date.Β·Payout of RSUs and RRSUs at each vesting date is typically contingent on the recipient remaining employed by IBM through that vesting date. See the 2017 Potential Payments Upon Termination Narrative for information on payout of unvested RSUs upon certain terminations.Β·All deferred shares, comprised of shares that were deferred by the participant (Deferred IBM Shares), in the 2017 Nonqualified Deferred Compensation Table may include certain previously-granted RRSUs. Executives have not been allowed to defer payment of RSUs.Option Awards (Column (f))There were no option awards granted to the named executive officers in the years shown in the 2017 Summary Compensation Table, except for Mrs.Β Rometty. On JanuaryΒ 26, 2016, Mrs.Β Rometty was granted a one-time award of 1.5 million nonqualified stock options that vest three years from the date of grant, is exercisable in four equal tranches at premium prices of 105%, 110%, 115% and 125% of the average of the high and low prices of IBM common stock on the date of grant, and expires 10 years from the date of grant.Non-Equity Incentive Plan Compensation (Column (g))representinclude payments under IBMβs Annual Incentive Program (AIP).General TermsΒ·All, in which all named executive officers participate in this program.participate. The performance period is the fiscal year (JanuaryΒ 1 through DecemberΒ 31)31, 2023).Β·See SectionΒ 1 Mr.Β Krishnaβs target was 200% of the 2017 Compensation Discussion and Analysis for information on performance targets for AIP.Payout RangeΒ·Mrs.Β Rometty had a target of $5 million for 2017. Thehis base salary rate. All other named executive officers had targetsan annual target of 135% of their 2023 salary rate for 2017. See column (d)Β ofrate. In the 20172023 Grants of Plan-Based Awards Table, see column (c)Β for the target payout.Β·Threshold payout ($0), column (d)Β for each named executive officer is $0 (seethe Target payout, and column (c)(e)Β for the Maximum payout.2017 Grants of Plan-Based Awards Table).Β·Maximum payout for each named executive officer is three times the target (see column (e)Β of the 2017 Grants of Plan-Based Awards Table). Beginning in 2018, maximum payout opportunity for only the Chairman and CEO is reduced to two times the target.Vesting and PayoutΒ·In addition to performance against corporate-wide and business unit goals, which determine the funding pool for the year, individual performance against commitments set at the beginning of the year determine payout amounts.Β·An executive generally must be employed by IBM at the end of the performance period in order to be eligible to receive an AIP payout. At the discretion of appropriate senior management, the Compensation Committee, or the Board, an executive may receive a prorated payout of AIP upon retirement.Β·AIP payouts earned during the performance period are paid on or before MarchΒ 15 of the year following the end of such period.Change in Retention Plan Value (Column (h))Β·For Mrs.Β Rometty, Dr.Β Kelly and Mr.Β Kavanaugh, amounts in the column titled Change in RetentionIBM Personal Pension Plan Value represent the annualstopped on DecemberΒ 31, 2007, for 2021, 2022 and 2023, change in Retention PlanΒ Value from DecemberΒ 31, 2016and Pension Value for the eligible named executive officers was due to DecemberΒ 31, 2017. Messrs.Β Schroetertheir age, changes in the discount rate, interest crediting rate, and Clementi do not have a benefit undermortality table. Assumptions can be found immediately after the 2023 Pension Benefits Table. Mr.Β Kavanaugh is the only eligible named executive officer in the Retention Plan.Β·SeePlan and the 2017change in Retention PlanΒ NarrativeValue for a description of the Retention Plan.Changehis benefit resulted in Pension Value (Column (h))Β·Β Β Β Amountsnegative amounts in the column titled Change in Pension Value represent the annual2023 ($8,528), 2022 ($169,948), and 2021 ($17,604). The change in Pension Value from DecemberΒ 31, 2016 to Β DecemberΒ 31, 2017 for each eligiblethe named executive officer.Β·Seeofficers resulted in the 2017 Pension Benefits Narrativefollowing negative amounts: 2022 for a description of the applicable defined benefit pension plan. Mr.Β Clementi does not have a benefit under any IBM defined benefit pension plan.Nonqualified Deferred Compensation Earnings (Column (h))Β·Krishna ($51,317); and 2021 for Mr.Β Krishna ($5,861) and Mr.Β Kavanaugh ($4,072).payprovide above-market or preferential earnings on nonqualified deferred compensation.Β·See the 20172023 Nonqualified Deferred Compensation Narrative for information about deferred compensation.nonqualified deferred compensation plansfollowing columns: Salary, Bonus, Stock Awards, Option Awards, Non-Equity Incentive PlanΒ Compensation, Change in which thePension Value, Nonqualified Deferred Compensation Earnings and All Other Compensation.officers participate.officer in the 2022 or 2023 Proxy Statement; therefore, 2021 and 2022 data are excluded for him.
β(Column(Column (i))Β·Amounts represent payments that has made to the named executive officers to cover taxes incurred by them for certain business-related taxable expenses.Β·These expenses, for a named executive officerwhich may include: tax equalization payments related to international assignments, cost of family travel to and attendance at business-related events, business-related local lodging and incidental expenses, and business-related ground transportation expenses (see Ground Transportation below).Β·Amounts represent matching and automatic contributions to the individual accounts for each named executive officer.Β·Underofficer under IBMβs 401(k) Plus Plan, participants hired or rehired by IBM U.S. before JanuaryΒ 1, 2005, including Mrs.Β Rometty, Dr.Β Kelly and Mr.Β Kavanaugh, are eligible to receive matching contributions up to 6% of eligible compensation. Participants hired or rehired by IBM U.S. on or after JanuaryΒ 1, 2005, including Messrs.Β Schroeter and Clementi, who complete the planβs service requirement, are generally eligible for up to 5% matching contributions. A participantβs hire/rehire date is measured by a participantβs most recent U.S. hire date. Mr.Β Schroeter rejoined IBM U.S. in 2011 after working for IBM Australia from AprilΒ 1, 2005 to JuneΒ 30, 2011. Mr.Β Clementi joined IBM U.S. in 2009 after working for IBM Italy since 1984. In addition, for all eligible participants,Β IBM makes automatic contributions equal to a certain percentage of eligible compensation, which generally depends on the participantβs pension plan eligibility on DecemberΒ 31, 2007. In 2017, the automatic contribution percentage was 4% for Mrs.Β Rometty; 2% for Dr.Β Kelly and Mr.Β Kavanaugh; and 1% for Messrs.Β Schroeter and Clementi.Β·Under IBMβs Excess 401(k)Β Plus Plan,Β IBM makes matching contributions equal to a percentage of the sum of (i)Β the amount the participant elects to defer under the Excess 401(k)Β Plus Plan, and (ii)Β the participantβs eligible compensation after reaching the Internal Revenue Code compensation limits. Participants hired or rehired by IBM U.S. before JanuaryΒ 1, 2005, including Mrs.Β Rometty, Dr.Β Kelly and Mr.Β Kavanaugh, are eligible to receive matching contributions up to 6% of eligible compensation. Participants hired or rehired by IBM U.S. on or after JanuaryΒ 1, 2005, including Messrs.Β Schroeter and Clementi, who complete the planβs service requirement, are eligible for up to 5% matching contributions. In addition, for all eligible participants,Β IBM makes automatic contributions equal to a percentage of the sum of (i)Β the amount the participant elects to defer under the Excess 401(k) Plus Plan, and (ii)Β the participantβs eligible compensation after reaching the Internal Revenue Code compensation limits. The automatic contribution percentage generally depends on the participantβs pension plan eligibility on DecemberΒ 31, 2007, and in 2017, the automatic contribution percentage was 4% for Mrs.Β Rometty; 2% for Dr.Β Kelly and Mr.Β Kavanaugh; and 1% for Messrs.Β Schroeter and Clementi.Β·For purposes of calculating the matching contribution and the automatic contribution under the 401(k)Β Plus Plan, the participantβs eligible compensation excludes the amount the participant elects to defer under the Excess 401(k)Β Plus Plan.Β·Savings Plans.20172023 Nonqualified Deferred Compensation Narrative for additional details on the nonqualified deferred compensation plans.Life and Travel Accident Insurance PremiumsΒ·Amounts represent insurance premiums paid by IBM on behalf of the named executive officers.Β·These executive officers are covered by life insurance policies under the same terms as other U.S. full-time regular employees.Β·Life insurance for executives hired or rehired by IBM U.S. before JanuaryΒ 1, 2004, including Mrs.Β Rometty, Dr.Β Kelly and Mr.Β Kavanaugh, is two times salary plus annual incentive program target, with a maximum coverage amount of $2,000,000. Life insurance for executives hired or rehired by IBM U.S. on or after JanuaryΒ 1, 2004, including Messrs.Β Schroeter and Clementi, is one times salary plus annual incentive program target, with a maximum coverage of $1,000,000.Β·In addition,Β IBM provides Travel Accident Insurance for most employees in connection with business travel. Travel Accident Insurance for all eligible employees and executives is up to five times salary plus annual incentive target with a maximum coverage amount of $15,000,000.2017.2017,2023, IBM offered financial planning services with coverage generally up to $15,000 annually for senior U.S. executives, including each named executive officer.Β·Β·Mrs.Β RomettyβsMr.Β Krishnaβs personal travel, is included in column (i)Β of the 2017 Summary Compensation Table. These amounts also include theincluding any aggregate incremental cost if any, of travel by her family members or other guests on both business and non-business occasions.Β·occasions, is included in column (i)Β of the 2023 Summary Compensation Table.20172023 on Company aircraft by named executive officers other than Mrs.Β Rometty,Mr.Β Krishna, and the aggregate incremental cost, if any, of travel by the officerβs family or other guests whenΒ·Β·Β·Β·Β·Β·Β·Β·In addition, under IBMβs security practices, Additionally, the Chairman and CEO and his family may use a Company-leased car with an IBM driver or an authorized car service for non-business occasions. Further, the family of the Chairman and CEO may use a Company-leased car with an IBM driver or an authorized car service on non-business occasions or when accompanying the Chairman and CEO on business occasions.Β· other than the Chairman and CEO in a Company-leased car with an IBM driver or an authorized car service on these occasions.Β·Β·The incremental cost foror an authorized car service for commutation and non-business eventsincremental cost is calculated by multiplying the variable rate by the applicable driving time. The variable rate includes a driverβs salary and overtime payments, plus a cost per mile calculation based on fuel and maintenance expense.Β·The incremental cost forΒ·occasions and for the family of the Chairman and CEO on certain non-business occasions or when accompanying her on business occasions.Β·Β·Β·Β·Β·coversfor the cost of an annual executive physical for the named executive officers under IBMβs corporate wellness program.Β·Amounts represent any payments by IBM for the named executive officers under this program, if applicable.Β·Business-related events attended by the named executive officers and their family members may include meetings, dinners and receptions with IBMβs clients, executive management or board members.Β·events.Β·Β·Β· home office equipment, items relating to business events and administrative charges incurred by executives.
β2017 SUMMARY COMPENSATION TABLE
Principal
Position
(a)
Year
(b)
Deferred
Compensation
Earnings(5)
($)
(h)
Incentive Plan
Compensation
($)
(g)
Retention
PlanΒ Value(3)
($)
(h)
Pension
Value(4)
($)
(h)
Awards(1)
($)
(e)
Awards(2)
($)
(f)
Compensation(6)(7)
($)
(i)
($)
(c)
($)
(d)
($)
(j)Note: For assumptions used in determining the fair valuestock and option awards, see Note R (Stock-Based Compensation) to IBMβs 2017 Consolidated Financial Statements.(1)Amounts in this column reflect the total Performance Share Units (PSUs), Restricted Stock Units (RSUs), and Retention Restricted Stock Units (RRSUs). RRSUs were not awarded in 2016 or 2017.Amounts include the aggregate grant date fair values of PSUs at the Target number (described in the 2017Annual Meeting & Proxy StatementΒ Β Β |Β Β Β Narrative), calculatedin accordance with accounting guidance; these amounts reflect an adjustment for the exclusionand Related Narrativedividend equivalents. At the Maximum number, these values forMrs.Β Rometty would be: 2017: $10,168,002; 2016: $12,501,699; 2015: $19,357,994; for Mr.Β Schroeter: 2017: $4,204,970; 2016: $4,699,880; 2015: $6,549,863; forDr.Β Kelly: 2017: $4,204,970; 2016: $5,169,993; 2015: $7,277,472; for Mr.Β Clementi: 2017: $4,204,970; 2016: $5,169,993; and for Mr.Β Kavanaugh: 2017: $3,058,222.Amounts also include the aggregate grant date fair values of RSUs and RRSUs granted to Mrs.Β Rometty, Mr.Β Schroeter, Dr.Β Kelly, Mr.Β Clementi and Mr.Β Kavanaugh, if applicable, calculated in accordance with accounting guidance; these amounts reflect an adjustment for the exclusion of dividend equivalents.(2)There were no option awards granted to any of the named executive officers in the years shown in the 2017 Summary CompensationPlan-Based Awards Table except for Mrs.Β Rometty. In 2016, Mrs.Β Rometty was granted a one-time award of 1.5 million nonqualified stock options that vest three years from the date of grant, are exercisable in four equal tranches at premium prices of 105%, 110%, 115%, and 125% of the average of the high and low prices of IBM common stock on the date of grant.(3)Assumptions can be found immediately after the 2017 Retention Plan Table. Although accruals under the Retention Plan stopped on DecemberΒ 31, 2007, changes in Retention Plan Value can occur based on changes to participantsβ ages and actuarial assumptions. For 2015, 2016 and 2017, Change in Retention Plan Value for the eligible named executive officers was due to their age, changes in the discount rate, interest crediting rate, and mortality table. The change in Retention Plan Value for the eligible named executive officers resulted in negative amounts in 2016 for Dr.Β Kelly $(7,649), and negative amounts in 2015 for Mrs.Β Rometty $(18,082) and for Dr.Β Kelly $(584,946).(4)Assumptions can be found immediately after the 2017 Pension Benefits Table. Although accruals under the IBM Personal Pension Plan stopped on DecemberΒ 31, 2007, changes in Pension Value can occur based on changes to participantsβ ages and actuarial assumptions. For 2015, 2016 and 2017, Change in Pension Value for the named executive officers was due to their age, changes in the discount rate, interest crediting rate, and mortality table. For 2015, the change in Pension Value for the named executive officers resulted in the following negative amount for Mrs.Β Rometty: $(118,735).(5)IBM does not provide above-market or preferential earnings on deferred compensation. See the 2017 Nonqualified Deferred Compensation Narrative for information about deferred compensation.(6)Amounts in this column include the following for 2017: Mrs.Β Rometty: tax reimbursements of $21,833 and IBM contributions to defined contribution plans of $655,000; for Mr.Β Schroeter: IBM contributions to defined contribution plans of $112,496; for Dr.Β Kelly: tax reimbursements of $10,620 and IBM contributions to defined contribution plans of $140,628; for Mr.Β Clementi: tax reimbursements of $25,407 and IBM contributions to defined contribution plans of $98,622; and for Mr.Β Kavanaugh: IBM contributions to defined contribution plans of $114,700.(7)Amounts in this column also include the following perquisites for 2017: for Mrs.Β Rometty: personal financial planning, personal travel on Company aircraft of $177,491, ground transportation, personal security, annual executive physical, family attendance at business-related events, and other personal expenses; for Mr.Β Schroeter: personal financial planning, personal security, annual executive physical, family attendance at business-related events, and other personal expenses; for Dr.Β Kelly: personal financial planning, personal travel on Company aircraft of $67,269, ground transportation, personal security, annual executive physical, family attendance at business-related events, and other personal expenses; for Mr.Β Clementi: personal financial planning, personal travel on Company aircraft of $33,087, ground transportation, annual executive physical, family attendance at business-related events, and other personal expenses. See the 2017 Summary Compensation Table Narrative for a description and information about the aggregate incremental cost calculations for perquisites.(8)Amounts in this column reflect the total of the following columns: Salary, Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation, Change in Retention Plan Value, Change in Pension Value, Nonqualified Deferred Compensation Earnings and All Other Compensation.(9)In JanuaryΒ 2018, Mr.Β Schroeter became Senior VP,Β IBM Global Markets, Mr.Β Clementi became Senior VP,Β IBM Global Integrated Accounts, and Mr.Β Kavanaugh became Senior VP and CFO.(10)Β Β Β Β Mr.Β Clementi was not a named executive officer in IBMβs 2016 Proxy Statement; therefore, this table does not provide 2015 data for him. Mr.Β Kavanaugh was not a named executive officer in IBMβs 2016 or 2017 Proxy Statements; therefore, this table does not provide 2015 or 2016 data for him.β
(a)
Type of
Award(1)β β Grant Date
(b)β β Compensation
Committee
Approval
Dateβ β Estimated Future Payouts
Under Non-Equity
Incentive Plan Awardsβ β
Under Equity
Incentive PlanAwards(2)β β All Other
Stock
Awards:
Number of
shares
of Stockβ β All Other
Option
Awards:
Numberβof
Securities
Underlyingβ β Exercise
or Base
Price of
Optionβ β Closing
Price
on the
NYSE on
the Date
of Grant
($/Sh)β β Grant Date
Fair Value
of Stock
and
Optionβ β Threshold
($)
(c)β β Target
($)
(d)β β Maximum
($)
(e)β β Threshold
(#)
(f)β β Target
(#)
(g)β β Maximum
(#)
(h)β β βorβUnits
βββ(#)
βββ(i)(3) β ββOptions
βββ(#)
βββ(j)(3) β βAwards
($/Sh)
(k)(4) β βββAwards
($)
(l)(5) β β β AIP β β β β N/A β β β β β 1/30/2023 β β β β $ 0 β β β β $ 3,000,000 β β β β $ 6,000,000 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β PSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β 18,369 β β β β β 73,476 β β β β β 124,909 β β β β β β β β β β β β β β β β β β β β β β β β β β β β $ 8,612,857 β β β RSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 24,492 β β β β β β β β β β β β β β β β β β β β β β β 2,870,952 β β β SO β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 146,923 β β β β $ 133.00 β β β β $ 131.71 β β β β β 3,339,560 β β β β β AIP β β β β N/A β β β β β 1/30/2023 β β β β β 0 β β β β β 1,479,000 β β β β β 4,437,000 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β PSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β 10,724 β β β β β 42,897 β β β β β 72,925 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 5,028,386 β β β RSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 14,299 β β β β β β β β β β β β β β β β β β β β β β β 1,676,129 β β β SO β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 85,777 β β β β β 133.00 β β β β β 131.71 β β β β β 1,949,711 β β β β β AIP β β β β N/A β β β β β 1/30/2023 β β β β β 0 β β β β β 1,350,000 β β β β β 4,050,000 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β PSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β 9,347 β β β β β 37,387 β β β β β 63,558 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 4,382,504 β β β RSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 12,463 β β β β β β β β β β β β β β β β β β β β β β β 1,460,913 β β β SO β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 74,758 β β β β β 133.00 β β β β β 131.71 β β β β β 1,699,249 β β β β β AIP β β β β N/A β β β β β 1/30/2023 β β β β β 0 β β β β β 1,580,000 β β β β β 4,740,000 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β PSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β 7,834 β β β β β 31,336 β β β β β 53,271 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 3,673,206 β β β RSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 10,446 β β β β β β β β β β β β β β β β β β β β β β β 1,224,480 β β β SO β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 62,659 β β β β β 133.00 β β β β β 131.71 β β β β β 1,424,239 β β β β β AIP β β β β N/A β β β β β 1/30/2023 β β β β β 0 β β β β β 1,264,000 β β β β β 3,792,000 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β PSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β 6,808 β β β β β 27,230 β β β β β 46,291 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 3,191,901 β β β RSU β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 9,077 β β β β β β β β β β β β β β β β β β β β β β β 1,064,006 β β β SO β β β β 2/21/2023 β β β β β 1/30/2023 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 54,448 β β β β β 133.00 β β β β β 131.71 β β β β β 1,237,603 β β
β2017 GRANTS OF PLAN- BASED AWARDS TABLE(1)Type of Award:Plan.Plan (LTPP). See the 20172023 Summary Compensation Table Narrative for additional information on these types of awards.2020.vestvested 25% on JuneΒ 8, 2018, JuneΒ 8, 2019, JuneΒ 8, 2020,FebruaryΒ 21, 2024. The remaining tranches will vest FebruaryΒ 21, 2025, FebruaryΒ 21, 2026, and JuneΒ 8, 2021,FebruaryΒ 21, 2027, provided that in each case, the named executive officer is an employee of IBM as of those dates unless they meet certain requirements to be eligible for continued vesting (see 2017vesting. See 2023 Potential Payments Upon Termination Narrative for a description of these eligibility requirements).RSUSO awards calculated in accordance with accounting guidance. The values shown for the PSU awards are based on the Target number, as described in the 20172023 Summary Compensation Table Narrative.Table. The values shown for the PSUs, RSUs, and RSUsSO awards reflect an adjustment for the exclusion of dividend equivalents.
