UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549
SCHEDULE 14A

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International Business Machines Corporation
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Armonk, New York

March 7, 2022
11, 2024
Dear Fellow Stockholders:
On behalf of the IBM Board of Directors, you are cordially invited to attend the Annual Meeting of Stockholders on Tuesday, April 26, 2022.30, 2024.
GROWING IBMTechnology and Expertise
IBM’s performance over the last two years, our improving trajectory, and return to shareholders over the last twelve months, make me optimistic about IBM’s future. We have an unwavering commitment to our clients’ success. We have refined our portfolio, expanded our ecosystem of partners, and enhanced productivity throughout IBM.
I am proud of the innovations we are bringing to market in AI and hybrid cloud. In 2023, we launched watsonx, IBM’s flagship AI and data platform. Designed to manage the past year, we madefull lifecycle of AI for business, watsonx represents a series of decisive movesleap forward in our ability to supportdeliver end-to-end AI solutions. IBM’s 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.
Watsonx is one example of how we are quickly transforming research into commercial applications. We also continued to enhance IBM Z and AI strategy. We spun off Kyndryl. We launched IBM Consulting. We closed 15 acquisitions. We delivered new digital capabilities and innovations. We broadened our ecosystem and accelerated changes in our go-to-market model.Ops solutions. And we continuedunveiled our Quantum Heron processor, which improved the performance, efficiency, and scalability of the newly deployed IBM Quantum System Two. IBM also expanded our portfolio through strategic acquisitions, underscoring our commitment to instill a more client-centric corporate culture.invest in the success of our clients.
These changesOur innovations and financial momentum are taking hold and our strategy is strongly resonating among clients.enabling IBM is now a nimbler, more focused and more technologically capable company that can better help clients predict, automate, secure, and modernize their business. For these reasons, we are well positioned to deliver growth this year and greater value to you, our stockholders.
EXPANDING ENGAGEMENT WITH OUR STOCKHOLDERSEngaging with our Stockholders
Stockholder engagement is a core IBM value. Our investor outreach program runs year-round, engaging stockholders on a wide variety of topics. The feedback we receive during our year-round engagement is integral to the Board’s decision-making process and informs important practices and policies inpolicies. This ongoing engagement is a cornerstone of our corporate governance, executive compensationcommitment to transparency and ESG programs.accountability.
Following last year’s negative Say on Pay vote, we expanded our investor outreach program to fully take into account your feedback and concerns about our pay programs and practices. I once again participated in these outreach efforts, along with our independent lead directorLead Director Alex Gorsky and members of our senior management. You will see the feedback we incorporated intoOur conversations have directly influenced our executive compensation programstrategic decisions and practices from this outreach reflected in this Proxy Statement on pages 5 and 34.governance practices. We are committed to listening to our investors and ensuring theiryour interests remain a priority.priority, and we pride ourselves on being responsive to shareholder concerns.
LEADING IN ENVIRONMENTAL AND SOCIAL RESPONSIBILITY
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Corporate socialTrust and Transparency
At IBM, we are aware of the profound impact technologies like AI will have on business and society. We bear a significant responsibility has been a hallmark of IBM’s cultureto develop technologies ethically and to deploy them with trust and transparency. Our efforts in building powerful AI governance into watsonx, advocating for smart AI regulation, and forming the AI Alliance with more than a century. Today we continue70 other organizations, reflect our commitment to pursue the highest standards of corporate social responsibility. This is reflected in how we empower employees, work with clientsopen, safe, and our ecosystem of partners, and run our company.responsible AI.
We are proud of our long history of environmental leadership and in 2021 we set a new goal of net zero greenhouse emissions by 2030. In 2021, we also launched the IBM Environmental Intelligence Suite to help clients leverage data and AI to measure, monitor, and predict environmental outcomes, assess climate risk, and simplify ESG reporting. And more recently, we acquired Envizi, a leading data and analytics software provider for environmental performance, that builds on IBM’s AI-powered software.
Talent is everywhere; training opportunities are not. To help address this issue, we have committed to providing 30 million people with new skills by 2030. This will expand access to digital skills and employment opportunities so that more people —  regardless of their background — can participate in and take advantage of the digital economy.
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This past year, we published our Diversity & Inclusion Report, which allows us to be more transparent about the progress we continue to make. We also added a diversity modifier to our executive compensation program metrics to continue to reinforce senior management’s focus on improving the diverse representation of our workforce, as you will see on pages 36 and 37.
NEW INDEPENDENT LEAD DIRECTOR
Finally, this year, Mike Eskew is retiring from the Board. He served as IBM’s inaugural independent Lead Director, Chair of the Audit Committee and provided strong leadership and valuable insights as a Director. The Board and I would like to thank him for his many contributions in service of IBM and its stockholders and wish him well in retirement.
To succeed Mike, the independent members of your Board of Directors selected Alex Gorsky as independent Lead Director. Given Alex’s global business, technology, leadership, and board experience, we are confident he will excel in this role.
As we approach the Annual Meeting of Stockholders, I am incredibly proud of the progress IBMers have achievedmade to advance our business and help our clients thrive. And I am even more optimistic for what lies ahead.
On behalf of the Board of Directors, thank you for your continued investment and support of IBM.
Very truly yours,
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Arvind Krishna

Chairman of the Board




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Armonk, New York

March 7, 2022
11, 2024
A Message from our Lead Director:
20212023 was a pivotalan important year of growth for our Company and its stakeholders. I am honored to be writing for the first time asCompany. As IBM’s independent Lead Director, and I am pleased to report that IBM is well-positioned for continued success in 2024. Allow me to further share my perspective on our work over the past year and highlight how the Board continues its efforts to ensure effective oversight of your Company.


New Independent Board Leadership. As you will see in this Proxy Statement, Mike Eskew will retire from the Board and will not stand for re-election at the Annual Meeting of Stockholders. As your first independent Lead Director, Mike served with distinction and integrity, leaving a legacy of thoughtful, engaging, and independent leadership. On behalf An essential component of the Board we are incredibly grateful to Mike for his contributions to and leadership of your Board.
structure is independent leadership. As your new independent Lead Director, I am responsible for helping to ensure thatensuring the Board exercises prudent judgment, independent from the management team of the Company. As described further in this Proxy Statement, I commit to you that I will faithfully execute my responsibilitiesperform many duties to ensure independent and effective oversight.oversight, including presiding over an executive session at each Board meeting without management present and leading the Board’s annual self-evaluation process.

Building a Diverse
The IBM Board. We are continuously focused on ensuring that IBM has an optimal Board structure and composition, and have refreshed more than half the Board is comprised ofin the last five years. This proactive and strategic approach to Board refreshment has brought fresh perspectives and a diverse mixdiversity of skills backgrounds and perspectives. 2021 was no different.experience. Since the last Annual Meeting, we have welcomed Michael Miebach and Marianne C. Brown to the Board welcomed Alfred W. Zollar. As you will read, Al hasBoard. Both Michael and Marianne have deep global technology and business leadership experience including as a director of Red Hat, that will serve as an asset tobenefit stockholders and your Board in the years to come. They add to a Board that is a diverse group of global thought and business leaders with a wide array of technology, strategic, and business skills and experience in areas including artificial intelligence, hybrid cloud, and cybersecurity.
In the last three years, we have continued to add strong technical skills, including cybersecurity, artificial intelligence,
Oversight of Strategy and hybrid cloud, as well gender and ethnic diversity to your Board.

Strategic Oversight.Risk. Your Board believes that engaged oversight of Company strategy is essential to the Company’s creation of long-term sustainable value. Throughout 2021, we werePart of this responsibility is ensuring the Board is actively engaged asassessing and overseeing both current and emerging risk. Anticipating for and factoring risks into IBM’s strategy allows IBM continued to accelerate its hybrid cloudbe both prepared and AI strategy. This includes the completed separation of the managed infrastructure services business, investment in the development of new technologies, and the acquisition of strategic businesses. In 2022, we remain focused on the growth of IBMagile as a leading hybrid cloud and AI company.


Say on Pay and EnhancedRobust Stockholder Engagement. Engagement with you, IBM’s owners, is an essential part ofa core IBM value and integral to the Board’s decision-making process. The feedback we receive during our year-round engagement informs important practices and policies in areas ranging from corporate governance to executive compensation. We are committed to an open dialogue to ensureensuring that your voices are heard. In 2021,heard, and in turn, to responsive action. For example, in 2023, responsive to stockholder feedback, we expanded the reach ofenhanced our engagement program to ensure that we captured your input following our negative Say on Pay vote at the 2021 Annual Meeting. We offered engagement to investors representing 55% of the shares that voted at the 2021 Annual Meeting, meeting with more than 35% of the shares that voted. The independent Lead Director, together with the Chairmandisclosure regarding trade associations and CEO and other senior management, met with more than 26% of the shares that voted. What we heard is that while investors are strongly supportive of the overall design of our compensation program, they were concerned with the one-time retention award to IBM’s former president.adopted a director overboarding policy.
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We heard you and you will see your feedback reflected in this year’s compensation disclosure at page 34. Notably, no one-time award was granted to a named executive officer in 2021.

Commitment to SustainabilityCorporate Responsibility and an Ethical Business Culture. We also heard from stockholders thatknow you value IBM’s legacylong-standing pursuit of the highest standards of corporate responsibility, trust and transparency. Thetransparency, and the Company’s balanced viewpoint. These are guiding values that differentiate IBM’s approach to its business, including AI, which we believe must be trustworthy, transparent, and explainable. Your Board agrees and is actively engaged in overseeing the Company’s ESG efforts in these areas and providing disclosure of our progress. You will find on page 37 of this Proxy Statement the results of the diversity modifier the Board added to our executive compensation program to reinforce senior management’s focus on improving the diversity of the Company’s workforce. In 2022, we will also continue our decades long practice of disclosing the Company’s progress, against its environmental goals, including net zero greenhouse gas emissions by 2030. You can read more in the dedicated “Environmental and Social Responsibility” section of this Proxy Statement.annual IBM Impact Report.
Your Board believes that an ongoing commitment to good corporate governance enhances sustainable stockholder value, particularly over the long term.
We appreciate your investment in IBM and hope that you vote at our Annual Meeting on April 26, 2022.30, 2024.
Very truly yours,
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Alex Gorsky

Lead Director




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Table of Contents
Proxy Summary3
6
IBM Board of Directors
5
IBM Board of Directors
1. Election of Directors for a Term of One Year
Governance and the Board
16
18
1920
2321
2425
2426
2526
27
IBM Impact
20212023 Executive Compensation
3132
3233
48
5148
5251
5552
5755
6056
6459
62
65
Report of the Audit Committee of the Board of Directors
6967
2. Ratification of Appointment of Independent Registered Public Accounting Firm
3. Management Proposal on Advisory Vote on Executive Compensation (Say
(Say
on Pay)
4. Stockholder Proposal Requesting a Public Report on Stockholder Special Meeting RightLobbying Activities
5. Stockholder Proposal to Have an Independent Board ChairmanRequesting a Public Report
on Congruency in China Business Operations and ESG
Activities
6. Stockholder Proposal Requesting a Public Report on the Use of Concealment ClausesRight to Act by
Written Consent
8075
8377
ESG HIGHLIGHTS
Frequently Asked Questions
At IBM, trust and corporate responsibility are integral to
our business — and our ESG efforts are reflected throughout this Proxy Statement. Key topics include:
79
Appendix A – Non-GAAP Financial Information and Reconciliations

2024 Notice of Annual Meeting & Proxy Statement 1



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20222024 Notice of Annual Meeting

and Proxy Statement
Items of Business:
The Annual Meeting of Stockholders of International Business Machines Corporation will be held on Tuesday, April 26, 202230, 2024 at 10 a.m.1:00 p.m. Eastern Time in a virtual format. The items of business are:
1.Election of directors proposed by IBM’s Board of Directors for a term of one year, as set forth in this Proxy Statement.
2.Ratification of the appointment of PricewaterhouseCoopers LLP as IBM’s independent registered public accounting firm.
3.Advisory vote on executive compensation.
4.ThreeFive stockholder proposals, if properly presented at the meeting.
These items are more fully described in the following pages, which are a part of this Notice.
Stockholders of record can vote their shares by using the Internet or the telephone. Instructions for using these convenient services are set forth on the proxy card or the 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.
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Frank Sedlarcik

Vice President and Secretary
Date:April 26, 202230, 2024
Time:10 a.m.1:00 p.m. Eastern Time
Virtual

Meeting
Site:
www.virtualshareholdermeeting.com/
IBM2022IBM2024
Your vote is important.
Please vote by following the instructions on
your proxy card or voting instruction form.
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Your vote is important.
Please vote by following the instructions on
your proxy card or voting instruction form.
To express our appreciation for your
participation, IBM will make a $1 charitable donation to Opportunity@WorkWorld Food Program USA on behalf of
every stockholder account that votes this year.
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Opportunity@Work aimsWorld Food Program USA proudly supports the mission of the United Nations World Food Programme by mobilizing resources and advocacy to rewiretransform food assistance into a lifeline for peace, stability, and prosperity in the U.S. labor market so workers Skilled Through Alternative Routes (STARs) can work, learnaftermath of conflict, disasters, and earn to their full potential.climate change.
The proxy materials, including this Proxy Statement, the IBM 20212023 Annual Report, which includes the consolidated financial statements, and the proxy card, or the noticeNotice of Internet availabilityAvailability of proxy materials,Proxy Materials, as applicable, are being distributed beginning on or about March 7, 202211, 2024 to all stockholders entitled to vote.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on April 26, 2022:30, 2024: the Proxy Statement and the Annual Report to Stockholders are available at www.ibm.com/investor/material/.
Websites throughout this Proxy Statement are provided for reference only. Websites referred to herein are not incorporated by reference into this Proxy Statement.
202222024 Notice of Annual Meeting & Proxy Statement1





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Proxy Summary
Voting MattersStockholders will be asked to vote on the following matters at the Annual Meeting:
Items of BusinessBoard’s recommendationWhere to find details
1.Election of 1213 DirectorsFOR all nomineesP. 10-1511-17
2.Ratification of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting FirmFORP. 7068
3.Advisory Vote on Executive Compensation (Say on Pay)FORP. 7169
4.Stockholder Proposal Requesting a Public Report on Lobbying ActivitiesAGAINSTP. 70-72
5.Stockholder Special Meeting RightProposal Requesting a Public Report on Congruency in China Business Operations and ESG ActivitiesAGAINSTP. 72-73
5.6.Stockholder Proposal Requesting a Right to Have an Independent Board ChairmanAct by Written ConsentAGAINSTP. 74-7673-75
6.7.Stockholder Proposal Requesting a Public Report on the Use of Concealment ClausesClimate LobbyingAGAINSTP. 77-7975-76
8.Stockholder Proposal Requesting the Adoption of Greenhouse Gas Emissions TargetsAGAINSTP. 77-78
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What’s new?
We continue to enhance our governance, compensation, and sustainability practices and disclosures. Among many other items, since last year, IBM has:


Enhanced our disclosure regarding trade associations

Adopted a director overboarding policy

Continued to publish our annual IBM Impact Report, sharing IBM’s progress towards our corporate responsibility commitments and performance

Continued our commitment to active Board refreshment, adding technical experience and diversity with the addition of Alfred W. Zollar in 2021

Provided enhanced Board diversity disclosure

Introduced Stock Options to ensure a portion of equity granted to executives does not generate value unless IBM’s stock price increases

Disclosed the 2021 diversity modifier results in the 2021 Annual Incentive Program section

Beat, by five years, our ambitious goals to reduce carbon emissions and procure electricity from renewable sources

Announced a new goal to skill 30 million people of all ages with new skills for the jobs of tomorrow by 2030, committing to collaborate with universities and government agenciesPerformance Share Unit metrics that were established in 2021, reflecting IBM’s continued focus on underserved youth, womenrevenue and military veteransfree cash flow to align with shareholder value
Governance Highlights
Effective Board leadership, independent oversight and strong corporate governance


Independent Lead Director with robust and well-defined responsibilities


Committee sessions with key strategic leaders from senior management

Annual Board self-evaluations led by the independent Lead Director

Executive session led by the independent Lead Director at each Board meeting


Proactive Board and Committeecommittee refreshment with focus on diversity and the optimal mix of skills and experience


Annual review of the Board leadership structure


Confidential voting

Director overboarding policy NEW
Stockholder rights and accountability


Annual election of all directors


Majority voting for directors in uncontested elections


Stockholder special meeting right


Proxy access


No stockholder rights plan


No supermajority voting provisions


Robust year-round stockholder engagement process


Signatory of Commonsense Principles 2.0


Endorser of Investor Stewardship Group Principles


Signatory to the Business Roundtable Statement on the Purpose of a Corporation


Stockholder right to remove directors
220222024 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

3



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IBM Board of Directors(PAGE 7)
Director Nominees
IBM’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders.
DirectorAgePrimary Occupation
Director
Since
Committee
Memberships
Audit
Committee
Financial
Expert
DirectorAgePrimary OccupationDirector
Since
Committee
Memberships
Audit
Committee
Financial
Expert
Thomas Buberl48Chief Executive Officer, AXA S.A.2020
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Marianne C. Brown65Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc.2023
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David N. Farr67Retired Chairman and Chief Executive Officer, Emerson Electric Co.2012
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Thomas Buberl50Chief Executive Officer, AXA S.A.2020
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Alex Gorsky61Executive Chairman and Retired Chief Executive Officer, Johnson & Johnson2014
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David N. Farr69Retired Chairman and Chief Executive Officer, Emerson Electric Co.2012
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Michelle J. Howard61Retired Admiral, United States Navy2019
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Alex Gorsky63Former Chairman and Chief Executive Officer, Johnson & Johnson2014
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Arvind Krishna59Chairman and Chief Executive Officer, IBM2020
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Michelle J. Howard63Retired Admiral, United States Navy2019
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Andrew N. Liveris67Retired Chairman and Chief Executive Officer, The Dow Chemical Company2010
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Arvind Krishna61Chairman and Chief Executive Officer, IBM2020
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F. William McNabb III64Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc.2019
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Andrew N. Liveris69Retired Chairman and Chief Executive Officer, The Dow Chemical Company2010
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Martha E. Pollack63President, Cornell University2019
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F. William McNabb III66Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc.2019
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Joseph R. Swedish70Retired Chairman, President and Chief Executive Officer, Anthem, Inc.2017
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Michael Miebach56Chief Executive Officer, Mastercard Incorporated2023
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Peter R. Voser63Retired Chief Executive Officer, Royal Dutch Shell plc, and Chairman, ABB Ltd.2015
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Martha E. Pollack65President, Cornell University2019
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Frederick H. Waddell68Retired Chairman and Chief Executive Officer, Northern Trust Corporation2017
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Peter R. Voser65Retired Chief Executive Officer, Royal Dutch Shell plc, and Chairman, ABB Ltd.2015
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Alfred W. Zollar67Executive Advisor, Siris Capital Group, LLC2021
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Frederick H. Waddell70Retired Chairman and Chief Executive Officer, Northern Trust Corporation2017
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Number of meetings held in 202111870Alfred W. Zollar69Executive Advisor, Siris Capital Group, LLC2021
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Number of meetings held in 202310480
Audit:
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Directors and Corporate Governance:
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Executive Compensation and Management Resources:
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Executive:
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Audit Committee Financial Expert:
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202242024 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary3





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Optimal Mix of Skills and Experience of Director Nominees
IBM’s directors collaboratively contribute significant experience in the areas most relevant to overseeing the Company’s business and strategy.
The skills and experience of our boardBoard include, but isare not limited to:


Industry leaders with deep executive and oversight experience;


Global operational experience to oversee a business of IBM’s scale, scope, and complexity;


Technology, cybersecurity and digital transformation experience;


Key insight into IBM’s regulatory environment; and


Diversity of backgrounds and experiencesexperiences.
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Active Board Refreshment
2019202020212023
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Michelle J.
Howard
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F. William
McNabb
III
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Martha E.
Pollack
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Thomas
Buberl
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Arvind
Krishna
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Alfred W.
Zollar
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Michael
Miebach
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Marianne C.
Brown
Policy expertise and technology experience with a cybersecurity focusGlobal business, corporate governance and technology experienceResearch leadership and technology experience, including artificial intelligenceGlobal business experience and expertise leading digital transformationsGlobal business and organizational leadership experience and deep technology expertiseDeep technology experience in systems and softwareGlobal business and technology experience, including digital transformation, cybersecurity and data-driven insightsGlobal business and technology experience, including financial services, systems, and software
Independent and Diverse Board
[MISSING IMAGE: tm2122634d2-tbl_boardnewpn.jpg]The Board includes directors who have a deep understanding of our business and who bring new skills and fresh perspectives. We have a deliberate mix of age and tenure on the Board, which reflects our commitment to ongoing and proactive Board refreshment.
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420222024 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

5



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Integrated Approach toOngoing Stockholder Engagement
Robust Engagement and Dialogue
IBM customizes its engagements by aligning discussion topics with stockholders’ areas of interest. After last year’s negative Say on Pay vote, IBM expanded its off-season engagement efforts to ensure stockholders were afforded an opportunity to provide feedback on IBM’s executive compensation program, as well as any other topics of concern to stockholders. Such stockholderStockholder feedback is integral to the Board’s decision-making process and informs the Company’s policies, practices and disclosures. IBM proactively engages with stockholders throughout the year in order to share key updates and solicit perspectives and feedback. It is essential to IBM’s Board 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 IBM’s independent Lead Director.
Off-Season EngagementIBM’S ONGOING ENGAGEMENT PROCESS
[MISSING IMAGE: tm2122634d1-pc_offeredpn.gif]Engaging with Stockholders
Offered engagementIn 2023, we reached out to over 70% of institutional investors and >250,000 retail investors leading up to the Annual Meeting. Following the 2023 Annual Meeting, during the off-season, we reached out to stockholders owning 55%of shares that voted at 2021 Annual Meeting
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Met with stockholders owning 37%more than 57% of shares that voted at the 2021 Annual MeetingMeeting.
IBM also engaged in investor dialogue related to strategy at 14 sell-side hosted conferences, reaching large audiences, along with individual investor and group engagements throughout the year.
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Robust Conversations
IBM customizes its engagements by aligning discussion topics with stockholders’ areas of interest, ensuring that stockholders have an opportunity for an open dialogue with the Company, including appropriate subject matter experts. This year, the topics stockholders expressed interest in learning more about included: responsible AI; IBM’s annual Impact Report; policies and practices regarding board diversity; and human capital management.
Enhancing Practices
Stockholder feedback is integrated into boardroom discussions and helps to inform the Board’s decisions and the Company’s policies, practices and disclosures.
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OUTCOMES OF ENGAGEMENT
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IBM’s independent Lead Director, as well as IBM’s senior management, met with stockholders owning over 26% of shares that voted at the 2021 Annual Meeting.
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Outcomes of Stockholder Engagement
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EXECUTIVE
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Board and Governance
Reconfirmed with stockholders the unique circumstances around the one-time equity award for James Whitehurst in March 2020, and reiterated that no one-time awards were granted to named executive officers in 2021
Enhanced our disclosure regarding trade associations