β2017(Columns(Columns (b)β(f))Β·Β·Options generally expire ten years after the date of grant.Β·The option recipient must remain employed by IBM through each vesting date in order to receive any potential payout value.Β·Premium-priced optionsβ Historically, the exercise price has been equal to 110% of the average of the high and low prices of IBM common stock on the NYSE on the date of grant and these options vested in four equal increments on the first four anniversaries of the grant date.β The one-time premium-priced award granted to Mrs.Β Rometty on JanuaryΒ 26, 2016 is exercisable in four equal tranches at premium prices of 105%, 110%, 115% and 125% of the average of the high and low prices of IBM common stock on the NYSE on the date of grant and will vest three years from the date of grant and expires 10 years from the date of grant.(Columns(Columns (g)β(j))(Column(Column (g))andor RRSUs that were outstanding as of DecemberΒ 31, 2017.(Column(Column (h))andor RRSU awards disclosed in column (g), calculated by multiplying the number ofΒ units by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 20172023 fiscal year ($153.42)163.55).(Column(Column (i))2017.Β·Β·IBMβs PSU programIBM PSUs is based on cumulative three-year rolling targets. Therefore, measuring annual performance against these targets is not meaningful.Β·20172023 Compensation Discussion and Analysis, as well as the 20172023 Summary Compensation Table, Narrative, for a detailed description of the PSU program, including payout calculations.Β·2017 OUTSTANDING A Maximum number of PSUs earned is 170% of the Target number based on business objectives (inclusive of an additional 20 points based on the relative ROIC modifier for the relevant performance period).AWARD PAYOUT LEVELSβ Name β β Grant Date β β Threshold β β Target β β Maximum β β A. Krishna β β β β 02/21/2022 β β β β β 15,491 β β β β β 61,963 β β β β β 105,337 β β β β β β β β 02/21/2023 β β β β β 18,369 β β β β β 73,476 β β β β β 124,909 β β β J.J. Kavanaugh β β β β 02/21/2022 β β β β β 10,140 β β β β β 40,558 β β β β β 68,949 β β β β β β β β 02/21/2023 β β β β β 10,724 β β β β β 42,897 β β β β β 72,925 β β β R.D. Thomas β β β β 02/21/2022 β β β β β 7,886 β β β β β 31,545 β β β β β 53,627 β β β β β β β β 02/21/2023 β β β β β 9,347 β β β β β 37,387 β β β β β 63,558 β β β G. Cohn β β β β 02/21/2022 β β β β β 8,168 β β β β β 32,672 β β β β β 55,542 β β β β β β β β 02/21/2023 β β β β β 7,834 β β β β β 31,336 β β β β β 53,271 β β β M.H. Browdy β β β β 02/21/2022 β β β β β 5,633 β β β β β 22,532 β β β β β 38,304 β β β β β β β β 02/21/2023 β β β β β 6,808 β β β β β 27,230 β β β β β 46,291 β β (Column(Column (j))20172023 fiscal year ($153.42)163.55).2017 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END ββ β β β Option Awards β β Stock Awards β β β β β Number of
Securities
Underlying
Unexercised
Optionsβ β Number of
Securities
Underlying
Options
(#)β β Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearnedβ β Option
Exerciseβ β Option β β β β β β β β β β β β β β Number
of Shares
or Units
That Haveβ β Market Value
of Shares
or Units
That Haveβ β β β β β β β β β β β β β Equity
Incentive
PlanΒ Awards:
Number of
Unearned
Shares,
Units
or Other
Rights
That Haveβ β Equity
Incentive
PlanΒ Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights
That Haveβ β Name β β (#) β β Options β β Price (2) β Expiration β β β β β β β β β β β β β β NotβVested (3) β NotβVested (4) β β β β β β β β β β β β β NotβVested (5) β NotβVested (4) β (a) β β Exercisable β β Unexercisable (1) β (#) β β ($) β β Date β β Type of β β Grant β β (#) β β ($) β β Type of β β Grant β β (#) β β ($) β β Grant Date β β (b) β β (c) β β (d) β β (e) β β (f) β β Award β β Date β β (g) β β (h) β β Award β β Date β β (i) β β (j) β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 02/21/22 β β β β 36,134 β β β β β 108,403 β β β β β N/A β β β β $ 124.51 β β β β β 02/20/32 β β β β β RSU β β β β β 06/08/20 β β β 10,091 β β β $ 1,650,383 β β β β β PSU β β β β β 02/21/22 β β β 61,963 β β β $ 10,134,049 β β β 02/21/23 β β β β 0 β β β β β 146,923 β β β β β N/A β β β β β 133.00 β β β β β 02/20/33 β β β β β RSU β β β β β 06/08/21 β β β 17,210 β β β β 2,814,696 β β β β β PSU β β β β β 02/21/23 β β β 73,476 β β β β 12,017,000 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/22 β β β 15,492 β β β β 2,533,717 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/23 β β β 24,492 β β β β 4,005,667 β β β β β β β β β β β β β β β β β β β β β β β β Total β β β β 36,134 β β β β β 255,326 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 67,285 β β β $ 11,004,463 β β β β β β β β β β β β β β β 135,439 β β β $ 22,151,049 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 02/21/22 β β β β 23,651 β β β β β 70,955 β β β β β N/A β β β β $ 124.51 β β β β β 02/20/32 β β β β β RSU β β β β β 06/08/20 β β β 5,688 β β β $ 930,272 β β β β β PSU β β β β β 02/21/22 β β β 40,558 β β β $ 6,633,261 β β β 02/21/23 β β β β 0 β β β β β 85,777 β β β β β N/A β β β β β 133.00 β β β β β 02/20/33 β β β β β RSU β β β β β 06/08/21 β β β 10,326 β β β β 1,688,817 β β β β β PSU β β β β β 02/21/23 β β β 42,897 β β β β 7,015,804 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/22 β β β 10,140 β β β β 1,658,397 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/23 β β β 14,299 β β β β 2,338,601 β β β β β β β β β β β β β β β β β β β Total β β β β 23,651 β β β β β 156,732 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 40,453 β β β $ 6,616,087 β β β β β β β β β β β β β β β 83,455 β β β $ 13,649,065 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 02/21/22 β β β β 18,395 β β β β β 55,188 β β β β β N/A β β β β $ 124.51 β β β β β 02/20/32 β β β β β RRSU β β β β β 02/11/20 β β β 36,782 β β β $ 6,015,696 β β β β β PSU β β β β β 02/21/22 β β β 31,545 β β β $ 5,159,185 β β β 02/21/23 β β β β 0 β β β β β 74,758 β β β β β N/A β β β β β 133.00 β β β β β 02/20/33 β β β β β RSU β β β β β 06/08/20 β β β 3,673 β β β β 600,719 β β β β β PSU β β β β β 02/21/23 β β β 37,387 β β β β 6,114,644 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 06/08/21 β β β 6,885 β β β β 1,126,042 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/22 β β β 7,887 β β β β 1,289,919 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/23 β β β 12,463 β β β β 2,038,324 β β β β β β β β β β β β β β β β β β β β β β β β Total β β β β 18,395 β β β β β 129,946 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 67,690 β β β $ 11,070,700 β β β β β β β β β β β β β β β 68,932 β β β $ 11,273,829 β β β β β β β β β β β β β β β β β β 02/21/22 β β β β 19,052 β β β β β 57,159 β β β β β N/A β β β β $ 124.51 β β β β β 02/20/32 β β β β β RSU β β β β β 01/04/21 β β β 10,226 β β β $ 1,672,462 β β β β β PSU β β β β β 02/21/22 β β β 32,672 β β β $ 5,343,506 β β β 02/21/23 β β β β 0 β β β β β 62,659 β β β β β N/A β β β β β 133.00 β β β β β 02/20/33 β β β β β RSU β β β β β 02/21/22 β β β 8,169 β β β β 1,336,040 β β β β β PSU β β β β β 02/21/23 β β β 31,336 β β β β 5,125,003 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/23 β β β 10,446 β β β β 1,708,443 β β β β β β β β β β β β β β β β β β β β β β β β Total β β β β 19,052 β β β β β 119,818 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 28,841 β β β $ 4,716,945 β β β β β β β β β β β β β β β 64,008 β β β $ 10,468,509 β β β β β β β β β β β β β β β β β β 02/21/22 β β β β 13,139 β β β β β 39,420 β β β β β N/A β β β β $ 124.51 β β β β β 02/20/32 β β β β β RSU β β β β β 06/08/20 β β β 3,231 β β β $ 528,430 β β β β β PSU β β β β β 02/21/22 β β β 22,532 β β β $ 3,685,109 β β β 02/21/23 β β β β 0 β β β β β 54,448 β β β β β N/A β β β β β 133.00 β β β β β 02/20/33 β β β β β RSU β β β β β 06/08/21 β β β 5,945 β β β β 972,305 β β β β β PSU β β β β β 02/21/23 β β β 27,230 β β β β 4,453,467 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/22 β β β 5,634 β β β β 921,441 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β RSU β β β β β 02/21/23 β β β 9,077 β β β β 1,484,543 β β β β β β β β β β β β β β β β β β β β β β β β Total β β β β 13,139 β β β β β 93,868 β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β β 23,887 β β β $ 3,906,719 β β β β β β β β β β β β β β β 49,762 β β β $ 8,138,576 β β for Mrs.Β Romettyβs premium-priced optionsshown in this column are equal to 105%, 110%, 115% and 125% of the average high and low prices of IBM common stock on the NYSE onNew York Stock Exchange as of the date of grant.(2)grant date.20172023 Outstanding Equity Awards at Fiscal Year-End Table are unvested RSU and RRSU awards that have not yet vested.awards. See the 20172023 Compensation Discussion and Analysis and the 2023 Summary Compensation Table Narrative for additional information on these types of awards. The Vesting Schedule for Unvested RSUs and RRSUs table below shows the vesting schedules for these outstanding awards. The remaining unvested portion of Mr.Β Schroeterβs and Mr.Β Clementiβs 2015 RRSU award will fully vest on FebruaryΒ 2, 2019, provided that in each case, they are employees of IBM as of that date. The remaining unvested portion of Dr.Β Kellyβs 2015Thomasβ RRSU award vests 50% on DecemberΒ 30, 2018the anniversary of the grant date in 2024 and 50% on DecemberΒ 30, 2019,2025 provided that in each case, he is an employee of IBM as of those dates. The remaining unvested portion of Mr.Β Kavanaughβs 2013 RRSU award fully vested on FebruaryΒ 1, 2018 and the remaining unvested portion of Mr.Β Kavanaughβs 2014 RRSU award will fully vest on JanuaryΒ 2, 2019, provided that he is an employee of IBM as of thateach vesting date. In 20162020, 2021, 2022, and 2017,2023, each named executive officer other than Mr.Β Cohn received RSU awards that vest 25% per year on the first through the fourth anniversaries of the grant date.(3)date (Mr.Β Cohn was hired at the end of 2020, so his RSU granted in JanuaryΒ 2021 vests 25% per year on the first through the fourth anniversaries of the grant date).20172023 fiscal year ($153.42)163.55).(4)20172023 Outstanding Equity Awards at Fiscal Year-End Table are PSU awards that have not yet vested. See the 20172023 Compensation Discussion and Analysis and the Summary Compensation Table Narrative for additional information on PSU awards. The Vesting SchedulePSUs for Unvested PSUs table below shows the vesting schedules for these outstanding PSU awards (reflecting Target payout), all of whichNamed Executive Officers are paid out in February following the end of the respective performance period.
βVESTING SCHEDULE FOR UNVESTED RSUs AND RRSUsVESTING SCHEDULE FOR UNVESTED PSUsVestingΒ ScheduleNameGrantΒ DateDec-2018Dec-2019V.M. Rometty06/08/201659,62106/08/201749,400M.J. Schroeter06/08/201622,41406/08/201720,429J.E. Kelly III06/08/201624,65606/08/201720,429E. Clementi06/08/201624,65606/08/201720,429J.J. Kavanaugh06/08/201615,69006/08/201714,8582017 OPTION EXERCISES AND STOCK VESTED β β β β Option Awards β β β β Name
(a)β β Number of
Shares
Acquired
on Exercise
(#)
(b)β β Value
Realized
on Exercise
($)
(c)β β Number of
Shares
Acquired
on Vesting
(#)
(d)β β Value
Realized
on Vesting
($)
(e)β β A. Krishna β β β β 0 β β β β $ 0 β β β β β 206,185 β β β β $ 32,883,416 β β β J.J. Kavanaugh β β β β 0 β β β β β 0 β β β β β 50,335 β β β β β 7,701,524 β β β R.D. Thomas β β β β 0 β β β β β 0 β β β β β 43,649 β β β β β 6,509,506 β β β G. Cohn β β β β 0 β β β β β 0 β β β β β 46,938 β β β β β 7,489,153 β β β M.H. Browdy β β β β 0 β β β β β 0 β β β β β 29,511 β β β β β 4,504,848 β β 2017.2023. The PSU and RPSU award for the 2015β20172021-2023 performance period vested on DecemberΒ 31, 2017,2023, and paid out to each named executive officer on FebruaryΒ 1, 2018;2024; 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.date ($163.55). See the 2017Compensation Discussion and Analysis and the 2023 Summary Compensation Table Narrative for details on these types of rewards.Pay RatioThe ratioawards.the CEOβs annual total compensation to that of the median employeeβs annual total compensation is 341:1. This ratio is based on annual total compensation of $18,595,350 for the CEO (as reported in the Summary Compensation Table)Annual Meeting & Proxy StatementΒ Β Β |Β Β Β 2023 Outstanding Equity Awards at Fiscal Year-End Table and $54,491 for the median employee. The median employee was determined using annual base pay for IBM employees as of October 1, 2017; all foreign currencies were converted to U.S. dollars. For purposes of determining our median employee, approximately 17,000 employees* (which represents less than 5% of IBMβs total employees) were excluded either because they became IBM employees in connection with certain acquisitions who maintain separate terms of employment (some of which closed prior to 2017), or were employed by a limited number of subsidiaries that maintain separate terms of employment. The Company believes that this calculation is a reasonable estimate of the pay ratio.* Certain employees from Aperto, Blue Express Computer Engineering Technology Company, BNP Paribas Partners for Innovation, Bluewolf, Cloudigo, exc.io, EXA Corporation, GesNext, Ingenieria De Software Avanzado, Innovative Solutions for Finance, Information Technology Nostrum, Iru Ederra XXI, ISM Canada, IT Now, KTS, Promontory, Proxxi, SI Solutions, SoftINSA, SoftLayer, Truven, Value Transformation Services, and Wedoit Sociedad Tecnologias De la Information.
Related Narrative2017 an additional form of retention compensation was created for certain IBM U.S. leaders. The plan, formally called the βIBM Supplemental Executive Retention Planβ (Retentionβ(Retention Plan), began in 1995 during a particularly trying time in IBMβs history when it faced challenges that many thought put its very existence at risk. Some key leaders were recruited away from IBM during this time. In this environment,Β IBM was created this new plan to help retain for full careers the caliber of senior leaders needed to turn IBM around, preserve its long-term viability and position it for growth in the future.Because its original purpose had been met, the Retention Plan was closed to new participants effective MayΒ 1, 2004, and will not be replaced by any other plan. Future accruals under the Retention Plan stopped on DecemberΒ 31, 2007, therefore, a participantβs Retention Plan benefit does not consider pay earned or service performed after such date.Payments accrue based on age and service and are typically payable only after age 60, as a way to encourage senior leaders to continue working for IBM past the age when many others at IBM choose to retire.Even though the Retention Plan provides for the payment of specified benefits after retirement, given the nature of this program as a retention vehicle, the The Retention Plan is discussed in its own section insteada nonqualified deferred compensation plan, which is unfunded, that provides for payment of inan annual benefit if the Pension Benefits section. As a consequence,participant satisfies the amounts reflected below are separately presented in the 2017 Retention Plan Tableage, service, pay, and are not included in the 2017 Pension Benefits Table.The 2017 Retention Plan Table shows each eligible named executive officerβs number of years of credited service, present value of accumulated benefit and payments during the last fiscal year under the Retention Plan.job level requirements. The Retention Plan is a U.S. Plan and eligibility is based on U.S. employment. Mrs.Β Rometty, Dr.Β Kelly and Mr.Β Kavanaugh are eligible for a benefit under the Retention Plan. Mr.Β Schroeter is not eligible for a Retention Plan benefit because he did not meet all of the eligibility criteria. Specifically, he did not continuously remainbenefit.the U.S. payroll, as he worked for IBM Australia from AprilDecemberΒ 31, 2007. Effective JulyΒ 1, 2005 through JuneΒ 30, 2011. Mr.Β Clementi began U.S. employment after1999, the Retention Plan was closed.Description of Retention PlanΒ·The Retention Plan provides for payment of an annual benefit as long as the participant satisfies the age, service, pay and job level requirements.Β·Effective JulyΒ 1, 1999,Β IBM amended the Retention Plan to provide a new benefit formula, but allowed participants who met certain age, service, and pay level conditions as of JuneΒ 30, 1999 to continue to earn benefits under the prior formula if the prior formula provides a greater benefit.Β·Β· benefits provided under the Retention Plan benefit for Dr.Β Kelly and Mr.Β Kavanaugh areis determined under the Retention Plan formula in effect prior to the JulyΒ 1, 1999Β amendment (1995 Retention Plan).Β·only if at the time a participant terminates employment, becomes disabled or dies on or after meetingseparates from service they meet the early retirement age and service requirement, holds an executive-level position immediately prior to termination or death,separation from service, and has final average pay of at least $160,000 immediately prior to termination, disability or death.Β·The$160,000.providedis determined under the 1995 Retention Plan, he was partially grandfathered under this formula which means that his accruals stopped DecemberΒ 31, 2003 and the threshold to determine his benefit is payable only as an annuity beginning on the first day$233,400 instead of the month following termination of employment (subject to a six-month delay$311,400 for βspecified employeesβ as required under SectionΒ 409A of the Internal Revenue Code).Β·fully grandfathered participants. If the participantMr.Β Kavanaugh terminates employment on or after age 60, the 1995his Retention Plan benefit expressed as an annual single life annuity is equal to:
Β·![[MISSING IMAGE: tb_20retpla-pn.jpg]](/files/DEF 14A/0001104659-24-032641/tb_20retpla-pn.jpg)
For example, if a participant terminates at age 59, the benefit is reduced by 3%, at age 58, by 7%, and at age 57, by 11%.Β·The benefit of a participant in the 1995 Retention Plan will not be less than the benefit that would be provided if the participant were in the 1999 Retention Plan, as described in the next subsection.
βMaterial Terms and Conditions:1999 Retention PlanΒ·The benefits provided under the Retention Plan to Mrs.Β Rometty are determined under the Retention Plan formula in effect on and after the JulyΒ 1, 1999 amendment (1999 Retention Plan).Β·Benefits are available under the 1999 Retention Plan if a participant holds an executive-level position immediately prior to termination or death, has final average pay in excess of $405,400 on both JanuaryΒ 1, 2007 and immediately prior to termination or death, and either:β Terminates employment for any reason other thancause or dies, in each case after attaining age 60 and completing at least five years of service; orβ Terminates employment for any reason other than cause or dies, in each case after attaining age 55 and completing at least 15 years of service and either becomes disabled (as determined under IBMβs long-term disability plan), or if approved by the Board in the case of the two highest paid officers (and if approved by the Compensation Committee and the chairman and chief executive officer in the case of any other officer of IBM).Β·If the participant terminates employment after attaining age 60 and completing at least five years of service, the 1999 Retention Plan benefit expressed as an annual single life annuity is equal to:
Β·In no event will the sum of the amounts in (1)Β and (2)Β exceed 65% times final average pay times a fraction (no greater than 1), the numerator of which is the participantβs years of service and the denominator of which is 35.Β·A participant who terminates employment after attaining age 55, but prior to attaining age 60, who completes at least 15 years of service, and who receives Compensation Committee and chairman and chief executive officer approval (or Board approval in the case of the two highest paid officers) as described above, will receive a reduced single life annuity. The reduced single life annuity will be determined by reducing the sum of the amounts specified in (1)Β and (2)Β by 0.5% for each month that the benefit commencement date precedes age 60.Β·FundingΒ·The Retention Plan is unfunded and maintained as a book reserve (notional) account.Β·No funds are set aside in a trust or otherwise; participants in the Retention Plan are general unsecured creditors of IBM regarding the payment of their Retention Plan benefits.Β·Β·termination of employmentseparation from service (subject to a six-month delay for βspecified employeesβ as required under SectionΒ 409A of the Internal Revenue Code)tax law). Lump sum payments are not available under the Retention Plan.Β·A participant may elect to receive his or her benefit in the form of a single life annuity or in certain other actuarially equivalent forms of payment.Β·each eligible named executive officerMr.Β Kavanaugh is detailed in the table below.
EarliestΒ UnreducedΒ RetirementΒ Ageβ Name β β Annual Retention PlanΒ Benefit at
Earliest Unreduced Retirement Ageβ β J.J. Kavanaugh β β β $ 10,097 β β Β·20172023 Retention PlanΒ Table below is the value as of DecemberΒ 31, 20172023 of the annual Retention Plan benefit that was earned as of DecemberΒ 31, 2007.Β·earliest unreduced retirement age is the earliest age an eligible named executive officer may start receiving the Retention Plan benefit without a reduction for early commencement. As of DecemberΒ 31, 2017, Mrs.Β Rometty and Dr.Β Kelly had reached the earliest unreduced retirement age. Because Mr.Β Kavanaugh did not attain age 60 by DecemberΒ 31, 2017, the earliest unreduced retirement age is his age on the first day of the month that coincides with or next follows the attainment of age 60.Β·Certain assumptions were used to determine the present value of the annual accumulated Retention Plan benefit that is payable beginning at the earliest unreduced retirement age. Those assumptionsage are described immediately following the 20172023 Pension Benefits Table.Table.2017 RETENTION PLAN TABLEβ β β β β β β Number
of Years
Creditedβ β Present
Value of
Accumulatedβ β Payments
During
Lastβ β β β β β β β Service (1) β Benefit (2) β Fiscal Year β β Name
(a)β β PlanΒ Name
(b)β β (#)
(c)β β ($)
(d)β β ($)
(e)β β J.J.Β Kavanaugh β β RetentionΒ Plan β β β β 12 β β β β $ 131,110 β β β β $ 0 β β
β2007, which was the date accruals under the Retention Plan stopped. Each of the eligible named executive officers in this table2007. Mr.Β Kavanaugh has 1016 additionalΒ years of service with IBM after that date.While the accruals under the Retention Plan stopped on DecemberΒ 31, 2007, the value of the Retention Plan benefit for the eligible named executive officers will continue to change based on their ages, theofsee the accumulated benefit, and the benefit that would be provided under the IBM Personal Pension Plan.Assumptions to determine present value for each eligible named executive officer, as of DecemberΒ 31, 2017:Β·Measurement date: DecemberΒ 31, 2017Β·Interest rate for present value: 3.4%Β·To determine Personal Pension Account benefit:βInterest crediting rate: 2.3% for 2018 and afterβInterest rate to convert Personal Pension Account balance to single life annuity: 1.98% for years 1β5, 3.5867% for years 6β20, and 4.3267% for year 21 and afterβMortality table to convert Personal Pension Account balance to single life annuity is 2018 Personal Pension Account Optional Combined Unisex TableΒ·Mortality (pre-commencement): NoneΒ·Mortality (post-commencement):βBase Table: Modified RP-2014 White Collar sex-distinct annuitant tables with adjustment to 2011 by backing out MP-2014 improvement and further adjusting the mortality rates at each age (averaging approximately 1.06)βImprovement Scale: A modified Scale MP-2017 projection table with projected improvements starting in 2011 for healthy mortality. The modified table is based on the RPEC 2014 v2017 model, with the same 20 year diagonal convergence period and 10 year horizontal convergence period and underlying weighting percentages for the age/period and year-of-birth cohort periods. The long-term improvement rates are 0.75% up to age 85, linearly decreasing to 0.0% at age 115Β·Withdrawal rates: NoneΒ·Retirement rates: None prior to Assumed Retirement AgeΒ·Normal Retirement Age: Age 60 for Retention Plan, Age 65 for IBM Personal Pension PlanΒ·Assumed Retirement Age: Later of Age 60 for Retention Plan, Age 65 for IBM Personal Pension Plan, or current ageΒ·Accumulated benefit is calculated based on credited service and final average pay as of DecemberΒ 31, 2007Β·Offset for benefit payable under the IBM Personal Pension Plan is determined based on the single life annuity that would be payable under the plan beginning on the first day of the month following the assumed termination of employmentΒ·Present value is the present value of the single life annuity payable at assumed retirement age beginning on the first day of the month following the assumed termination of employment. The six-month delay under the Retention Plan for βspecified employeesβ as required under SectionΒ 409A of the Internal Revenue Code was disregarded for this purposeΒ·All results shown are estimates only; actual benefits will be based on precise credited service and compensation history, which will be determined at termination of employmentAssumptionsβAssumptions used to determine present value as of DecemberΒ 31, 2016:Β·The column titled Change in2023β immediately following the 2023 Pension Benefits table.Value in the 2017 Summary Compensation Table quantifies the change in the present value of the Retention Plan benefit from DecemberΒ 31, 2016 to DecemberΒ 31, 2017Β·To determine the present value of the Retention Plan benefit as of DecemberΒ 31, 2016, the same assumptions that are described above to determine present value as of DecemberΒ 31, 2017 were used, except (1)Β a 3.8% interest rate and the Modified MP-2016 improvement scale, and (2)Β to determine the Personal Pension Account benefit, the following were used:βInterest crediting rate: 1.6% for 2017 and afterβInterest rate to convert Personal Pension Account balance to annual single life annuity: 1.4767% for years 1β5, 3.3533% for years 6β20, and 4.29% for year 21 and afterΒ·Mortality table for Personal Pension Account balance conversion: 2017 Personal Pension Account Optional Combined Unisex Table201720172023 Pension Benefits Tables show the number ofΒ years of credited service, present value of accumulated benefit and payments during the last fiscal year for each eligible named executive officer under the IBM U.S. defined benefit pension plan. Mrs.Β Rometty, Mr.Β Schroeter, Dr.Β Kelly,As of DecemberΒ 31, 2023 Messrs. Krishna, Kavanaugh and Mr.Β Kavanaugh haveThomas had pension benefits under the U.S. defined benefit pension plan, and Mr.Β Clementi does not have a benefit under any IBM defined benefit pension plan.Β·Β Β Β Β Β Β Β Effective JulyΒ 1, 1999,Β IBM amended the IBM Personal Pension Plan to provide a new benefit formula, but allowed participants who met certain age and service conditions as of JuneΒ 30, 1999, to elect to continue to earn benefits under the prior formulas, including the Pension Credit Formula.Β·Β Β Β Β Β Β Β Accrual of future benefits under the IBM Personal Pension Plan stopped on DecemberΒ 31, 2007. Accordingly, a participantβs pension benefit does not consider pay earned and service credited after such date.Β·Β· (Qualified
(Qualified Plan)Β·arewere generally available to all U.S. regular employees.Β·Β Β Β Β Β Β Β The cessation of accruals under the Qualified Plan and the continued IBM contributions under the tax-qualified defined contribution plan, the IBM 401(k)Β Plus Plan, reflects IBMβs desire to provide appropriate benefits for its employees, consistent with the changing needs of IBMβs workforce and the changing nature of retirement benefits provided by IBMβs current competition.Material Terms and Conditions: Pension Credit Formula under the Qualified PlanΒ·for Mrs.Β Rometty are determined under the Pension Credit Formula. Mrs.Β Rometty satisfied the eligibility requirements for the Pension Credit Formula in 1999.Β·Β Β Β Β Β Β Β The Pension Credit Formula is a pension equity formula that provides annual benefits based on a participantβs total point value divided by an annuity conversion factor.Β·Β Β Β Β Β Β Β The total point value is equal to total base points times final average pay plus total excess points times final average pay in excess of Social Security Covered Compensation.Β·Β Β Β Β Β Β Β For purposes of the Pension Credit Formula, final average pay is equal to average compensation over the final five years of employment or the highest consecutive five calendar years of compensation, whichever is greater, prior to 2008.Β·Β Β Β Β Β Β Β The annuity conversion factor is pre-determined according to the IBM Personal Pension Plan document.Β·Β Β Β Β Β Β Β Prior to 2008, participants earned points as follows: 0.16 base points each year until a 4.25 base point cap was reached, and 0.03 excess points each year until a 0.75 excess point cap was reached.Β·Β Β Β Β Β Β Β The total point value is converted to an annuity at the benefit commencement date based on pre-determined annuity conversion factors.Β·Β Β Β Β Β Β Β A participant may receive his or her benefit immediately following termination of employment, or may defer benefit payments until any time between early retirement age and normal retirement age.Β·Β Β Β Β Β Β Β Early retirement age is defined as:β Any age with 30 years of service;β Age 55 with 15 years of service; orβ Age 62 with five years of service.Β·Β Β Β Β Β Β Β As of DecemberΒ 31, 2017, Mrs.Β Rometty had attained early retirement age.Β·Β Β Β Β Β Β Β Under the Pension Credit Formula, a participant who terminates employment and whose pension benefit commences before his or her normal retirement age will receive smaller monthly annuity payments than if his or her benefit commences at normal retirement age.Β·Β Β Β Β Β Β Β Instead of receiving his or her entire benefiteither under the Pension Credit Formula as an annuity, a participant may elect to receive a portion(for those who met certain eligibility criteria in 1999) or the Personal Pension Account described below. As the named executive officersβ benefits under the Qualified Plan are determined under the Personal Pension Account formula, this disclosure will only address the material terms of the benefit as an unsubsidized lump sum. The lump sum amount is based on the benefit the participant earned before JanuaryΒ 1, 2000.Β·Β Β Β Β Β Β Β Mr.Β Schroeterβs, Dr.Β KellyβsMr.Β KavanaughβsThomasβs benefit under the Qualified Plan is determined under the Personal Pension Account formula, which is a cash balance formula.Β·Β Β Β Β Β Β Β According to the terms of the Qualified Plan, under above receive pay credits and interest credits to their respective Personal Pension Accounts. The pay credits for a year were equal to 5% of the eligible named executive officersβ eligible compensationthe following forms:either a lump sum equal to the Personal Pension Account balance, an annuity that is actuarially equivalent to the Personal Pension Account balance, or both a partial lump sum and a reduced annuity.Β·β β stock optionsStock Options and other equity awards); andβ Β·Β Β Β Β Β Β Β Equity compensation β stock options, RSUs, RRSUs and PSUs β was excluded from eligible compensation.Β·Code. For 2007,Code, which for the last year that benefits accrued under the Qualified Plan, the compensation limit was $225,000. In addition, benefits provided under the Qualified Plan may not exceed an annual benefit limit under the Internal Revenue Code (which in 20172023 was $215,000$265,000 payable as an annual single life annuity beginning at normal retirement age).Qualified Plan FundingΒ·Β Β Β Β Β Β Β Benefits under the Qualified Plan are funded by an irrevocable tax-exempt trust.Β·Β Β Β Β Β Β Β A participantβs benefits under the Qualified Plan are payable from the assets held by the tax-exempt trust.Β·Β Β Β Β Β Β Β Generally, a participantβsparticipates in the Qualified Plan.Β·Β Β Β Β Β Β Β The years of credited service for the eligible named executive officers are based only on their service whilewas eligible for participation in the Qualified Plan. In 2005, Mr.Β Schroeter left IBM U.S. and became an executive of IBM Australia, and therefore, Mr.Β Schroeterβs years of credited service for benefit calculations in the 2017 Pension Benefits Table are based only on his service with IBM U.S. Because accruals under the Qualified Plan, stopped onthrough DecemberΒ 31, 2007, service performed after such date is not counted for any named executive officer.Β·Β·SectionΒ 409A of the Internal Revenue Code)tax law).Β· that is equal to the benefit that would be provided under the Qualified Plan if the compensation and benefit limits did not apply minus the benefit actually provided under the Qualified Plan disregarding the benefit limits.Nonqualified Plan FundingΒ·Β Β Β Β Β Β Β The Nonqualified Plan is unfunded and maintained as a book reserve (notional) account.Β·Β Β Β Β Β Β Β No funds are set aside in a trust or otherwise; participants in the Nonqualified Plan are general unsecured creditorsIBM with respect to the payment of their Nonqualified Plan benefits.Β·for the eligible named executive officers are based only on their service whiletheΒ years an employee was eligible for participation in the Qualified Plan. Because accruals under the Nonqualified Plan stopped on DecemberΒ 31, 2007, service performed after such date is not counted.Pension Credit FormulaΒ·Β Β Β Β Β Β Β A portion of the benefit that is available to Mrs.Β Rometty under the Qualified Plan may be paid as a lump sum. The portion is determined on the benefit that was earned before JanuaryΒ 1, 2000.Β·Β Β Β Β Β Β Β The benefit available to Mrs.Β Rometty under the Nonqualified Plan may only be paid as an annuity.Personal Pension AccountΒ·Β·Β Β Β Β Β Β Β Under the terms of the Nonqualified Plan, Mr.Β Schroeterβs entire Nonqualified Plan benefit must be paid as a mandatory lump sum. Dr.Β KellyMr.Β KavanaughThomas have elected to receive their Nonqualified Plan benefit in a lump sum immediately following separation from service.Β·20182024 if they had a separation from service from IBM on DecemberΒ 31, 20172023 was equal to:
Plan
Plan
LumpΒ SumΒ·β Name β β Maximum Lump Sum β β Qualified
Planβ β Nonqualified
Planβ β Total Available
Lump Sumβ β A. Krishna β β β $ 224,528 β β β β $ 87,850 β β β β $ 332,378 β β β J.J. Kavanaugh β β β β 118,148 β β β β β 81,412 β β β β β 269,560 β β β R.D. Thomas β β β β 92,471 β β β β β 272 β β β β β 92,743 β β Β·Mr.Β Schroeter, Dr.Β KellyMessrs. Krishna, Kavanaugh, and Mr.Β KavanaughThomas will receive a lump sum payment for their Nonqualified Plan benefits, no amount is represented for them in the Nonqualified Plan column below:
Plan
Planβ Name β β Annual Pension Benefit at Normal
Retirement Ageβ β Qualified
Planβ β Nonqualified
Planβ β Total Benefit β β A. Krishna β β β $ 24,891 β β β β β N/A β β β β $ 24,891 β β β J.J. Kavanaugh β β β β 21,962 β β β β β N/A β β β β β 21,962 β β β R.D. Thomas β β β β 14,605 β β β β β N/A β β β β β 14,605 β β Β·20172023 of the annual pension benefit that was earned as of DecemberΒ 31, 2007.Β·or her normal retirement age.Β·Β·20172023 Pension Benefits Table.2017 PENSION BENEFITS 20172023 Retention PlanΒ Narrative, the 20172023 Pension Benefits Table does not include amounts reflected in the 20172023 Retention PlanΒ Table.
(a)
(b)
CreditedΒ ServiceΒ (1)
(#)
(c)
AccumulatedΒ Benefit(2)
($)
(d)
LastΒ FiscalΒ YearΒ
($)
(e)β β β β β β β Number of Years β β Present Value of β β Payments During β β β β β β β β CreditedβService (1) β AccumulatedβBenefit β β Last Fiscal Year β β Name
(a)β β PlanΒ Name
(b)β β (#)
(c)β β ($)
(d)β β ($)
(e)β β A. Krishna β β Qualified Plan β β β β 17 β β β $245,597 β β β $ 0 β β β β β β Nonqualified Plan β β β β β β β β 86,086 β β β β 0 β β β β β β Total Benefit β β β β β β β β $331,683 β β β $ 0 β β β J.J. Kavanaugh β β Qualified Plan β β β β 12 β β β $180,497 β β β $ 0 β β β β β β Nonqualified Plan β β β β β β β β 76,413 β β β β 0 β β β β β β Total Benefit β β β β β β β β $256,910 β β β $ 0 β β β R.D. Thomas β β Qualified Plan β β β β 9 β β β $80,293 β β β $ 0 β β β β β β Nonqualified Plan β β β β β β β β 232 β β β β 0 β β β β β β Total Benefit β β β β β β β β $80,525 β β β $ 0 β β
β2007, which was the date accruals under the Qualified Plan and the Nonqualified Plan stopped.2007. Each of the named executive officers in this table has ten16 additionalΒ years of service with IBM after that date.(2)Β Β Β While the accruals under the Qualified Plan and the Nonqualified Plan stopped on DecemberΒ 31, 2007, the value of the Qualified Plan and Nonqualified Plan benefits for the eligible named executive officers will continue to change based on their ages and the assumptions used to calculate the present value of the accumulated benefit.
β20172023 for each eligible named executive officer:Β·2017Β·20233.4%Β·5.00%β 2.3%6.4% for 20182024 and 3.80% for 2025 and afterβ 1.98%5.6000% forΒ years 1β5, 3.5867%1-5, 5.7733% forΒ years 6β20,6-20, and 4.3267%5.7267% for year 21 and afterβ 2018 Personal2024 Pension AccountProtection Act Optional Combined Unisex TableΒ·Β·β RP-2014PRI-2012 White Collar sex-distinct annuitant tables for retirees adjusted by a factor of 0.762 with adjustmentimprovement from 2012 to 2011 by backing out MP-2014 improvement and further adjusting the mortality rates at each age (averaging approximately 1.06)β DecemberΒ 31, 2023.MP-2017MP-2021 projection table starting in 2011 for healthy mortality. The modified table is based on the RPEC 2014 v 2017 model, with the same 20 year diagonal convergence period and 10 year horizontal convergence period and underlying weighting percentages for the age/period and year-of-birth cohort periods. The long-term improvement rates are 0.75% up to age 85, linearly decreasing to 0.0% at age 115Β·table.Β·Β·Β·Β·Β·Β Β Β Β Β Β Β Benefit payable as a single life annuity inPension Credit Formula and lump sum in the case of thequalified Personal Pension Account Formulaformula, the benefit is payable as a 90% lump sum/10%Β·Β Β Β Β Β Β Β The Pension Credit Formula conversion factor is based on age at DecemberΒ 31, 2007 and commencement at age 65Β·2016:Β·2022:20172023 Summary Compensation Table quantifies the change in the present value of the pension benefit from DecemberΒ 31, 20162022 to DecemberΒ 31, 2017Β·20232016,2022, the same assumptions that are described above to determine the present value as of DecemberΒ 31, 20172023 were used, except (1)Β a (1)Β 3.8%5.3% interest rate, and Modified MP-2016 improvement scale, andPRI-2012 White Collar sex-distinct tables for retirees adjusted by a factor of 0.762 (2)Β to determine the Personal Pension Account benefit, the following were used:β 1.6%4.90% for 20172023 and 4.40% for 2024 afterβ 1.4767%4.4567% forΒ years 1β5, 3.3533%1-5, 5.2367% forΒ years 6-20, and 4.29%5.1467% for year 21 and afterβ 2017 Personal2023 Pension AccountProtection Act Optional Combined Unisex Table2017Β·Β Β Β Β Β Β Β Effective JanuaryΒ 1, 2008, the IBM Executive Deferred Compensation Plan (EDCP) was amended and renamed the IBM Excess 401(k) Plus Plan. IBM employees, including the named executive officers, who are eligible to participate in the IBM 401(k) Plus Plan and whose eligible pay is expected to exceed the Internal Revenue Code compensation limit for the applicable plan year are eligible to participate in the Excess 401(k)Β Plus Plan. 401Β (k)401(k) Plus Plan if the compensation limits did not apply.Β·Β Β Β Β Β Β Β The 2017 Nonqualified Deferred Compensation Table shows Eligibility is based on those 401(k) participants whose eligible pay is expected to exceed the employee deferrals (executive contributions),Β IBM match (registrant contributions), automatic contributions (registrant contributions), discretionary awards (registrant contributions) and investment gain or loss (aggregate earnings)Internal Revenue Code compensation limit for each named executive officer during 2017.Β·Β Β Β Β Β Β Β The table also shows the total balance that each named executive officer has accumulated over all the years he or she has participated in the plan.Β·applicable plan year.