Adopted a director overboarding policy

Continued focus on Board diversity with 3 women directors and 3 ethnically diverse directors added in the last 5 years

Active Board refreshment with over 60% of the Board new in the last 5 years
Executive Compensation

Continued our Annual Incentive Program and Performance Share Unit metrics that were established in 2021, reflecting IBM’s continued focus on revenue and free cash flow to align with shareholder value


Updated our Compensation Peer Group to increase the weighting of peers in the technology industry, reflect IBM’s increased orientation as a hybrid cloud and AI company, and align with the size and scope of IBM following the separation of our managed infrastructure business

IntroducedContinued stock options in 20222023 as part of the overall equity pay mix for executives, which ensures a portion of equity does not generate value unless IBM’s common stock price increases over the price when granted

Disclosed the 2021 diversity modifier results in the “2021 Annual Incentive Program” section of this Proxy Statement
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BOARD AND
GOVERNANCE

Corporate Responsibility
Continued focus on Board diversity with 2 women directors and 3 ethnically diverse directors added in the last 3 years

Active Board refreshment with more than 60% of the Board new in the last 5 years

Enhanced Board diversity disclosure
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ESG REPORTING AND
THE ENVIRONMENT

Provided stakeholders with comparable ESG data by reporting under the Sustainability Accounting Standards Board (SASB) framework

Committed to publish EEO-1 data this year after the completion of the Company’s spin-off of its managed infrastructure services business


Published our Diversity & InclusionIBM Impact Report, assessing the effectiveness ofsharing IBM’s diversity, equityprogress on its commitments and inclusion programsperformance


Set goalContinued to reachaccelerate assessment, due diligence, and controls related to human capital throughout our value chain

Continued pursuit of our goals to use more renewable electricity, reduce our greenhouse gas emissions, offer more energy efficient products and services, and achieve net zero operational greenhouse gas emissions by 2030 and updated our goals regarding renewable electricity and greenhouse gas emissions to reflect our strong progress in these areas
202262024 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary5





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Business Highlights
In 2021,2023, IBM accelerated revenue growth through the year at constant currency and completed substantialcontinued to take meaningful actions to focus onstrengthen its position as a leader in hybrid cloud and AI, capabilities. IBM generated $12.8 billion of cash from operations* in 2021 with capital strategically allocated todelivering financial results that fueled business investment,investments and stockholder returns and debt reduction.through dividends.
20212023 Performance Highlights
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* Cash from operations is presented on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl.
Compensation Highlights
Our compensation strategy supports IBM’s high value business model
What We Do
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Tie a significant portion of pay to Company performance
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Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions
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Require significant share ownership by the Chairman and CEO, Vice Chairman and Senior Vice Presidents
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Utilize noncompetition and nonsolicitation agreements for senior executives
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Remove impact of share repurchase on executive incentives
What We Don’t Do
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No individual severance or change-in-control agreements for executive officers
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No excise tax gross-ups for executive officers
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No dividend equivalents on unearned RSUs/PSUs
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No hedging/pledging of IBM stock
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No stock option repricing, exchanges or stock options granted below market value
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No guaranteed incentive payouts for executive officers
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No accelerated vesting of equity awards for executive officers
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No above-market returns on deferred compensation plans
620222024 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

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IBM Board of Directors
Overview
Overview
IBM’s Board of Directors is responsible for supervision of the overall affairs of IBM. Following the Annual Meeting in 2022,2024, the Board will consist of 1213 directors. In between annual meetings, the Board has the authority under the by-laws to increase or decrease the size of the Board and to fill vacancies.
Director Selection Process
The Directors and Corporate Governance Committee is responsible for leading the search for qualified individuals for election as directors to ensure the Board has the optimal mix of skills, expertise, experience, and diversity of backgrounds. The Committee recommends candidates to the full Board for election.
The Board believes that the following core attributes are key to ensuring the continued vitality of the Board and excellence in the execution of its duties:
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The Committee and the Board identify candidates through a variety of means, including:


recommendations from members of the Committee and the full Board


information the Committee requests from the Secretary of IBM


suggestions from IBM management


a third-party search firm, from time to time
202282024 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors7





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Director Skills and Qualifications
The IBM Board is composed of a diverse group of members, all leaders in their respective fields. All current directors have leadership experience at major domestic and international organizations with operations inside and outside the United States, at academic or research institutions, or in government. Directors also have deep industry expertise as leaders of organizations within some of the Company’s most important client industries and constituencies.
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The Directors and Corporate Governance Committee and the Board believe that the above-mentioned attributes, along with the leadership skills and other experiences of the Board members described below, provide IBM with the perspectives and judgment necessary to guide IBM’s strategies and oversee their execution.
820222024 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors

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IBM BOARD OF DIRECTORS — EXPERIENCE AND SKILLS OF DIRECTOR NOMINEES
Board of Directors – Experience and Skills of Director Nominees
Director
Thomas
Buberl
Marianne C.
Brown
David N.
Farr
Thomas
Buberl
Alex
Gorsky
David N.
Farr
Michelle
J. Howard
Alex
Gorsky
Arvind
Krishna
Michelle J.
Howard
Andrew N.
Liveris
Arvind
Krishna
F. William
McNabb III
Andrew N.
Liveris
Martha E.
Pollack
F. William
McNabb III
Joseph R.
Swedish
Michael
Miebach
Peter R.
Voser
Martha E.
Pollack
Frederick H.
Waddell
Peter R.
Voser
Frederick H.
Waddell
Alfred W.

Zollar
Client Industry Expertise
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Organizational Leadership
and
Management
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Global Operations
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CFO
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Specific Risk Oversight/
Risk Management
Exposure
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Technology, Cybersecurity
or
Digital
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Academia
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Government/
Regulatory,

Business Associations
or Public Policy
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Public Board
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Gender IdentityMaleFemaleMaleMaleMaleFemaleMaleMaleMaleMaleFemaleMaleMaleMaleMale
Race and/or Ethnicity
White/
White/
Caucasian
White/
White/
Caucasian
White/Caucasian
White/
Caucasian
Black/African AmericanAsian/Pacific Islander
White/
White/
Caucasian
White/
White/
Caucasian
White/
White/
Caucasian
White/
White/
Caucasian
White/
White/
Caucasian
White/
White/
Caucasian
Black/African American
Born Outside the U.S.
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The following client industries provide a snapshot into the many key and diverse industries in which our directors have relevant experience. Many of our directors have experience in multiple client industries.
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Healthcare
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Manufacturing
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Energy
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Information Technology
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Government
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Research & Development
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Financial Services & Insurance
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Chemicals
2022102024 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors9





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1. Election of Directors for a Term of One Year
The Board proposes the election of the following director nominees for a term of one year. Below is information about each nominee, including biographical data for at least the past five years. If one or more of these nominees become unavailable to accept a nomination or election as a director, the individuals named as proxies on the proxy card will vote the shares that they represent for the election of such other persons as the Board may recommend, unless the Board reduces the number of directors.
Michael EskewJoseph R. Swedish is not a nominee for election, and his term on the Board will end in April. We are very grateful to him for his many valuable contributions and will miss his participation.
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Thomas BuberlMarianne C. Brown
Former Chief ExecutiveOperating Officer, AXA S.A., a multinational insurance firmGlobal Financial Solutions, Fidelity National Information Services, Inc.
Director since:20202023
Age: 4865
Committee:Committee:
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Directors and Corporate Governance
Qualifications


Global business and technology experience as chief operating officer, Global Financial Solutions, Fidelity National Information Services, Inc.

Significant expertise in IT goods and services, cybersecurity and business management

Outside board experience as a director of Northrop Grumman Corporation, The Charles Schwab Corporation, and Akamai Technologies, Inc.
Relevant experience
Ms. Brown, 65, served as chief operating officer of Fidelity National Information Services, Inc.’s (FIS) Global Financial
Solutions organization from January 2018 to June 2019. Prior to that, Ms. Brown served as chief operating officer, Institutional and Wholesale Business of FIS, when it acquired SunGard Financial Systems. In 2014, Ms. Brown was chief operating officer of SunGard Financial Systems. In 2006, Ms. Brown was the chief executive officer and president of Omgeo LLC. Before joining Omgeo LLC, she was the chief executive officer of the Securities Industry Automation Corporation. She is a director of Northrop Grumman Corporation, The Charles Schwab Corporation, and Akamai Technologies, Inc., and served on the board of VMware, Inc. from 2019 until 2023.
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Thomas Buberl
Chief Executive Officer, AXA S.A., a multinational insurance firm
Director since:2020
Age: 50
Committee:
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Executive Compensation and Management Resources
Qualifications

Global business experience as chief executive officer of AXA S.A.


Affiliation with leading business and public policy associations (member of the Climate Finance Leadership Initiative and former chair of Pan-European Insurance Forum)


Acknowledged leader in digital transformation


Outside board experience as a member of the supervisory board of Bertelsmann VerwaltungsgesellschaftVerwaltungsGesellschaft
Relevant experience
Mr. Buberl, 48,50, joined Winterthur in 2005, which became a subsidiary of AXA in 2006. In 2008, he joined Zurich Insurance
Group as chief executive officer for Switzerland. Mr. Buberl returned to AXA in 2012 as chief executive officer for AXA Konzern AG (Germany) and he became a member of AXA’s executive committee. In 2015, Mr. Buberl became the chief executive officer of AXA’s health business and a member of AXA’s group management committee. Mr. Buberl was additionally appointed chief executive officer of AXA’s global business line for life and savings and deputy chief executive officer of AXA in early 2016. He was named chief executive officer and joined the board of directors of AXA in September 2016. He is a member of the supervisory board of Bertelsmann, a member of the Climate Finance Leadership Initiative and the former chair of the Pan-European Insurance Forum. Additionally, during the past five years, he was a director of AXA Equitable Holdings, Inc., a former subsidiary of AXA S.A.
2024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors11



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David N. Farr
Retired Chairman and Chief Executive Officer, Emerson Electric Co., a diversified manufacturing and technology company
Director since: 2012
Age: 67 69
Committee:Committee:
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Audit
Qualifications


Global business and technology experience as chairman and chief executive officer of Emerson Electric Co.


Affiliation with leading business and public policy associations (former director of the U.S.-China Business Council)


Outside board experience as former director of Delphi Corporation
Relevant experience
Mr. Farr, 67,69, 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. Farr was named chairman, president and chief executive officer in 2005 and chairman and chief executive officer in 2010, positions he held until his retirement in 2021. He is the former chairman of the National Association of Manufacturers and is a former director of the U.S.-China Business Council.
102022 Notice of Annual Meeting & Proxy Statement   |   Election of Directors


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Alex Gorsky
ExecutiveFormer Chairman and Retired Chief Executive Officer, Johnson & Johnson, a global healthcare products company
Director since: 2014
Age: 61 63
Committees:Committee:
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Executive Compensation and Management Resources
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Executive
Qualifications


Global business and technology experience as executive chairman and chief executive officer of Johnson & Johnson


Affiliation with leading business and public policy associations (former Chair of the Business Roundtable’s Corporate Governance Committee and former member of the Business Council Executive Committee)


Leader in diversity & inclusion and veteransveterans’ issues


Experience as a university trusteeMember of an advisory board at an academic institution
Relevant experience
Mr. Gorsky, 61,63, is the former chairman and chief executive chairmanofficer of Johnson & Johnson, and one of just seven leaders to have served in the dual role of chairman and chief executive officer since the company was listed on the New York Stock Exchange in 1944. He joined Johnson & Johnson in 1988 as a
sales representative with Janssen Pharmaceutica.
In 2003, he was named company group chairman of the Johnson & Johnson pharmaceutical business in Europe, the Middle East and Africa. Mr. Gorsky left Johnson & Johnson in 2004 to join the Novartis Pharmaceuticals Corporation, where he served as head of the company’s pharmaceutical business in North America. Mr. Gorsky returned to Johnson & Johnson in 2008 as company group chairman for Ethicon. In early 2009, he was appointed worldwide chairman of the Surgical Care Group and member of the executive committee. In September 2009, he was appointed worldwide chairman of the Medical Devices and Diagnostics Group, and became vice chairman of the executive committee in January 2011. He was named chief executive officer and joined the board of directors in April 2012, and was named chairman of the board of directors in December 2012. Mr. Gorsky remained chief executive officer until he transitioned to his current role as executive chairman at the end of 2021. He currently sits on the boards of Apple, and NewYork-Presbyterian Hospital,JPMorgan Chase and the Travis Manion Foundation, and serves on the Wharton School of the University of Pennsylvania Board of Advisors.
122024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors



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Michelle Howard
Retired Admiral, United States Navy
Director since: 2019
Age: 61 63
Committee:
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Audit
Qualifications


Leadership and policy experience as the U.S. Navy’s first woman four-star admiral


Operational experience as commander of U.S. Naval Forces in Europe and Africa


Global operations and technology experience as Vice Chief of Naval Operations, with focus on cybersecurity and information technology in the digital age


Leadership and teaching positions in government and academia
Relevant experience
Admiral Michelle J. Howard, 61,63, is a retired United States Navy officer. Admiral Howard began serving in the United States Navy in 1982, after graduating from the U.S. Naval Academy. During her 35 years of service, she led sailors and marines as, at various times, the Commander of a ship, an Expeditionary Strike Group, a Task Force, and a Naval theater. In 1999, she became the first African American woman to command a ship in the United States Navy. In 2014, she was the first woman to become a four-star admiral in the U.S. Navy and the first
woman and African American to be appointed to the position of Vice Chief of Naval Operations, the second-highest ranking uniformed officer in the branch. Responsible for the Navy’s day-to-day operations, she focused on cyber culture and information security in the digital age, as well as gender integration, in addition to oversight of a multi-billion dollar budget and the establishment of an auditing framework. In 2016, Admiral Howard was appointed by the President to serve as commander of U.S. Naval Forces in Europe and Africa and the Allied Joint Forces Command in Naples, Italy, making her the first woman four-star admiral to command operational forces. She retired from the Navy in 2017. Admiral Howard’s distinguished career in national defense has included both at-sea and ashore posts, placing her in key leadership positions within the areas of engineering, operations, and strategic planning and policy. Admiral Howard is a graduate of the U.S. Naval Academy and the U.S. Army Command and General Staff College. She was the J.B. and Maurice C. Shapiro Professor of International Affairs at the Elliott School of International Affairs at George Washington University from 2018 to 2020, where she taught in the areas of cybersecurity and international policy. In 2022, she was appointed by the President to the Board of VistorsVisitors of the U.S. Naval Academy.
2022 Notice of Annual Meeting & Proxy Statement   |   Election of Directors 11


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Arvind Krishna
Chairman and Chief Executive Officer, IBM
Director since: 2020
Age: 59 61
Committee:Committee:
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Executive (Chair)
Qualifications


Global business and organizational leadership experience as chairman and chief executive officer of IBM


Research experience as Director of IBM Research and a computer scientist with expertise in key IBM technologies such as artificial intelligence, cloud and quantum computing


Technology experience as general manager of IBM’s Systems and Technology group and Senior Vice President for IBM’s Cloud and Cognitive Software

Outside business experience as a director of the Federal Reserve Bank of New York
Relevant experience
Arvind Krishna, 59,61, became the chief executive officer of IBM, and a member of the Board of Directors, in April 2020. He was elected chairman of the Board of Directors in December 2020. Mr. Krishna joined IBM in 1990. Mr. Krishna led the IBM Cloud and Cognitive Software business unit from 2017 to April 2020 and was a principal architect of the acquisition of Red Hat, the largest acquisition in the Company’s history. Mr. Krishna also served as the director of IBM’s Research division from 2015 to 2020. Previously, he was general manager of IBM’s Systems and Technology Group, IBM’s development and manufacturing organization. Prior to that, he built and led many of IBM’s data-related businesses. In 2022, he became a director of the Federal Reserve Bank of New York. He is also a director of Northrop Grumman Corporation. 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.
2024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors13



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Andrew N. Liveris
Retired Chairman and Chief Executive Officer, The Dow Chemical Company, a materials, polymer, chemicals, and biological sciences enterprise
Director since:2010
Age:67 69
Committees:
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Directors and Corporate Governance (Chair)
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Executive
Qualifications


Global business and technology experience as the chairman, president and chief executive officer of The Dow Chemical Company and executive chairman of DowDuPont Inc.


U.S. and international government service (member of the President’s Task Force on Apprenticeship Expansion, former chairman of the President’s American Manufacturing Committee, member of the Australian government’s Industry Growth Centres Advisory Committee and a former member of Thailand’s Board of Investment)


Affiliation with leading business and public policy associations (former executive committee member, former chairman of The Business Council, and former vice chairman of the Executive Committee of the Business Roundtable)


Experience as a university trustee
Relevant experience
Mr. Liveris, 67,69, 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. Liveris wasbefore being named president and chief executive officer of Dow in 2004 and chairman in 2006.
In 2016, he transitioned to the president role and continued as chairman and chief executive officer of Dow until late 2017, when he transitioned to the position of executive chairman of DowDuPont, a position he held until his retirement in July 2018. Mr. Liveris is a director of Worley, Saudi Aramco and Lucid Motors. He serves as a director of NOVONIX Limited, and chairman of the board of Lucid Motors.which has announced that he will not stand for re-election at its Annual Meeting on April 17, 2024. Additionally, Mr. Liveris has served as a member of the President’s Export Council and as chairman of the President’s American Manufacturing Committee. Mr. Liveris is a former Executive Committee member of The Business Council, the former chairman of The Business Council and the former vice chairman of the Executive Committee of the Business Roundtable. Mr. Liveris is also a trustee of the 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. He is also the president of the Brisbane 2032 Olympic and Paralympic Games Organizing Committee.
122022 Notice of Annual Meeting & Proxy Statement   |   Election of Directors


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Frederick William McNabb III
Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc., one of the world’s largest investment management companies
Director since: 2019
Age: 64 66
Committee:Committee:
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Audit
Qualifications


Global business and technology experience as chairman and chief executive officer of The Vanguard Group, Inc.


Outside board experience as a director of UnitedHealth Group


Member of several advisory boards at academic institutions
Relevant experience
Mr. McNabb, 64,66, served as chairman of The Vanguard Group, Inc. from 2008 until his retirement in 2018 and served as chief executive officer from 2008 to 2017. He joined Vanguard in 1986. In 2010, he became chairman of the board of directors
and the board of trustees of the Vanguard group of investment companies.
Earlier in his career, Mr. McNabb led each of Vanguard’s client facing business divisions. Mr. McNabb served as the vice-chairman of the Investment Company Institute’s Board of Governors and served as its chairman from 2013 to 2016. He is a director of UnitedHealth Group and serves as the chair of its audit committee. He is also a director of Axiom. Mr. McNabb is the former chairman of the board of the Zoological Society of Philadelphia, chairman of the USRowing Foundation, and former chairman of Ernst & Young’s Independent Audit Quality Committee. Mr. McNabb also serves on the Wharton Leadership Advisory Board, the Dartmouth Athletic Advisory Board, the Advisory Board of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia University and is also a board memberCo-Chair of the Board of Directors of CECP: The CEO Force for Good.
142024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors



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Michael Miebach
Chief Executive Officer, Mastercard Incorporated
Director since: 2023
Age: 56
Committee:
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Directors and Corporate Governance
Qualifications

Global business and technology experience as chief executive officer of Mastercard

Affiliation with leading business and public policy associations (including the Business Roundtable, the Business Council, and the International Business Council of the World Economic Forum)

Member of the United States Council for International Business
Relevant experience
Mr. Miebach, 56, is the chief executive officer of Mastercard and a member of its board of directors. He joined Mastercard in
2010 to lead its Middle East and Africa operations, before becoming chief product officer in 2016. As Mastercard’s chief product officer he gained essential perspective into consumer insights as well as valuable experience in information security and innovation. Mr. Miebach became president in 2020 and then chief executive officer in 2021. Prior to joining Mastercard, Mr. Miebach held senior roles at Barclays Bank and CitiBank. Mr. Miebach is a member of the Business Roundtable, the Business Council, the U.S.-India CEO Forum, the U.S.-India Strategic Partnership Forum, the International Advisory Panel of the Monetary Authority of Singapore, the International Business Council of the World Economic Forum, and the United States Council for International Business. He sits on the board of directors for the Metropolitan Opera, and the World Resources Institute.
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Martha E. Pollack
President, Cornell University, a leading research university that creates new technologies and achieves fundamental breakthroughs in understanding and improving lives around the world
Director since:2019
Age:63 65
Committee:Committee:
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Executive Compensation and Management Resources
Qualifications


Organizational leadership, management and risk oversight, and management experience as president of Cornell University


Research experience as a computer scientist with expertise in artificial intelligence as a professor of computer science, information science, and linguistics


U.S. Government service as a former member of the advisory committee for the National Science Foundation’s Computer and Information Science and Engineering Division


Healthcare experience as a former member of the Board of Directors of the University of Michigan Hospitals and Health Center, and as a member (ex officio) of the board of overseers of Weill Cornell Medicine


Technology experience as a fellow of the Association for Computing Machinery, a former president of the Association for the Advancement of Artificial Intelligence, a former board member of the Computing Research Association, and a former member of the technical staff in the Artificial Intelligence Center at SRI International
Relevant experience
Dr. Pollack, 63,65, is the president of Cornell University and a professor of computer science, information science and
linguistics. She took office in 2017. From 2000 to 2017, Dr. Pollack held various positions at the University of Michigan with increasing responsibility, including dean of the School of Information, vice provost for academic and budgetary affairs, and finally, provost and executive vice president for academic affairs. Dr. Pollack is a fellow of the American Association for the Advancement of Science, the Association for Computing Machinery and the Association for the Advancement of Artificial Intelligence. Dr. Pollack has served as editor-in-chief of the Journal of Artificial Intelligence Research, 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 Foundation’s Computer and Information Science and Engineering Division, and a former member of the board of directors of the Computing Research Association. Dr. Pollack also served on the Steering Committee of the Jacobs Technion-Cornell Institute, the academic partnership between Cornell and Technion-Israel Institute of Technology at Cornell Tech. She is currently a board member of the American Association of Universities, and a Trustee of ITHAKA. In 2022, Dr. Pollack was elected as a member of the American Academy of Arts & Sciences.
20222024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors13

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Joseph R. Swedish
Retired Chairman, President and Chief Executive Officer, Anthem, Inc., a leading health benefits provider
Director since: 2017
Age: 70
Committee:
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Executive Compensation and Management Resources
Qualifications

Global business and technology experience as executive chairman, president, and chief executive officer of Anthem, Inc.