βΒ·The Excess 401(k) Plus Plan is an unfunded plan and a participantβs account balance is not paid to, and cannot be accessed by, the participants until afteronly payable once a separationparticipant separates from service fromwith IBM.Β·Β Β Β Β Β Β Β The Excess 401(k)Β Plus Plan allows the clawback ofmadeare subject to a participantβs account after MarchΒ 31, 2010,forfeiture or recission if a participant is terminated for cause or engages in competitive or other activity that is detrimental to IBM (including but not limited to competitive business activity, disclosure of confidentialduring or following employment.information401(k) Plus Plan was renamed the IBM 401(k) Plan and solicitation ofthe Excess 401(k) Plus Plan was renamed the IBM clients or employees).Β·Β Β Β Β Β Β Β An eligible employeeΒ·Β Β Β Β Β Β Β In both cases, the Internal Revenue Code requires the deferral elections to be made before the calendar year in which the compensation is earned.Β·under the EDCP, any executive including non-U.S. executives, could have elected to defer receipt of shares of IBM stock that otherwise would be paid as a result of the vesting of certain restricted stock unit awards granted on or before DecemberΒ 31, 2007, under IBMβs Long-Term Performance Plan (LTPP). Such deferral occurred when the awards vested.Β·Β·Β Β Β Β Β Β Β There are no outstanding deferral elections that would result in any future deferral of stock.Β·stockholders.Excess 401(k)Β Plus Plan FundingΒ·Β Β Β Β Β Β Β The Excess 401(k)Β Plus Plan is unfundedstockholders and maintained as a book reserve (notional) account.Β·Β Β Β Β Β Β Β No funds are set aside in a trust or otherwise; participants incontributed to the plan are general unsecured creditors of IBM for payment of their Excess 401(k)Β Plus Plan accounts.Β·creditscredited matching contributions each pay period to the Basic Account of each eligible participant who defersdeferred salary or eligible performance pay under the Excess 401(k) Plus Plan.Β·of:of (i)Β a participantβs match rate times the amount the participant elects to defer under the Excess 401Β (k)401(k) Plus Plan; and (ii)Β the participantβs match rate times the eligible compensation after reaching the Internal Revenue Code compensation limits. The maximum matching contributionΒ percentage for a participant is the same as the participantβsΒ percentage under the IBM 401(k) Plus Plan. Generally, participants hired or rehired by IBM U.S. before JanuaryΒ 1, 2005 arewere eligible for up to 6% matching contributions; generally, participants hired or rehired by IBM U.S. on or after JanuaryΒ 1, 2005, and who complete one year of service, arewere eligible for up to 5% matching contributions. Mrs.Β Rometty, Dr.Β Kelly,Mr.Β Krishna, Mr.Β Kavanaugh, and Mr.Β Kavanaugh areThomas were eligible for a 6% matching contributioncontribution. Mr.Β Cohn and Messrs.Β Schroeter and Clementi areMs.Β Browdy were eligible for a 5% matching contribution. Effective JanuaryΒ 1, 2016, the matching contributions equal the sum of: (i)Β a participantβs match rate times the amount the participant elects to defer under the Excess 401(k) Plus Plan; and (ii)Β the participantβs match rate times the eligible compensation after reaching the Internal Revenue Code compensation limits.Β·Β Β Β Β Β Β Β Effective JanuaryΒ 1, 2008,creditscredited automatic contributions each pay period to the Basic Account of each eligible participant.Β·401Β (k)401(k) Plus Plan; and (ii)Β the participantβs eligible compensation after reaching the Internal Revenue Code compensation limits. The automatic contributionΒ percentage for a participant is the participantβs automatic contributionΒ percentage under the IBM 401(k) Plus Plan. Generally, theΒ percentage is 2% or 4% if the participant was hired or rehired by IBM U.S. before JanuaryΒ 1, 2005 (dependingbased on thea participantβs pensionretirement plan eligibility onas of DecemberΒ 31, 2007), or 1% if the participant was2007. In addition, for participants hired or rehired by IBM U.S. on or after JanuaryΒ 1, 2005, and completesthey must complete one year of service.service to be eligible. For purposes of calculating the automatic contributions under the IBM 401(k) Plus Plan, the participantβs eligible pay excludes the amount the participant elects to defer under the Excess 401(k) Plus Plan. The automatic contributionΒ percentage is 4% for Mrs.Β Rometty;was: 2% for Dr.Β KellyMessrs.Β Krishna, Kavanaugh and Mr.Β Kavanaugh;Thomas; and 1% for each of Messrs.Β SchroeterMr.Β Cohn and Clementi.Β·Β Β Β Β Β Β Β Matching contributions and automatic contributions are made once annually at the end of the year. In order to receive such IBM contributions each year, a participant must have completed the service requirement, and must be employed on DecemberΒ 15 of the plan year. However, if a participant separates from service (including going on long-term disability) prior to DecemberΒ 15, and the participant has:β At least 30 years of service;β At least 15 years of service and is at least age 55;β At least 5 years of service and is at least age 62; orβ At least 1 year of service and is at least age 65;or, effective JulyΒ 1, 2016, if a participant dies prior to DecemberΒ 15 in a given year, then the participant will be eligible to receive such IBM contributions as soon as practicable following separation from service.IBM Transition CreditsΒ·Β Β Β Β Β Β Β Effective for the period of JanuaryΒ 1, 2008 through JuneΒ 30, 2009,Β IBM credited transition credits to an eligible
βparticipantβs Basic Account for those employees who were receiving transition credits in their Personal Pension Account under the Qualified Plan as of DecemberΒ 31, 2007. According to the terms of the IBM 401(k)Β Plus Plan, Dr.Β Kelly and Mr.Β Kavanaugh were eligible to receive transition credits.Β·Β·Β·are as follows (with 2017 annual rates of return indicated for each):β Target Retirement 2010 Fund (8.52%)β Target Retirement 2015 Fund (10.29%)β Target Retirement 2020 Fund (12.31%)β Target Retirement 2025 Fund (14.46%)β Target Retirement 2030 Fund (16.63%)β Target Retirement 2035 Fund (17.88%)β Target Retirement 2040 Fund (18.14%)β Target Retirement 2045 Fund (18.15%)β Target Retirement 2050 Fund (18.13%)β Target Retirement 2055 Fund (18.17%)β Income Plus Fund (7.28%)β Conservative Fund (10.88%)β Moderate Fund (13.53%)β Aggressive Fund (18.13%)β Interest Income Fund (3.00%)β Inflation Protected Bond Fund (3.05%)β Total Bond Market Fund (3.52%)β High YieldΒ & Emerging Markets Bond Fund (10.99%)β Total Stock Market Index Fund (21.17%)β Total International Stock Market Index Fund (28.28%)β Real Estate Investment Trust Index Fund (4.96%)β Global Real Estate Index Fund (9.09%)β International Real Estate Index Fund (18.93%)β Long-Term Corporate Bond Fund (12.30%)β Large Company Index Fund (21.82%)β Large-Cap Value Index Fund (13.68%)β Large-Cap Growth Index Fund (30.18%)β Small/Mid-Cap Stock Index Fund (18.16%)β Small-Cap Value Index Fund (7.96%)β Small-Cap Growth Index Fund (22.39%)β European Stock Index Fund (26.29%)β Pacific Stock Index Fund (25.08%)β Emerging Markets Stock Index Fund (31.44%)βincludes the IBM Stock Fund (-4.02%)*
β*Performance includes dividend equivalent reinvestmentΒ·Β·Β·Β·Β·20172023 Nonqualified Deferred Compensation Table are calculated as the change in the price of IBMβs common stock between DecemberΒ 31, 20162022, and DecemberΒ 31, 20172023, for all Deferred IBM Shares that were contributed prior to 2017.Β·Shares.Β·Β·β β β β β Β·2017, Mrs.Β Rometty2023, Messrs. Krishna and Dr.Β KellyKavanaugh had satisfied the age and service criteria. Although Mr.Β Clementi also satisfied the age and service criteria, he does not have a pre-2005 account balance under the Excess 401(k)Β Plus Plan.Β·
βΒ·If the participant has satisfied the age, service, and account balance criteria at termination and has made a validΒ·2017,2023, 50% of this limit was $135,000)$165,000), the amounts deferred on or after JanuaryΒ 1, 2005 are distributed in a lump sum on the date installments would have otherwise begun.Β·Β·Β·Β Β Β Β Β Β Β At DecemberΒ 31, 2017, the named executive officers had the following distribution elections on file:β Mrs.Β Rometty β 10 annual installments for all amountsβ Mr.Β Schroeter β lump sum in FebruaryΒ of the year following separation for all amountsβ Dr.Β Kelly β lump sum in FebruaryΒ of the year following separation for pre-2005 amounts, and 10 annual installments for post-2004 amountsβ Mr.Β Clementi β 10 annual installments for all amountsβ Mr.Β Kavanaugh β 2 annual installments for pre-2005 amounts, and lump sum in the FebruaryΒ of the year following separation for post-2004 amounts.Β·Β Β Β Β Β Β Β Deferred IBM Shares are distributed only in the form of shares of IBMβs common stock.Β·IBM Italy Pension FundGeneral DescriptionΒ·Β Β Β Β Β Β Β Mr.Β Clementi was an employeeIBM Italy prior to his U.S. employment, which commenced JanuaryΒ 1, 2009. While an employee of IBM Italy and an Italian citizen, Mr.Β Clementi is eligible for a pension under the social security system as required by law, and sponsored by the Italian government. IBM made legally required contributions to the social security system (INPS) on behalf of Mr.Β Clementi through DecemberΒ 31, 2008.Β·Β Β Β Β Β Β Β In addition to contributions to INPS,Β IBM Italy offers a supplementary plan, βFondo Pensione Dirigenti IBMβ (the βSupplementary Planβ) to its executive population, which provides additional pension benefits that exceed those provided by the social security system. The Supplementary Plan is a separate qualified legal entity under Italian law and is a defined contribution plan.Β·Β Β Β Β Β Β Β Generally, all executives employed by IBM Italy are eligible to participate in the Supplementary Plan. Participation is voluntary, and an executive must elect to participate in the Supplementary Plan.Eligible for Deferral into the Supplementary PlanΒ·Β Β Β Β Β Β Β Eligible executives can choose to participate in the Supplementary Plan in two ways: (i)Β by irrevocably transferring severance pay legally required to be set aside; or (ii)Β making contributions that are based on the participantβs pay (ranges from 2.5% for pay up to β¬46,123 to 7.3% for pay over β¬87,633).Β·Β Β Β Β Β Β Β Participants may also elect to make further voluntary monthly contributions to the Supplementary Plan.Employer ContributionsΒ·Β Β Β Β Β Β Β For all participants,Β IBM Italy makes contributions to the Supplementary Plan on a monthly basis equal to a set amount that varies based on salary (2.5% to 5.48% of salary); provided that the employer contribution does not exceed 5.5% of the entire gross pay and that it is not less than the amount established under the applicable collective agreement (β¬4,800).Earnings MeasuresΒ·Β Β Β Β Β Β Β Participants choose to invest their account in one of three investment alternatives: the Insurance Fund, the Bond Securities Fund or the Share Fund. The default alternative is the Insurance Fund, which guarantees a minimum percentage return on capital depending on operating results (currently 2.0% annually calculated on the paid, consolidated capital as of JanuaryΒ 1, 2013).Β·Β Β Β Β Β Β Β Participants may change their investment election for new contributions at any time, and may change their allocations among the investment alternatives once each year.62NarrativeΒ·Β Β Β Β Β Β Β The Bond Securities Fund and the Share Fund do not provide any guaranteed return.Β·Β Β Β Β Β Β Β The 2017 annual rates of return for the three investment options are as follows:β Insurance Fund (2.74%)β Bond Securities Fund (1.26%)β Share Fund (7.75%)Payouts, Withdrawals and Other DistributionsΒ·Β Β Β Β Β Β Β Participants are eligible (but are not required) to take a distribution after reaching pensionable age as set forth under law and have participated in the Supplementary Plan for at least five years.Β·Β Β Β Β Β Β Β Participants may receive their benefit as an annuity or as a combination of an annuity and partial lump sum payment β which lump sum payment shall not exceed 50%. Due to his hire date, Mr.Β Clementi may choose to take his entire benefit in a lump sum payment. Distribution elections are made at the time of retirement.Β·Β Β Β Β Β Β Β Any annuities paid from the Supplementary Plan are calculated in accordance with the Supplementary Plan regulations for converting plan accounts to annuities.Β·Β Β Β Β Β Β Β If the participant dies before accessing the benefits, the individualβs heirs or designated beneficiaries shall receive his account.Β·Β Β Β Β Β Β Β A participant can request an advance of his account under the following circumstances: (i)Β at any time, up to 75%, to cover health care costs in the event of a serious illness affecting the participant or his spouse or dependents; (ii)Β up to 75% for the purchase of his, or his childrenβs, primary residence or for maintenance to the residence, once a participant has participated for at least eight years; and (iii)Β up to a maximum of 30% for other purposes, once a participant has participated for at least eight years.2017 NONQUALIFIED DEFERRED COMPENSATION TABLE
Contributions
inΒ LastΒ FY(1)
Contributions
inΒ LastΒ FY(2)
EarningsΒ in
LastΒ FY(3)
Withdrawal/
Distributions
BalanceΒ at
LastΒ FYE(4)
2023 Nonqualified Deferred Compensation Tableβ β β β β β β Executive
Contributionsβ β β β β Registrant
Contributionsβ β Aggregate
Earnings inβ β Aggregate
Withdrawal/β β Aggregate
Balance atβ β β β β β β β inβLastβFY (1) β β β β inβLastβFY (2) β LastβFY (3) β Distributions β β LastβFYE (4) β Name
(a)β β Plan β β ($)
(b)β β β β β ($)
(c)β β ($)
(d)β β ($)
(e)β β ($)
(f)β β A. Krishna β β Basic Account β β β $ 279,000 β β β Match β β β $ 279,000 β β β β $ 764,356 β β β β $ 0 β β β β $ 7,928,063 β β β β β β β β β β β β β β β Automatic β β β β 93,000 β β β β β β β β β β β β β β β β β β β β β β β β Deferred IBM Shares β β β β 0 β β β β β β β β 0 β β β β β 0 β β β β β 0 β β β β β 0 β β β β β β Total β β β $ 279,000 β β β β β β β $ 372,000 β β β β $ 764,356 β β β β $ 0 β β β β $ 7,928,063 β β β J.J. Kavanaugh β β Basic Account β β β $ 45,481 β β β Match β β β $ 45,481 β β β β $ 1,599,006 β β β β $ 0 β β β β $ 7,965,280 β β β β β β β β β β β β β β β Automatic β β β β 48,475 β β β β β β β β β β β β β β β β β β β β β β β β Deferred IBM Shares β β β β 0 β β β β β β β β 0 β β β β β 3,376 β β β β β 0 β β β β β 24,369 β β β β β β Total β β β $ 45,481 β β β β β β β $ 93,956 β β β β $ 1,602,382 β β β β $ 0 β β β β $ 7,989,649 β β β R.D. Thomas β β Basic Account β β β $ 81,893 β β β Match β β β $ 81,893 β β β β $ 165,799 β β β β β β β β β β $ 1,250,762 β β β β β β β β β β β β β β β Automatic β β β β 41,300 β β β β β β β β β β β β β β β β β β β β β β β β Deferred IBM Shares β β β β 0 β β β β β β β β 0 β β β β β 0 β β β β β 0 β β β β β 0 β β β β β β Total β β β $ 81,893 β β β β β β β $ 123,193 β β β β $ 165,799 β β β β $ 0 β β β β $ 1,250,762 β β β G. Cohn β β Basic Account β β β $ 1,466,240 β β β Match β β β $ 133,640 β β β β $ 436,883 β β β β $ 0 β β β β $ 3,085,784 β β β β β β β β β β β β β β β Automatic β β β β 26,728 β β β β β β β β β β β β β β β β β β β β β β β β Deferred IBM Shares β β β β 0 β β β β β β β β 0 β β β β β 0 β β β β β 0 β β β β β 0 β β β β β β Total β β β $ 1,466,240 β β β β β β β $ 160,368 β β β β $ 436,883 β β β β $ 0 β β β β $ 3,085,784 β β β M.H. Browdy β β Basic Account β β β $ 103,612 β β β Match β β β $ 103,612 β β β β $ 180,156 β β β β $ 0 β β β β $ 2,500,562 β β β β β β β β β β β β β β β Automatic β β β β 20,722 β β β β β β β β β β β β β β β β β β β β β β β β Deferred IBM Shares β β β β 0 β β β β β β β β 0 β β β β β 0 β β β β β 0 β β β β β 0 β β β β β β Total β β β $ 103,612 β β β β β β β $ 124,334 β β β β $ 180,156 β β β β $ 0 β β β β $ 2,500,562 β β 20172023 Summary Compensation Table. These amounts are: $79,800 for Mrs.Β Rometty; $36,210$70,200 for Mr.Β Schroeter; $33,630 for Dr.Β Kelly; $24,225Krishna; $45,480 for Mr.Β Clementi; and $129,800Kavanaugh; $39,885 for Mr.Β Kavanaugh.20172023 Summary Compensation Table. The amounts reported as IBM contributions to defined contribution plans in footnote 68 to the 20172023 Summary Compensation Table are larger because the amounts reported in that footnote also include IBMβs contributions to the IBM 401(k) Plus Plan.20172023 Summary Compensation Table because IBM does not pay above-market or preferential earnings on deferred compensation.(5)Amounts disclosed asDecemberΒ 31, 2017 were β¬42,157 and β¬1,581,396, respectively, and the exchange rate from euros to U.S. dollars was 1.2005.
Annual Meeting & Proxy StatementΒ Β Β |Β Β Β 2023 Nonqualified Deferred Compensation Narrative 612017 However, Mr.Β Clementi will be eligible for a payment upon termination pursuant to his IBM U.S. offer letter. This payment represents a one-time replacement payment to compensate Mr.Β Clementi for the retirement benefits that he would have continued to earn as an employee of IBM Italy.In order to become eligible for a payment under his offer letter, Mr.Β Clementi had to complete five years of service following JanuaryΒ 1, 2009. After completing such service Mr.Β Clementiβs payment is equal to $500,000, plus, for each year that Mr.Β Clementi works beyond JanuaryΒ 1, 2014, the amount payable is increased by 10% for a maximum period of five years (through JanuaryΒ 1, 2019). payment shall be made in a lump sum no later than the end of the year after Mr.Β Clementi separates from service with IBM.The 20172023 Potential Payments Upon Termination Table that follows this narrative reports such payments and benefits for each named executive officer assuming termination on the last business day of the fiscal year end.IBM (including but not limitedIBM. In addition, performance pay paid to competitive business activity, disclosure of confidential IBM information and solicitation of IBM clients or employees).20172023 Potential Payments Upon Termination Narrative and the 20172023 Potential Payments Upon Termination Table do not reflect payments that would be provided to each named executive officer under (i)Β the Qualified Plan; (ii)Β the Nonqualified Plan; (iii)Β the IBM 401(k) Plus Plan orPlan; (iv)Β the IBM Individual Separation Allowance PlanPlan; or (v)Β with respect to retiree medical or life insurance benefits, following termination of employment on the last business day of the fiscal year end because these plans are generally available to all U.S. regular employees similarly situated in age, years of service and date of hire and do not discriminate in favor of executive officers.Qualified Plan amounts and Nonqualified Plan amounts are not reflected in the 2017 Potential Payments Upon Termination Table. Previously, these amounts were available under one plan, the IBM Personal Pension Plan, which was generally available to all U.S. regular employees similarly situated in years of service and dates of hire and did not discriminate in favor of executive officers. For amounts payable under the Qualified and Nonqualified Plans, see the 2017 Pension Benefits Table. 2017 Potential Payments Upon Termination Table also does not quantify the value of retiree medical and life insurance benefits, if any, that would be provided to each named executive officer following such termination of employment because these benefits are generally available to all U.S. regular employees similarly situated in age, years of service and date of hire and do not discriminate in favor of executive officers; however, the named executive officersβ eligibility for such benefits is described below. The 20172023 Potential Payments Upon Termination Table does not contain a total column because the Retention Plan payment is paid as an annuity, not a lump sum. Therefore, a total column would not provide any meaningful disclosure.Β·MarchApril of the year following resignation, retirement or involuntary termination without cause. An AIP payment may not be paid if an executive engages in activity that is detrimental to IBM.Β·Β·clawback as described in SectionΒ 3 of the 2017 Compensation Discussion and Analysis.Β·clawback.20172023 Potential Payments Upon Termination Table below, it is assumed that the AIP payment made to each named executive officer following terminationMarchΒ 2018.Β·β β β β Β·β stock options,Stock Options, RSUs, RRSUs, PSUs and PSUsRPSUs are cancelled upon termination; andβ stock optionsStock Options may be exercised only for 90Β days following termination.Β·β stock optionsStock Options continue to be exercisable for the remainder of their ten-year term if approved by the Board, Compensation Committee or other appropriate management;term; andβ Β·stock options,Stock Options, RSU awards and RRSU awards would vest immediately, and outstanding PSU and RPSU awards would remain outstanding and continue to vest under their original vesting schedules.Β·stock options, RSU awardsStock Options, RSUs and RRSU awardsRRSUs would continue to vest under their original vesting schedules, and outstanding PSU awardsPSUs would remain outstanding and continue to vest under their original vesting schedules.Β·Β Β Β Β Β Β Β Beginning with PSU and RSU awards granted in 2009, inβ Β·Β·Β·Β·β except shebut instead must have reachedreach age 60 with 15Β years of service, and the payout must be approved by the Board, in its discretion.β and only ifbased on the performance goals are met.final program score. Payouts of RSU awards after termination, as described above, will be made in accordance with the original vesting schedule.Β· 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.20172023 Potential Payments Upon Termination Table assumes the following:β 20152021 PSU awards calculated using the actual performance achieved for the 2015β20172021-2023 performance period and the 20172023 fiscal year-end closing price of $153.42 for$163.55 or IBM common stock; andβ 20162022 and 20172023 PSU awards were not included because there is no guarantee of payment on these awards as they are subject to meeting threshold performance criteria.β 20162020, 2021 and 2022 RSU awards and 2022 Stock Options, if the required retirement criteria is met, at the fiscal year-end closing price of $153.42$163.55 for IBM common stock because the one-year service requirement from grant has been completed; andβ 20172023 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.Β·payment.release, exercise, or payment (or within 36Β 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 twoΒ years following termination of employment.Β·Β·20172023 Retention PlanΒ Narrative.Β·Β·Β·20172023 Potential Payments Upon Termination Table reflects the annual amount payable as a single life annuity.Β·β β 2018.Β·2024.Β·20172023 Nonqualified Deferred Compensation Narrative, payment of the named executive officersβ Excess 401(k) Plus Plan accounts (Basic Accounts and any Deferred IBM Shares) is triggered by resignation, retirement, or involuntary termination.
βΒ·Β Β Β Β Β Β Β Under the terms of the LTPP, Deferred IBM Shares are subject to rescission if the named executive officer participates in activity that is detrimental to IBM within 12 months following the release date.Β·With respect to IBM matching and automatic contributions made to a participantβs account after MarchΒ 31, 2010, if a participant engages in activity that is detrimental to IBM, the Excess 401(k) Plus Plan allows the clawback of such IBM contributions made during the 12-month period prior to the detrimental activity through the date of termination.Β·20172023 Potential Payments Upon Termination Table indicates the estimated amount and the time and form of payment, determined by either the executiveβs distribution election in effect, if any, or the planβs default distribution provision.Β·β β Β·β β IBM Italy Pension FundΒ·Β Β Β Β Β Β Β As described in the 2017 Nonqualified Deferred Compensationpayment to Mr.Β Clementi of his benefits under the Supplementary Plan is triggered by resignation, retirement or involuntary termination.Β·Β Β Β Β Β Β Β Estimated payment reflects a lump sum of the aggregate account balance as of the last business day of the fiscal year end, without assumptions for any investment gains or losses between such date and distribution.Retiree Medical and Life InsuranceGeneral DescriptionBenefits under IBMβs retiree medical and life insurance programs are triggered by a named executive officerβs retirement, as described below. IBM maintains the Retiree Benefits Plan, the Future Health Account, Access to Group Health Care Coverage and the Retiree Group Life Insurance Plan. Eligibility for a particular program is dependent upon date of U.S. hire, age and years of service at termination. Future coverage under such programs remains subject to IBMβs right to amend or terminate the plans at any time. The named executive officers would not have been eligible for the Retiree Benefits Plan following a separation from service on the last business day of the fiscal year end because they had not met the eligibility requirements.IBM Future Health Account (FHA)Β·Β Β Β Β Β Β Β Amounts credited by IBM to a hypothetical account may be used to offset the cost of eligible medical, dental and vision insurance coverage for former employees and their eligible dependents.Β·Β Β Β Β Β Β Β Generally, all regular full-time or part-time U.S. IBM employees who meet the following criteria are eligible to use amounts from the account for these purposes:β Hired before JanuaryΒ 1, 2004;β Not within five years of earliest retirement eligibility under the prior IBM Retirement Plan on JuneΒ 30, 1999; andβ At termination they have attained 30 years of service (regardless of age) and were eligible for an opening balance on JulyΒ 1, 1999, or have attained at least age 55 with 15 years of service. An employee was eligible for an opening balance on JulyΒ 1, 1999 if the employee was at least age 40 and completed at least one year of service on JuneΒ 30, 1999.Β·Β Β Β Β Β Β Β Mrs.Β Rometty and Dr.Β Kelly would have been eligible for this benefit following a separation from service on the last business day of the fiscal year end.Β·Β Β Β Β Β Β Β Mr.Β Kavanaugh would not have been eligible for this benefit following a separation from service on the last business day of the fiscal year end because he had not met the eligibility requirement noted above.Access to Group Health Care CoverageΒ·Β Β Β Β Β Β Β Eligible employees may purchase retiree health care coverage under an IBM-sponsored retiree medical option. The cost of this coverage is paid solely by the employee, but the coverage is priced at IBM retiree group rates.Β·Β Β Β Β Β Β Β Generally, all regular full-time or part-time U.S. IBM employees who meet the following criteria are eligible to purchase such coverage:β Hired on or after JanuaryΒ 1, 2004, and meet the following age and service requirements at separation from service:Β·Β Β Β At least age 55, with at least five years of service; and eitherΒ·Β Β Β The employeeβs age and years of service equal 65; orΒ·Β Β Β Withdrawal-eligible for the Future Health Account and the funds in the account have been fully depleted.β Hired prior to JanuaryΒ 1, 2004 but are not eligible for either the IBM Retiree Benefits Plan or the Future Health Account, and at separation of service employee is at least age 55 or later, and the employeeβs age and years of service equal at least 65.Β·Β Β Β Β Β Β Β Mr.Β Clementi would have been eligible for this benefit following a separation from service on the last business day of the fiscal year end.
63Β·Β Β Β Mr.Β Schroeter would not have been eligible for this benefit following a separation from service on the last business day of the fiscal year end because he had not met the eligibility requirement noted above.IBM Retiree Group Life InsuranceΒ·Β Β Β Β Β Β Β Employees who retire on or after JanuaryΒ 1, 2016 will have the option to purchase life insurance at preferred rates, paid solely at their expense.2017 POTENTIAL PAYMENTS UPON TERMINATION β β β β β β β β β β β β β LTPP β β β β β β β β
Excess 401(k)(6)β β β β β β β β Annual Incentive β β Stock β β Stock β β Retention β β Basic β β Deferred IBM β β β β β Termination β β Program (2) β Options (3) β Awards (4) β Plan (5) β Account β β Shares β β Name β β Scenario β β ($) β β ($) β β ($) β β ($) β β ($) β β ($) β β A. Krishna β β β β β $ 3,510,000 β β β β $ 5,642,724 β β β β $ 30,709,784 β β β β β N/A β β β β $ 7,928,063(7) β β β β $ 0 β β β β β β For Cause β β β β 0 β β β β β 0 β β β β β 0 β β β β β N/A β β β β β 7,556,063 (7) β β β β β 0 β β β J.J. Kavanaugh β β β β β β 1,730,430 β β β β β 3,693,418 β β β β β 9,546,250 β β β β $ 10,503 β β β β β 7,473,182 (8) β β β β β 24,369(8) β β β β β β For Cause β β β β 0 β β β β β 0 β β β β β 0 β β β β β 0 β β β β β 7,379,226 (8) β β β β β 24,369(8) β β β R.D. Thomas β β β β β β 1,552,500 β β β β β 718,141 β β β β β 3,512,563 β β β β β N/A β β β β β 1,250,762(9) β β β β β 0 β β β β β β For Cause β β β β 0 β β β β β 0 β β β β β 0 β β β β β N/A β β β β β 1,127,569 (9) β β β β β 0 β β β G. Cohn β β β β β β 1,848,600 β β β β β 743,790 β β β β β 2,608,950 β β β β β N/A β β β β β 308,578(10) β β β β β 0 β β β β β β For Cause β β β β 0 β β β β β 0 β β β β β 0 β β β β β N/A β β β β β 148,210 (10) β β β β β 0 β β β M.H. Browdy β β β β β β 1,516,800 β β β β β 2,051,903 β β β β β 5,455,701 β β β β β N/A β β β β β 2,500,562(11) β β β β β 0 β β β β β β For Cause β β β β 0 β β β β β 0 β β β β β 0 β β β β β N/A β β β β β 2,376,228 (11) β β β β β 0 β β MarchΒ 2018.Assumes each named executive officer exercised all vested, in-the-money options$153.42 (the fiscal year-end closing price$163.55, unvested 2023 Stock Options are not included because the required service of IBM common stock onat least one year since the NYSE).20152021 according to its policy, for the three-year performance period ending DecemberΒ 31, 2017.2023. 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 20162020, 2021 and 2022 RSU awards are included if required retirement criteria is met, 20172023 RSU awards are not included because the required service of at least one year since the award date of grant hashad not been completed.end.end, and are based on their distribution elections under the plan. See the IBM Excess 401(k) Plus Plan section above for more details.Approximate annual payable for 10 years starting in FebruaryΒ 2018. Deferred IBM Shares are paid as shares of IBM common stock.(8)Payable in a lump sum in FebruaryΒ 2018.(9)Sum of the amount of Basic Account deferred prior to JanuaryΒ 1, 2005 is payable in a lump sum in FebruaryΒ 2018 ($4,239,557) and the approximate annual2024. The amount of the Basic Account deferred on or after JanuaryΒ 1, 2005 is payable for 10 years starting in FebruaryΒ 2018 ($823,292). Deferred IBM Shares are paid as shares of IBM common stock.(10)Approximate annual amount payable for 10 years starting in FebruaryΒ 2018.(11)Amount represents 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 aggregate balance as of DecemberΒ 31, 2017. Under the terms of thelast 12 months under plan Mr.Β Clementi does not have to make a distribution election until retirement. He can choose to receive his benefit as an annuity, a lump sum, or a combination of an annuity and lump sum.terms. See the 2017column (c) in 2023 Nonqualified Deferred Compensation Narrative for more information.(12)See the 2017 Potential Payments Upon Termination Narrative for more information.(13)Table.20182024 ($294,565)516,466) and the amount of the Basic Account deferred on or after JanuaryΒ 1, 2005 payable in a lump sum in FebruaryΒ 20182024 ($2,915,353)6,956,716). 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 2023 Nonqualified Deferred Compensation Table.
ββYear
β(a)β β Summary
Compensation
Total for the
Principal
Executive
Officer
(βPEOβ)β β Compensation
Actually Paid
to the PEOβ β Summary
Compensation
Total for the
Principal
Executive
Officer
(βPEOβ)β β Compensation
Actually Paid
to the PEOβ β Average
Summary
Compensation
Table Total
for Non-PEO
Named
Executive
Officers
(βNon-PEO
NEOsβ)β β Average
Compensation
Actually Paid
to Non-PEO
NEOsβ β Value of Initial Fixed $100
Investment Based on:β β β β Total
Shareholder
Returnβ β Peer Group
Total
Shareholder
Returnβ β Net
Income
(in $M)β β Revenue
(in $M)β β (b) (1) β (c) (1)(7) β (b) (2) β (c) (2) (7) β (d) (3) β (e) (3) (7) β (f) β β (g) (4) β (h) (5) β (i) (6) β2023 β β β $ 20,398,426 β β β β $ 32,769,352 β β β β β N/A β β β β β N/A β β β β $ 9,916,713 β β β β $ 14,444,039 β β β β $ 156 β β β β $ 167 β β β β $ 7,502 β β β β $ 61,860 β β β2022 β β β β 16,580,075 β β β β β 23,935,007 β β β β β N/A β β β β β N/A β β β β β 8,318,193 β β β β β 10,496,901 β β β β β 128 β β β β β 115 β β β β β 1,639 β β β β β 60,530 β β β2021 β β β β 17,550,959 β β β β β 23,798,901 β β β β β N/A β β β β β N/A β β β β β 8,706,301 β β β β β 9,116,435 β β β β β 115 β β β β β 179 β β β β β 5,743 β β β β β 57,350 β β β2020 β β β β 17,009,682 β β β β β 13,997,217 β β β β $ 21,062,593 β β β β $ 15,778,831 β β β β β 12,913,982 β β β β β 10,795,062 β β β β β 99 β β β β β 132 β β β β β 5,590 β β β β β 55,179 β β β β Revenue β β β β β β β Operating Cash Flow β β β β β β β Operating EPS β β β β β β β Free Cash Flow β β β β β statement on Auditing Standards No.Β 1301, Communications with Audit Committees, as adopted byapplicable requirements of the Public Company Accounting Oversight Board (PCAOB), as may be modified or supplemented.at: at http://www.ibm.com/investor/governance/audit-committee-charter.html.2017,2023, for filing with the Securities and Exchange Commission.M.L. Eskew |
D.N. Farr| J.W. Owens | P.R. Voser
M.J. Howard
F.W. McNabb IIIβ (Dollars in millions) β β 2023 β β 2022 β β Audit Fees β β β $ 49.9 β β β β $ 48.9 β β β Audit Related Fees β β β β 22.5 β β β β β 21.3 β β β Tax Fees β β β β 0.9 β β β β β 0.8 β β β All Other Fees β β β β 0.8 β β β β β 0.6 β β β Total β β β $ 74.1 β β β β $ 71.6 β β 2017,2023 and 2022, these services included approximately $19$16Β million, respectively, for independent assessments for service organization control reports. For 2016, these services included approximately $18 million for independent assessments for service organization control reports.2018.2024. With the endorsement of the Board of Directors, the Audit Committee believes that this selection is in the best interests of IBM and its stockholders and, therefore, recommends to stockholders that they ratify that appointment. PwC served in this capacity for the year 2017.Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·Β·
β β β 69Over the last several years,Β IBM has prioritized investments in our high growth strategic imperatives, while ensuring we deliver value to our investors. In 2017,Β of $79.1B and pre-tax income of $11.4B. IBM returned to revenue growth in the 4th quarter of 2017, with revenue$13.9Β billion cash from our strategic imperatives reaching a critical mass at 46% of overall IBM revenue, or $36.5B. IBM is now established as the leading enterprise provider of cloud platforms and cognitive solutions, with security at the core. We achieved this performance while continuing to return cash to shareholders β in 2017, we raised our dividendoperations. Revenue increased for the 22ndthird consecutive year, and nearly 75% of free cash flow has been returned to shareholders over the past three years. Our compensation strategy supports IBMβsgrowing 3% at constant currency(1). The Companyβs portfolio mix reinforces our high value business model.As discussed in the Compensation Discussionmodel, with approximately 75% of revenue coming from our higher growth businesses of Software and Analysis,Β IBMβs executive compensation programs are designed to:Β·Β Β Β Β Β Β Β Ensure that the interestsConsulting. Overall, about 50% of IBMβs leaders are closely alignedrevenue is recurring, with those67% of our investors by varying compensation based on both long-termthat recurring revenue coming from Software. The Company also returned $6Β billion to stockholders through dividends, and annual businessended the year with $13.5Β billion in cash and marketable securities (up over $4.6Β billion year-to-year).and delivering a large portion ofreflect the total pay opportunity insignificant actions we have taken to strategically position IBM stock;Β·Β Β Β Β Β Β Β Balance rewards for both short-term results and the long-term strategic decisions needed to ensure sustained business performance over time;Β·Β Β Β Β Β Β Β Attract and retain the highly qualified senior leaders needed to drive a global enterprise to succeed in todayβs highly competitive marketplace;Β·Β Β Β Β Β Β Β Motivate our leaders to deliver a high degree of business performance without encouraging excessive risk taking; andΒ·Β Β Β Β Β Β Β Differentiate rewards to reflect individual and team performance.addition to the Companyβs normal, extensive outreach to Stockholders,Β IBM enhanced its engagement practices in 2017. We2023, we once again engaged in a robust program to gather feedback from investors following the 2017 annual advisory vote on executive compensation (Say on Pay). IBM directors, including itsinvestor feedback. IBMβs Chairman and CEO, and independent PresidingLead Director, and the Chair of the Executive Compensation and Management Resources Committee, participated in this engagement along with members of IBMβs senior management in a significant portion of this engagement. The Company metmanagement. IBM once again offered to engage with investors representing more than 55%57% of the shares that voted on Say on Pay at the 2017its 2023 Annual Meeting.Overall, Through our stockholders continue to be supportive ofdiscussions with investors and our formal Say on Pay vote results, investors reaffirmed their support for the Companyβs compensation programpolicies and practices,programs, which focus on long-term financial performance that drives stockholder value. Therefore,Company has continued its standard compensation program and structures. Nonetheless, the Committee and the Board reviewed and considered allcontext of investor feedback, and made the following key updates designed to further strengthen IBMβs pay for performance design and enhance our transparency:Β·Β Β Β Β Β Β Β Increased transparency into the rigor of our goal setting process by disclosing performance attainment relative to goals, for both the Annual Incentive Program and Performance Share Unit ProgramΒ·Β Β Β Β Β Β Β Beginning in 2018, added a relative metric as a modifier to the Performance Share Unit payout formula, in the form of Relative Return on Invested Capital vs. IT peers and the broader S&P 500Β·Β Β Β Β Β Β Β Reduced the maximum incentive payment opportunity for the Chairman and CEO to two times target (from three times target) to align more closely with common market practiceΒ·Β Β Β Β Β Β Β Added clarity around stock ownership requirements by describing them as a multiple of base salary, which does not reduce the shares requireddecisions continued to be held, and remains at the high end of our peer groupIBMβs named executive officers are identified in the 2017 Summary Compensation Table, and pagesΒ 27β67 describe the compensation of these officers. 69% of target pay for the Chairman and CEO, and 63% of target pay for the other Named Executive Officers, is at risk and subject to rigorous performance targets. The rigor of these targets is evident in the payouts. For 2017, Mrs.Β Rometty earned 81% of her total target compensation. Over the longer term, the past 3 years, Mrs.Β Rometty has earned an average of 63% of her total target compensation.CEO TOTAL ACTUAL VS. TARGET COMPENSATIONValues in Millions ($)
Pay decisions were made in the context ofbased on our financial performance relative to our goals, while taking into consideration the transformationsignificant reshaping of IBMβs portfolio as a hybrid cloud and AI company.steps taken to strengthenCommittee considered Mr.Β Krishnaβs personal leadership in AI and quantum computing, driving IBMβs position for the future.theseour compensation policies and practicesprograms are aligned with the interests of our stockholders and designed to reward for performance.
β β
A VOTEFOR THIS PROPOSAL.β Walden Asset Management, One Beacon Street, Boston, MA 02108,John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, CA 90278, the beneficial owner of over $2,000 in market valueat least 25 shares of IBM shares, together with multiple co-filers, whose names, addresses and beneficial holdings are available on request,stock, intends to submit the following proposal at the meeting:![[MISSING IMAGE: ic_shareholder-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ic_shareholder-bw.jpg)
we believe in, full disclosure of our companyβs direct and indirectIBMβs lobbying activities and expenditures is needed to assess whether ourIBMβs lobbying is consistent with IBMβs expressed goals and in the best interests of shareholders.spent approximately $24.4 million from 2012β2016 on federal lobbying (Senate reports). This total does not include expenditures to influence legislation in states and provides limited information regarding lobbying conducted by third parties.Resolved, the shareholders of IBMstockholders request the preparation of a report, updated annually, and disclosing:the decision makingmanagementβs decision-making process and the Boardβs oversight by management and Board for lobbying expenditures.anya trade association or other organization of which IBM is a member.or other relevant oversight committees and posted on IBMβs website.We commend for its thoughtful policy regarding political spending and the electoral process prohibiting political contributions with company funds. We believe IBM should also establish high standards for evaluating and disclosing company participation and spending in the legislative process through lobbying as well.IBMspent $67Β million from 2010-2022 on federal lobbying. This does not include state lobbying, where IBM lobbied in at least 27 states in 2022 and spent over $935,000 on lobbying in California from 2010-2022. IBM also lobbies abroad, spending between β¬1,750,000-1,999,999 on lobbying in Europe for 2021. memberships in, or payments to trade associations and social welfare organizations, or the portions of these paymentsamounts used for lobbying. In contrast, competitors Microsoft, Xeroxlobbying, to stockholders. IBM belongs to the Business Roundtable and Intel publicly disclose their indirect lobbying expenditures through their trade associations.IBM sits on the board of the US Chamber of Commerce, which together have spent over $2.2Β billion on federal lobbying since 1998 spent approximately $1.4 billion dollars on lobbying.1998.disclosebelong to the controversial American Legislative Exchange Council, which is attacking βwokeβ investing,6 it is represented by its Chamber payments nor the portion used for lobbying.IBMβs statement on climate change policy states that βIBM recognizes climate change is a serious concern that warrants meaningful action on a global basis to stabilize the atmospheric concentration of greenhouse gases (GHGs).β In contrast,trade association, with the Chamber has publicly attacked the EPA and sued to stop climate change solutions.IBM is also a member of the Business Roundtable, an organization with approximately 200 CEOs as members. The BRT is leading an attack against shareholder rights to file resolutions. Yet IBM is justifiably proud ofsitting on its record of engaging shareholders in constructive conversation.IBMβs payments to the BRTΒ & Chamber help fund such attacks.This resolution received 26.54% vote in 2017. WePrivate Enterprise Advisory Council. Reputational damage stemming from these misalignments could harm stockholder value.public disclosurelobbying disclosure.