Affiliation with leading business and public policy associations (former member of the Business Roundtable and graduate member of The Business Council)

Outside board and technology experience as a director of CDW Corporation

Experience as the chairman of a university oversight board
Relevant experience
Mr. Swedish, 70, joined Anthem in 2013 as chief executive officer and was named chairman of Anthem’s board in 2015. He was the chairman, chief executive officer and president until late 2017 when he retired and became the executive chairman, a position he held until his retirement in May 2018.
Prior to joining Anthem, he was the division president of Hospital Corporation of America from 1993 to 1998, 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. Mr. Swedish became a director of Mesoblast Limited in 2018 and was named its chairman in March 2019. He is also a director of Centrexion Therapeutics and CDW Corporation. He also served as a director of the Blue Cross Blue Shield Association, the National Institute for Health Care Management, the Central Indiana Corporate Partnership, Inc. and as a member of the Business Roundtable. Mr. Swedish is currently a member and past chairman of the Board of Visitors of Duke University’s Fuqua School of Business and was the past chairman of America’s Health Insurance Plans. He is a graduate member of The Business Council and a past member of the Duke Margolis External Advisory Board. Mr. Swedish also serves as Co-Founder and Partner at Concord Health Partners, a private equity firm focused on strategic investing in healthcare portfolio companies.
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Peter R. Voser
Retired Chief Executive Officer, Royal Dutch Shell plc, a global group of energy and petrochemical companies; Chairman, ABB Ltd., a global group of power and automation companies
Director since:2015
Age:63 65
Committees:
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Audit (Chair)
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Executive
Qualifications


Global business and technology experience as chairman of ABB Ltd. and chief executive officer of Royal Dutch Shell plc


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)


Outside board experience as a director of Temasek
Relevant experience
Mr. Voser, 63,65, joined Shell in 1982 and held a variety of finance and business roles including chief financial officer of Oil
Products. In 2002, he joined the Asea Brown Boveri (ABB)
Group of Companies as chief financial officer and a member of the ABB Group executive committee. Mr. Voser returned to Shell in 2004, becoming a managing director of The Shell Transport and Trading Company, p.l.c. and chief financial officer of the Royal Dutch/Shell Group. He was appointed chief executive officer of Royal Dutch Shell plc in 2009 and held that position until his retirement in late 2013. Mr. Voser was named chairman of ABB Ltd. in 2015 and was the interim chief executive officer from April 2019 until February 2020. He is a director of Temasek Holdings (Private) Limited, as well as Group Chairman of the Board of PSA International Pte Ltd, Singapore, a Temasek subsidiary. Mr. Voser is also active in a number of international and bilateral organizations. Additionally, from 2011 until 2019, he was a director of Roche Holding Limited.
142022 Notice of Annual Meeting & Proxy Statement   |   Election of Directors


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Frederick H. Waddell
Retired Chairman and Chief Executive Officer, Northern Trust Corporation, a financial services company
Director since: 2017
Age: 68 70
Committees:
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Executive Compensation and Management Resources (Chair)
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Executive
Qualifications


Global business and technology experience as chairman and chief executive officer of Northern Trust Corporation


Outside board experience as a director of AbbVie Inc.


Experience as a university trustee
Relevant experience
Mr. Waddell, 68,70, joined Northern Trust Corporation in 1975 and served as the chairman of the board from November 2009
until his retirement in January 2019. He previously served as chief executive officer from 2008 through 2017, as president from 2006 through 2011 and again from October to December 2016, and as chief operating officer from 2006 to 2008. Additionally, Mr. Waddell is a member of the Board of Trustees of the Art Institute of Chicago, the Chicago Symphony Orchestra, and Northwestern University, and a director of AbbVie Inc.
162024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors



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Alfred W. Zollar
Executive Advisor, Siris Capital Group LLC, a private equity firm
Director since:2021
Age:67 69
Committee:Committee:
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Directors and Corporate Governance
Qualifications


Global business and leadership experience as an executive partner and executive advisor at Siris Capital Group


Deep technology experience with more than 40 years in systems and software, including as director of Red Hat


Outside board experience as a director of Nasdaq, Bank of New York Mellon, and as a former director of Public Service Enterprise Group
Relevant experience
Mr. Zollar, 67,69, has served as an executive advisor at Siris Capital Group, a private equity group specializing in technology
and telecom investments, since March 2021; previously, Mr. Zollar was an executive partner from 2014 through March 2021. While at Siris Capital Group, Mr. Zollar has worked closely with cloud-based technology providers, leading providers of enterprise security solutions and other technology and software-as-a-service companies. He served as a director of Red Hat from 2018 until 2019 and of Public Service Enterprise Group from 2012 until 2023. He is currently a director of Nasdaq Inc., and Bank of New York Mellon Corp,Corp. He is also a member of the Executive Leadership Council and Public Service Enterprise Group.a lifetime member of the National Society of Black Engineers. Mr. Zollar retired from IBM in 2011 following a 34-year career during which he held a variety of senior management positions in IBM’s systems and software groups.
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THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED ABOVE.
20222024 Notice of Annual Meeting & Proxy Statement   |   Election of Directors15

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Governance and the Board
Committees of the Board
Members of the Audit Committee, Directors and Corporate Governance Committee, and the Executive Compensation and Management Resources Committee are non-management directors who, in the opinion of the Board, satisfy the independence criteria established by the Board, and the standards of the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE).
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DirectorAudit
Directors and
Corporate Governance
Executive Compensation
and Management Resources
Executive
Thomas Buberl
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David N. Farr
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Alex Gorsky
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Michelle J. Howard
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Arvind KrishnaChair
Andrew N. LiverisChair
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F. William McNabb III
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Martha E. Pollack
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Joseph R. Swedish
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Peter R. VoserChair
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Frederick H. WaddellChair
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Alfred W. Zollar
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Board Committee Refreshment
On at least an annual basis, the Directors and Corporate Governance Committee reviews committee assignments and discusses whether rotation of committee members and committee chairs is appropriate to introduce fresh perspectives and to broaden and diversify the views and experiences represented on the Board’s committees. In 2021,2023, Mr. ZollarMiebach and Ms. Brown joined the Directors and Corporate Governance Committee. In 2022, the Board rotated several committee positions. Admiral HowardCommittee, and Mr. Buberl rotated from the Directors and Corporate Governance Committee to the Audit Committee, Mr. Liveris rotated from the Executive Compensation and Management Resources Committee and became the chair of the Directors and Corporate Governance Committee, Mr. Waddell rotated from the chair of the Directors and Corporate Governance Committee and became the chair of the Executive Compensation and Management Resources Committee, and Mr. Voser became the chair of the Audit Committee. In addition, Mr. Gorsky became Lead Director.
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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 2021.2023.
Members:
Arvind Krishna (Chair)
Alex Gorsky
Andrew N. Liveris
Peter R. Voser
Frederick H. Waddell
Number of meetings in 2021:2023: 0
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Members:
Peter R. Voser

(Chair)


David N. Farr


Michelle J. Howard


F. William McNabb III
Audit Committee

Financial Experts:
David N. Farr

Michelle J. Howard


F. William McNabb III


Peter R. Voser
Number of meetings in 2021: 112023: 10
Key Responsibilities:
The Audit Committee is responsible for reviewing reports of IBM’s financial results, audit results, internal controls, and adherence to IBM’s 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,its charter, the Audit Committee performs many other functions, including:


selecting the independent registered public accounting firm and reviewing its selection with the Board;


annually preapproving the proposed services to be provided by the accounting firm during the year;


receiving and discussing reports relating to key controls and processes, including cybersecurity.cybersecurity, and publicly reported environment, social and governance data;


reviewing the procedures of the independent registered public accounting firm for ensuring its independence with respect to the services performed for IBM; and


meeting with management prior to each quarterly earnings release.release; and

regular private sessions with senior management, including IBM’s Chief
Trust and Compliance Officer.
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 as an Audit Committee Financial Expert as defined by the rules of the SEC.
Charter: http://www.ibm.com/investor/att/pdf/auditcomcharter.pdf
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Members:
Andrew N. Liveris

(Chair)

Thomas Buberl

Marianne C. Brown
Michael Miebach
Alfred W. Zollar
Number of meetings in
2021: 8
2023: 4
Key Responsibilities:
The Directors and Corporate Governance Committee is devoted primarily to the continuing review and articulation of the governance structure and practices of the Board. Concurrent with that responsibility, set out more fully in the Charter,its charter, the Directors and Corporate Governance Committee performs many other functions, including:


recommending qualified candidates to 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,annual meeting, and planning for future Board and Committeecommittee refreshment actions;


advising and making recommendations to the Board on all matters concerning directorship practices, and on the function and duties of the committees of the Board;


making recommendations to the Board on compensation for non-management directors;


reviewing and considering IBM’s positionoverseeing policies and practices on significant public policy issues, such as protection of the environment,related to corporate social responsibility, sustainability and philanthropic contributions;environmental, social, and governance matters; and


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.
Charter:
https://www.ibm.com/investor/att/pdf/IBM-Directors-and-Corporate-Governance-Committee-Charter.pdf
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Members:
FederickFrederick H. Waddell

(Chair)

Alex Gorsky

Thomas Buberl
Martha E. Pollack

Joseph R. Swedish
Number of meetings in 2021: 72023: 8
Key Responsibilities:
The Executive Compensation and Management Resources Committee has responsibility for defining and articulating IBM’s 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,its charter, the Executive Compensation and Management Resources Committee performs many other functions, including:


reviewing and approving the corporate goals and objectives relevant to the Chairman and CEO’s compensation, evaluating performance in light of those goals and objectives and, together with the other independent directors, determining and approving the Chairman and CEO’s compensation based on this evaluation;


reviewing IBM’s human capital management, diversity and inclusion and other management resources programs, including overseeing, along with the full Board, the succession-planning process of the CEO and other senior management positions;


approving, by direct action or through delegation, participation in and all awards, grants, and related actions under IBM’s various equity plans;

managing the operation and administration of the IBM Supplemental Executive Retention Plan;


reviewing the compensation structure for IBM’s officers and providing oversight of management’s decisions regarding performance and compensation of other employees; and


monitoring compliance with stock ownership guidelines.
The Committee reports to stockholders as required by the SEC (see 20212023 Report of the Executive Compensation and Management Resources Committee of the Board of Directors in this Proxy Statement).
Members of the Committee are not eligible to participate in any of the plans or programs that the Committee administers.
Charter: https://www.ibm.com/investor/att/pdf/Executive_Compensation_and_Management_
Resources_Committee_Charter.pdfExecutive_Compensation_and_Management_Resources_Committee_Charter.pdf
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Compensation Committee Interlocks and Insider Participation: None
Messrs. Buberl, Gorsky, Liveris,Swedish, and SwedishWaddell and Dr. Pollack each served as members of the Executive Compensation and Management Resources Committee in 2021.2023. All members of the Committee were independent directors, and no member was an employee or former employee of IBM. During 2021,2023, 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.
Certain Transactions and Relationships
Under IBM’s written related person transactions policy, information about transactions involving related persons is assessed by the independent directors on IBM’s Board. Related persons include IBM directors and executive officers, as well as immediate family members of directors and officers, and beneficial owners of more than five percent of IBM’s common stock. If the determination is made that a related person has a material interest in any IBM transaction, then IBM’s independent directors would review, approve or ratify it, and the transaction would be required to be disclosed in accordance with the SEC rules. If the related person at issue is a director of IBM, or a family member of a director, then that director would not participate in those discussions. In general, IBM is of the view that the following transactions with related persons are not significant to investors because they take place under IBM’s standard policies and procedures: the sale or purchase of products or services in the ordinary course of business and on an arm’s-length basis; the employment by IBM where the compensation and other terms of employment are determined on a basis consistent with IBM’s human resources policies; and any grants or contributions made by IBM under one of its grant programs and in accordance with IBM’s corporate contributions guidelines.
From time to time, IBM may have employees who are related to our executive officers or directors. Mr. Eskew’s son is a former employee of IBM. He was an executive of IBM (not an executive officer) until January 2021. In addition, a daughter of Mr. R.F. Del Bene (Vice President and Controller) is also employed by IBM in a non-executive position. None of the above-referenced family member employees were or are executive officers of IBM. Each employee mentioned above received compensation in 2021 between $120,000 and $277,000. The compensation and other terms of employment of each of the family member employees
noted above are determined on a basis consistent with IBM’s human resources policies.
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Corporate Governance
IBM’s Corporate Governance Principles
IBM’s Board of Directors has long adhered to governance principles designed to ensure the continued vitality of the Board and excellence in the execution of its duties. For more than 25 years, the Board has had in place a set of governance guidelines reflecting these principles, including the Board’s 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 the practice of regularly scheduled executive sessions, including sessions of non-management directors without members of management.management led by IBM’s independent Lead Director. The IBM Board Corporate Governance Guidelines reflect IBM’s principles on corporate governance matters. In 2023, the Board adopted a director overboarding policy, as can be found in the amended IBM Board Corporate Governance Guidelines. Compliance with this policy is subject to an annual review by the Directors and Corporate Governance Committee and the Board. These guidelines are available at https://www.ibm.com/investor/att/pdf/IBM-Board-Corporate-Governance-Guidelines.pdf.
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/2021_Business_Conduct_Guidelines.pdfIBM_Business_Conduct_Guidelines.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 IBM’s website.
The process by which stockholders and other interested parties may communicate with the Board or non-management directors of IBM is available at https://www.ibm.com/investor/governance/contact-the-board.
Independent Board
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.
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The independence criteria established by the Board in accordance with 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 https://www.ibm.com/investor/att/pdf/Independence_Standards.pdf.
Applying those standards to IBM’s non-management director nominees, including those directors not standing for election, as well as a former director who served during 2021, the Committee and the Board have determined that each of the following has met the independence standards: M.C. Brown, T. Buberl, M.L. Eskew, D.N. Farr, A. Gorsky, M.J. Howard, A.N. Liveris, M. Miebach, F.W. McNabb III, M.E. Pollack, J.R. Swedish, S. Taurel, P.R. Voser, F.H. Waddell, and A.W. Zollar.
Mr. Eskew’s son is a former employee of IBM in a non-executive officer role. He was hired over a year before Mr. Eskew joined IBM’s Board and his compensation and other terms of employment were determined on a basis consistent with IBM’s human resources policies. Based on the foregoing, the Board has determined that this relationship does not preclude a finding of independence for Mr. Eskew.
Director Attendance
In 2021,2023, the Board held 118 meetings and the committees collectively met 2622 times. The Board and the Directors and Corporate Governance Committee recognize the importance of director attendance at Board and committee meetings. In 2021:2023:


Overall attendance at Board and committee meetings was over 99%94%; and


Attendance was at least 75% for each director.
In addition, each director attended IBM’s 20212023 Annual Meeting of Stockholders. IBM’s policy with regard to Board members’ attendance at annual meetings of stockholders is available at https://www.ibm.com/investor/governance/director-attendance-at-annual-meeting-of-stockholders.
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Independent Leadership Structure
The 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.
Mr. Krishna serves as IBM’s Chairman and CEO and Mr. Gorsky serves as IBM’s independent Lead 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. Among other factors, the Board considered and evaluated: the importance of consistent, unified leadership to execute and oversee the Company’s strategy; the strength of Mr. Krishna’s vision for the Company and the quality of his leadership; the strong and highly independent composition of the Board; the views and feedback heard from our investors through our ongoing engagement program throughout the years expressing support for IBM’s leadership structure; and the meaningful and robust responsibilities of the independent Lead Director.
A strong, independent Lead Director with clearly defined duties and responsibilities further enhances the contributions of IBM’s independent directors, which have been and continue to be substantial. As part of its annual review, and with the retirement of Mr. Eskew, the Board determined that Mr. Gorsky would best serve stockholders as the Company’s independent Lead Director. Mr. Gorsky has significant global business, technology, leadership, and oversight experience as the executiveformer chairman and former chief executive officer of Johnson & Johnson. Given Mr. Gorsky’s extensive experience leading a global business similar in size and complexity to that of IBM, he plays a pivotal role as independent Lead Director in administering the Board’s risk oversight responsibility.
The Board strongly believes that each company’s 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 Company’s 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.
RoleResponsibilities and Actions of the Lead Director
As Lead Director, Mr. Gorsky the Lead Director, has the following robust set of core responsibilities:
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presideactive participation in the strategic planning of the Board agendas and meetings, Board design and committee composition;
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approves information sent to the Board;
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reviews and approves meeting schedules to ensure there is sufficient time for discussion of all agenda items;
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presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, which are held at every Board meeting;
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serveauthority to call meetings of the independent directors, at which he presides in lieu of the Chairman;
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serves as liaison between the Chairman and the independent directors;
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approve information sent to the Board;
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approve meeting agendas for the Board;
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approve meeting schedules in collaboration with the Chairman to ensure there is sufficient time for discussion of all agenda items;
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authority to call meetings of the independent directors; and
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if requested by major stockholders, ensureensures 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 Lead Director engages in other regular activities, including:
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one-on-one debriefs with the Chairman after each meeting;
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analyzeanalyzes CEO performance in Executive Sessionexecutive session in conjunction with the Executive Compensation and Management Resources Committee Chair;
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review feedback fromleads the Board and committee evaluationself-evaluation process, workinginterviewing each director, together with the DirectorsChairman, and Corporate Governance Committee Chair on enhancements to Board processes and practices;reviews the feedback received with the full Board;
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spendspends time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of, and risks to, the Company;
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regular contact with members of the Board and meeting individually with each independent director; and
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attend Directors and Corporate Governance and Audit Committeeattends meetings in addition toheld by each of the Executive Compensation and Management Resources Committee meetings.Board’s committees.
The full Board reviews our leadership structure at least annually to ensure the allocationoptimal structure for the strategy and oversight of responsibilities remains appropriate.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.
Executive Sessions
Regularly scheduled executive sessions, including sessions of independent directors without members of management, chaired by the Lead Director, are held at each Board meeting. Additionally, executive sessions of the independent directors are led by the Chairs of the Directors and Corporate Governance and Executive Compensation and Management Resources Committees, respectively, at least once per year.
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Board Evaluation Process
IBM’s Board utilizesindependent Lead Director oversees a comprehensive, multi-part process for itsthe Board’s ongoing self-evaluation to ensure that the Board is operating effectively and that its processes reflect best practices. From time to time, thisThis process includes a third-party review of the Board’s process and evaluation criteria. Each year, IBM’s Directors and Corporate Governance Committee oversees the evaluation process to ensureensures that the full Board and each committee conduct an assessment of their performance and solicit feedback for enhancement and improvement. From time to time, this process includes a third-party review of the Board’s process and evaluation criteria.
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Full Board Self-Evaluation
The Lead Director leads the Board conductsin conducting an annual self-evaluation to review the effectiveness of the Board and its committees, led by the Chair of the Directors and Corporate Governance Committee.committees. In this comprehensive review, the self-evaluation focuses on:


The composition and performance of the Board, including the size, mix of skills and experience and director refreshment practices;


The quality and scope of the materials distributed in advance of meetings;


The Board’s access to Company executives and operations;


The promotion of rigorous decision making by the Board and theits committees;


The effectiveness of the Board and committee evaluation processes; and


The overall functioning of the Board and its committees.
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Each Individual Committee has Self-Evaluation
Each committee also performs a self-evaluation in executive session on an annual basis. The Audit Committee’s evaluation, for example, includes individual, one-on-one interviews between IBM’s internal Chief Auditor and each member of the Committee.
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One-on-OneIndividual Interviews with the Chairman of the Board and Lead Director
The Lead Director, together with the Chairman, holds individual, one-on-one interviews with each IBM director individually to obtain his or her candid assessment of director performance, Board dynamics and the effectiveness of the Board and its committees.
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Presentation of Feedback from Chairman
The ChairmanLead Director shares insights from each of these meetings with the Lead Director, the Chair of the Directors and Corporate Governance Committee, and the full Board.
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Results Discussion
The Board meets in executive session to discuss the results of the evaluation and any other issues that the directors may want to raise.
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Follow-ups
Self-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, 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.
Succession Planning
IBM has long been recognized for its leadership and talent development. One of the Board’s most important responsibilities is to ensure that IBM has the appropriate management to execute the Company’s long-term strategy. To fulfill this responsibility, the full Board meets regularly to actively review and plan the succession of the CEO and other senior management positions.
In succession planning, the Board discusses:


Succession process and timeline


Profile and candidate assessments, both internal and external, for the CEO and other senior leadership positions


Leadership pipeline and development plans for the next generation of senior leadership