Β Β YOUR BOARDβ ![[MISSING IMAGE: ic_voteagainstbox-bw.gif]](/files/DEF 14A/0001104659-24-032641/ic_voteagainstbox-bw.gif)
β β β β This proposal does not properly consider IBMβs well-known disclosures, policies and practices in this area, or the consistent independent third-party recognition of IBM as a leader in lobbying and political spending disclosure. Last year, IBM stockholders rejected an identical proposal. Accordingly, the Board recommends against this Proposal since it is unnecessary and therefore not in the best interests of the Company and its stockholders. β β Independent Third Parties Consistently Recognize IBM as a Leader in Lobbying and Political Spending Disclosure β β IBM consistently receives high ratings from independent analysts of corporate practices on lobbying and political spending, including the Center for Political Accountability and Transparency International UK. In fact, the Center for Political Accountabilityβs 2023 Report on Corporate Political Disclosure and Accountability gave IBM a score of 98.6 out of 100, naming IBM as one of only 20 companies that fully prohibit the use of corporate assets to influence elections and as one of only 38 companies that prohibit both trade associations and non-profits from using Company contributions for election-related purposes. β β IBM Already Provides the Disclosure Requested by This Proposal β β additional disclosure of IBMβs policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. It also requests disclosure of IBMβs lobbying activities and expenditures, including payments made by IBM for lobbying activities. IBM already provides the disclosure requested on the Companyβs public policy website (https://www.ibm.com/policy/philosophy-and-governance-new/).β β Based on stockholder feedback, IBM has further enhanced its disclosure by identifying those trade organizations that are directly engaged in U.S. lobbying through annual payments of $50,000 or higher. Moreover, on IBMβs public policy website the Company provides direct links to where it regularly files periodic reports with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives detailing its U.S. federal lobbying activities and expenditures (including expenditures for βindirect lobbyingβ via trade associations, as required by law), as well as with the European Union Transparency Register detailing its lobbying activities and expenditures with European Union institutions. In addition to this, IBM files reports with state and municipal governments, where required. β β Finally, this proposal requests a description of managementβs decision-making process and the Boardβs oversight of lobbying activities and expenditures. The Company provides this information on IBMβs public policy website. IBM has established clear oversight over such activities and expenditures through numerous written corporate policies, instructions, and guidelines, all of which are available on IBMβs public policy website. β β To be clear, IBMβs public policy advocacy spans a range of issues relevant to our business, clients, stockholders, employees, communities and other stakeholders. We engage leaders worldwide to promote ideas that can help spur growth and innovation with new technologies, or address societal changes, such as building a skilled and diverse workforce. IBM has always been committed to meaningful management, oversight, and accurate reporting with respect to our public policy engagement, including with respect to trade associations, and we consistently seek to provide our stockholders with relevant data regarding our public policy engagement. β β IBM Does Not Make Political Contributions of Any Kind β β We have a long-standing policy not to make contributions of any kind (money, employee time, goods or services), directly or indirectly, to political parties or candidates, including through intermediary organizations, such as political action committees, campaign funds, or trade or industry associations. β β IBMβs Lobbying Activities Support Growth and Innovation in the Digital Economy and Comply with All Applicable Laws β β All IBM lobbying activities, including by third parties on behalf of IBM, require the prior approval of the IBM Office of Government and Regulatory Affairsβββa globally integrated function providing public policy and government relations expertise in support of IBMβs business operations worldwideβββand must comply with applicable law and IBMβs Business Conduct Guidelines. IBM also complies fully with U.S. state and local lobbying disclosure laws, which vary by jurisdiction, but which do, in most cases, require lobbyists to register and disclose their lobbying activities. β β IBM Prohibits Trade Associations from Using IBM Funds to Engage in Political Expenditures β β IBM joins trade and industry associations that add value to IBM, its stockholders and employees. Although IBM works to make our voice heard, there may be occasions where our views on an issue differ from those of a particular association. On these occasions, IBM regularly shares its dissenting views within its trade associations and, when helpful to the policy debate, in public fora. We perform comprehensive due diligence on all of our trade associations to confirm they are reputable and have no history of malfeasance. Company policy prohibits them from using any IBM funds to engage in political expenditures, and we implement robust procedures to ensure they comply. β lobbying activities and expenditures. IBM already discloses lobbying activities and expenditures, including expenditures made through trade associations, as required by law. Furthermore,Β IBM has established clear oversight over such activities and expenditures through numerous written corporate policies, instructions and guidelines. This proposal does not appear to properly consider IBMβs well-known policies and practices in this area, and the Board recommends against this proposal.IBMβs policy on Lobbying is set forth in the IBM Business Conduct Guidelines under the section entitled βLobbying,β and is published by the Company on its website at:https://www.ibm.com/investor/att/pdf/BCG_English_Accessible_2018.pdfSpecifically, the IBM Business Conduct Guidelines provide that all lobbying activities, including lobbying activities by third parties on behalf of IBM and grassroots lobbying, require the prior approval of IBMβs Government and Regulatory Affairs office β a globally integrated function providing public policy and government relations expertise in support of IBMβs business operations worldwide. All IBM employees are required to comply with these guidelines. The IBM Government and Regulatory Affairs office works to advocate the public policy interests of IBM and its stockholders and employees with governments around the world.The Company provides disclosure on its website about its key public policy positions as well as its policies and practices with regard to public policy matters, including trade and industry associations and lobbying activities and expenditures. Seehttp://www.ibm.com/investor/governance/public-policy-matters.html and https://www.ibm.com/blogs/policyFurther,Β IBMβs U.S. federal lobbying reports disclose in extensive detail all issues lobbied and total U.S. federal lobbying expenditures made by IBM. Contrary to the proposalβs supporting statement,Β IBMβs total reported U.S. federal lobbying expenditures do, in fact, include expenditures for βindirect lobbyingβ via trade associations, as required by law. These reports are available for public review athttp://disclosures.house.gov/ld/ldsearch.aspxIBM also complies fully with U.S. state and local lobbying disclosure laws, which vary by jurisdiction, but which do, in most cases, require lobbyists to register and disclose their lobbying activities. Finally,Β IBM periodically reports to its Board of Directors about IBMβs policies and practices in connection with governmental relations, public policy and related expenditures.Given all of the foregoing, the Board views the proposal as unnecessary. THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.β The Board and Management Exercise Strong Oversight of Public Policy Efforts β β As part of the Boardβs oversight function, the Companyβs management periodically reports to its Board about IBMβs policies and practices in connection with governmental relations, public policy and related expenditures. IBMβs senior management, under the leadership of IBM Government and Regulatory Affairs, closely monitors and coordinates all public policy advocacy efforts, as well as lobbying activities. β β Conclusion β β For the reasons described above, the Board believes the adoption of this proposal is unnecessary and therefore not in the best interests of the Company and its stockholders. β β THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. β Shareholder Ability to Call a Special Shareholder MeetingJohn Chevedden, 2215 NelsonNational Center for Public Policy Research, 2005 Massachusetts Ave., No.Β 205, Redondo Beach, CA 90278, NW, Washington, DC 20036, the owner of at least 2513 shares of IBM stock, intends to submit the following proposal at the meeting:Resolved, Shareowners ask our boardtakedoing business in China align with its ESG commitments, including its Human Rights Statement of Principles. The Board of Directors should report on how it addresses the steps necessary (unilaterallyrisks presented by any misaligned activities and expenditures and the Companyβs plans, if possible)any, to amend our bylaws and each appropriate governing document to give holders in the aggregate of 10% of our outstanding common stock the power to call a special shareowner meeting. In other words this proposal asks for adoption of the most shareholder-friendly version of the shareholder right to call a special meeting as permitted by Delaware law. This proposal does not impact our boardβs current power to call a special meeting.This proposal topic won more than 70%-support at Edwards Lifesciences and SunEdison in 2013. A shareholder right to call a special meeting and to act by written consent and are 2 complimentary ways (written consent completely lacking at IBM) to bring an important matter to the attention of both management and shareholders outside the annual meeting cyclemitigate these risks, such as detailing its plans to shift these activities and expenditures to less repressive and hostile regimes.electionCompanyβs goals of directors. More than 100 Fortune 500 companies provide for shareholders to call special meetingsreducing pollution and to actreaching net-zero greenhouse gas emissions by written consent.This proposal is of particular importance to IBM shareholders because IBM shareholders completely lack the ability to act by written consent and do not have the full right to call a special meeting that is available under Delaware law. And this is at a time when IBM stock is slumping.If shareholders had a more complete right to call a special meeting2030, as called for in this proposal shareholders would have a greater ability to engage our Board to improve the qualifications of our directors since a special meeting can be called in regard to the election of directors.Sadly IBM had a rooster of directors with no skin in the game. In 2017 it was reported that 8 of 13 IBM directors owned no IBM stock: Alex Gorsky, Andrew Liveris, Hutham Olayan, Joan Spero, Michael Eskew, Peter Voser, Shirley Jackson and Walter McNerney. If our stock slumps further these 8 directors can just smile and collect their $400,000 for perhaps 400 hours of work.Kenneth Chenault and Sidney Taurel had 19 or 16 years long-tenure. Long-tenure can impair the independence of a director no matter how well qualified. Michael Eskew and Shirley Jackson were potentially distracted directors with work on 4 boards. And then Michael Eskew was given Lead Director duties. The 4 directors in this paragraph received our highest negative votes in 2017.Any claim that a shareholder right to call a special meeting can be costly β may be largely moot. When shareholders have a good reason to call a special meeting β our board should be able to take positive responding action to make a special meeting unnecessary.Please vote to improve shareholder oversight of our company:Shareholder Ability to Call a Special Shareholder Meeting β Proposal 5
Β YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.The Board believes that the adoption of this proposal is unnecessary because of its existing special meeting by-law provision. The current provision, which allows stockholders owning at least 25% of IBMβs shares to call a special meeting, can be found in ArticleΒ II, SectionΒ 3 of IBMβs by-laws athttps://www.ibm.com/investor/governance/by-laws.html.The current 25% threshold is consistent with market practice and already accurately reflects the preference of IBMβs stockholders. At IBMβs 2010 and 2017 Annual Meetings, the same proponent presented this same proposal seeking to lower the 25% threshold to 10%. On both occasions, a majority of the votes cast voted against lowering the threshold, clearly demonstrating the stockholdersβ support for the 25% threshold.Lowering the threshold to 10% would allow special interest groups with small minority ownership interests to potentially cause disruption and substantial costs to be incurred by the other 90% of stockholders. Further, a lower threshold is not necessary in light of IBMβs history of strong governanceas policies and practices that it says prioritize qualities such as ethics and accountability.2 The ESG report also highlights the Companyβs commitment to human rights and its Human Rights Statement of Principles.3lead independent Presiding Directormilitary-civil fusion strategy11 and existing procedures giving stockholders the abilityenvironmental and human rights abuses, to communicate with the Board.Therefore, the Board believesensure that the proponentβs proposal is counterproductiveIBMβs actions as a company live up to IBMβs already well-respected corporate governance practices. Additionally, this same proposal has already been reviewed and rejected by a majorityits words.the votes cast at two prior annual meetings. As IBM has an existing by-law permitting stockholders to call special meetings, and this same proposal to lower the threshold failed to receive majority support each time it has been presented, the Board believes that this proposal is unnecessary. THEREFORE, THE IBM BOARDAnnual Meeting & Proxy StatementΒ Β Β |Β Β Β Stockholder Proposalsβ β β β β This Board believes adoption of this proposal is unnecessary and would not provide additional useful information to the Companyβs stockholders. This proposal was overwhelmingly rejected by IBM stockholders in 2023 with more than 90% of stockholders voting AGAINST. β β IBM adheres to the law across all of the countries where we do business, including government controls on the export and use of certain technologies. Further, IBM complies with all laws related to human rights and forced labor, including the US Uyghur Forced Labor Prevention Act and similar rules proposed by the European Commission. β β Globally, IBM practices the highest level of social, environmental and ethical responsibility in our global supply chains and we expect the same level of due diligence from our suppliers. The company was a founding member of the Responsible Business Alliance (RBA), a nonprofit industry group that helps its members continuously develop and execute the highest level of ethical standards in global supply chains. β β IBM requires our first-tier suppliers of hardware, software, and services to adhere to the RBA Code of Conduct, which contains provisions on labor, health and safety, environmental requirements, ethics, and management systems. We apply the same requirement across IBMβs own operations. And our suppliers must establish goals, disclose results, cascade IBMβs requirements to their next-tier suppliers, and more. β β β β In conclusion, we see no conflict between IBMβs business activities in China, which accounts for only a small fraction of IBMβs total global revenue, and our commitments to corporate responsibility. β β Conclusion β β For the reasons described above, the Board believes the adoption of this proposal is unnecessary and not in the best interests of the Company and its stockholders. β β THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. β Have an Independent Board ChairmanAvenue, 2M,Ave., Great Neck, NY 11021, the owner of at least 500100 shares of IBM stock, intends to submit the following proposal at the meeting:Boardboard of Directors to adoptdirectors undertake such steps as policy, and amend our governing documents asmay be necessary to require henceforthpermit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This includes shareholder ability to initiate any appropriate topic for written consent.Chair of the Board of Directors, whenever possible,shares that do not have time to be an independent member of the Board. The Boardvote would have the discretion to phase in this policytime for the next CEO transition, implemented so it does not violate any existing agreement.If the Board determines thatbureaucratic requirements to call for a Chairman who was independent when selected is no longer independent, the Board shall select a new Chairman who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chairman. This proposal requests that all the necessary steps be taken to accomplish the above.Caterpillar is an example of a company recently changing course and naming an independent board chairman. Caterpillar had strongly opposed aspecial shareholder proposal for an independent board chairman as recently as its JuneΒ 2016 annual meeting. Wells Fargo also changed course and named an independent board chairman in OctoberΒ 2016.It was reported that 53% of the StandardΒ & Poors 1,500 firms separate these 2 positions (2015 report). 50%-plus support at 5 major U.S. companies in 2013 including 73%42%-support at NetflixAn independent board chairman would havethe 2020 IBM annual meeting.time to cure weaknesses in our board members after 2018. David Farr and Joan Spero were tainted by a bankruptcy at another company where they served. Kenneth Chenault had 19-years long tenure and received our highest negative votes β asimpressive because it takes much as 5-times as many negative votes as othermore IBM directors. Sidney Taurel had 16-years tenure. Long-tenure can impairshareholder conviction of the independencemerits of a director no mater how qualified. Independenceproposal to support a shareholder proposal, and thereby reject the Board of Directorβs position, than to simply go along with the Boardβs position.all-importanta means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director. For instance Mr.Β Andrew Liveris, who chaired the IBM governance committee, was rejected by 22% of shares in 2023 when a 5% rejection is often the norm for a director.In responsewell-performing directors. A shareholder right to this proposal top managementact by written consent could name one stepgive IBM directors more of an incentive to improve their performance.The fact that our Lead Director cannot callpreferred a special shareholder meeting mayto written consent. With the widespread use of online shareholder meetings the IBM Board could take control and allow only one shareholder to speak at an online special meeting.red flag that our Board does not believedecade from its $200 price in a strong lead director to counter-balance the powerful dual role of our current CEO.
Shareholder Right to enhance oversight of our CEO:Independent Board ChairmanAct by Written Consent
β β β β Your Board of Directors believes that action by written consent without prior notice to all stockholders is not in the best interest of stockholders and recommends a vote AGAINST this proposal. β β β β β β IBMβs current practices also guarantee that notice and an opportunity to be heard precede stockholder votes, enabling meaningful discourse to occur before important decisions are made affecting your Company. In contrast, this proposal would enable the owners of a bare majority of shares to act by voting in favor of their own proposed action, without a meeting and without ever providing notice to other stockholders or IBM. The Board of Directors believes that the adoption of this proposal would not be in the best interests of its stockholders. β β Currently, any matter that IBM or its stockholders wishes to present for a stockholder vote must be noticed in advance and presented at a meeting of stockholders. This transparency and fairness allows all stockholders to consider, discuss, and vote on pending stockholder actions. In contrast, the written consent proposal at issue would permit a small group of stockholders (including those who accumulate a short-term voting position through the borrowing of shares) with no fiduciary duties to other stockholders to initiate action with no prior notice either to other stockholders or to the Company, thus preventing all stockholders from having an opportunity to deliberate in an open and transparent manner, and to consider arguments for and against any action, including IBMβs position. Permitting stockholder action by written consent could also lead to substantial confusion and disruption for stockholders, with potentially multiple, even conflicting, written consents being solicited by multiple stockholder groups. For these reasons, the Board does not believe that such a written consent right is an appropriate corporate governance model for a widely-held public company like IBM. β β β β Conclusion β β The Board views the proposal calling for action by written consent without prior notice to all stockholders as unnecessary and not in the best interests of its stockholders. β β THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. β One![[MISSING IMAGE: ic_addvalue-bw.jpg]](/files/DEF 14A/0001104659-24-032641/ic_addvalue-bw.jpg)
most important tasks undertakenInflation Reduction Act, critical gaps remain between the United Statesβ Nationally Determined Contributions and necessary climate action. Companies like IBM have an essential role in enabling policymakers to close these gaps, given the increasingly material risks they face with delays in emissions reductions.β β β β β The Board has reviewed and considered this proposal and determined that it is unnecessary given IBMβs history on environmental matters, current disclosures and policies. β β IBM Has a Long History of Actively Addressing Environmental Matters β β For the past three decades, IBM has been actively addressing environmental concerns. When it comes to climate change, IBM has demonstrable leadership and results. In 1994, IBM began to voluntarily disclose carbon dioxide emissions associated with IBMβs consumption of energy and has done so every year since. In 2000, IBM established its first carbon dioxide emissions goal and is now working on its fifth successive goal, with factual achievement every step of the way. In 2001, IBM made its first purchase of renewable electricity and has continued ever since. In 2007, IBM published a formal position on climate change calling for meaningful action on a global basis to stabilize the atmospheric concentration of greenhouse gases. In 2015, IBM stood by this statement when it supported the Paris Agreement and reaffirmed its support in 2017. In 2019, IBM once again demonstrated its commitment to combating climate change by becoming a Founding Member of the Climate Leadership Council and supporting its bipartisan plan for a carbon tax with 100% of the net proceeds returned to citizens as a carbon dividend. Furthermore, IBM has been recognized with numerous awards for its climate leadership. Most recently, for example, IBM was named to Forbes Top 100 Net Zero Leaders 2023 and USA Today Americaβs Climate Leaders 2023. β β IBM Already Publicly Discloses its Climate Policy and Positions β β β β β β IBM Already Provides Robust Disclosure on its Lobbying Activities and it is Recognized for its Transparency by Independent Third Parties β β IBM already discloses robust information with regards to its lobbying activities. In fact, IBM consistently receives high ratings from independent analysts of corporate practices on lobbying and political spending, including the Center for Political Accountability and Transparency International UK. In its latest report, the Center for Political Accountabilityβs 2023 Report on Corporate Political Disclosure and Accountability gave IBM a score of 98.6 out of 100, naming IBM as one of only 20 companies that fully prohibit the use of corporate assets to influence elections and as one of only 38 companies that prohibit both trade associations and non-profits from using Company contributions for election-related purposes. β β β β Conclusion β β For the reasons described above, the Board believes the adoption of this proposal is unnecessary and therefore not in the best interests of the Company and its stockholders. β β THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. β board is to select the leadership of the boardthird party creates business and the company. In order to do that job most effectively and in the best interests of the stockholders, a board should have the flexibility to combine or split the Chairman and CEO roles. Because one size does not fit all situations, your Board has altered its structure at various times depending upon the particular circumstances.reputational risks. For example, your Board split the ChairmanCompany markets and CEO roles during previous CEO transitions. These seamlesssells end-to-end sustainability solutions including cloud-based software, Envizi ESG Suite, which helps customers calculate and successful leadership transitionsreport Scope 3 emissions, and it notes in a Wall Street Journal ad that, βCompanies need tools that can help them do detailed carbon accountingβ¦β3servedcommitted to the SBTi.model for public company succession planning. We already have independent board leadership incompanyβs goals,β undermining the formvalue of our Presiding Director,Β IBMβs lead independent director. We do not believeits own services.requiring these roles always be split, or that the Chairman always be a non-management director, is in the best interestIBM adopt independently verified short-, medium- and long-term science-based greenhouse gas emissions reduction targets, inclusive of IBM, and we recommend a vote against the proposal.There is little doubt that selection of IBMβs Chairman and CEO is one of the most important functions for the Board. The responsibility is taken seriously by your Board, a diverse group of leaders in their fields, including current and former Chairmen and CEOs of Fortune 500 companies and leaders of major academic and philanthropic institutions. The Board is uniquely positioned to see the opportunities and challenges IBM faces, and to test personally the candidates for the Chairman and CEO positions over time,emissions from its full value chain, in order to select the leadership needed for IBM for the long term. Limiting the candidate pool as suggestedachieve net zero emissions by the proponent will do nothing to enhance the ability of the Board to exercise its fiduciary obligation to identify the best leadership for IBM.IBM already has an independent director holding the position of Presiding Director. The Presiding Director is elected by the independent members of the Board,2050 in line with the following robust and meaningful responsibilities that serveParis Agreementβs goal of limiting global temperature rise to enhance the contributions1.5 degrees Celsius.