Diversity, inclusion, and Company culture
The Executive Compensation and Management Resources Committee also regularly reviews succession planning and the Company’s management resources programs, overseeing a broad range of human capital management topics, including diversity and inclusion.
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Strategy Oversight
The Board actively oversees IBM’s long-term business strategy and is actively engaged in ensuring that IBM’s culture reflects its longstanding commitment to integrity, compliance, and inclusion. The Board is continuously engaged with management on these topics. For example, each year, the Board:
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Risk Oversight
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 risk could be destructive to stockholder value.
In addition, an overall review of 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 inherentleveraged by management in monthly emerging risk reviews, to proactively identify and respond to changes in the business environment. IBM’s comprehensive annual enterprise risk review is also discussed with both the Audit Committee and full Board.
Risk assessment is integral to the Board’s consideration of IBM’s long-term strategiesstrategic planning and in the analysis of transactions and other matters presented to the Board, including capital expenditures, acquisitions, divestitures and other portfolio actions, and operational and financial matters. In addition to the annual enterprise risk reviews, IBM’s risk professionals, including the Chief Risk Officer, work closely with senior management to integrate risk assessment into Board and committee briefings on topics of strategic importance. The Board and the Audit Committee also receive reports from IBM’s Chief Trust and Compliance Officer (CTCO) on compliance related matters. The CTCO reports to the Senior Vice President and General Counsel with dotted line reporting to the Audit Committee, and holds a private session with members of the Audit Committee at every meeting.
The Board’s role in risk oversight of IBM is consistent with IBM’s leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing IBM’s 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, IBM’s quarterly and annual financial statements and related disclosures are reviewed by its disclosure committee, comprised of senior management including IBM’s 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.
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Cybersecurity is a critical part of risk management at IBM. To more effectively address cybersecurity threats, IBM leverages a multi-layered approach. IBM has a dedicated Chief Information Security Officer (CISO) whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes. The CISO is a part of IBM’s Enterprise and Technology Security (ETS) organization, which works across all of the organizations within the Company to protect IBM, its brand, and its clients against cybersecurity risks.
Both the Board and the Audit Committee each receive regular updates from senior management, including the CISO and cybersecurity experts, in areas such as threat intelligence, major cyber risk areas, emerging global policies and regulations, cybersecurity technologies and best practices, and cybersecurity incidents.
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Climate change is a serious concern that warrants meaningful action on a global basis. IBM considers risks as identified by the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) in its risk management process. IBM senior management assesses the significance of environmental and climate-related risks. In addition, they manage these risks and provide regular updates to the Board and to the Directors and Corporate Governance Committee.
IBM has established objectives and targets for energy conservation, procurement of renewable energy, carbon dioxide (CO2) emissions reduction and other key environmental performance indicators. Performance against these objectives and targets is routinely monitored, and results are reviewed annually by the Board’s Directors and Corporate Governance Committee. Details on IBM’s performance against key environmental performance indicators can be found in our annual ESGImpact Report available at https://www.ibm.org/responsibility/reportswww.ibm.com/impact/reports-and-policies.
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Director Compensation
Annual Retainer: In 2021,2023, non-management directors received an annual retainer of $325,000.$350,000. Chairs of each of the Directors and Corporate Governance Committee and the Executive Compensation and Management Resources Committee each received an additional annual retainer of $20,000 and the chair of the Audit Committee received an additional annual retainer of $30,000. The additional retainer for the Lead Director position is $40,000.$50,000.
Under the IBM Deferred Compensation and Equity Award Plan (DCEAP), 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 IBM’s common stock. When a dividend is paid on IBM’s common stock, each director’s 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) deferral into PFS, (b) deferral into an interest-bearing cash account, and/or (c) 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.
Stock Ownership Guidelines: Under the IBM Board Corporate Governance Guidelines, within five years of initial election to the Board, non-management directors are expected to have stock-based holdings in IBM equal in value to eight times the equity portion of the annual retainer initially payable to such director. Stock-based holdings mean (i) IBM shares owned personally or by members of immediate family sharing the same household, and (ii) DCEAP PFS. Stock-based holdings do not include unexercised stock options.
Our stock ownership guidelines remain the strongest in our peer group.
Payout under the DCEAP: Upon a director’s retirement or other completion of service as a director (a) all amounts deferred as PFS are payable, at the director’s choice, in cash and/or shares of IBM’s common stock, and (b) amounts deferred into the interest-bearing cash account are payable in cash. Payouts may be made in any of (a) a lump sum payment as soon as practicable after the date on which the director ceases to be a member of the Board, (b) a lump sum payment paid in February of the calendar year immediately following the calendar year in which the director ceases to be a member of the Board, or (c) between two and ten annual installments, paid beginning in February following the calendar year in which the director ceases to be a member of the Board. If a director elects to receive PFS in cash, the payout of PFS is valued using the closing price of IBM common stock on the NYSE as follows: for payouts made in an immediate lump sum, IBM common stock will be valued on the first day after the date on which the director ceases to be a member of the Board; for lump sum payments made in February of the calendar year immediately following the calendar year of separation or for installment payouts, IBM common stock will be valued on the last business day of the January preceding such February payment.
IBM’s Matching Grants Program: In 2021,2023, non-management directors were eligible to participate in IBM’s Matching Grants Program on the same basis as IBM’s employees based in the U.S. Under this program, IBM matched a director’s eligible contributions in cash on a 1-to-1 basis to approved educational institutions, medical facilities and cultural or environmental institutions. Each director was eligible for a Company match on total gifts up to $10,000 per calendar year. Amounts shown in the Director Compensation Table for matching grants may be in excess of $10,000 because such amounts include Company contributions on gifts that were made by directors in previous years.
Director Compensation Consultant: The Committee retains Semler Brossy Consulting Group, LLC (Semler Brossy) to assess trends and developments in director compensation practices and to compare IBM’s practices against them. The Committee uses the analysis prepared by the consultant as part of its periodic review of IBM’s director compensation practices. Other than services provided to IBM’s Directors and Corporate Governance Committee and IBM’s Executive Compensation and Management Resources Committee, Semler Brossy does not perform any other work for IBM. The Committee determined that Semler Brossy is free of conflicts of interest.
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20212023 Director Compensation Table
Name
Fees Earned or
Paid in Cash ($)
All Other
Compensation ($)
Total ($)NameFees Earned or
Paid in Cash ($)
All Other
Compensation ($)
Total ($)
(a)(b)(c)(1)(d)(a)(b)(c)(1)(d)
Thomas Buberl325,00038,901363,901
Marianne C. Brown(2)
19,444619,450
Michael L. Eskew395,000539,632934,632Thomas Buberl350,00055,278405,278
David N. Farr325,000162,671487,671David N. Farr350,000119,333469,333
Alex Gorsky345,000219,084564,084Alex Gorsky400,000169,758569,758
Michelle J. Howard325,00069,668394,668Michelle J. Howard350,00071,134421,134
Andrew N. Liveris325,000323,856648,856Andrew N. Liveris370,000232,313602,313
F. William McNabb III325,00056,698381,698F. William McNabb III350,00066,257416,257
Martha E. Pollack325,00080,046405,046
Michael Miebach(3)
59,3061359,319
Joseph R. Swedish325,00079,086404,086Martha E. Pollack350,00080,662430,662
Sidney Taurel(2)
81,25076,358157,608Joseph R. Swedish350,00080,069430,069
Peter R. Voser325,000205,490530,490Peter R. Voser380,000159,908539,908
Frederick H. Waddell345,000133,815478,815Frederick H. Waddell370,000117,058487,058
Alfred W. Zollar(3)
59,5831359,596Alfred W. Zollar350,00026,740376,740
(1)

Amounts in this column include the following: for Mr. Buberl: $38,836 dividend equivalent payments on PFS; for Mr. Eskew: $539,557$55,203 of dividend equivalent payments on PFS; for Mr. Farr: $162,596$119,258 of dividend equivalent payments on PFS; for Mr. Gorsky: $219,008$169,683 of dividend equivalent payments on PFS; for Admiral Howard $69,593Howard: $71,059 of dividend equivalent payments on PFS; for Mr. Liveris: $323,781$232,238 of dividend equivalent payments on PFS; for Mr. McNabb, $56,622McNabb: $66,182 of dividend equivalent payments on PFS; for Dr. Pollack: $79,971$80,587 of dividend equivalent payments on PFS; for Mr. Swedish: $79,011 of dividend equivalent payments on PFS; for Mr. Taurel: $71,333$79,994 of dividend equivalent payments on PFS; for Mr. Voser: $205,415$159,833 of dividend equivalent payments on PFS; and for Mr. Waddell: $123,739$109,483 of dividend equivalent payments on PFS and $10,000$7,500 contributed by the Company under IBM’s Matching Grants Program.Program; and for Mr. Zollar: $26,665 of dividend equivalent payments on PFS.
(2)

Mr. Taurel’sMs. Brown’s term on the Board ended April 2021.began December 2023.
(3)

Mr. Zollar joinedMiebach’s term on the Board inbegan October 2021.2023.
Fees Earned or Paid in Cash (column (b)): Amounts shown in this column reflect the annual retainer paid to each director as described above. A director receives a prorated amount of the annual retainer for service on the Board and, if applicable, as Lead Director or a committee chair, based on the portion of the year for which the director served.
All Other Compensation (column (c)): Amounts shown in this column represent:


Dividend equivalent payments on PFS accounts under the DCEAP as described above.


Group Life Insurancelife insurance premiums paid by IBM on behalf of the directors.


Value of the contributions made by IBM under IBM’s Matching Grants Program as described above.
Delinquent Section 16(a) Reports: None
IBM believes that all reports for IBM’s executive officers and directors that were required to be filed under Section 16 of the Securities Exchange Act of 1934 in 20212023 were timely filed.
Insurance and Indemnification
IBM 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 June 30, 20212023 through June 30, 2022,2024, at a total cost of approximately $6.7$6.2 million. The primary carrier is AXA/XL Specialty Insurance Company.
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Ownership of Securities
Security Ownership of Certain Beneficial Owners
The following sets forth information as to any person known to IBM to be the beneficial owner of more than five percent of IBM’s common stock as of December 31, 2021.2023.
Name and address
Number of Shares
Beneficially Owned
Percent of ClassName and addressNumber of Shares
Beneficially Owned
Percent of Class
The Vanguard Group(1)
100 Vanguard Boulevard
Malvern, PA 19355
75,553,6558.42%
The Vanguard Group(1)
100 Vanguard Boulevard
Malvern, PA 19355
82,604,0569.05%
BlackRock Inc.(2)
55 East 52nd Street
New York, NY 10055
65,452,3747.3%
BlackRock Inc.(2)
50 Hudson Yards
New York, NY 10001
75,479,6568.3%
State Street Corporation(3)
State Street Financial Center
One Lincoln Street
Boston, MA 02111
53,156,0145.93%
State Street Corporation(3)
State Street Financial Center
1 Congress Street, Suite 1
Boston, MA 02114
55,035,8216.03%
(1)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 10, 202213, 2024 by The Vanguard Group and certain subsidiaries (Vanguard). Vanguard reported that it does not have sole voting power over any shares, and has shared voting power over 1,387,2761,120,906 shares, sole dispositive power over 71,965,56178,726,445 shares, and shared dispositive power over 3,588,0943,877,611 shares. The Schedule 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The Schedule 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.
(2)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 1, 2022January 25, 2024 by BlackRock, Inc. and certain subsidiaries (BlackRock). BlackRock reported that it hadhas sole voting power over 56,913,42368,491,656 shares, does not have shared voting power over any shares, and sole dispositive power over all shares beneficially owned. The Schedule 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The Schedule 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.
(3)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 14, 2022January 30, 2024 by State Street Corporation and certain subsidiaries (State Street). State Street reported that it does not have sole voting power over any shares, has shared voting power over 42,836,55232,946,835 shares, has shared dispositive power over 53,048,68154,961,927 shares, and does not have sole dispositive power over any shares. The Schedule 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The Schedule 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.
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Common Stock and Stock-based Holdings of Directors and Executive Officers
The following table sets forth the beneficial ownership of shares of IBM’s common stock as of December 31, 2021,2023, by IBM’s current directors and nominees, the executive officers named in the 20212023 Summary Compensation Table, and such directors and all of IBM’s executive officers as of December 31, 2021,2023, as a group. Also shown are shares over which the named person could have acquired voting power or investment power within 60 days after December 31, 2021.2023. 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.
IBM’s current non-management directors had beneficial ownership of a total of 210,200232,726 shares of common stock and DCEAP shares as of December 31, 2021.2023. In the aggregate, these shares were valued at more than $28$38 million as of December 31, 2021,2023, or an average of more than $2.3$2.9 million for each of IBM’s non-management directors as of December 31, 2021.2023.
Acquirable within 60 days
Value of
Common Stock
shares at
Fiscal Year End
Acquirable within 60 daysValue of
Common Stock
shares at
Fiscal Year End
CommonStock-basedStock Options And
Directors’
DCEAP
CommonStock-basedOptions AndDirectors’
DCEAP
NameStock(1)Holdings(2)RSUs(3)Shares(4)($)(5)NameStock(1)Holdings(2)RSUs(3)Shares(4)($)(5)
Michelle H. Browdy86,068119,8040N/A11,503,849Michelle H. Browdy119,442147,99730,898N/A19,534,739
Thomas Buberl0004,470597,460
Marianne C. Brown(6)
440(7)440011991,424
Gary Cohn14,35085,3115,112N/A1,918,021Thomas Buberl00010,0621,645,640
Michael L. Eskew00048,2606,450,432Gary D. Cohn52,95881,79945,162N/A8,661,281
David N. Farr7,508 (6)7,508014,7992,981,554David N. Farr8,508(8)8,508019,4384,570,568
Alex Gorsky4,4454,445020,2103,295,387Alex Gorsky4,4444,444028,0285,310,796
Michelle J. Howard14414407,037959,812Michelle J. Howard144144012,3702,046,665
James J. Kavanaugh94,018(7)151,5730N/A12,566,446James J. Kavanaugh98,395(9)148,83452,050N/A16,092,502
Arvind Krishna118,691(8)278,1000N/A15,864,239Arvind Krishna307,431(10)393,30284,150N/A50,280,340
Andrew N. Liveris2,6552,655029,2564,265,224Andrew N. Liveris2,6552,655037,5986,583,378
F. William McNabb III9,2509,25006,0182,040,721F. William McNabb III9,2509,250011,7643,436,840
Martha E. Pollack0008,0491,075,829
Michael Miebach(6)
00036359,369
Thomas W. Rosamilia17,83182,5490N/A2,383,291Martha E. Pollack00013,9982,289,373
Joseph R. Swedish5,261(9)5,26107,9651,767,787Joseph R. Swedish5,261(11)5,261013,9063,134,763
Peter R. Voser00018,9602,534,194Robert D. Thomas33,482(12)101,17764,896N/A5,475,981
Frederick H. Waddell3,7633,763011,9232,096,591Peter R. Voser00026,4144,320,010
Alfred W. Zollar00044659,612Frederick H. Waddell3,7633,763018,5643,651,581
Directors and executive officers as a group385,663(10)826,5545,112(10)177,393(10)Alfred W. Zollar0005,637921,931
Directors and executive officers as a group674,703(13)961,796302,662(13)198,261(13)142,773,263
(1)

This column is comprised of shares of IBM common stock beneficially owned by the named person. Unless otherwise noted, voting power and investment power in the shares are exercisable solely by the named person, and none of the shares are pledged as security by the named person. Standard brokerage accounts may include nonnegotiable provisions regarding set-offs or similar rights. This column includes 110,372186,396 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 14,8846,807 shares held by the IBM Personal Pension Plan Trust Fund, over which the members of the IBM Retirement Plans Committee, a management committee presently consisting of certain executive officers of the Company, have voting power, as well as the right to acquire investment power by withdrawing authority now delegated to various investment managers.
(2)

For executive officers, this column is comprised of the shares shown in the “Common Stock” column and, as applicable, all restricted stock units including retention restricted stock units, officer contributions into the IBM Stock Fund under the IBM Excess 401(k) PlusSavings Plan, and Company contributions into the IBM Stock Fund under the Excess 401(k) PlusSavings Plan. Some of these restricted stock units may have been deferred under the Excess 401(k) PlusSavings Plan in accordance with elections made prior to January 1, 2008, and they will be distributed to the executive officers after termination of employment as described in the 20212023 Nonqualified Deferred Compensation Narrative.
(3)

For executive officers, this column is comprised of (i) shares that can be purchased under an IBM stock option plan within 60 days after December 31, 2021,2023, and (ii) RSU awards that vest within 60 days after December 31, 2021.2023. For Ms. Browdy, Mr. Cohn, Mr. Kavanaugh, Mr. Krishna, and Mr. Thomas, shares in this column are from an IBM restricted stock awardawards which will vest within 60 days after December 31, 2021.2023.
(4)

Promised Fee Shares earned and accrued under the IBM Deferred Compensation and Equity Award Plan (DCEAP) as of December 31, 2021,2023, including dividend equivalents credited with respect to such shares. Upon a director’s retirement, these shares are payable in cash or stock at the director’s choice (see 2021 Director Compensation Narrativesection for additional information).
(5)

Values in this column are calculated by multiplying the number of shares shown in the “Common Stock” column plus the “Directors’ DCEAP Shares” column by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 20212023 fiscal year ($133.66)163.55).
(6)

Ms. Brown joined the Board in December 2023 and Mr. Miebach joined the Board in October 2023.
(7)
Voting and investment power are shared.
(8)
Includes 450 shares in which voting and investment power are shared.
(7)
(9)
Includes 15,17411,061 shares in which voting and investment power are shared.
(8)
(10)
Includes 89,486169,145 shares in which voting and investment power are shared.
(9)
(11)
Voting and investment power are shared.
(10)
(12)
Includes 39 shares in which voting and investment power are shared.
(13)
The total of these three columns represents less than 1% of IBM’s outstanding shares, and no individual’s beneficial holdings totaled more than 1/10020 of 1% of IBM’s outstanding shares.
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IBM Impact
EnvironmentalWe believe IBM is a catalyst that makes the world work better. We aspire to make a lasting, positive impact in business ethics, our environment, and Social Responsibilitythe communities in which we work and live. The IBM approach is embodied in the three pillars of our IBM Impact framework. It is informed through collaboration and engagement with a broad range of stakeholders and considers frameworks and initiatives such as the Global Reporting Initiative Standards, the Sustainability Accounting Standards Board Standards, the Task Force on Climate-Related Financial Disclosures, and the United Nations Sustainable Development Goals. Our latest Impact Report is available at https://www.ibm.com/impact/reports-and-policies.
IBM Impact Framework
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Corporate social responsibility has been a hallmark of IBM’s culture
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Environmental Impact  [MISSING IMAGE: ic_environmentalimpact-pn.jpg]
Creating innovations, policies and practices that prioritize ethics, trust, transparency, and above all — accountabilityCreating spaces and opportunities for over 100 years. With oversight from the Board, we lead with purposeeveryone by focusing on diversity, equity, and integrityinclusivity within IBM as well as globallyCreating better pathways to empower IBMers to be a force of positive changeconserve natural resources, reduce pollution, and to use technology to accelerate discovery. The trust of our stakeholders is IBM’s license to operate.minimize climate-related risks
In 2022, based on stockholder feedback on how
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 Ethical Impact
IBM is committed to make our ESG information even more accessible, we will synthesize our environmental, corporate responsibilitydeveloping policies and diversity reporting into one unified ESG Report. Inpractices that prioritize ethics, trust, transparency, and accountability. For over a century, IBM has earned the meantime, we encourage stockholders to read our latest Corporate Responsibility Report which provides insight into alltrust of our ESG initiatives, including a mappingclients by responsibly managing their data. We earn the trust of key ESG metricsour stakeholders by ushering powerful new technologies into the world, ethically and with purpose. We believe it is our responsibility to SASB,continue to contribute to diverse, global efforts that shape standards and is available at https://www.ibm.org/responsibility/reports.best practices for current and emerging technologies, such as AI.
Based on feedback from investor outreach, below we also provide some examples reflecting how we are:

Putting trust and transparency into practice as a leader advancing responsible AI

Protecting the environment

Embracing and enabling a diverse and inclusive workforce

Advocating for responsible public policy positions
Putting our Principles of Trust and Transparency into Practice
For more than 100 years, IBM has continuously strivedIBM’s Principles for responsible innovation that puts people first and ensures the benefits are felt broadly across society. This philosophy applies to our approach to artificial intelligence (AI): we aim to create and offer trusted technology that can augment, not replace, human decision-making. Properly calibrated, AI can assist humans in making fairer choices, countering human biases, and promoting inclusivity. IBM recognized early on that clearly articulating principles around the responsible deployment of AI technologies was critical — backed by a strong commitment to putting words into practice. Our commitment is represented by our long-standing values and our Trust and Transparency Principles, as well as our continued leadership withare the Vatican’s Rome Call forguiding values that distinguish IBM’s approach to AI Ethics,ethics. They include:

The purpose of AI is to augment human intelligence;

Data and insights belong to their creator; and

New technology, including AI systems, must be transparent and explainable.
These principles are supported by five pillars of trust that IBM developed to guide the Notre Dame-IBM Tech Ethics Lab,responsible adoption of AI technologies: explainability, fairness, robustness, transparency and published points of view on facial recognition and mitigating bias in AI. We share technology solutions with the open-source community, including several toolkits, created byprivacy. The IBM Research, designed to promote trustworthy AI.
While continuing to collaborate with governments, companies, and other organizations, we have expanded the work of our internal governance frameworks and processes to further embed privacy, tech ethics, and security into our operations. Our AI Ethics Board which is comprised of a cross-disciplinary team of senior IBM leaders, co-chaired by IBM’s Chief Privacy Officeractively engaged in supporting alignment with these principles and IBM’s AI Ethics Global Leader, and reports to the highest level of the company, works with experts throughout our businesspillars to address our most complicated questions. We regularly share ourgenerative AI and has published a white paper on the opportunities, risks and mitigations for foundation models (https://www.ibm.com/impact/ai-ethics). IBM’s leadership in AI ethics in reflected in many external collaborations, including the Notre Dame — IBM Technology Ethics Board governance process with clientsLab, which in 2023 focused on the challenges of auditing AI systems and others outsidein 2024 will explore the ethical issues of foundation models in enterprises, among other projects. IBM so that we can collectively workalso launched the AI Alliance, a group of leading organizations across industry, startup, academia, research and government coming together to advance thesupport open innovation and open science in AI. The AI Alliance is focused on fostering an open community and enabling developers and researchers to accelerate responsible use of technology.innovation in AI while ensuring scientific rigor, trust, safety, security, diversity and economic competitiveness, and IBM is proud to be a founding member to lead in this space.
IBM Trust and Transparency Principles
The Purpose of AI
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Data Insights
and Ownership
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Transparency and
Explainability
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The purpose of AI is to augment human intelligence. At IBM, we believe AI should make all of us better at our jobs, and that the benefits of the AI era should touch the many.
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Data and insights belong to their creator. IBM clients’ data is their data, and their insights are their insights.
Equitable Impact
New technology, including AI systems, must be transparent and explainable. Technology companies must be clear about who trains their AI systems, what data was used in that training and, most importantly, what went into their algorithms’ recommendations.
By providing an inclusive environment that encourages learning and exploration of new ideas and innovative approaches, we can make the greatest impact with our clients, partners, colleagues, and the world. Fostering a culture underpinned by our purpose, values, and growth behaviors is what drives us. It’s what motivates employees to do their best work. Together, we think big, set the pace for our industry, forge partnerships, and make the world work better.
Embracing and Enabling a Diverse and Inclusive Workforce
The IBM Board of Directors strongly believes that much of IBM’s future success depends on the caliber of its talent and the full engagement and inclusion of IBMers in the workplace. We foster a culture of conscious inclusion and active allyship where IBMers can make a positive impact on society and bring their authentic selves to work.
IBM has had an equal pay policy since 1935. We have conducted statistical pay equity analyses for decades, and in 2023 we continued this practice for all countries where we have employees.
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Supporting our Employees
IBM offers a competitive benefits program, designed to help employees build a solid foundation for meeting a diverse array of needs — health care, income protection, retirement security, and personal interests. IBMers worldwide have confidential, 24/7 access to critical mental health support through employee assistance programs and supplemental resources. Other programs include training for employees on resilience, ergonomics, and financial well-being.
ProtectingIBM is actively fostering an environment of growth, inclusion, innovation, and feedback. We support our employees’ professional development by investing in a range of advanced tools and resources that empower IBMers to direct their own career paths and build the Environment
Environmental Highlights
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Net Zero Greenhouse Gas
Emissions by 2030
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16,900 Metric Tons of Product
Waste Reused, Resold or Sent
for Recycling
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Reduced CO2 Emissions 56.6%
Against Base Year 2005, Adjusted
for Divestitures and Acquisitions
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Procured 59.3% of Electricity
from Renewable Sources
Ambitious Goal Setting
Settingskills required to pursue their goals. IBMers globally participate in our annual engagement survey, providing actionable, data-driven insights on workplace experience, inclusion, pride and achieving ambitious goals has long beenpropensity to recommend IBM as an essential partemployer. In 2023, more than 8 of IBM’s global environmental management system: from10 IBMers who participated in the 1970s and 1980s, when we first established formal goals around energy conservation and waste management,survey responded that they felt engaged at work — a testament to our first CO2 reduction goals set in 2000. And, in 2021, we conducted an extensive review of all our goals and announced 21 goals for environmental sustainability, including a new goal to achieve net zero greenhouse gas emissions by 2030, as well as new and updated goals covering energy and climate change, conservation and biodiversity, pollution prevention and waste management, supply chain and value chain, and our global environmental management system.industry-leading talent practices.
Please see our latest environmental report for additional information on our environmental goals and IBM’s environmental performance, which is available at https://www.ibm.org/responsibility/reports-and-policies.Community Development
Enabling Our Clients and Communities
At IBM, we believe that science, technology and innovation are essential to tackling environmental issues and helping clients and communities address environmental challenges. IBM continues to develop solutions that enable clients to assess and minimize their environmental footprint.
Enabling our ClientsEnabling our Communities
Last year, we launched the IBM Environmental Intelligence Suite to help clients leverage data and AI for climate risk assessment and adaptation. Using IBM’s Environmental Intelligence Suite, clients can plan for and respond to critical weather events to ensure business continuity. We are continuing to develop our portfolio of AI-enabled solutions to help our clients analyze, manage and report on environmental goals.We are also uniting our experts and technology with the purpose of supporting communities. We believe that together, we have the potential to make a lasting, scalable impact on communities that need the most help. That is why we launched the Call for Code Global Challenge, which invited the world’s software developers to combat climate change with open source-powered technology. The top prize this year went to Saaf Water, an accessible water quality sensor and analytics platform for people living in rural localities. Leveraging IBM’s Service Corps, we will work with Saaf Water to incubate, test and deploy their solution in communities relying on groundwater for domestic use.
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Embracing and Enabling a Diverse and Inclusive Workforce
At IBM we are passionate about creating a culture where employees of all backgrounds can thrive. IBM’s purpose is underpinned by a corporate culture that harnesses data transparency and AI to achieve growth and increase inclusion and diversity for our clients, our company and ourselves. In addition to embracing and enabling our workforce, we have committeda shared commitment to providing 30 million people with new skills by 2030.create a better, more equitable world — for each other, and within our global community. We are expanding access to digital skills and employment opportunities so that more people — regardless of their background — can participate in the digital economy. In 2023, IBM committed to train two million learners in AI by the end of 2026, with a focus on underrepresented communities. To achieve this goal at a global scale, we are expanding our collaborations with universities and partners to deliver AI training to adult learners and are launching new generative AI coursework through IBM SkillsBuild. Closing the skills gap is one of IBM’s top priorities in this space. We are taking bold action to achieve this.
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Environmental Impact
For more than 50 years, IBM has been committed to environmental responsibility — a commitment formalized by our first corporate environmental policy in 1971, which integrated environmental responsibility throughout the fabric of our business. IBM views environmental leadership as a long-term strategic imperative, demonstrated today as we continue to set ambitious goals and apply our technologies to accelerate solutions to global environmental challenges.
Enabling Our Clients and Communities
At IBM, we help clients and communities achieve their sustainability goals by infusing trustworthy data with AI into daily operations enabled by expertise that can operationalize sustainability to combat climate change.
Enabling Our Clients: IBM’s sustainability technology, consulting and research capabilities make data visible and actionable. By leveraging AI and automation for scale and speed across functions, we accelerate clients’ business objectives and sustainability goals, increase productivity, reduce costs, waste and emissions — and help them meet regulatory requirements.
Enabling Our Communities: Through programs like the IBM Sustainability Accelerator, IBM addresses multiple environmental threats around the world. The program applies IBM Boardtechnologies, such as watsonx, and an ecosystem of Directors strongly believes that much ofexperts to enhance and scale non-profit and government organization initiatives helping populations especially vulnerable to environmental threats. The program selects five projects around a theme every year. Currently, the future success of IBM dependsSustainability Accelerator has three active cohorts: the first is focused on sustainable agriculture, the caliber of its talentsecond on clean energy, and the full engagement and inclusion of IBMers in the workplace. Our commitmentthird on water management. In 2024, we plan to equity and inclusion, talent and culture, education and diversity has been recognized by JUST Capital. IBM ranked first in our industry in JUST Capital’s 2022 America’s Most JUST companies.
For more informationdeploy a fourth cohort focused on IBM’s Diversity and Inclusion efforts, please see our diversity and inclusion report at https://www.ibm.org/responsibility/reports-and-policies.
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Diversity and Inclusion

9 out of 10 IBMers feel empowered to be their authentic selves at work and feel that IBM is an inclusive workplace

IBM’s industry-leading diversity hiring practices have resulted in a 20% increase in underrepresented minority hiring over the past 3 years and a 31% increase in executive minority hiring

We currently have 8 D&I Communities with over 300 Business Resource Groups globally, spanning 47 countries with over 32,000 IBMers actively participating in programs, events, and other D&I initiatives

Same-sex partner benefits have been extended in 50 countries and 6,000 IBMers are certified LGBT+ Allies

IBM has had an equal pay policy since 1935; we have conducted statistical pay equity analysis for decades, and in 2021 this included all countries where we have employees
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Community Impact Through Skilling

IBM has pledged to skill 30 million people by 2030, preparing them for in-demand jobs

Learners participating in our skilling programs earn digital badges and certifications widely recognized by the labor market

We are collaborating with over 23 historically black colleges and universities (HBCUs) on IBM quantum centers to advance STEM-based opportunities for traditionally underrepresented communities

900,000 college students at 10,000 universities are enrolled in specialized academic courses through our global university programs

IBM experts are matched with learners in programs like STEM for Girls and IBM SkillsBuild providing practical career advice and strategies for professional development and advancement; IBM employees volunteered over 870,000 hours in 2021
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Talent and Culture

IBM offers a compelling value proposition to employees: IBMers develop innovative technologies including Cloud, AI, quantum computing and cybersecurity, for clients whose businesses the world relies on

In 2021, IBMers logged an average of over 70 learning hours per person, reflecting IBM’s commitment to provide access to every IBMer to the resources to build strategic skills, grow their careers, and face the future with confidence

Training and support is provided to help every IBMer be an upstander through inclusive behaviors

Hundreds of thousands of IBMers globally participate in our annual engagement survey, and our industry-leading talent practices enable more than 8 out of 10 IBMers to be highly engaged

Every IBM manager and leader has access to their team and organization engagement levels along with actionable data-driven insights
advancing resilient cities.
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IBM Impact



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Responsibly Advocating Public Policy
IBM’s Government and Regulatory Affairs team engages in worldwide policy advocacy to drive growth and innovation in the digital economy. IBM has never had a political action committee (PAC), makes no political donations, and has always been committed to meaningful management, oversight, and accurate reporting of our engagement with government officials. To be clear, these policies do not putThrough deep expertise in specific areas of public policy relevant to its business, clients and communities, IBM at a disadvantage — instead, they empower usworks collaboratively with governments worldwide to promote meaningful policies that are good for business, employees,expand economic prosperity and all our stakeholders. Overadvance the past year, while America’s democratic institutions were tested and manyability of IBM’s corporate peers contemplated suspending financial contributionspowerful technologies to certain elected officials, we faced no such quandary. Consistent with our long-held principles, IBM was able to stay focusedhave positive impacts on substantive policy issues.society.
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Political Contributions
IBM engages in policy, not politics. In 1968, former IBM CEO Thomas Watson Jr. said a company “should not try to function as a political organization in any way.” 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, even where such contributionsgovernment. 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 Michigan’s 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 permitted by law. In short, IBM engagesfocused on strengthening trust in civic institutions and their interactions with business, and providing a framework for how business can responsibly influence public policy not politics.
IBM does not havewithout giving a PAC and does not engage in independent expendituresdime to political candidates or electioneering communications as defined by law.campaigns.
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Lobbying
IBM’s 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 IBM’s 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.
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Trade Associations
IBM joins trade and industry associations that add value to IBM, its stockholders and employees. These groups have many members from a wide variety of industries, and cover broad sets of public policy and industry issues. 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. 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. Please visit https://www.ibm.com/policy/philosophy-and-governance-new/ for a list of the trade associations that we support, through annual payments of $50,000 or higher, that are directly engaged in U. S. lobbying.
The IBM Board of Directors, as part of its oversight function, periodically receives reports from senior management relating to IBM’s policies and practices regarding governmental relations, public policy, and any associated expenditures.
IBM’s senior management, under the leadership of IBM Government and Regulatory Affairs, closely monitors and coordinates all public policy advocacy efforts, as well as any lobbying activities.
IBM is proud to report that the Center for Political Accountability’s 20212023 Report on Corporate Political Disclosure and Accountability gave IBM a score of 98.6 out of 100, naming IBM a trendsetter in Political Disclosure and Accountability and recognizing IBM as one of only 3220 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 purposespurposes.
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20212023 Executive Compensation
Message to Stockholders
Report of the Executive Compensation and
Management Resources Committee of the Board of Directors
Set out below is the Compensation Discussion and Analysis, which is a discussion of IBM’s executive compensation programs and policies written from the perspective of how we and management view and use such programs and policies.
Given the Committee’s role in providing oversight to the design of those programs and policies, and in making specific compensation decisions for senior executives using those programs and 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.
At the 2021 annual meeting, 51% of our shares voted did not support our Say on Pay proposal, which was substantially below the support received in prior years. Following the 2021 vote, we increased our investor outreach efforts to ensure we fully understood our investors’ feedback and concerns. We offered engagement to investors representing 55% of the shares that voted at the 2021 annual meeting, and ultimately met with investors representing more than 35% of voted shares — including 6 of our 10 largest investors. We greatly appreciate the feedback that our investors provided.
Through these discussions, we learned that investors generally remained supportive of our pay programs, and appreciated the changes in our incentive plan metrics to reinforce IBM’s growth strategy following the plan to separate Kyndryl that was announced at the end of 2020. However, many investors did express concern over the one-time equity award provided to James Whitehurst in March 2020, in connection with Mr. Whitehurst signing an IBM non-compete agreement. These discussions confirmed for us that this unique grant was the basis for the failed vote.
In these meetings, we openly discussed the one-time award for Mr. Whitehurst, and heard specific concerns about whether the award was necessary to secure a non-compete agreeement. We sought to clarify that we considered the circumstances to be extraordinary in this situation, as this is the first time a senior leader from a large acquisition has become an IBM Officer prior to signing an IBM non-compete agreement. Since Mr. Whitehurst’s prevailing non-compete agreement as the CEO of Red Hat when it was acquired in July 2019 was more limited to the scope of the Red Hat business, we considered the IBM non-compete agreement important to protect IBM’s intellectual property and stockholders’ interests. That said, we fully understand the concerns around the one-time award that were expressed and appreciated the feedback. We explained to our investors that we do not anticipate a need to provide one-time awards to our named executive officers going forward. For example, no named executive officers received a one-time retention award in 2021. We also reconfirmed that our ongoing compensation programs, including our annual incentive program and long-term incentives, are designed to be effective to motivate, retain, and align IBM’s named executive officers with stockholders.
The full summary of what we heard from investors, and the actions the Compensation Committee took as a result, can be found in the Compensation Discussion and Analysis summary following this report. We continue to evaluate the effectiveness of our executive compensation programs and practices, and a critical component of that evaluation process is feedback from engaging with our stockholders.
We appreciate all of the feedback and support, and we join with management in welcoming readers to examine our pay practices and in affirming the commitment of these pay practices to the long-term interests of stockholders.
Frederick H. Waddell (chair)
Alex Gorsky

Joseph R. Swedish


Martha E. Pollack

Thomas Buberl
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20212023 Compensation Discussion and Analysis
In 2021,2023, IBM
delivered
$57.4B61.9B in revenue, $11.2B of free cash flow, and
generated
$12.8B13.9B in cash from operations.(1)operations.
Improved Revenue growth profile
Continuing Operations revenue, year-to-year growth figures at constant currency(2)
Accelerating IBM GrowthOptimized Portfolio, Including Kyndryl Separation
Revenue growth accelerated in 2021, exiting the 4th quarter at 8.6% including approximately 3.5 points from incremental external sales to Kyndryl
Completed the separation of Kyndryl on November 3, 2021, and focused on Hybrid Cloud & AI strategy
2021
Revenue Generation
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Revenue year-to-year growth figures at constant currency.(1)
Optimized Portfolio Positioned to Deliver High ValueRecurring Revenue Acceleration
IBM continues to strengthen and reinforce its position in delivering high-value, differentiated technology to its clientsAbout 50% of IBM revenue is recurring, with a high-value mix
2023 Revenue Mix2023 Recurring Revenue Mix
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Increased revenue mix due to higher growth softwareSoftware and consultingConsulting
Software revenue +4% Year-to-Yeargrew 5% year-to-year
Annual Recurring Revenue* over $13B, +8%Hybrid Platform & Solutions +5% year-to-year, exiting 4Q2021including Red Hat +9% year-to-year
Consulting revenue +8% Year-to-Yeargrew 6% year-to-year
Business Transformation +13%
Year-to-Year
Technology Consulting +10%
Year-to-Year
*Annual Recurring Revenue for Hybrid Platform & Solutions(2)
Hybrid Cloud RevenueContinued Red Hat Success
Hybrid Cloud Revenue grew 19% in 2021,Broad-based growth across all business lines and now
makes up 35%geographies reflecting the strength of IBM revenue
[MISSING IMAGE: tm222452d1-bc_cloudrevpn.jpg]our consulting expertise and offerings
Over 3,800 clients using hybrid cloud platform, up 1,000 Year-to-Year[MISSING IMAGE: pc_recurringrevmix2022-pn.jpg]
67% of recurring revenue now comes from high-growth Software
[MISSING IMAGE: tm2122634d2-bc_redhatpn.jpg]Hybrid Platform & Solutions exited 2023 with over $14 billion in Annual Recurring Revenue(1)
Revenue year-to-year growth figures at constant currency.(1)
Strategic Capital Allocation
Completed 159 acquisitions

in 20212023 for $3B
$5B, and invested nearly $7B in RD&E
ReturnReturned $6B to stockholders
through
dividends in 2021
2023
Reduced debt by $10BEnded 2023 with $13.5B in 2021cash and
marketable securities, up over
$21B since acquiring Red Hat4.6B year-to-year
(1)

Cash from operations is presented on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl.
(2)
Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.
(2)
Year-to-Year revenue growth % includes incremental sales to Kyndryl (post-separation, through October 2022) of ~1 point and ~4 points for 2021 and 2022, respectively.
Note: In an effort to provide additional and useful information regarding IBM’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), this Compensation Discussion and Analysis and Proxy Statement contains certain non-GAAP financial measures, including operating earnings per share, free cash flow, including discontinued operations activity related to the separation of Kyndryl,consolidated operating cash flow, including discontinued operations activity related to the separation of Kyndryl, operating net income,and revenue growth rates adjusted for currency, and revenue adjusted for currency. Amounts are presented on a continuing operations basis unless otherwise noted. For reconciliation and rationale for management’s use of this non-GAAP information, refer to Appendix A — “Non-GAAPNon-GAAP Financial Information and Reconciliations.
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Our compensation strategy, with significant pay at risk, supports the drivers of IBM’s high value business model.
For 2021,2023, at target, 65%approximately 77% of Mr. Krishna’s pay remained at risk and subject to attainment of rigorous performance goals.
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For 20212023 performance, the Board approved an annual incentive payment of $2,940,000$3,510,000 for Mr. Krishna, which was 98%117% of target. The payout reflects a 100% Individual Contribution Factor (ICF) and the Annual Incentive Program (AIP) pool funding at 98%117%.
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In making this award in line with the Company’s incentive score, the Committee also considered Mr. Krishna’s overall performance against his objectives, which included optimizingstrong free cash flow generation, sustainable revenue generation (at constant currency), and the continued optimization of the Company’s portfolio, to focus on hybrid cloudwith an increased mix of higher growth software and AI growth by successfully separating Kyndryl on November 3, 2021, two months prior to year end.consulting revenue. In addition, the Committee considered hisMr. Krishna’s personal leadership in AI and quantum computing, improving diversity representation including meaningful improvementsdriving IBM’s high performance culture, as well as continued best in diverse executive representation, and continuing to improveclass employee engagement in a year where the company underwent significant change.engagement.
Payouts in both the annual and long-term programs reflect rigorous performance goals.
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Feedback from Our Investors Continues to Inform the Committee

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.

Our stockholder discussions and formal 2023 Say on Pay vote reaffirmed investor support of our pay practices.
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Stockholder Engagement Provided Important Feedback for the Committee
IBM continually reviews and enhances its corporate governance and executive compensation programs. As part of this review, it is IBM’s 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.
In 2021, 51% of shares voted did not support the annual advisory vote on Executive Compensation (Say on Pay). Following the vote and in order to understand fully our investors’ feedback and concerns about our pay programs and practices, IBM launched an expanded investor outreach program, offering engagement to 55% of the shares that voted at the 2021 annual meeting, and meeting with investors representing more than 35% of voted shares, including 6 of our 10 largest investors. IBM’s independent Lead Director, together with our Chairman and CEO and other senior management, met directly with investors representing over 26% of the shares voted.
This in-depth engagement process provided valuable feedback to the Compensation Committee. Overall, our stockholders reconfirmed support for our pay programs and practices, including changes to AIP and PSU metrics introduced in 2021. However, many investors also expressed concern with the one-time equity award granted to James Whitehurst in March 2020, in connection with Mr. Whitehurst signing an IBM non-compete agreement (NCA) that fully covered the scope of IBM’s business footprint and was consistent with those signed by other IBM senior leaders. The following table summarizes the major items raised by our investors, and the Committee’s response to this feedback.
What We Heard
Compensation Committee’s Response
Support for our pay programs, including the updates to our plan metrics that reinforced our growth strategy

Continued our Annual Incentive Program (AIP) and Performance Share Unit (PSU) metrics that were established in 2021.

Updated Compensation Peer Group to increase the weighting of peers in the technology industry, reflect IBM’s increased orientation as a hybrid cloud and AI company, and align the Peer Group with the size and scope of IBM following the separation of Kyndryl.

Introduced Stock Options in 2022 as part of the overall equity pay mix for executives; ensures a portion of equity does not generate value unless IBM’s stock price increases over the price when granted.
Positive reaction to the AIP diversity modifier, as well as management’s support for the 2021 stockholder proposal calling for annual reporting on Diversity & Inclusion

IBM is committed to a diverse and inclusive workplace, and reports annually on the effectiveness of our diversity and inclusion programs.

IBM Board of Directors will continue to engage openly on all stockholder proposals and may support proposals in the future that align with IBM’s strategy and values.

Disclosure of the 2021 diversity modifier results are included in the “2021 Annual Incentive Program” section, with additional details of our diverse executive representation to be disclosed in IBM’s annual ESG Report.
Concern over the one-time grant for James Whitehurst awarded in March 2020 in connection with Mr. Whitehurst signing an IBM NCA

The circumstances of Mr. Whitehurst’s one-time award were unique and resulted in him entering into an IBM NCA to protect the company’s intellectual property and its stockholders’ interests. The Compensation Committee’s philosophy is that ongoing compensation programs, including AIP and long-term incentives, are designed to be effective to motivate, retain, and align named executive officers with stockholders. As such, one-time awards for named executive officers are not a common practice. The Committee regards the input of stockholders as important and agrees grants of this nature would only occur in extraordinary circumstances. No one-time awards were provided to any named executive officers in 2021.

In connection with Mr. Whitehurst stepping down as President in 2021, the planned 2021 annual long term incentive award was not granted.

Mr. Whitehurst has agreed to stay with IBM as a Senior Advisor until May 2022. Unvested equity awards were not accelerated, and any outstanding equity awards (including the final tranche of this one-time award) will forfeit following his separation; under the IBM NCA Mr. Whitehurst cannot provide services to a competitor, or solicit clients, for one year following his separation.
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Section 1: Executive Compensation Program Design and Results
Trust and personal responsibility in all relationships — relationships with clients, partners, communities, fellow IBMers, and investors — is a core value at IBM. As a part of maintaining this trust, we well understand the need for our investors — not only professional fund managers and institutional investor groups, but also millions of individual investors — to know how and why compensation decisions are made.
To that end, IBM’s executive compensation practices are designed specifically to meet five key objectives:


Align the interests of IBM’s leaders with those of our investors by varying compensation based on both long-term and annual business results and delivering a large portion of the total pay opportunity in IBM stock;


Balance rewards for both short-term results and the long-term strategic decisions needed to ensure sustained business performance over time;


Attract and retain the highly qualified senior leaders needed to drive a global enterprise to succeed in today’s highly competitive marketplace;


Motivate our leaders to deliver a high degree of business performance without encouraging excessive risk taking; and


Differentiate rewards to reflect individual and team performance.
The specific elements of IBM’s current U.S. executive compensation programs are:
TypeComponentKey Characteristics
Current Year

Performance
SalarySalary is a market-competitive, fixed level of compensation.
Annual Incentive Program (AIP)
At target, annual incentive provides a market-competitive total cash opportunity. Actual annual incentive payments are funded by business performance against financial metrics and distributed based on annual performance scores, with top performers typically earning the greatest payouts and the lowest performers earning no incentive payouts.
Long-Term