β β β β β This proposal is unnecessarily prescriptive and does not properly consider IBMβs well-known disclosures, policies and practices in this area. Accordingly, the Board recommends AGAINST this proposal since it is unnecessary and not in the best interest of the Company and its stockholders. β β IBM Has a Long History of Actively Addressing Environmental Matters β β For the past three decades, IBM has been actively addressing environmental concerns. When it comes to climate change, IBM has demonstrable leadership and results. In 1994, IBM began to voluntarily disclose carbon dioxide emissions associated with IBMβs consumption of energy and has done so every year since. In 2000, IBM established its first carbon dioxide emissions goal and is now working on its fifth successive goal, with factual achievement every step of the way. In 2001, IBM made its first purchase of renewable electricity and has continued ever since. In 2007, IBM published a formal position on climate change calling for meaningful action on a global basis to stabilize the atmospheric concentration of greenhouse gases. In 2015, IBM stood by this statement when it supported the Paris Agreement and reaffirmed its support in 2017. In 2019, IBM once again demonstrated its β IBMβs independent directors. The Presiding Director:Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β presides at all meetingsAnnual Meeting & Proxy StatementΒ Β Β |Β Β Β β commitment to combating climate change by becoming a Founding Member of the Climate Leadership Council and supporting its bipartisan plan for a carbon tax with 100% of the net proceeds returned to citizens as a carbon dividend. Furthermore, IBM has been recognized with numerous awards for its climate leadership. Most recently, for example, IBM was named to Forbes Top 100 Net Zero Leaders 2023 and USA Today Americaβs Climate Leaders 2023. β β IBMβs Climate Change Goals Are Transparent, Authentic and Factually Based on Science β β Since its first carbon dioxide emissions reduction goal in 2000, IBMβs climate goals have always been transparent, authentic, and, most importantly, based on science. Currently, IBM has 11 voluntary goals pertaining to climate change, including goals for greenhouse gas (GHG) emissions reduction and net zero. These goals are aligned with the scientific recommendations of the United Nations Intergovernmental Panel on Climate Change (IPCC). We establish near-term targets to promote action and accountability and to promote our long-term objectives. β β We believe that demonstrable and factual results are what matter most and, for this reason, we avoid opaque representations of achievement. For example, one of IBMβs goals is to reduce the companyβs operational GHG emissions by 65% by 2025 against base year 2010, adjusted for acquisitions and divestitures. As reported in our 2022 Impact Report, as of year-end 2022, IBM had already achieved a 63.3% reduction. This achievement was, and will continue to be, evaluated by an independent third party that reviewed GHG emissions and associated data from the activities under IBMβs operational control. It is also worth noting that the 63.3% reduction exceeds the annual rate of reduction recommended by the United Nations IPCC, which in its βSpecial Report: 1.5Β CΒ°β indicated that anthropogenic carbon dioxide emissions must decrease 45% between 2010 and 2030 to limit Earthβs warming to 1.5 degrees Celsius above pre-industrial levels. This translates to an annual rate of reduction of 2.25%, while IBMβs goal achieves a rate of reduction of 4.3% per year. Further, we do not include the purchase of nature-based carbon offsets to comprise any emissions reduction. β β IBMβs Climate Change Goals Already Include Our Value Chain β β Scope 3 GHG emissions are the direct emissions of numerous other entities with whom a company interacts. These entities include, for example, all suppliers around the world across all tiers (from the origin of a raw material to a finished product to its disposition), all of a companyβs customers, and all of a companyβs employees as those employees commute to a workplace. These entities are collectively referred to as a companyβs βvalue chain.β Under a voluntary accounting standard named the Greenhouse Gas Protocol, the direct emissions of all the entities described above are also allocated and assigned to the company in question as that companyβs indirect, estimated Scope 3 emissions. As such, these estimated emissions are typically counted multiple times. β β Determining Scope 3 emissions in a factual manner across a companyβs value chain can be extremely challenging due to a lack of access to primary source data across multiple entities. That is why the majority are estimates of considerable uncertainty. Nevertheless, estimates can help inform where emissions occur in a macro sense across a broad market economy. For this reason, IBM reports in Scope 3 categories where it has relevant data to make estimates, and we offer software and solutions to help interested clients as well. β β IBM believes real reductions of emissions are directly and demonstrably achieved when the organization generating the emission takes action to do so. That is why we are committed to achieve net-zero operational GHG emissions by 2030 that includes our Scope 1 and Scope 2 emissions, as well as Scope 3 emissions associated with IBMβs electricity consumption (which we control) at co-location data centers. IBM does not, however, include in its operational goals estimates of its global suppliersβ and global clientsβ emissions (Scope 3) that it does not control. Rather than commit to purchase carbon offsets or credits every year to offset these emissions, IBM believes it is much more impactful to invest in emerging solutions for climate change like the IBM Research Divisionβs work to accelerate the discovery of new materials for carbon removal; IBMβs Environment Intelligence Suite software for the complex modeling of potential climate impacts; IBMβs Envizi software for energy and greenhouse gas emissions management; and IBMβs philanthropic Sustainability Accelerator program. β β At the same time, we remain closely engaged with our suppliers and clients. Since 2010, IBM has required all of its first-tier suppliers to implement an environmental management system, measure and set goals to reduce their GHG emissions, and publicly disclose their results. Building upon these requirements, in AprilΒ 2021, IBM enhanced its supplier engagement by establishing a new goal requiring key suppliers in emissions-intensive business sectors to set a goal to reduce their Scope 1 and Scope 2 emissions that is aligned with scientific recommendations from the IPCC to limit Earthβs warming to 1.5Β°C above pre-industrial levels. We also convene an annual Sustainability Leadership Symposium with our suppliers, during which they share innovations and best practices. In addition, we continue to design products and solutions with the environment in mind, as we have done since 1991. For example, IBM servers such as the z16 have been exemplars of energy efficiency, yet we sustain a goal to continually reduce the power consumption per unit of work delivered by our future servers from one generation to the next. We further invest in research and develop solutions with demonstrable environmental benefits to help our clients transform their operations for environmental sustainability. β β Conclusion β β There is no one size fits all approach for addressing climate change. For the reasons described above, the Board believes the adoption of this prescriptive proposal is unnecessary and therefore not in the best interests of the Company and its stockholders. β β THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. β the Board at which the Chairman is not present, including executive sessions of the independent directors,Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β serves as liaison between the Chairman and the independent directors,Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β approves information sent to the Board,Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β approves meeting agendas for the Board,Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β approves meeting schedules to assure that there is sufficient time for discussion of all agenda items,Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β has authority to call meetings of the independent directors, andΒ·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β if requested by major stockholders, ensures that he or she is available, as necessary after discussions with the Chairman and Chief Executive Officer, for consultation and direct communication.In addition to these core responsibilities, the Presiding Director engages in other regular activities including:Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β one-on-one debriefs with the Chairman after each meeting;Β·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β spending time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of the Company; andΒ·Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β attending certain other committee meetings in addition to the committee he chairs.The Presiding Director position is just the latest example of IBMβs continued commitment to strong corporate governance. Independent directors comprise more than 93% of the Board and 100% of the Audit, Directors and Corporate Governance and Executive Compensation and Management Resources Committees. After each regularly scheduled Board meeting, both the full Board and the non-management directors of the Board meet in executive session, with the non-management directorsβ session led by the independent Presiding Director.In addition, the Board has a history of proactively responding to stockholder issues, such as implementing proxy access, a majority voting policy for director elections and granting stockholders owning at least 25% of the outstanding shares of the Company the power to call a special meeting of stockholders. In contrast to the exemplary performance and quality of the IBM Board over the years, the proponent provides no evidence demonstrating that separating the roles of Chairman and CEO at IBM would result in increased value for IBM stockholders. In light of this total lack of empirical support,Β IBMβs strong and independent Board, and IBMβs Presiding Director structure, this stockholder proposal is both inappropriate and unnecessary.We believe that stockholders benefit when the Board can select the best candidates to run IBM at a given time. THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Annual Meeting & Proxy StatementΒ Β Β |Β Β Β Stockholder Proposals(βrecord ownerβ)(record owner) is a stockholder whose ownership of IBM common stock is reflected directly on the books and records of our transfer agent, Computershare Trust Company, N.A. If you hold IBM stock through a bank, broker or other intermediary, you are not a stockholder of record. Instead, you hold your stock in βstreet name,β and the βrecord ownerβrecord owner of your shares is usually your bank, broker or other intermediary. If you are not a registered stockholder,record owner, please understand that IBM does not know that you are a stockholder, or how many shares you own.annual meeting.2024 Annual Meeting. What procedures must I follow?Admission to theon a first-come, first-served basis, and an admission ticket and picture identificationconducted virtually. All stockholders will be requiredable to enterattend the meeting. Any individual arriving without an admission ticket will not be admitted toAnnual Meeting via webcast by entering the meeting unless it can be verified that the individual is an IBM stockholder as of the record date for the meeting.For stockholders of record that received a Proxy Statement by mail: An admission ticket is attached to the proxy card sent with this Proxy Statement.For stockholders of record that received a Notice of Internet Availability of Proxy Materials: Please follow the instructions provided16-digit control number included on the Notice of Internet Availability of Proxy Materials, on your proxy card, or on the instructions that accompanied your proxy materials at request an admission ticket.For holders in street name: Stockholders holding IBM stock in bank or brokerage accounts can obtain an admission ticket in advance by sending a written request, along with proof of stock ownership (suchregister as a brokerage statement) to our transfer agent, Computershare Trust Company, N.A., P.O.Β Box 505005, Louisville, KY 40233-5005. Ifguest; however, you hold your shares in street name and you wish to vote those shares at the meeting, you must also request a βlegal proxyβ directly from your bank, broker or other intermediary well in advance of the meeting and bring it to the meeting. Contact your bank, broker or other intermediary for specific information on how to obtain a legal proxy in order to attend and vote your shares at the meeting.3.Are there specific restrictions on attending the annual meeting, and whatI can bring with me into the meeting?This is a meeting for stockholders, and security at the meeting is very important. You will be asked to walk through an electronic screening device before entering the meeting hall. In addition, cameras, cell phones, recording equipment and electronic devices will not be permittedable to be brought intovote or submit questions before or during the meeting.annual meeting?FebruaryΒ 23, 2018.5.Annual Meeting?annual meeting?stockholder of record owner and each stockholder who holds stock in street name at the close of business as of the record date is entitled to one vote for each share held at the meeting, or any adjournment or postponement.6.stockholders of record: record owners:The proxy card covers the number of shares to be voted in your account as of the record date, including any shares held for participants in the Computershare CIP (the Direct Stock Purchase and Dividend Reinvestment Plan) and the IBM Employees Stock Purchase Plans.Plus Plan:The card serves as a voting instruction to the Trustee of the plan for IBM shares held in the IBM Stock Fund as of the record date.7.annual meeting?For stockholders of record: Annual Meeting?If you wish to give a proxy to someone other thanTo vote during the individuals named as proxiesAnnual Meeting, log into the Annual Meeting Website with your 16-digit control number (found on theyour Notice of Internet Availability of Proxy Materials, your proxy card, you may replace the names appearing on theor your instructions that accompanied your proxy card with the name of some other person, sign the card and give the proxy card to that person for use at the meeting.For holders in street name: Yes, but in order to do so you will first have to ask your bank, broker or other intermediary to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting, and hand it in with a signed ballot that you can request at the meeting. You will not be able to vote your shares at the meeting without a legal proxy and a signed ballot.
9.8.Can I vote my shares without attending the annual meeting?stockholders of record: record owners:Your shares cannot be voted unless a signed proxy card is returned, shares are voted using the Internet or the telephone, or other specific arrangements are made to have your shares represented at the meeting. You are encouraged to specify your choices by checking the appropriate boxes on the proxy card. Shares will be voted following your written instructions. However, it is not necessary to check any boxes if you wish to vote in accordance with the Board of Directorsβ recommendations; in that case, merely sign, date, and return the proxy card in the enclosed envelope, or if you received noticeNotice of Internet availabilityAvailability of proxy materials,Proxy Materials, follow the instructions on how to access the proxy materials and vote online.Plus Plan:In order to have the Trustee vote your shares as you direct, you must timely furnish your voting instructions over the Internet or by telephone by 12:01 a.m.Β EDT11:59Β p.m. ET on AprilΒ 23, 2018,28, 2024, or otherwise ensure that your card is signed, returned, and received by such time and date. If instructions are not received over the Internet or by telephone by 12:01 a.m.Β EDT11:59Β p.m. ET on AprilΒ 23, 2018,28, 2024, or if the signed card is not returned and received by such time and date, the IBM shares in the IBM Stock Fund under the IBM 401(k)Β Plus Plan will be voted by the Trustee in proportion to the shares for which the Trustee timely receives voting instructions, provided the Trustee determines such vote is consistent with its fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended.You If you are not voting your shares in person at the Annual Meeting, you must timely deliver your voting instructions to your respective bank, broker or other intermediary, following the specific instructions that have been provided to you by your bank, broker or other intermediary.9.stockholders of record:record owners: Yes. A proxy may be revoked at any time prior to the voting at the meeting by submitting a later-dated proxy (including a proxy via the Internet or by telephone) or by giving timely written notice of revocation to the Secretary of IBM.10.505005, Louisville, KY 40233-5005,43078, Providence, RI 02940-3078, or by telephoning 888-IBM-6700 (outside the United States, Canada, and Puerto Rico 781-575-2727).11.annual meeting?12.annual meeting,Annual Meeting, what topics will be discussed?13.annual meeting.Annual Meeting. What constitutes a quorum?14.2018,2024, there were 921,167,894916,744,848 shares of common stock outstanding and entitled to be voted.15.16.17.cast?18.meeting,Annual Meeting, how many shares are required to approve the proposals being voted upon in this proxy statement?DoΒ abstentions
RequiredDo
abstentions
count as
votes cast?β β Is broker
discretionary
voting
allowed?β VotecountΒ asdiscretionaryProposalrequiredvotesΒ cast?votingΒ allowed?β Majority of
votes castβ NoNo β No β Ratification of Appointment of PricewaterhouseCoopers LLP β Majority of
votes castβ NoNo β Yes β Management Proposal on βAdvisory Vote on Executive Compensation* β Majority of
votes castβ NoNo β No β Stockholder Proposals* β Majority of
votes castβ NoNo β No β
β19.Who tabulates the votes?Votes are counted by employees of Computershare Trust Company, N.A.,Β IBMβs transfer agent and registrar, and certified by the Inspectors of Election (who are employees of IVS Associates,Β Inc.).20.annual meeting?21.22.20192025 proxy material?20192025 proxy materialmaterials after the 20182024 Annual Meeting and must be received at our corporate headquarters no later than NovemberΒ 12, 2018.11, 2024. Proposals should be sent via registered, certified or express mail to: Office of the Secretary, International Business Machines Corporation, 1 New Orchard Road, Mail Drop 301, Armonk, NY 10504.23.2019 annual meeting?20192025 Annual Meeting of Stockholders (other than a proposal submitted for inclusion in IBMβs Proxy Statement), including nominations for election to the Board of Directors pursuant to the Companyβs proxy access by-law provision, must provide notice of such business to IBMβs Secretary no earlier than OctoberΒ 13, 201812, 2024 and no later than NovemberΒ 12, 2018,11, 2024, as set forth more fully in, and in compliance with, IBMβs by-laws.24. In addition, to comply with universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Companyβs nominees must also provide the additional information required by RuleΒ 14a-19 under the Securities Exchange Act of 1934 by no later than MarchΒ 1, 2025.annual report.Annual Report. How can I get one?1011 above). If you are not a stockholder of record and did not receive an Annual Report from your bank, broker or other intermediary, you must contact your bank, broker or other intermediary directly.
28.25.What is βhouseholdingβ and does IBM do this?26.27.28.noticeNotice of internet availabilityInternet Availability of proxy materials.Proxy Materials. What does this mean?stockholders of record owners, or a voting instruction form in the case of stockholders holding shares in street name), please follow the instructions included in your notice.29.I received my proxy materials in hard copy. How may I arrange to receive them electronically?To enroll for electronic delivery, go to our Investor Relations website athttp://www.ibm.com/investor/ and select βStockholder services,β scroll down to βConsent for materials online,β click on either βif you own stock directly in your nameβ or βif you own stock beneficially through a brokerage account,β and follow the instructions to enroll.30.stockholders of record: record owners:We will deliver promptly, upon written or oral request, a separate copy of these proxy materials. Contact our transfer agent, Computershare Trust Company, N.A. (address and phone number in Question 1011 above).31.Morrow Sodali LLC,Innisfree M&A Incorporated, to assist in soliciting proxies for a fee of approximately $45,000,$50,000, plus reasonable out-of-pocket expenses.
Christina M. MontgomeryIBMsupplementally, the company separates business results into operating and non-operating categories. Operating earnings from continuing operations is a non-GAAP measure that excludes the effects of certain acquisition-related charges, intangible asset amortization, expense resulting from basis differences on equity method investments, retirement-related costs, discontinued operationscertain impacts from the Kyndryl separation and their related tax impacts. ForDue to the fourth-quarter and full-year 2017, operating (non-GAAP) earnings also excludes a one-time charge associated withunique, non-recurring nature of the enactment of the U.S. Tax Cuts and Jobs Act (U.S. tax reform duereform), the company characterizes the one-time provisional charge recorded in the fourth quarter of 2017 and adjustments to itsthat charge as non-operating. Adjustments primarily include true-ups, accounting elections and any changes to regulations, laws, and audit adjustments that affect the recorded one-time charge. Management characterizes direct and incremental charges incurred related to the Kyndryl separation as non-operating given their unique and non-recurring nature. In 2022, these charges primarily related to any net gains or losses on the Kyndryl common stock and the related cash-settled swap with a third-party financial institution, which were recorded in other (income) and expense in the Consolidated Income Statement. As of NovemberΒ 2, 2022, the company no longer held an ownership interest in Kyndryl. For acquisitions, operating (non-GAAP) earnings exclude the amortization of purchased intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, and tax charges related to acquisition integration.integration and pre-closing charges, such as financing costs. These charges are excluded as they may be inconsistent in amount and timing from period to period and are dependent onsignificantly impacted by the size, type and frequency of IBMβsthe companyβs acquisitions. Given its unique and temporary nature, management has also characterized as non-operating expense, the mark-to-market impact on the foreign exchange call option contracts to economically hedge the foreign currency exposure related to the purchase price of the companyβs announced acquisition of StreamSets and webMethods from Software AG. The mark-to-market impact is recorded in other (income) and expense in the Consolidated Income Statement and reflects the fair value changes in the derivative contracts. All other spending for acquired companies is included in both earnings from continuing operations and in operating (non-GAAP) earnings. For retirement-related costs, IBMthe company characterizes certain items as operating and others as non-operating. IBMnon-operating, consistent with GAAP. The company includes defined benefit plan and nonpension postretirement benefit plan service cost, amortization of prior service costcosts, multi-employer plan costs and the cost of defined contribution plans in operating earnings. Non-operating retirement-related cost includescosts include defined benefit plan and nonpension postretirement benefit plan amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements including the one-time, non-cash, pre-tax settlement charge of $5.9Β billion ($4.4Β billion net of tax) in the third quarter of 2022 and multi-employer plan costs, pension insolvency costs and other costs. Non-operating retirement-related costs are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance, and IBMthe company considers these costs to be outside of the operational performance of the business.IBMthe company believes that supplementally providing investors with a view of operating earnings as described above provides increased transparency and clarity into both the operational results of the business and the performance of IBMβsthe companyβs pension plans; improves visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows IBMthe company to provide a long-term strategic view of the business going forward. IBMβsIn addition, these non-GAAP measures provide a perspective consistent with areas of interest the company routinely receives from investors and analysts. The companyβs reportable segment financial results reflect pre-tax operating earnings from continuing operations, consistent with IBMβsthe companyβs management and measurement system.IBMshare repurchaseshareholder return levels and strategic investments and assess its ability and need to incur and service debt. The entire free cash flow amount is not necessarily available for discretionary expenditures. IBMThe company defines free cash flow as net cash from operating activities less the change in Global Financing receivables and net capital expenditures, including the investment in software. A key objective of the Global Financing business is to generate strong returns on equity, and increasingour Financing receivables isare the basis for that growth. Accordingly, management considers Global Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency. Therefore, management includes presentations ofpresents both free cash flow and net cash from operating activities that exclude the effect of Global Financing receivables. Free cash flow guidance is derived using an estimate of profit, working capital and operational cash outflows. Since IBM views Global Financing receivables as a profit-generating investment which it seeksmaximize,growth rates at constant currency or adjusts such growth rates for currency, it is done so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of its business performance. Financial results adjusted for currency are calculated by translating current period activity in local currency using the comparable prior year periodβs currency conversion rate. This approach is used forconsidered when formulating guidance for free cash flow. As a result, IBM doesrepresent the amount of revenue recognized in the period and therefore is not estimate a GAAP Net Cash from Operations expectation metric.intended to represent current period revenue or revenue that will be recognized in future periods.tabletables below provides a reconciliationprovide reconciliations of the Companyβs income statement results as reported under GAAP to its operating earnings presentation, which is a non-GAAP measure.
ForΒ theΒ yearΒ endedΒ DecemberΒ 31,Β 2017
Related
Adjustments
Related
Adjustments
One-Time
Charge(1)
(Non-GAAP)β ($ in millions except per share amount)
For the year ended DecemberΒ 31, 2023β β GAAP β β Acquisition-
Related
Adjustmentsβ β Retirement-
Related
Adjustmentsβ β Tax
Reform
Impactsβ β Kyndryl
Related
Impactsβ β Operating
(Non-GAAP)β β Gross Profit β β β $ 34,300 β β β β $ 631 β β β β $ β β β β β $ β β β β β $ β β β β β $ 34,931 β β β Gross Profit Margin β β β β 55.4% β β β β β 1.0Pts β β β β β βPts β β β β β βPts β β β β β βPts β β β β β 56.5% β β β S,G&A β β β $ 19,003 β β β β $ (1,039) β β β β $ β β β β β $ β β β β β $ β β β β β $ 17,964 β β β Other (Income) & Expense* β β β β (914) β β β β β 10 β β β β β 39 β β β β β β β β β β β β β β β β β (866) β β β Total Expense & Other (Income) β β β β 25,610 β β β β β (1,029) β β β β β 39 β β β β β β β β β β β β β β β β β 24,620 β β β Pre-tax Income from Continuing Operations β β β β 8,690 β β β β β 1,660 β β β β β (39) β β β β β β β β β β β β β β β β β 10,311 β β β Pre-tax Income Margin from Continuing Operations β β β β 14.0% β β β β β 2.7Pts β β β β β (0.1)Pts β β β β β βPts β β β β β βPts β β β β β 16.7% β β β Provision for/(benefit from) Income Taxes** β β β $ 1,176 β β β β $ 368 β β β β $ (8) β β β β $ (95) β β β β $ β β β β β $ 1,441 β β β Effective Tax Rate β β β β 13.5% β β β β β 1.4Pts β β β β β 0.0Pts β β β β β (0.9)Pts β β β β β βPts β β β β β 14.0% β β β Income from Continuing Operations β β β $ 7,514 β β β β $ 1,292 β β β β $ (30) β β β β $ 95 β β β β $ β β β β β $ 8,870 β β β Income Margin from Continuing Operations β β β β 12.1% β β β β β 2.1Pts β β β β β 0.0Pts β β β β β 0.2Pts β β β β β βPts β β β β β 14.3% β β β Diluted Earnings Per Share: Continuing Operations β β β $ 8.15 β β β β $ 1.40 β β β β $ (0.03) β β β β $ 0.10 β β β β $ β β β β β $ 9.62 β β
β(1)Β Operating (non-GAAP) earnings excludesone-time chargegain of $5.5 billion associated with$12Β million on foreign exchange call option contracts related to the enactmentcompanyβs planned acquisition of U.S. tax reform due to its unique non-recurring nature.