Incentive
Performance Share Units (PSUs)
Equity awards are typically granted annually and may consist of PSUs and RSUs, and beginning in 2022, Stock Options. EquityAnnual equity grants are based on competitive positioning and vary based on individual talent factors. Lower performers do not receive equity grants.
For PSUs, the number of units granted can be increased or decreased at the end of the three-year performance period based on IBM’s performance against predetermined targets.
In addition,targets and a relative performance metric applies to all PSU awards. The final number of PSUs earned can be increased or decreased based on IBM’s Return on Invested Capital (ROIC) performance relative to S&P indices.metric.
Restricted Stock Units (RSUs)RSUs vest over time; typically ratably over four years.
Stock Options (Options)Will become part of the annual equity mix in 2022. Stock Options will vest over time; typically ratably over four years. The exercise price will beis at least the value of the IBM stock price on the date of grant, and will be exercisable for up to 10 years from the date of grant.
RetentionStock-Based Grants & Cash AwardsPeriodically, 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 Retention Restricted Stock Units (RRSUs), retention PSUs (RPSUs), or cash for certain executives. RRSU and RPSU vesting periods typically may range from two to five years. In addition to time-based vesting, RPSUs include a relative ROIC performance metric (consistent with standard PSUs) for some or all of a given award. Cash awards have a clawback if an executive leaves IBM before it is earned.
Other CompensationPerquisites and Other BenefitsPerquisites are intended to ensure safety and productivity of executives. Perquisites include such things as annual executive physicals, transportation, financial planning, and personal security.
Post
Employment
Savings PlanU.S. employees may participate in the IBM 401(k) Plus Plan by saving a portion of their pay in the plan, and eligible employees may also participate in a non-qualified deferred compensation savings plan, which enables participants to save a portion of their eligible pay in excess of IRS limits for 401(k) plans. The Company provides matching and automatic contributions for both of these plans.
Non-qualified Savings Plan
Pension Plans (closed)Named Executive Officers (NEOs) may have legacy participation in closed retention and retirement plans, for which future accruals ceased as of December 31, 2007.
Supplemental Executive
Retention Plan (closed)
Other compensation elements include perquisites, which are used on a limited basis to ensure safety and productivity of executives, and retirement benefits.
Full Career Performance: Retention, Pension, and Savings:
Periodically, awards may be made in the form of Retention Restricted Stock Units (RRSUs) or cash awards to help retain certain executives. Vesting of RRSUs typically range from two to five years and cash awards have a clawback if an executive leaves IBM before it is earned.
Eligible U.S. employees may participate in post-employment savings plans such as the IBM 401(k) Plus Plan, and a non-qualified deferred compensation plan. Effective January 1, 2024 the Company also provided a new cash balance retirement benefit in the IBM Personal Pension Plan to all eligible employees equal to 5% of eligible pay. In light of this change, the Company match and automatic contributions in the 401(k) Plan ended December 31, 2023; and effective January 1, 2024 employer contributions in the non-qualified deferred compensation savings plan moved to a consistent 5% matching contribution for all eligible employees.
A full description of the Retention, Pension, and Non-Qualified Deferred Compensation plans is provided in this Proxy Statement, beginning with the 2021 Retention Plan Narrative.
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Our Incentive Compensation Design Supports our Business Strategy
Our senior executive pay is heavily weighted to IBM’s performance through the annual and long-term incentive programs. Each year, the Committee ensures that these programs are closely aligned to the Company’s financial and strategic objectives and are appropriately balanced. Targets are set at challenging levels and are consistent with IBM’s financial model shared with investors for that year. As part of IBM’s ongoing management system, targets are evaluated to ensure they do not encourage an inappropriate amount of risk taking.
AIP and PSU Design Updates Beginning in 2021
To reinforce the strategic shift of the Company’s business model announced in October 2020, when IBM announced the planned separation of the Company’s managed infrastructure services business, and to support the focus on delivering sustainable revenue growth and free cash flow as a hybrid cloud and AI company, the Committee revamped the performance metrics in our executive compensation programs as follows:
20212023 Metrics and Weightings
Annual Incentive Program (AIP)
RevenueOperating Cash Flow*
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Measures total revenue performance across the portfolio of business
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Measures our ability to reinvest and return value to shareholders
Diversity Modifier: Affirms management’s commitment to diverse representation in our workforce that reflects the labor pool demographics of the communities in which we operate.
Performance Share Unit (PSU) Program(1)
RevenueOperating EPS*Free Cash Flow*
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Measures revenue performance over three years
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Measures operating profitability on a per share basis over three years
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Measures our ability to reinvest and return value to shareholders over three years
Performance adjusted by a relative Return on Invested Capital Modifier.
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*
Non-GAAP financial metric. Net Cash from Operating Activities, excluding Global Financing receivables.metrics. See Appendix A for information on how we calculate these performance metrics.
**
(1)
Non-GAAP Financial Metric. ROIC equals consolidated net operating profits after tax (consolidated GAAP net income plus after-tax interest expense) divided by the sum of the average debt and average total stockholders’ equity over the period. Due to the significant nature of the Red Hat acquisition, the Company utilizes a computation of ROIC excluding goodwill associated with the acquisition. The goodwill that was generated is primarily attributable to the assembled workforce of Red Hat and the increased synergies expected to be achieved over time from the integration of Red Hat products into the Company’s various integrated solutions. The calculation also excludes current period U.S. tax reform charges due to its unique, non-recurring nature.
Note: For PSU performance periods that began prior to 2021,period 2020-2022, the metrics included were Operating EPS at 70%, Free Cash Flow at 30%, and the ROIC Modifier.
IBM shares its financial model each year with investors in the context of its long-term strategy. To provide further transparency, into the rigor of our goal setting process, IBM discloses the performance attainment against financial targets for the most recent performance period, for both the Annual Incentive Program and the Performance Share Unit Program.
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20212023 Annual Incentive Program
How It Works
IBM sets business objectives at the beginning of each year, which are approved by the Board of Directors. The Compensation Committee and the Board of Directors review IBM’s annual business objectives and set the metrics and weightings for the annual incentive 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 AIP.
Performance against 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 tax rates, compared to plan.rates.
The financial targets may be adjusted up or down for extraordinary events if recommended by the Chairman and CEO and approved by the Compensation Committee. For example, adjustments are usually made for large acquisitions and divestitures. For 2021, following the separation of Kyndryl on November 3, 2021 into its own publicly traded company with approximately $19 billion in revenue, the targets were adjusted to incorporate the impact on planned Revenue and Operating Cash Flow plan due to separating Kyndryl two months ahead of schedule.
Beginning in 2021, a newThe diversity modifier was added to AIP to affirmaffirms management’s commitment to improving diverse representation in our workforce that reflects the labor pool demographics of the communities in which we operate. A diverse workforce and an inclusive work environment fuel both innovation and creativity. The diversity modifier creates a common mechanism to align leaders with our workforce.commitment to creating an inclusive environment for all. This modifier can result in a 5 point reduction, no impact, or 5 point increase to the AIP scoring. In 2021,2023, the modifier was based on the improvementour progress in creating and developing a diverse executive population. Executive representation for executiveof women globally, andas well as Black and Hispanic executives in the United States.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.
Finally, the Chairman and CEO can recommend an adjustment, up or down, based on factors beyond IBM’s financial performance; this includes, for example, client experience, market share, growthresearch and diversityinnovation, and inclusionculture and engagement. Taking such matters into account for 2023, the Compensation Committee approved an upward adjustment to the score of ten points reflecting progress in AI and quantum computing, IBM’s workforce. For 2021, no qualitative adjustment was made.high performance culture, and employee engagement.
The Compensation Committee reviews the financial scoring, diversity modifier, and proposed qualitative adjustments, and approves the final AIP funding level.
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Once the total pool funding level has been approved, payouts for each executive are calculated using an Individual Contribution Factor (ICF). The ICF is determined by evaluating individual performance against predetermined business objectives. As a result, a lower-performing executive will receive as little as zero payout and the most exceptional performers (excluding the Chairman and CEO) are capped at three times their individual target incentive (payoutsincentive. Payouts at this level are rare and only possible when IBM’s performance has also been exceptional).exceptional. The AIP, which covers approximately 4,000 IBM executives, includes this individual cap at three times the individual target to ensureallow for differentiated pay for performance. For the Chairman and CEO, the cap is two times target. 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. AIP payouts earned during the performance period are generally paid on or before MarchApril 15 of the year following the end of such period.
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This incentive design ensures payouts are aligned to IBM’s overall business performance and diversity goals while also ensuring individual executive accountability for specific business objectives.
20212023 AIP Payout Results
Based on full year financial performance against IBMof revenue and operating cash flow, the weighted incentiveIBM pool funding score was 93. In addition, executive representation of women globally, and Black and Hispanic executives in the United States improved by 1.0 point, 1.5 points and 0.4 points, respectively in 2021. This improvement in executive representation for these groups resulted in the diversity modifier increasing the weighted incentive score by 5 points, to 98.117.
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(1)

Based on AIP payout table.
(2)
IBMtable; the 2023 leveraged score resulted in 98% for Revenue and 116% for Operating Cash Flow; for Revenue, threshold attainment is 80% with a 50% payout, target attainment and payout is 100%, maximum attainment is 110% with a 200% payout; for Operating Cash Flow, are presented onthreshold attainment is 70% with a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl. 70% payout, target attainment and payout is 100%, maximum attainment is 120% with a 200% payout.
(2)
Operating Cash Flow is a non-GAAP financial metric. See Appendix A for information on how we calculate thesethis performance metrics.metric.
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Performance Share Unit Program
The Performance Share Unit (PSU) metrics for the 2019-20212021-2023 performance period were Revenue, Operating EPS, and Free Cash Flow, unchanged from previous years. TargetsFlow.
Financial targets are established at the beginning of each three-year performance period. These targets are based on IBM’s financial model, as shared with investors, and the Board-approved annual budget. business objectives.
As discussed in prior years, in connection with the separation of Kyndryl in 2021, the Committee approved adjustments to the 2021-2023 PSU program targets in December 2021.
The Committee’s longstanding practice is that the Company’s share repurchase activities have no effect on executive compensation. Actual operatingOperating EPS results and the 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 three years. Additionally, the scoring for the PSU Program may also take into accountconsider extraordinary events. For the 2021-2023 performance period, 2022 and 2023 results were adjusted to exclude the impact of exiting our business in Russia.
At the end of each three-year performance period, the Compensation Committee approves the determination of actual performance relative to pre-established financial targets and the number of PSUs are adjusted up or down from 0% to 150% of targets, based on the approved actual performance.
In addition, the PSU Program has a Relative Return on Invested Capital (ROIC) modifier.modifier. The modifier is based on IBM’s 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 IBM’s ROIC performance falls between the S&P 500 Index median and the S&P Information Technology Index median. There is no qualitative adjustment to the PSU program score.
Relative ROIC Modifier
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The PSU score is calculated as a weighted average of results against targets for Operating EPS (70%) and Free Cash Flow (30%). The calculation for the 2019-2021 performance period is shown in the table below. For the 2019-2021 performance period, the ROIC modifier was 0%. While IBM ROIC was at the 65th percentile of the S&P 500 Index (excluding financial services), it did not exceed the median of S&P Information Technology Index.
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(1)

The PSU score is calculated as a weighted average of results against targets for Revenue (40%), Operating EPS (30%) and Free Cash Flow (30%). The calculation for the 2021-2023 performance period is shown in the table 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.
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(1)
Based on PSU payout table.levels displayed below.
(2)

Non-GAAP financial metric. ROIC equals consolidated net operating profits after tax (consolidated GAAP net income plus after-tax interest expense) divided by the sum of the average debt and average total stockholders’ equity over the period. Due to the significant nature of the Red Hat acquisition, the Company utilizes a computation of ROIC excluding goodwill associated with the acquisition. The goodwill that was generated is primarily attributable to the assembled workforce of Red Hat and the increased synergies expected to be achieved over time from the integration of Red Hat products into the Company’s various integrated solutions. The calculation also excludes current period U.S. tax reform charges due to its unique, non-recurring nature.See Appendix A for information on how we calculate this performance metric.
(3)

2021-2023 Revenue result is calculated using historical 2021 consolidated revenue, including ten months of Kyndryl discontinued operations revenue, and 2022 and 2023 revenue as reported, adjusted for fluctuations in foreign currency and impacts of separating business in Russia.
(4)
Non-GAAP financial metrics. 2021-2023 Operating EPS result is calculated based on 2021 historical as reported amounts adjusted to include discontinued operations. Operating EPS excludes certain separation related charges in 2021 and includes immaterial share adjustments in all three years. For 2022 and 2023, both Operating EPS and Free Cash Flow were adjusted to exclude the impact of separating business in Russia. Free Cash Flow amounts are on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl. Operating EPS cumulative performance is calculated based on 2019 and 2020 historical as reported amounts, with immaterial share adjustments, and 2021 Operating EPS, adjusted for discontinued operations less separationrelated charges.operations. See Appendix A for GAAP to Non-GAAPnon-GAAP reconciliation.
Impact of Significant One-Time Events2021-2023 PSUs: Threshold, Target, and Max Attainment % and Payout %:
ThresholdTargetMax
Financial MetricsAttainment % / Payout %Attainment % / Payout %Attainment % / Payout %
Revenue (40%)70% / 25%100% / 100%120% / 150%
Operating EPS (30%)(1)
70% / 25%100% / 100%120% / 150%
Free Cash Flow (30%)(1)
70% / 25%100% / 100%120% / 150%
(1)
Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.
Note: For PSU performance period 2020-2022, the Open PSU Performance Periods
As previously disclosed in connection with the separation of Kyndryl, the Committee determined that the targets for these two outstanding PSU programsmetrics included were no longer reflective of the company’s strategic direction and growth objectives as communicated to stockholders prior to the announced plan to separate Kyndryl. In February 2021, the Committee approved an adjustment to the targets for the 2019-2021 and 2020-2022 PSU programs, to incorporate the planned impact of the 2021 separation of Kyndryl, including one-time transaction-related cash charges associated with the separation, and actions taken to enable the separation of Kyndryl and IBM’s growth. Following the separation of Kyndryl on November 3, 2021 into its own publicly traded company with approximately $19 billion in revenue, a final target adjustment was made for all three open PSU programs. The final adjustment was made to incorporate the impact of separating Kyndryl, including the early separation of Kyndryl two months ahead of schedule. As a result of the adjustments made for the Kyndryl separation and actions taken to enable IBM’s growth strategy,Operating EPS andat 70%, Free Cash Flow targets forat 30%, and the 2019-2021 PSU program are lower than those for the 2018-2020 PSU program. Consistent with the Company’s long-standing practice of setting rigorous performance plans, cumulative targets for both plans remain higher than comparable metrics shared with investors on October 4, 2021.ROIC Modifier.
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Section 2: Compensation Program Governance
Stockholder Engagement Provided Important Feedback for the Committee
IBM continually reviews and enhances its corporate governance and executive compensation programs. As part of this review, it is IBM’s 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.
Which Stockholders were EngagedWho Engaged from IBM
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.The Company continued its enhanced engagement practices in 2023. IBM’s Chairman and CEO, Lead Director, and members of IBM’s senior management participated in this engagement program.
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This in-depth engagement process provides valuable feedback to the Compensation Committee on an ongoing basis. Overall, our stockholders continue to support the Company’s compensation programs and practices. We heard from stockholders that they are strongly supportive of the overall design of the program, which focuses on long-term financial performance that drives stockholder value. Still, the Committee and the Board review and consider all of the investor feedback in making decisions relating to the design of our executive compensation programs.
Compensation Practices
Overall, IBM’s compensation policies and decisions, explained in detail in this Compensation Discussion and Analysis, continue to be focused on long-term financial performance to drive stockholder value.
The table below highlights practices that IBM embraces in support of strong governance practices.
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What We Do
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What We Don’t Do

Tie a significant portion of pay to Company performance
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Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions
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Require significant share ownership by the Chairman and CEO, Vice Chairman and Senior Vice Presidents
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Utilize noncompetition and nonsolicitation agreements for senior executives
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Remove impact of share repurchase on executive incentives
What We Don’t Do
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No individual severance or change-in-control agreements for executive officers
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No excise tax gross-ups for executive officers
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No dividend equivalents on unearned RSUs/PSUs
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No hedging/pledging of IBM stock
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No stock option repricing, exchanges or stock options granted below market value
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No guaranteed incentive payouts for executive officers
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No accelerated vesting of equity awards for executive officers
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No above-market returns on deferred compensation plans
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Personal Stake in IBM’s Future through Stock Ownership Requirements
Investors 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 IBM’s Chairman and CEO, Vice Chairman, and Senior Vice Presidents (SVPs). Within 5 years of hire or promotion, each is required to own a minimum number of IBM shares or equivalents that is equal to a multiple of salary at the time of hire, promotion, or election as an Executive Officer. The minimum multiple of salary required is in excess of standard market practice. Following the separation of Kyndryl, IBM refreshed the minimum number of IBM shares or equivalents that are required to be owned based on each senior leader’s base salary at the time of the Kyndryl separation, and the post-separation IBM stock price.
Stock Ownership Requirements
Ownership Requirements as a Multiple of Salary
NEO NameIBM Minimum RequirementMedian Peer Group Minimum Requirement
A. Krishna107
J.J. Kavanaugh74
G. Cohn74
T. Rosamilia74
M.H. Browdy74
Ownership Requirements as a Multiple of Salary
IBM Minimum RequirementMedian Peer Group Minimum Requirement
CEO107
Other NEOs74
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In over a year as Chairman and CEO, Mr. Krishna owns common stock and stock-based holdings above his ownership requirement (about 12(over 35 times his base salary) as of December 31, 2021.2023. More information on Mr. Krishna’s holdings can be found in the Common Stock and Stock-Based Holdings of Directors and Executive Officers Table. As a group, the Chairman and CEO, Vice Chairman and SVPs, inclusive of the NEOs, owned shares or equivalents valued at over $91$155 million as of December 31, 2021;2023; as of that date, this group held, on average, about 6over 9 times their base salary, and are all on track to reachmeet or exceed their ownership goal within 5 years of hire or promotion.
The following table illustrates which equity holdings count towards stock ownership requirements:
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What Counts
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What Does Not Count
What Counts
What Does Not Count
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IBM shares owned personally or by members of the officer’s immediate family sharing the same household
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Unvested equity awards, including PSUs, RPSUs, RSUs, and RRSUs
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Holdings in the IBM Stock Fund of the 401(k) Plus Plan and the Excess 401(k) Plus Plan
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Unexercised stock options
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Shares of IBM stock deferred under the Excess 401(k) Plus Plan

Unvested equity awards

Unexercised stock options
Stock Ownership Continues Beyond Retirement
Finally, our programs are designed to ensure alignment with IBM’s long-term interests past the retirement date for our Chairman and CEO, Vice Chairman and SVPs. 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. For example, shares for Mr. Krishna that remained restricted and subject to performance of IBM represent more than 110%100% of his share ownership requirement as of December 31, 2021;2023, assuming future performance at target.
Compensation Committee Consultant
The Committee enters into a consulting agreement with its outside compensation consultant on an annual basis. In 2021,2023, the Committee retained Semler Brossy Consulting Group, LLC (Semler Brossy) as its compensation consultant to advise the Committee on market practices and specific IBM policies and programs. Semler Brossy reports directly to the Compensation Committee Chair and takes direction from the Committee. The consultant’s 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 IBM’s Directors and Corporate Governance Committee. The Committee determined that there is no conflict of interest with regard to Semler Brossy.
How Compensation Decisions are Made
At any level, compensation reflects an employee’s value to the business — market value of skills, individual contribution and business results. To be sure we appropriately assess the value of senior executives, IBM follows an evaluation process, described here in some detail:
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1. Making Annual Performance Commitments
All IBM employees, including the Chairman and CEO, Vice Chairman and SVPs, develop goals, both qualitative and quantitative, that they seek to achieve in a particular year in support of the business. The Board of Directors reviews and approves the Chairman and CEO’s performance goals and formally reviews progress and outcomes. As part of this process, many factors are considered, including an understanding of the business risks associated with the performance goals.
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2. Determining Annual Incentive Payouts
Evaluation of Chairman and CEO Results by the Compensation Committee
The Chair of the Compensation Committee works directly with the Committee’s compensation consultant to provide a decision-making framework for use by the Committee in determining annual incentive payouts for the Chairman and CEO. This framework considers the Chairman and CEO’s self-assessment of performance against commitments in the year, both qualitative and quantitative, and also considers progress against strategic objectives, an analysis of IBM’s total performance over the year and the overall Company incentive score. The Committee considers all of this information in developing its recommendations, which are then presented to the independent members of the IBM Board of Directors for further review, discussion, and final approval.
Evaluation of Vice Chairman and SVP Results by the Chairman and CEO and the Compensation Committee
Executives work with their managers throughout the year to update their own results against their stated goals. The self-assessments of the Vice Chairman and SVPs are reviewed by the Senior Vice President of Human Resources (SVP HR) and the Chairman and CEO, who evaluate the information.
Following this in-depth review and taking into account the Company incentive score, the Chairman and CEO makes compensation recommendations to the Compensation Committee based on an evaluation of the Vice Chairman and each SVP’s performance for the year, and the Committee decides whether to approve or adjust the Chairman and CEO’s recommendations for the Vice Chairman and SVPs. The Committee then presents the compensation decisions for the Chief Financial Officer to the independent members of the IBM Board of Directors for ratification.
3. Setting Competitive Target Pay
Approach to Benchmarking
IBM participates in several executive compensation surveys that provide general trend information and details on levels of salary, target annual incentives and long-term incentives, the relative mix of short- and long-term incentives, and mix of cash and stock-based pay. Given the battle for talent that exists in our industry, the benchmark companies that are used by the Compensation Committee to guide its decision making have included a broad range of key information technology companies, to help us identify trends in the industry. We also include companies outside our industry, with stature, size, and complexity that approximate our own, in recognition of the flow of executive talent in and out of IBM from other industries. The surveys and benchmark data are supplemented by input from the Compensation Committee’s outside consultant on factors such as recent market trends. The Committee reviews and approves this list annually.
The CompensationFor 2023 and 2024 compensation decisions, the Committee re-examinedutilized the following benchmark group for 2021 and determined that companies which meet the following criteria should be included in the 2021 benchmark group:criteria:


Companies in the technology industry with revenue that exceeds $15$10 billion, plus


Additional companies (up to two per industry if available) in industries other than technology,industries, with revenue that exceeds $40$30 billion, and that have a global complexity similar to IBM, and whose business strategy results in substantial competition for senior leadership talent.
For 2021 compensation decisions, the Committee approved the following benchmark group using the criteria above.
2021 BENCHMARK GROUP:
AccentureBoeingJohnson & JohnsonRaytheon
AlphabetCisco SystemsMicrosoftSalesforce
Amazon.comDowOracleUPS
AppleGeneral ElectricPepsiCoVerizon
AT&THewlett Packard EnterprisePfizer
Bank of AmericaIntelQualcomm
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For 2022 compensation decisions, the Committee revised the benchmark group criteria as follows, to increase the weighting of peers in the technology industry and to better align with the overall size and scope of IBM following the separation of Kyndryl.

Companies in the technology industry with revenue that exceeds $10 billion (down from $15 billion), plus

Additional companies in other industries, with revenue that exceeds $30 billion (down from $40 billion), and that have a global complexity similar to IBM, and whose business strategy results in substantial competition for senior leadership talent.
For 20222024 compensation decisions, the Committee approved the following benchmark group using the criteria above, which isachieves a better balance between prominent technology competitors and large-scale companies of similar size of IBM, after Kyndryl separated, and more accurately represents IBM’s competition for senior leadership talent. As a result of the changes, the median revenue for the 2022 benchmark group decreased by approximately $15 billion compared to the 2021 benchmark group. The data from compensation surveys and related sources form the primary external view of the market. In consideration of size and complexity, IBM’s philosophy is to generally target the 50th50th percentile of the market for cash and total compensation.
2022 BENCHMARK GROUP:
Benchmark Group:
AccentureBoeingMicrosoftUPS
AdobeCisco SystemsOracleVerizon
AlphabetGeneral ElectricPepsiCoVisa
Amazon.comHoneywellHewlett Packard EnterpriseQualcomm
VMware(1)
AT&THewlett Packard EnterpriseHoneywellRaytheon
Bank of AmericaIntelSalesforce
(1)
VMware was acquired by Broadcom in November 2023.
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Approach to Determining Individual Compensation
For individual compensation decisions, the benchmark information is used together with an internal view of individual performance relative to other executives and recognizing that the skills and experience of our senior executives are highly sought after by other companies and, in particular, by IBM’s competitors. Because factors such as performance and retention, as well as size and complexity of the job role, are considered when compensation decisions are made, the cash and total compensation for an individual named executive officer may be higher or lower than the target reference point of the broader benchmark group.
Evaluation of Chairman and CEO Target Pay by the Compensation Committee
The Chair of the Compensation Committee works directly with the Committee’s compensation consultant to provide a decision-making framework for use by the Committee in setting target compensation opportunities for the Chairman and CEO. The independent members of the IBM Board of Directors review and provide final approval.
Evaluation of Vice Chairman and SVP Target Pay by the Chairman and CEO and the Compensation Committee
The Chairman and CEO makes compensation recommendations on the Vice Chairman and SVPs’ target compensation to the Compensation Committee. The Committee evaluates all of the factors considered by the Chairman and CEO and reviews compensation summaries that tally the dollar value of all compensation and related programs, including salary, annual incentive, long-term compensation, deferred compensation, retention payments and pension benefits. These summaries provide the Committee with an understanding of how their decisions affect other compensation elements, and the impact of separation of employment or retirement. The Committee decides whether to approve or adjust the Chairman and CEO’s recommendations for the Vice Chairman and SVPs. The Committee then presents the compensation decisions for the Chief Financial Officer to the independent members of the IBM Board of Directors for ratification.
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Section 3: Compensation Decisions for the Chairman and CEO and Named Executive Officers
2023 Annual Incentive Payment Decision for the Chairman and CEO
2021 Annual Incentive Decision for the Chairman and CEO
For 20212023 performance, the Board approved an annual incentive payment of $2,940,000,$3,510,000, which represented 98%117% of Mr. Krishna’s target opportunity and was in line with the Company incentive score.
In addition to overall IBM 20212023 revenue performance of $57.4$61.9 billion and $12.8$13.9 billion cash from operations,,(1) the Compensation Committee noted the following achievements for Mr. Krishna, which have positioned IBM for sustained growth going forward:
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BUSINESS RESULTS
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PORTFOLIO AND INVESTMENT


IBM Hybrid CloudSoftware revenue grew to over $20B, now 35% of IBM5% year-to-year and growing 19%Consulting revenue grew 6% year-to-year at constant currency.(2)currency*


Consulting grew high single digits for the year,Continued shift toward higher growth revenue, with ~75% of revenue now in Software and Software exited 4th quarter with 10% growth at constant currency,(2) including 5 points from incremental external sales to Kyndryl.Consulting


Over 3,800 clients using our Hybrid Cloud platform, up >1,000 Year-to-Year.

Reduced Debt by $10B in 2021, down $21B since the Red Hat Acquisition.
Portfolio and Investment

Realigned operating model to a platform-centric approach with four new reportable segments: Consulting, Software, Infrastructure and Financing.

Completed the separationFree cash flow* generation of Kyndryl on November 3, 2021, ahead of the year-end timeline.

Closed 15 strategic acqisitions in 2021, focused on strengthening our hybrid cloud capabilities.$11.2B (+$1.9B year over year)
Leadership
Closed 9 strategic acquisitions in Innovation

Deployed Eagle 127-Qubit system, the first quantum chip that breaks the 100-qubit barrier.2023 and invested $7B in Research, Development, & Engineering, focused on expanding Hybrid Cloud and AI capabilities
Societal Impact

Sustainable revenue growth for third consecutive year
Successfully deployed components of our privacy program and organizational best practices into
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LEADERSHIP IN
 INNOVATION
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SOCIETAL IMPACT
   
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TALENT DEVELOPMENT
  AND LEADERSHIP

Delivered AI capabilities across the IBM commercial offerings, including IBM Cloud Paks. Recognized by JUST Capital’s ESG ranking as first in industry for customer privacy.technology stack through watsonx


Significant progress toward our goal of reducingExtended IBM’s quantum-centric supercomputing

Reduced IBM’s operational greenhouse gas emissions by 63%, with a goal of 65% by 2025 with a 54% reduction to date.
Talent Development
Centralized governance for data, privacy and Leadership

Increased skills across all four key technical areas: AI Cloud, Quantum,in a single Integrated Governance Program, creating a consolidated, company-wide view enhancing regulatory compliance and Security.

Improved executive diversity; representation of women executives globally improved by 1 point, Black executives in the US grew by 1.5 points, and Hispanic executives in the US grew by 0.4 points.

Employee engagement and inclusiveness index both continuedtime to increase year-to-year.market

Continued best in class employee engagement

Growth in expertise levels for key skills (AI, Cloud, Security)
20222024 Compensation Decisions for the Chairman and CEO
For 2022,2024, the independent members of the Board made no changes to MrMr. Krishna’s base salary, orwhich has not changed since he became CEO in April 2020. Mr. Krishna’s target annual incentive which was just below the median total target compensation of the 2022 benchmark group that was updated following the separation of Kyndryl. Heincreased to $3.5 million and he was granted an annual long-term incentive award valued at $13.75M, which was also unchanged from 2021. This$20 million. Mr. Krishna’s target cash and total compensation are in line with the median of the 2024 benchmark group. Mr. Krishna’s long-term incentive grant is comprised of 60% of 2022-20242024-2026 Performance Share Units, 20% of Restricted Stock Units, and 20% of Stock Options. For 2022, 77%2024, 78% of Mr. Krishna’s annual total target compensation is at risk which is up from 65% in 2021 dueand subject to the introductionattainment of Stock Options as a component of his long-term incentive grant.rigorous performance goals and IBM’s stock price performance.
(1)
Cash from operations is presented on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl.
(2)
*
Non-GAAP financial metrics.metric. See Appendix A for information on how we calculate these performance metrics.
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20212023 Annual Incentive Decisions for Mr. Kavanaugh, Mr. Cohn,Thomas, Mr. Rosamilia,Cohn, and Ms. Browdy
The Compensation Committee also made decisions for the following named executive officers (NEOs), based on overall corporate performance as described in the Business Highlights and Executive Summary and an assessment of their individual contributions, manysome of which are summarized below:
JamesJAMES J. KavanaughKAVANAUGH
Senior Vice President, Finance & Operations and Chief Financial Officer
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Optimized portfolio and drove productivity initiatives generating margin expansion in 2023. Achieved over $1.5 billion dollars in annual run-rate savings, with a path to deliver at least $3 billion in annual run-rate savings by the end of 2024.
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Delivered free cash flow* of $11.2 billion, up $1.9 billion year-to-year, which enabled returning $6 billion to stockholders through dividends and investing over $5 billion to acquire 9 companies in 2023.
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Attracted new investors to IBM through strong engagement with shareholders; including one-on-one interactions, group functions, and participation in conferences.
Accelerated revenue growth; exited 4th quarter with 8.6% revenue growth at constant currency,* including approximately 3.5 points from incremental external sales to Kyndryl.
Delivered value through focus with successful separation of Kyndryl on November 3, 2021, and 15 acquisitions completed in 2021 for $3B.
Returned $6B to stockholders while reducing debt by $10B in 2021; over $21B since acquiring Red Hat.
ROBERT D. THOMAS
Senior Vice President, Software & Chief Commercial Officer
Gary Cohn
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Delivered 5% Software revenue growth, increasing client demand for watsonx and growing our AI footprint.
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Bolstered Software portfolio through investment in skills and innovation, including launching watsonx and driving strategic M&A.
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Continued transformation in go-to-market model to infuse more technical and experiential selling, leveraging expanded ecosystem and strategic partnerships.
GARY COHN
Vice Chairman
Business development aligned to IBM’s future portfolio, including the strategy that led to the divestiture of healthcare data and analytics assets that are currently part of the Watson Health business.
Developed partnerships with clients to expand brand awareness in hybrid cloud and AI. Worked with client teams on account planning and client relationship management.
Led relations with influential industry and government leaders on policy in the areas of IT modernization and data transformation, driving and responding to policy initiatives on cybersecurity and data privacy in the face of escalating threats.
Tom Rosamilia
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Contributed to increased revenue and reach by leveraging IBM’s public and private partnerships.
Senior Vice President
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Expanded IBM’s presence and brand awareness with strategic clients by deepening senior relationships.
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Served as a spokesperson in discussions with global government leaders, media, and at public events to further advance IBM’s technology point of IBM Software and Chairman, North Americaview.
Positioned mainframe as a core component of a hybrid cloud architecture.
Lead growth in 4th quarter software revenue, and in Cloud Pak deployments.
Aligned software strategy to support hybrid multi-cloud.
MichelleMICHELLE H. BrowdyBROWDY
Senior Vice President and General Counsel
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Provided legal and regulatory support for IBM’s growth initiatives globally, including supporting the company’s AI agenda at the research, regulatory and field level.
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Continued to enhance IBM’s cybersecurity, privacy, data governance and AI ethics posture as regulatory focus on these issues continued to heighten around the world.
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Focused on talent development globally to ensure availability of world class legal and regulatory skills to support IBM’s growth initiatives across geographies and business lines.
Responsible for legal and regulatory support worldwide for all aspects of the spin-off of Kyndryl, enabling separation on November 3, 2021, ahead of the year-end timeline.
Continue to enhance IBM’s cybersecurity and privacy posture globally, providing legal, security and policy support and helping drive deployment of best practices into commercial offerings.*
Refresh intellectual property legal strategy to better protect IBM’s innovation agenda in key technology areas going forward.
* Non-GAAP financial metric. See Appendix A for information on how we calculate thisthese performance metric.metrics.
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Following the process outlined above and based on business and individual performance, the Compensation Committee approved the 20212023 annual incentive payouts below for these NEOs:
Name2021
2023 Annual Incentive Payouts(1)
(1)
J.J. Kavanaugh$1,437,7001,730,430
R.D. Thomas1,552,500
G. Cohn1,548,400
T. Rosamilia1,064,0001,848,600
M.H. Browdy1,266,3001,516,800
(1)

The named executive officers each had an incentive target equal to 135% of their salary for 2021.2023.
20222024 Compensation Decisions for Mr. Kavanaugh, Mr. Cohn,Thomas, Mr. RosamiliaCohn, and Ms. Browdy
The Committee also approved the following compensation elements for 2022:2024: base salary, annual incentive target, Performance Share Unit (PSU), Restricted Stock Unit (RSU) and Stock Option grants under the Long-Term Performance Plan. For Long-Term Incentive Plan grants, the mix of equity vehicles is 60% PSUs, 20% RSUs and 20% Stock Options, (new in 2022), which aligns with market practice. This mix provides competitive pay, while at the same time ensuring a strong link between pay and performance, and creates the right balance relative to peers with which we compete for talent. For 2022,2024, based on the compensation decisions detailed below at target, 74%approximately 75% of the NEOs’ (excluding the Chairman and CEO) pay is at risk.
NEO 20222024 PAY MIX
For 2024, 75% of the NEOs’ (excluding the Chairman and CEO) annual total target compensation is at risk.
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2022 Cash(1)
2022 Long-Term Incentive Awards(2)
2024 Cash
2024 Long-Term Incentive Awards(2)
NameSalary Rate
Annual Incentive
Target
Performance
Share Units
Restricted
Stock Units
Stock OptionsName
Salary  Rate(1)
Annual Incentive
Target
Performance
Share Units
Restricted
Stock Units
Stock Options
J.J. Kavanaugh$1,064,000$1,436,000$5,400,000$1,800,000$1,800,000J.J. Kavanaugh$1,170,000$1,580,000$6,150,000$2,050,000$2,050,000
G. Cohn1,170,0001,580,0004,350,0001,450,0001,450,000R.D. Thomas1,064,0001,436,0005,700,0001,900,0001,900,000
T. Rosamilia894,0001,206,0003,900,0001,300,0001,300,000G. Cohn1,170,0001,580,0004,800,0001,600,0001,600,000
M.H. Browdy936,0001,264,0003,000,0001,000,0001,000,000M.H. Browdy936,0001,264,0003,780,0001,260,0001,260,000
(1)

Salary increases for the Named Executive Officers, if applicable, will be effective April 1, 2022.2024.
(2)

PSUs, RSUs and Stock Options will bewere granted on February 21, 20222024 to the named executive officers, including the Chairman and the CEO. The actual number of units granted on this date will beare determined by dividing the value shown above by the average of IBM’s closing stock price for the 30 active trading days prior to the date of grant. The actual number of Stock Options granted on this date will beare determined by dividing the value shown by the product of (1) the average of IBM’s closing stock price for the 30 active trading days prior to the date of grant and (2) an option valuation factor of .14290.20 (to reflect the discounted value of Stock Options compared to full value awards). The performance period for the PSUs ends December 31, 2024,2026, and the award will pay out in February 2025. The Restricted Stock Units2027. RSUs and Stock Options will vest 25% per year on each anniversary of the date of grant.
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Section 4: Additional Information
Compensation Program as itIt Relates to Risk
IBM management, the Compensation Committee and the Committee’s outside consultant review IBM’s compensation policies and practices, with a focus on incentive programs, to ensure that they do not encourage excessive risk taking. This review includes the cash incentive programs and the long-term incentive plans that cover executives and employees. Based on this comprehensive review, we concluded that our compensation program doesprograms do not encourage excessive risk taking for the following reasons:


Our programs appropriately balance short- and long-term incentives, with approximately 72%75% of 20222024 annual total target compensation provided in equity for the Chairman and CEO, Vice Chairman, and SVPs as a group provided in equity.group.


Our executive compensation program pays for performance against financial targets that are set to be challenging to motivate a high degree of business performance, with an emphasis on longer-term financial success and prudent risk management.


Our incentive plans include a profit metric as a component of performance to promote disciplined progress toward financial goals. None of IBM’s incentive plans areis based solely on signings or revenue targets, which mitigates the risk of employees focusing exclusively on the short term.


Qualitative factors beyond the quantitative financial metrics are a key consideration in the determination of individual executive compensation payments. How our executives achieve their financial results, integrate across lines of business and demonstrate leadership consistent with IBM values are key to individual compensation decisions.


As explained in the 20222023 Potential Payments Upon Termination Narrative, we further strengthened our retirement policies on equity grants for our senior leaders beginning in 2009 to ensure that the long-term interests of IBM continue to be the focus, even as these executives approach retirement.


Our stock ownership guidelines require that the Chairman and CEO, Vice Chairman, and each SVP hold a significant amount of IBM equity to further align their interests with stockholders over the long term.


IBM has adopted a policy that requires a clawback of cash incentive payments in the event thatincentive-based compensation paid to an executive officer’s conduct leads toofficer if there is a restatement of IBM’s financial results.results that would have affected the amount of incentive-based compensation, regardless of whether the executive officer’s conduct lead to the restatement. Likewise, IBM’s equity plan has a clawback provision under which states that awards may be cancelled and certain gains repaid if a senioran executive 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.
We are confident that our compensation program is aligned with the interests of our stockholders, rewards for performance and represents strong executive compensation governance practices.
Equity Award Practices
Under IBM’s long-standing practices and policies, all equity awards are approved before or on the date of grant. The exercise price of at-the-money Stock Options is the average of the high and low market price of IBM common stock on the New York Stock Exchange on the date of grant or as specified by the Compensation Committee.
The approval process specifies the individual receiving the grant, the number of units or the value of the award, the exercise price or formula for determining the exercise price, if different from the average of the high and low market price of IBM common stock on the New York Stock Exchange on the grant date, and the date of grant. In the case of planned grant value, the number of shares granted are determined by dividing the planned value by the average of IBM’s closing stock price for the 30 active trading days prior to the date of grant for PSUs and RSUs. For Stock Options, the average IBM closing stock price is further adjusted by an option valuation factor to reflect the discounted value of Stock Options compared to full value awards.
As with all compensation decisions, the independent members of the Board approve all equity awards for the Chairman and CEO, and ratify all equity awards for the Chief Financial Officer. In addition, all equity awards for the Vice Chairman and each SVP are approved by the Compensation Committee. All equity awards for employees other than the Chairman and CEO, Vice Chairman and SVPs are approved by the Chairman and CEO, Vice Chairman and SVPs pursuant to a series of delegations that were approved by the Compensation Committee, and the grants made pursuant to these delegations are reviewed periodically with the Committee.
Equity awards granted as part of annual total compensation for senior leaders and other employees are made on specific cycle dates scheduled in advance.advance, typically February 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 Committee’s approval of any applicable equity awards (at the end of January). IBM’s policy for new hires and promotions requires approval of any awards before or on the grant date of the award.
IBM does not have any plans, programs or agreements that would provide any payments to any of the named executive officers upon a change in control of IBM, a change in the named executive officer’s responsibilities or a constructive termination of the named executive officer.
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Ethical Conduct
Every executive is held accountable to comply with IBM’s high ethical standards: IBM’s Values, including “Trust and Personal Responsibility in allAll Relationships,” and IBM’s Business Conduct Guidelines. This responsibility is reflected in each executive’s performance goals, and is reinforced through each executive’s annual certification to the IBM Business Conduct Guidelines.
An executive’s compensation, including annual cash incentive payments, is tied to compliance with these standards; compliance is also a condition of IBM employment for each executive.
IBM’s equity plans and agreements have a clawback provision — awards may be cancelled and certain gains repaid if an executive engages in activity that is detrimental to IBM, such as violating IBM’s 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.
In addition, approximately 1,6001,500 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 12 months of leaving IBM or soliciting employees after leaving IBM.
The Committee has also 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 officer’s conduct leads toof a restatement of IBM’s financial results:results.
To the extent permitted by governing law, IBM will seek to recoup any bonus or incentive paid to any executive officer if: (i) the amount of such payment was based on the achievement of certain financial results that were subsequently the subject of a restatement; (ii) the Board determines that such officer engaged in misconduct that resulted in the obligation to restate; and (iii) a lower payment would have been made to the officer based upon the restated financial results.
Hedging and Pledging Practices
IBM has two seniormultiple corporate leadership teams:teams, including the Performance Team and the Acceleration Team. The Performance Team consists of approximately 7085 of our most senior leaders who run IBM business units and geographies and includes the Chairman and CEO, Vice Chairman, and each 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 IBM’s growth through leadership initiatives to engage their teams and promote innovation, speed, and simplicity in service of our clients.
IBM does not allow any member of the IBM Board of Directors or any member of the Acceleration Team,its corporate leadership teams, including any named executive officer, to hedge the economic risk of their ownership of any IBM securities, which includes entering into any derivative transaction on IBM stock (e.g., any short-sale, prepaid variable forward contract, equity swap, collars, exchange funds) or to pledge any IBM securities at any time, which includes having IBM stock in a margin account or using IBM stock as collateral for a loan. Further, IBM does not allow any employee granted equity awards through the IBM Long-Term Incentive Plan to hedge or pledge those securities.
Tax Considerations
Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended, limits deductibility of compensation in excess of $1 million paid to IBM’s covered employees. A “covered employee”,employee,” under Section 162(m) as amended, is the CEO, the CFO, the three highest paid executive officers, and any other individual who was a covered employee of the Company for the preceding tax years beginning after December 31, 2016. Prior to 2018 (before the Tax Cut and Jobs Act), a deduction was available for performance-based compensation. Transition rules allow a deduction for performance-based compensation paid pursuant to a contract in effect as of November 2, 2017, that is not materially modified after such date. IBM will seek deductions for compensation under this transition relief consistent with applicable law.
Although the tax deduction for performance-based compensation has been eliminated for awards after November 2, 2017, IBM continues to believe that a strong link between pay and performance is critical to align executive and stockholder interests. IBM and the Committee will continue to ensure that a significant portion of pay for our Vice Chairman and SVPs, including the Chairman and CEO, is at risk and subject to the attainment of performance goals.
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20212023 Summary Compensation Table and Related Narrative
2021 SUMMARY COMPENSATION TABLE2023 Summary Compensation Table
Name and
Principal
Position
StockOption
Non-Equity
Incentive Plan
Change in
Pension
Nonqualified
Deferred
Compensation
All Other
(a)Salary(1)Bonus(2)Awards(3)Awards(4)Compensation(5)Value(6)Earnings(7)Compensation(8)(9)Total(10)
Year
(b)
($)
(c)
($)
(d)
($)
(e)
($)
(f)
($)
(g)
($)
(h)
($)
(h)
($)
(i)
($)
(j)
A. Krishna, Chairman and CEO
2023$1,500,000$0$11,483,809$3,339,560$3,510,000$23,183$0$541,874$20,398,426
20221,500,00008,927,7012,033,6363,480,00000638,73816,580,075
20211,500,000012,605,50702,940,00000505,45217,550,959
J.J. Kavanaugh, Senior VP, F&O and CFO
2023$1,088,000$     0$6,704,515$1,949,711$1,730,430$15,264$0$203,369$11,691,289
20221,040,00005,843,6691,331,1061,665,76019,1870233,26310,132,985
2021968,00007,563,38401,437,70000200,53410,169,618
R.D. Thomas, Senior VP and Software Chief Commercial Officer(11)
2023$994,750$0$5,843,417$1,699,249$1,552,500$3,170$0$241,228$10,334,314
G. Cohn, Vice Chairman
2023$1,170,000$0$4,897,686$1,424,239$1,848,600N/A$0$196,565$9,537,090
20221,170,00004,707,4181,072,2891,832,800N/A0169,4188,951,925
20211,170,0001,000,0006,180,78701,548,400N/A02,4179,901,604
M.H. Browdy, Senior VP and General Counsel
2023$936,000$0$4,255,907$1,237,603$1,516,800N/A$0$157,847$8,104,157
2022925,50003,246,447739,5051,466,240N/A0147,7536,525,445
2021894,00004,354,62701,266,300N/A0135,9306,650,857
Name and
Principal
Position
StockOption
Non-Equity
Incentive Plan
Change in
Retention
Change in
Pension
Nonqualified
Deferred
Compensation
All Other
(a)Salary(1)Bonus(2)Awards(3)Awards(4)Compensation(5)Plan  Value(6)Value(7)Earnings(8)Compensation(9)(10)Total(11)
Year
(b)
($)
(c)
($)
(d)
($)
(e)
($)
(f)
($)
(g)
($)
(h)
($)
(h)
($)
(h)
($)
(i)
($)
(j)
A. Krishna, Chairman and CEO(12)
2021$1,500,000$0$12,605,507$ 0$2,940,000N/A$0$            0$505,452$17,550,959
20201,352,591013,159,11802,181,000N/A42,8060274,16717,009,682
J.J. Kavanaugh, Senior VP and CFO
2021$968,000$0$7,563,384$ 0$1,437,700$     0$0$            0$200,534$10,169,618
2020899,00007,416,93101,176,30094,22900159,8369,746,296
2019787,50005,063,12701,064,00083,87711,8040129,8847,140,192
G. Cohn, Vice Chairman(12)
2021$1,170,000$1,000,000$6,180,787$ 0$1,548,400N/AN/A$            0$  2,417$9,901,604
T. Rosamilia, Senior VP of IBM Software and Chairman, North America(12)
2021$830,000$0$5,959,005$ 0$1,064,000$     0$0$            0$250,119$8,103,124
M.H. Browdy, Senior VP and General Counsel
2021$894,000$0$4,354,627$ 0$1,266,300N/AN/A$            0$135,930$6,650,857
2020830,00004,211,03101,109,520N/AN/A0124,1126,274,663
2019744,50003,753,7660982,300N/AN/A0107,5045,588,070
Note: For assumptions used in determining the fair value of stock and option awards, see Note A (Significant Accounting Policies — Stock-Based Compensation) and Note U (Stock-Based Compensation) to IBM’s 20212023 Consolidated Financial Statements.
(1)

Amounts in this column reflect the actual salary amount paid to each named executive officer during 2021.2023.
(2)

Mr. Cohn’s offer letter included a cash sign-on payment; $1,000,000 of that was paid on December 31, 2021. Mr. Cohn will need to repay the sign-on if his employment with IBM is terminated within one year following the payment, unless his employment is terminated due to death, disability or without cause (as such term is defined in his IBM non-competition agreement).
(3)