ForΒ theΒ yearΒ endedΒ DecemberΒ 31,Β 2016
Related
Adjustments
Related
Adjustments
(Non-GAAP)
β
ForΒ theΒ yearΒ endedΒ DecemberΒ 31,Β 2015
Related
Adjustments
Related
Adjustments
(Non-GAAP)* The tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income.β ($ in millions except per share amount)
For the year ended DecemberΒ 31, 2022β β GAAP β β Acquisition-
Related
Adjustmentsβ β Retirement-
Related
Adjustments*β β Tax
Reform
Impactsβ β Kyndryl
Related
Impactsβ β Operating
(Non-GAAP)β β Gross Profit β β β $ 32,687 β β β β $ 682 β β β β $ β β β β β $ β β β β β $ β β β β β $ 33,370 β β β Gross Profit Margin β β β β 54.0% β β β β β 1.1Pts β β β β β βPts β β β β β βPts β β β β β βPts β β β β β 55.1% β β β S,G&A β β β $ 18,609 β β β β $ (1,080) β β β β $ β β β β β $ β β β β β $ β β β β β $ 17,529 β β β Other (Income) & Expense β β β β 5,803 β β β β β (3) β β β β β (6,548) β β β β β β β β β β β (351) β β β β β (1,099) β β β Total Expense & Other (Income) β β β β 31,531 β β β β β (1,083) β β β β β (6,548) β β β β β β β β β β β (351) β β β β β 23,549 β β β Pre-tax Income from Continuing Operations β β β β 1,156 β β β β β 1,765 β β β β β 6,548 β β β β β β β β β β β 351 β β β β β 9,821 β β β Pre-tax Income Margin from Continuing Operations β β β β 1.9% β β β β β 2.9Pts β β β β β 10.8Pts β β β β β βPts β β β β β 0.6Pts β β β β β 16.2% β β β Provision for/(benefit from) Income Taxes** β β β $ (626) β β β β $ 436 β β β β $ 1,615 β β β β $ 70 β β β β $ 0 β β β β $ 1,495 β β β Effective Tax Rate β β β β (54.2)% β β β β β 14.2Pts β β β β β 52.6Pts β β β β β 0.7Pts β β β β β 1.9Pts β β β β β 15.2% β β β Income from Continuing Operations β β β $ 1,783 β β β β $ 1,329 β β β β $ 4,933 β β β β $ (70) β β β β $ 351 β β β β $ 8,326 β β β Income Margin from Continuing Operations β β β β 2.9% β β β β β 2.2Pts β β β β β 8.1Pts β β β β β (0.1)Pts β β β β β 0.6Pts β β β β β 13.8% β β β Diluted Earnings Per Share: Continuing Operations β β β $ 1.95 β β β β $ 1.46 β β β β $ 5.41 β β β β $ (0.08) β β β β $ 0.38 β β β β $ 9.13 β β β ($ in millions except per share amount)
For the year ended DecemberΒ 31, 2021β β GAAP β β Acquisition-
Related
Adjustmentsβ β Retirement-
Related
Adjustmentsβ β Tax
Reform
Impactsβ β Kyndryl
Related
Impactsβ β Operating
(Non-GAAP)β β Gross Profit β β β $ 31,486 β β β β $ 719 β β β β $ β β β β β $ β β β β β $ β β β β β $ 32,205 β β β Gross Profit Margin β β β β 54.9% β β β β β 1.3Pts β β β β β βPts β β β β β βPts β β β β β βPts β β β β β 56.2% β β β S,G&A β β β $ 18,745 β β β β $ (1,160) β β β β $ β β β β β $ β β β β β $ (8) β β β β $ 17,577 β β β Other (Income) & Expense β β β β 873 β β β β β (2) β β β β β (1,282) β β β β β β β β β β β 126 β β β β β (285) β β β Total Expense & Other (Income) β β β β 26,649 β β β β β (1,162) β β β β β (1,282) β β β β β β β β β β β 118 β β β β β 24,324 β β β Pre-tax Income from Continuing Operations β β β β 4,837 β β β β β 1,881 β β β β β 1,282 β β β β β β β β β β β (118) β β β β β 7,881 β β β Pre-tax Income Margin from Continuing Operations β β β β 8.4% β β β β β 3.3Pts β β β β β 2.2Pts β β β β β βPts β β β β β (0.2)Pts β β β β β 13.7% β β β Provision for Income Taxes* β β β $ 124 β β β β $ 457 β β β β $ 251 β β β β $ (89) β β β β $ (37) β β β β $ 706 β β β Effective Tax Rate β β β β 2.6% β β β β β 5.2Pts β β β β β 2.8Pts β β β β β (1.1)Pts β β β β β (0.4)Pts β β β β β 9.0% β β β Income from Continuing Operations β β β $ 4,712 β β β β $ 1,424 β β β β $ 1,031 β β β β $ 89 β β β β $ (81) β β β β $ 7,174 β β β Income Margin from Continuing Operations β β β β 8.2% β β β β β 2.5Pts β β β β β 1.8Pts β β β β β 0.2Pts β β β β β (0.1)Pts β β β β β 12.5% β β β Diluted Earnings Per Share: Continuing Operations β β β $ 5.21 β β β β $ 1.57 β β β β $ 1.14 β β β β $ 0.10 β β β β $ (0.09) β β β β $ 7.93 β β IBMβs net cash flows which is presented on a consolidated basis, including activity from discontinued operations related to the separation of Kyndryl. Free cash flow and operating activitiescash flow are non-GAAP measures.β ($ in billions)
For the year ended DecemberΒ 31:β β 2023 β β 2022* β β 2021 β β Net cash from operating activities per GAAP** β β β $ 13.9 β β β β $ 10.4 β β β β $ 12.8 β β β Less: the change in Financing receivables β β β β 1.2 β β β β β (0.7) β β β β β 3.9 β β β Net cash from operating activities, excluding Financing receivables β β β β 12.7 β β β β β 11.2 β β β β β 8.9 β β β Capital expenditures, net β β β β (1.5) β β β β β (1.9) β β β β β (2.4) β β β Free Cash Flow+ β β β β 11.2 β β β β β 9.3 β β β β β 6.5 β β β Acquisitions β β β β (5.1) β β β β β (2.3) β β β β β (3.3) β β β Divestitures β β β β (0.0) β β β β β 1.3 β β β β β 0.1 β β β Dividends β β β β (6.0) β β β β β (5.9) β β β β β (5.9) β β β Non-Financing Debt β β β β 5.5 β β β β β 1.9 β β β β β (1.2) β β β Other (includes Financing receivables and Financing debt)++ β β β β (1.0) β β β β β (2.9) β β β β β (3.0) β β β Change in cash, cash equivalents and short-term marketable securities β β β $ 4.6 β β β β $ 1.3 β β β β $ (6.7) β β its free cash flow,revenue adjusting for constant currency (@CC), which is a non-GAAP measure.
ForΒ theΒ yearΒ endedΒ DecemberΒ 31,β β β β 2023 β β β β β GAAP β β @CC β β Reconciliation of Revenue Growth Rates: β β β β β β β β β β β β β β Software β β β β 5% β β β β β 5% β β β Hybrid Platform & Solutions β β β β 5% β β β β β 5% β β β Red Hat β β β β 9% β β β β β 9% β β β Consulting β β β β 5% β β β β β 6% β β β β β β GAAP β β @CC β β Reconciliation of Total Revenue Growth Rates: β β β β β β β β β β β β β β 2023 β β β β 2.2% β β β β β 2.9% β β β 2022 β β β β 5.5% β β β β β 11.6% β β β 2021 β β β β 3.9% β β β β β 2.7% β β * Β Β Β Reclassified![[MISSING IMAGE: px_ibmproxy1pg01-bw.jpg]](/files/DEF 14A/0001104659-24-032641/px_ibmproxy1pg01-bw.jpg)
reflect adoptionwww.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 29, 2024, for shares held directly and by 11:59 p.m. Eastern Time on April 28, 2024, for shares held in the FASB guidance on stock-based compensation of $0.1 billion and $0.2 billion for the years ended DecemberΒ 31, 2016 and 2015, respectively.** 116% excluding the one-time charge of $5.5 billion associated with the enactment of U.S. tax reform in 2017.Corporate Responsibility & Sustainability at IBMΒ·Under the guidance and supervision of the Board,Β IBM pursues the highest standards of corporate responsibility and sustainability, from how we support, protect and empower our employees, to how we work with our clients, to how we govern the Company and connect to our communities.Β·Our corporate responsibility efforts reflect our expansive footprint and span environmental leadership, social responsibility, innovation and a culture of ethics and integrity that promotes transparency.Β·For the past 27 consecutive years,Β IBM has voluntarily published a Corporate Environmental Report providing detailed information on our environmental programs and performance. IBMβs uninterrupted annual publication of this report since 1990 is unsurpassed across our industry.Corporate CitizenshipΒ·Created the P-TECH 9-14 school model β a pioneering education reform model to provide young people with the skills required for βNew Collarβ jobs; 120 schools around the world anticipated by the fall of 2018Β·Introduced Teacher Advisor with Watson β a groundbreaking effort to strengthen teacher instruction through cognitive computing with nearly 10,000 teachers registered in the first 6 months of public availabilityΒ·More than 4,000 IBMers have served in IBM Corporate Service Corps, delivering $70M of expertise to communities in 40 countriesΒ·IBMers have contributed nearly 21 million volunteer hours since 2003Β·Recognition includes: CR Magazine 100 Best Corporate Citizens; Forbes Just 100 Americaβs Best Corporate Citizens; Fortune Change the World list; Points of Light The Civic 50Supporting the IBMerΒ·From our in-house platform using cognitive computing to meet IBMersβ professional education needs to an exemplary well-being management system,Β IBM supports, protects and empowers its employeesΒ·Β Β Β Β Β Expansive family leave provides new birth mothers with up to 20 weeks of paid leave and 12 weeks for fathers, partners and adoptive parentsΒ·Β Β Β Β Β 2018 Catalyst Award for leadership in building a workplace that values diversity and inclusionΒ·Β Β Β Β Β U.S. Business Leadership Network 2017 Employer of the Year for People with DisabilitiesΒ·Β Β Β Β Β Working Mother Media 2017 Top Ten Company for Working MothersΒ·Β Β Β Β Β Victory Media 2018 Military Friendly Employer of the YearΒ·Β Β Β Β Β Perfect score on the Human Rights Campaignβs Corporate Equality Index for 15 consecutive years
EnvironmentΒ·Demonstrably committed to environmental leadership for over four decadesΒ·IBMβs Green Horizon initiative harnesses the power of cognitive computing and the Internet of Things (IoT) to help fight air pollution in China; research collaborations with governments in India and South Africa are also leveraging this technology to combat air pollutionΒ·In 1997, became the 1stΒ major company to achieve a single global registration to the ISO 14001 standard for Environmental Management Systems; 2017 marks 20 years of executionΒ·1stΒ and only company to win the Climate Leadership Award (from The Climate Registry and the Center for Climate and Energy Solutions) 6 times in the programβs 7-year tenureΒ·More than 40% of electricity consumed during 2016 came from renewable sourcesΒ·Over 38% reduction in CO2Β emissions since 2005Supply ChainΒ·With about 11,000 supplier locations worldwide, our upstream focus on social and environmental responsibility has far-reaching positive impactsΒ·Recognized leader with nearly 50 years of growing the diversity of our supply chainΒ·Endorses the Responsible Business Alliance (RBA) Code of Conduct for its global operations and requires direct suppliers to comply with this codeΒ·Collaborates with industry groups to drive supply chain improvements in areas such as worker well-being and responsible sourcing of mineralsIBMβs corporate responsibility report, which is available at https://www.ibm.com/ibm/responsibility/, gives a comprehensive look at all of these initiatives, as well as information on other Company-wide sustainability programs and practices. Our Corporate Environmental Report, published in JuneΒ 2017, is available at https://www.ibm.com/ibm/environment/annual/reporting.shtml.Letβs putsmartto work.
MMMMMMMMMMMM . Admission Ticket MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Instead of mailing401(k) Plan. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic Voting Instruction Form.During The Meeting - Go to www.virtualshareholdermeeting.com/IBM2024You may choose one ofattend the twomeeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting methods outlined belowinstructions. Vote by 11:59 p.m. Eastern Time on April 29, 2024, for shares held directly and by 11:59 p.m. Eastern Time on April 28, 2024, for shares held in the 401(k) Plan. Have your proxy card in hand when you call, and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to vote.Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote by telephone or the Internet, please DO NOT mail back this proxy card. MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by Internet β’ Log on to: www.ibm.com/investor/vote Vote by telephone β’ Within USA, US territories & Canada, call toll-free 1-800-652-VOTE (8683) on a touch tone telephone. There is NO CHARGE to you for the call. β’ Outside USA, US territories & Canada, call 1-781-575-2300 on a touch tone telephone. Standard rates will apply. β’ Follow the instructions provided by the recorded message. Mark your votes with an X as shown in this example. Please do not write outside the designated areas. 1234 5678 9012 345 q IF YOU HAVE NOT VOTED VIA THE INTERNETProxy Card. TO VOTE, MARK BLOCKS BELOW IN BLUE OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACHBLACK INK AS FOLLOWS:V28926-P04943KEEP THIS PORTION FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THE BOTTOMTHIS PORTION IN THE ENCLOSED ENVELOPE. q PROXY/VOTING INSTRUCTION CARD SIGNED PROXIES RETURNED WITHOUT SPECIFIC VOTING DIRECTIONS WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORSβ RECOMMENDATIONS. + Abstain IBMβsONLYINTERNATIONAL BUSINESS MACHINES CORPORATIONIBM's Directors recommend a vote FOR each director (please mark your vote for each director separately). 1. Election.1.Election of Directors for a Term of One Year Nominees:For Against Abstain For Against Abstain For Against Abstain For Against 01 - K. I. Chenault 02 - M. L. Eskew 03 - D.Abstain1a.Marianne C. Brown!!!1b.Thomas Buberl!!!1c.David N. Farr 04 - A. Gorsky 05 - S. A. Jackson 06 - A.Farr!!!1d.Alex Gorsky!!!1e.Michelle J. Howard!!!1f.Arvind Krishna!!!1g.Andrew N. Liveris 07 -Liveris!!!1h.F. William McNabb III!!!1i.Michael Miebach!!!1j.Martha E. Pollack!!!1k.Peter R. Voser!!!1l.Frederick H. S. Olayan 08 - J.Waddell!!!1m.Alfred W. Owens 09 - V. M. Rometty 10 - J. R. Swedish 11 - S. Taurel 12 - P. R. Voser 13 - F. H. Waddell IBMβsZollar!!! IBM's Directors recommend a vote FOR Proposalsproposals 2 and 3. For Against Abstain ForAgainst Abstain 2. Ratification3.2.Ratification of Appointment of Independent Registered Public Accounting Firm 3. Advisory3.Advisory Vote on Executive Compensation IBMβsIBM's Directors recommend a vote AGAINST Proposalsproposals 4, 5, 6, 7 and 6. ForAgainst Abstain ForAgainst Abstain 4. Stockholder8.4.Stockholder Proposal Requesting a Public Report on Lobbying Disclosure 5. StockholderActivities 5.Stockholder Proposal Requesting a Public Report on Shareholder AbilityCongruency in China Business Operations and ESG Activities 6.Stockholder Proposal Requesting a Right to CallAct by Written Consent 7.Stockholder Proposal Requesting a Special Shareholder Meeting 6. StockholderPublic Report on Climate Lobbying 8.Stockholder Proposal to Have an IndependMent BoarMd ChairmMan MMMM C 1234567890 J N T 1 6 4 7 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X 3 6 002CSP0080 02QPSE MMMMMMMMM C B A X IMPORTANT ANNUAL MEETING INFORMATION
. Annual Meeting Admission Ticket This is your admission ticket![[MISSING IMAGE: px_ibmproxy1pg02-bw.jpg]](/files/DEF 14A/0001104659-24-032641/px_ibmproxy1pg02-bw.jpg)
Stockholders to be held on Tuesday, April 24, 2018, at 10 a.m. at the Hyatt Regency Milwaukee, 333 West Kilbourn Avenue, Milwaukee, WI 53203. Stockholders must have a ticket for admission to the meeting. This ticketStockholdersThis proxy is issued to the stockholder whose name appears on it and is non-transferable. PLEASE DETACH AND PRESENT THIS TICKET AND PHOTO IDENTIFICATION FOR ADMISSION TO THE ANNUAL MEETING. CAMERAS, CELLULAR PHONES, RECORDING EQUIPMENT AND OTHER ELECTRONIC DEVICES WILL NOT BE PERMITTED AT THE MEETING. Dear IBM Stockholder: Your vote is important. Please read both sides of the attached 2018 IBM Proxy/Voting Instruction Card. You can vote your shares through the Internet, by telephone, or by marking, signing and returning your card. If you vote through the Internet or by telephone, there is no need to mail your card. You are invited to attend the Annual Meeting of Stockholders on Tuesday, April 24, 2018, at 10 a.m. at the Hyatt Regency Milwaukee, 333 West Kilbourn Avenue, Milwaukee, WI 53203. If you plan to attend the Annual Meeting, you should either mark the box provided below on the proxy card, or signify your intention to attend when you access the Internet or telephone voting system. We urge you to vote your shares. Thank you very much for your cooperation and continued loyalty as an IBM Stockholder. Christina M. Montgomery Vice President and Secretary q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy Solicitedsolicited by the Board of Directors for the Annual Meeting of Stockholders β April 24, 2018 Virginia M. Rometty,DirectorsArvind Krishna, James J. Kavanaugh, Michelle H. Browdy and Christina M. Montgomery,Frank Sedlarcik, or any of them with the power of substitution, are hereby appointed Proxies of the undersigned to vote all common stock of International Business Machines Corporation owned on the record date by the + undersigned at the Annual Meeting of Stockholders to be held virtually via www.virtualshareholdermeeting.com/IBM2024 at the Hyatt Regency Milwaukee, 333 West Kilbourn Avenue, Milwaukee, WI 53203, at 10 a.m.1:00 p.m. Eastern Time on Tuesday, April 24, 2018,30, 2024, or any adjournment or postponement thereof. THEthereof.THE PROXIES WILL VOTE USING THE DIRECTIONS PROVIDED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN THISRETURNTHIS PROXY, BUT DO NOT PROVIDE SPECIFIC DIRECTION WITH RESPECT TO A VOTING ITEM, THIS PROXY WILL BE VOTED WITH RESPECT TO SUCH ITEM AS RECOMMENDED BY THE BOARD OF DIRECTORS. THE PROXIES ARE ALSO AUTHORIZED TO VOTE UPON ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF, UTILIZING THEIR OWN DISCRETION AS SET FORTH IN THE NOTICE OF 2018THE 2024 ANNUAL MEETING AND PROXY STATEMENT. THISSTATEMENT.THIS CARD WILL ALSO BE USED TO PROVIDE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANY SHARES OF COMMON STOCK OFSTOCKOF INTERNATIONAL BUSINESS MACHINES CORPORATION HELD IN THE IBM STOCK FUND INVESTMENT ALTERNATIVE UNDER THE IBM 401(k) PLUS PLAN ON THE RECORD DATE, AS SET FORTH IN THE NOTICE OF 20182024 ANNUAL MEETING AND PROXY STATEMENT. UNLESSSTATEMENT.UNLESS YOU USE THE INTERNET OR THE TELEPHONE TO VOTE YOURTHESE SHARES, YOU MUST SIGN AND RETURN THIS PROXY IN ORDER FOR YOURTHESE SHARES TO BE VOTED. (Shares willContinued and to be voted as directed if this card is: 1. signed and returned or 2. shares are voted over the Internet or by telephone or 3. other specific arrangements are made to have the shares represented at the meeting.) Please date and sign below, and return this card in the enclosed envelope, or you may vote by using the Internet or telephone. Date (mm/dd/yyyy) β Please print date below. Signature(s) β Please keep signature(s) within the box. + IF VOTING BY MAIL, YOU MUST DATE, SIGN AND RETURN THIS CARD. D Mark the box if you plan to attend the Annual Meeting.
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