Amounts in this column reflect the total Performance Share Units (PSUs) and Restricted Stock Units (RSUs).
Amounts include the aggregate grant date fair values of PSUs at the Target number as described below, calculated in accordance with accounting guidance; these amounts reflect an adjustment for the exclusion of dividend equivalents.
2019–2021 PSUsThresholdTargetMax*
MetricsAttainment % / Payout %Attainment % / Payout %Attainment % / Payout %
Operating EPS (70%)70% / 25%100% / 100%120% / 150%
Free Cash Flow (30%)70% / 25%100% / 100%120% / 150%
* Note: The Relative ROIC modifier may further modify the final payout up or down by up to 20 points, based on IBM’s ROIC performance relative to broader market indices. (See the “Performance Share Unit Program” description in Section 1 of the Compensation Discussion and Analysis for additional detail on the ROIC Modifier). As a result, the total maximum number of PSUs earned could be up to 170% of the Target number.
At the Maximum number, these values for Mr. Krishna would be: 2023: $14,641,833; 2022: $11,382,727; 2021: $13,928,980; 2020: $14,540,788; for Mr. Kavanaugh: 2023: $8,548,269; 2022: $7,450,586; 2021: $8,357,494; 2020: $8,195,713; 2019: $5,594,668;for Mr. Thomas: 2023: $7,450,269; for Mr. Cohn: 2023: $6,244,427; 2022: $6,001,912; 2021: $6,829,751; for Mr. Rosamilia: 2021: $6,584,652; for Ms. Browdy: 2023: $5,426,231; 2022: $4,139,173; 2021: $4,811,810; 2020: $4,653,236; 2019: $4,147,858.$4,811,810.
Amounts also include the aggregate grant date fair values of RSUsRSU grants, if applicable, calculated in accordance with accounting guidance; these amounts reflect an adjustment for the exclusion of dividend equivalents.
(4)

There were noThis column reflects the grant date fair value of stock option awards granted to any of the named executive officersgrants, if applicable, calculated in the years shown in the 2021 Summary Compensation Table.accordance with accounting guidance.
(5)

Amounts in this column include payments under IBM’s Annual Incentive Program (AIP). All, in which all named executive officers participate in this program.participate. The performance period is the fiscal year (January 1 through December 31, 2021)2023). Mr. Krishna’s target was 200% of his base salary rate. All other named executive officers had an annual target of 135% of their 20212023 salary rate. See column (c) ofIn the 20212023 Grants of Plan-Based Awards Table, see column (c) for the Threshold payout ($0), column (d) for the targetTarget payout, and column (e) for the maximumMaximum payout.
(6)

See the 2021 Retention Plan Narrative for a full descriptionAlthough accruals under each of the Retention Plan. Assumptions can be found immediately afterPlan and the 2021IBM Personal Pension Benefits Table. Although accruals under the Retention Plan stopped on December 31, 2007, changesfor 2021, 2022 and 2023, change in Retention Plan Value can occur based on changes to participants’ ages and actuarial assumptions. For 2019, 2020 and 2021, Change in Retention PlanPension 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 2021 Mr. Kavanaugh ($17,604) and Mr. Rosamilia ($121,275).
(7)
See the 2021 Pension Benefits Narrative for a full description of the Pension Plan. Assumptions can be found immediately after the 20212023 Pension Benefits Table. Although accruals underMr. Kavanaugh is the IBM Personal Pensiononly eligible named executive officer in the Retention Plan stopped on December 31, 2007, changesand the change in PensionRetention Plan Value can occur based on changes to participants’ ages and actuarial assumptions. For 2019, 2020for his benefit resulted in negative amounts in 2023 ($8,528), 2022 ($169,948), and 2021 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.($17,604). The change in Pension Value for the named executive officers resulted in the following negative amounts: 2022 for Mr. Krishna ($51,317); and 2021 for Mr. Krishna ($5,861), and Mr. Kavanaugh ($4,072) and Mr. Rosamilia ($10,820), and 2020 for Mr. Kavanaugh ($9,281).
(8)
(7)
IBM does not provide above-market or preferential earnings on deferred compensation. See the 20212023 Nonqualified Deferred Compensation Narrative for information about deferred compensation.
(8)
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(9)
Amounts in this column include the following for 2021:2023: for Mr. Krishna: tax reimbursements of $31,826$43,561 and IBM contributions to defined contribution plans of $294,480;$398,400; for Mr. Kavanaugh: IBM contributions to defined contribution plans of $120,356; for Mr. Thomas: tax reimbursements of $15,129$38,037 and IBM contributions to defined contribution plans of $171,544;$149,594; for Mr. Rosamilia: tax reimbursements of $11,046,Cohn: IBM contributions to defined contribution plans of $147,040;$180,168; and for Ms. Browdy: IBM contributions to defined contribution plans of $120,211.$144,134. For 2021 and 2022, the amounts in this column include Travel Accident Insurance and Group Life Insurance; such amounts are not included for 2023 because the Travel Accident Insurance and Group Life Insurance are available to all employees and does not discriminate in favor of executive officers. See the 20212023 Summary Compensation Table Narrative below for a description and information about these items.
(10)
(9)
Amounts in this column also include the following perquisites for 2021:2023: for Mr. Krishna: personal financial planning, ground transportation, family attendance at business-related events, personal travel on company aircraft $127,722,of $46,299, and other personal expenses; for Mr. Kavanaugh: annual executive physical,personal financial planning, family attendance at business-related events, and personal travel on company aircraft of $66,056; for Mr. Thomas: ground transportation, family attendance at business related events of $29,311, personal travel on company aircraft, and other personal expenses; for Mr. Rosamilia: personal financial planning, ground transportation, personal security, annual executive physical, family attendance at business-related events,Cohn: personal travel on company aircraft, $60,570,family attendance at business related events, and other personal expenses; and for Ms. Browdy: personal financial planning, ground transportation, and other personal expenses. See the 20212023 Summary Compensation Table Narrative below for a description and information about the aggregate incremental cost calculations for perquisites.
(11)
(10)
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.
(12)
(11)
Mr. KrishnaThomas was not a named executive officer in IBM’s 2020the 2022 or 2023 Proxy Statement; therefore, 20192021 and 2022 data isare excluded for him. Mr. Cohn and Mr. Rosamilia were not named executive officers in the 2021 or 2020 Proxy Statement; therefore, 2020 and 2019 data is excluded for them. Mr. Cohn was hired on December 28, 2020.
2021
482024 Notice of Annual Meeting & Proxy Statement   |   2023 Summary Compensation Table and Related Narrative



2023 Summary Compensation Table Narrative — All Other Compensation (Column (i))
Amounts in this column represent the following as applicable:
Tax Reimbursements


Amounts represent payments thatPayments by IBM has made to the named executive officers to cover taxes incurred by them for certain business-related taxable expenses.

These expenses, for a named executive officerwhich may include: tax equalization payments related to prior year international assignments in accordance with IBM’s standard mobility policy, 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).
IBM Contributions to Defined Contribution Plans


Amounts represent IBM matching and automatic contributions to the individual accounts for each named executive officer under IBM’s 401(k) Plus and Excess 401(k) PlusSavings Plans.


Under IBM’s 401(k) Plus Plan, eligible participants can receive matching contributions, ranging from 2 to 6%, up to a percentage of eligible compensation (subject to Internal Revenue Code compensation limits), depending on a person’s date of hire and job role. In addition, for all eligible participants, IBM makes automatic contributions, ranging from 1% to 4%, equal to a certain percentage of eligible compensation (subject to Internal Revenue Code compensation limits), which generally depends on the participant’s pension plan eligibility on December 31, 2007. In 2021, Messrs. Krishna, Kavanaugh and Rosamilia are eligible to receive matching contributions up to 6% of eligible pay. Mr. Cohn and Ms. Browdy are eligible for up to 5% matching contributions. The automatic contribution percentage was 2% for Messrs. Krishna, Kavanaugh, and Rosamilia; and 1% for Mr. Cohn and Ms. Browdy.

Under IBM’s Excess 401(k) Plus Plan, IBM makes matching contributions and automatic contributions equal to a percentage of the sum of (i) the amount the participant elects to defer under the Excess 401(k) Plus Plan, and (ii) the participant’s eligible compensation after reaching the Internal Revenue Code compensation limits. The matching and automatic contributions for the Excess 401(k) Plus Plan for each named executive officer are the same percentages as described for the IBM 401(k) Plus Plan above.

See the 20212023 Nonqualified Deferred Compensation Narrative for additional details on the nonqualified deferred compensation plan.
Life and Travel Accident Insurance PremiumsPerquisites

Amounts represent insurance premiums paid by IBM on behalf of the named executive officers.

These executive officers are covered by life insurance policies under the same terms as other U.S. full-time regular employees.

Life insurance for executives hired by IBM U.S. before January 1, 2004, including Messrs. Krishna, Kavanaugh and Rosamilia, is two times salary plus annual incentive program target, with a maximum coverage amount of $2,000,000. Life insurance for executives hired by IBM U.S. on or after January 1, 2004, including Mr. Cohn and Ms. Browdy, is one times salary plus annual incentive program target, with a maximum coverage of $1,000,000.

In addition, 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.
Perquisites
The following describes perquisites (and their aggregate incremental cost calculations) provided to the named executive officers in 2021.2023.
Personal Financial Planning
In 2021,2023, IBM offered financial planning services with coverage generally up to $15,000 annually for senior U.S. executives, including each named executive officer.
Personal Travel on Company Aircraft
General Information


Amounts represent the aggregate incremental cost to IBM for travel not directly related to IBM business.


IBM’s security practices provide that all air travel by the Chairman and CEO, including personal travel, be on Company aircraft. IBM’s security practices for air travel are consistent with best practices as assessed by independent third partythird-party security experts.
2022 Notice of Annual Meeting & Proxy Statement   |   2021 Summary Compensation Table and Related Narrative49



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The aggregate incremental cost for Mr. Krishna’s personal travel, is included in column (i) of the 2021 Summary Compensation Table. These amounts also include theincluding any aggregate incremental cost if any, of travel by their family members or other guests on both business and non-business occasions.occasions, is included in column (i) of the 2023 Summary Compensation Table.


Additionally, personal travel or commutation in 20212023 on Company aircraft by named executive officers other than Mr. Krishna, and the aggregate incremental cost, if any, of travel by the officer’s family or other guests when accompanying the officer on both business and non-business occasions is also included.


Also, from time to time, named executive officers who are members of the boards of directors of certain other companies and non-profit organizations travel on Company aircraft to those outside board meetings. These amounts may include travel related to participation on these outside boards.


Any aircraft travel by named executive officers for an annual executive physical under the corporate wellness program is included in these amounts.
Aggregate Incremental Cost Calculation


The aggregate incremental cost for the use of Company aircraft for personal travel, including travel to outside boards, is calculated by multiplying the hourly variable maintenance cost rate for the specific aircraft by the number of flight hours used, plus the actual costs for fuel, parking, landing fees, crew expenses and catering.


The maintenance rate for each aircraft is periodically reviewed by IBM’s flight operations team and adjusted as necessary to reflect changes in costs.


The aggregate incremental cost includes deadhead flights (i.e., empty flights to and from the IBM hangar or any other location).


The aggregate incremental cost for any charter flights is the full cost to IBM of the charter.
Ground Transportation
General Information


IBM’s security practices provide that the Chairman and CEO be driven to and from work by IBM personnel in a car leased by IBM or by an authorized car service.

In addition, under IBM’s 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 them on business occasions.


Other named executive officers may use a Company-leased car with an IBM driver or an authorized car service for business-related transportation, and travel to outside board meetings and an annual executive physical under IBM’s corporate wellness program. Family members and other guests may accompany these named executive officers in a Company-leased car with an IBM driver or an authorized car service on these occasions.


Amounts reflect the aggregate incremental cost, if any, for the above-referenced items.
Aggregate Incremental Cost Calculation


For the Company-leased car with an IBM driver, incremental cost is calculated by multiplying the variable rate by the applicable driving time. The variable rate includes a driver’s salary and overtime payments, plus a cost per mile calculation based on fuel and maintenance expense.


For an authorized car service, the incremental cost is the full cost to IBM for such service.
Personal Security
General Information


Under IBM’s security practices, IBM provides security personnel for the Chairman and CEO on certain non-business occasions, and for his family on certain business and non-business occasions, or when accompanying them on business occasions.


Amounts include the aggregate incremental cost, if any, of security personnel for those occasions.


In addition, amounts also include the cost of home security systems and monitoring for the Chairman and CEO, and any other named executive officers, if applicable.
2024 Notice of Annual Meeting & Proxy Statement   |   2023 Summary Compensation Table and Related Narrative 49



Aggregate Incremental Cost Calculation


The aggregate incremental cost for security personnel is the cost of any commercial airfare to and from the destination, hotels, meals, car services, and salary and travel expenses of any additional subcontracted personnel if needed.


The aggregate incremental cost for installation, maintenance, and monitoring services for home security systems reflects the full cost to IBM for these items.
Annual Executive Physical


Amounts represent any payments by IBM coversfor the cost of an annual executive physical for the named executive officers under IBM’s corporate wellness program.program, if applicable.

Amounts represent any payments by IBM for the named executive officers under this program, if applicable.
Family Travel and Attendance at Business-Related Events


Business-related events attended by the named executive officers and their family members may include meetings, dinners, and receptions with IBM’s clients, executive management or board members.

Amounts represent the aggregate incremental cost, if any, of travel and/or meals and entertainment for the family members of the named executive officers to attend business-related events.events, such as meetings, dinners, and receptions with IBM’s clients, executive management, or board members.
Other Personal Expenses


Amounts represent the cost of meals and lodging for the named executive officers who traveled for their annual executive physical under IBM’s corporate wellness program.


Amounts also include expenses associated with participation on outside boards other than those disclosed as Personal Travel on Company Aircraft and Ground Transportation.


Amounts also include items relating to tax services for prior year international assignments in accordance with IBM’s standard mobility policy, business events and administrative charges incurred by executives.
5020222024 Notice of Annual Meeting & Proxy Statement   |   20212023 Summary Compensation Table and Related Narrative





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2023 Grants of Plan-Based Awards Table
2021 GRANTS OF PLAN-BASED AWARDS TABLE
Name
(a)
Type of
Award(1)
Grant Date
(b)
Compensation
Committee
Approval
Date
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
All Other
Stock
Awards:
Number of
shares
of Stock
All Other
Option
Awards:
Numberof
Securities
Underlying
Options
(#)
(j)
Exercise
or Base
Price of
Option
Awards
($/Sh)
(k)
Closing
Price
on the
NYSE on
the Date
of Grant
($/Sh)
Grant Date
Fair Value
of Stock
and
Option
Name
(a)
Type of
Award
(1)
Grant Date
(b)
Compensation
Committee
Approval
Date
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
Estimated Future Payouts
Under Equity
Incentive PlanAwards
(2)
All Other
Stock
Awards:
Number of
shares
of Stock
All Other
Option
Awards:
Number of
Securities
Underlying
Exercise
or Base
Price of
Option
Closing
Price
on the
NYSE on
the Date
of Grant
($/Sh)
Grant Date
Fair Value
of Stock
and
Option
Threshold
($)
(c)
Target
($)
(d)
Maximum
($)
(e)
Threshold
(#)
(f)
Target
(#)
(g)
Maximum
(#)
(h)
or Units(3)
   (#)
   (i)
  Awards
($)
(l)
(4)
Threshold
($)
(c)
Target
($)
(d)
Maximum
($)
(e)
Threshold
(#)
(f)
Target
(#)
(g)
Maximum
(#)
(h)
 or Units
   (#)
   (i)
(3)
  Options
   (#)
   (j)
(3)
 Awards
($/Sh)
(k)
(4)
   Awards
($)
(l)
(5)
A. Krishna
A. Krishna
AIPN/A01/25/202103,000,0006,000,000AIPN/A1/30/2023$0$3,000,000$6,000,000
PSU06/08/202101/25/202115,98063,918108,6618,193,533PSU2/21/20231/30/202318,36973,476124,909$8,612,857
RSU06/08/202101/25/202134,4184,411,974RSU2/21/20231/30/202324,4922,870,952
J.J. KavanaughSO2/21/20231/30/2023146,923$133.00$131.713,339,560
AIPN/A01/25/202101,307,0003,921,000
J.J. Kavanaugh
PSU06/08/202101/25/20219,58838,35165,1974,916,173AIPN/A1/30/202301,479,0004,437,000
RSU06/08/202101/25/202120,6512,647,211PSU2/21/20231/30/202310,72442,89772,9255,028,386
G. CohnRSU2/21/20231/30/202314,2991,676,129
AIPN/A12/15/202001,580,0004,740,000SO2/21/20231/30/202385,777133.00131.711,949,711
PSU01/04/202112/15/20201,6156,45810,979683,063
R.D. Thomas
PSU01/04/202112/15/20203,13312,53321,3061,325,688AIPN/A1/30/202301,350,0004,050,000
PSU01/04/202112/15/20204,74818,99032,2832,008,750PSU2/21/20231/30/20239,34737,38763,5584,382,504
RSU01/04/202112/15/202020,4512,163,286RSU2/21/20231/30/202312,4631,460,913
T. RosamiliaSO2/21/20231/30/202374,758133.00131.711,699,249
AIPN/A01/25/202101,120,0003,360,000
G. Cohn
PSU06/08/202101/25/20217,55430,21651,3673,873,340AIPN/A1/30/202301,580,0004,740,000
RSU06/08/202101/25/202116,2712,085,665PSU2/21/20231/30/20237,83431,33653,2713,673,206
M.H. BrowdyRSU2/21/20231/30/202310,4461,224,480
AIPN/A01/25/202101,206,0003,618,000SO2/21/20231/30/202362,659133.00131.711,424,239
PSU06/08/202101/25/20215,52022,08137,5382,830,508
M.H. Browdy
RSU06/08/202101/25/202111,8901,524,120AIPN/A1/30/202301,264,0003,792,000
PSU2/21/20231/30/20236,80827,23046,2913,191,901
RSU2/21/20231/30/20239,0771,064,006
SO2/21/20231/30/202354,448133.00131.711,237,603
(1)

Type of Award:
AIP = Annual Incentive Program
PSU = Performance Share Unit
RSU = Restricted Stock Unit
SO = Stock Option
Each of these awards was granted under IBM’s 1999 Long-Term Performance Plan (“LTPP”)(LTPP). For RSUs and PSUs that were granted prior to the separation of Kyndryl on November 3, 2021, the number of units were adjusted to ensure the value of the award immediately prior to the separation was maintained immediately after the separation, as described in the Employee Matters Agreement and in accordance with IBM’s LTPP. See the 20212023 Summary Compensation Table for additional information on these types of awards.
(2)

PSU awards will be adjusted based on performance and paid in February 2024.2026.
(3)

Other than for Mr. Cohn,The first tranche of the RSU and SO awards vestvested 25% on June 8, 2022, June 8, 2023, June 8, 2024,February 21, 2024. The remaining tranches will vest February 21, 2025, February 21, 2026, and June 8, 2025,February 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. Mr. Cohn’s January 2021 RSU award vests 25% per year on January 4, 2022, January 4,See 2023 January 4, 2024, and January 4, 2025, provided that he is an employee of IBM as of those dates unless he meets certain requirements to be eligible for continued vesting. See 2021 Potential Payments Upon Termination Narrative for a description of these eligibility requirements.
(4)

All SOs have an exercise price equal to the average of the high and low prices of IBM common stock on the New York Stock Exchange (NYSE) as of the grant date.
(5)
The amounts in this column reflect the aggregate grant date fair values of PSU, RSU, and 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 20212023 Summary Compensation Table. The values shown for the PSUs, RSUs, and RSUsSO awards reflect an adjustment for the exclusion of dividend equivalents.
20222024 Notice of Annual Meeting & Proxy Statement   |   2021 GRANTS OF PLAN-BASED AWARDS TABLE2023 Grants of Plan-Based Awards Table 51





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Pay Ratio
The ratio of the CEO’s annual total compensation to that of the median employee’s annual total compensation is 258:1. This ratio is based on annual total compensation of $17,550,959 for the CEO (as reported in the Summary Compensation Table) and $67,926 for the median employee. The base salary for the median employee was $45,197. The median employee used for the pay ratio disclosure was determined as of October 1, 2021 using annual base pay for IBM employees on that date (excluding Kyndryl employees, who would separate and begin employment with Kyndryl on November 4, 2021); all foreign currencies were converted to U.S. dollars. The calculation to determine the median employee was updated this year as required by SEC rules, due to a significant change in the workforce resulting from the separation of Kyndryl. The new calculation resulted in a new median employee from a different country given the global dynamics of IBM’s workforce. The Company believes that this calculation is a reasonable estimate of the pay ratio.
20212023 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative
Option Awards(ColumnsAwards (Columns (b)  – (f))
General Terms


In accordance with IBM’s Long-Term Performance Plan (LTPP), the exercise price of stock options is not less than the average of the high and low prices of IBM common stock on the New York Stock Exchange (NYSE) on the date of grant.


Options generally expire ten years after the date of grant.

The option recipient must remain employed by IBM through each vesting date in order to receive any potential payout value.

IBM has not granted any option awards that are Equity Incentive Plan Awards.
Stock Awards(ColumnsAwards (Columns (g)  – (j))
Number of Shares or Units of Stock That Have Not Vested (Column(Column (g))
The amounts in this column are the number of RSUs or RRSUs that were outstanding as of December 31, 2021 (adjusted on November 4, 2021 following the separation of Kyndryl, in accordance with IBM’s LTPP).2023.
Market Value of Shares or Units of Stock That Have Not Vested (Column(Column (h))
The amounts in this column are the value of the RSU or RRSU awards disclosed in column (g), calculated by multiplying the number of units by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 20212023 fiscal year ($133.66)163.55).
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (Column(Column (i))
The amounts in this column are the number of PSUs or RPSUs that were outstanding as of December 31, 2021 (adjusted on November 4, following the separation of Kyndryl, in accordance with IBM’s LTPP).2023.
Performance Share Units and retention Performance Share Units


Amounts in column (i) reflect the Target number for each PSU and RPSU award.


The performance criteria for IBM PSUs and RPSUs is based on cumulative three-year rolling targets. Therefore, measuring annual performance against these targets is not meaningful.


See Section 1 of the 20212023 Compensation Discussion and Analysis, as well as the 20212023 Summary Compensation Table, for a detailed description of the PSU program, and RPSUs, including payout calculations.


The table below provides the payout levels for all outstanding PSU and RPSU awards for each of the named executive officers. A Maximum number of PSUs earned is 150%170% of the Target number based on business objectives plus up to an additional 20 points (for a maximum of 170%) based on the relative ROIC modifier. A Maximum number of RPSUs earned is 120% (inclusive of an additional 20 points based on the relative ROIC modifier for the relevant performance period).
2021 OUTSTANDING2023 Outstanding PSU and RPSU AWARD PAYOUT LEVELSAward Payout Levels
NameGrant DateThresholdTargetMaximum
A. Krishna02/21/202215,49161,963105,337
02/21/202318,36973,476124,909
J.J. Kavanaugh02/21/202210,14040,55868,949
02/21/202310,72442,89772,925
R.D. Thomas02/21/20227,88631,54553,627
02/21/20239,34737,38763,558
G. Cohn02/21/20228,16832,67255,542
02/21/20237,83431,33653,271
M.H. Browdy02/21/20225,63322,53238,304
02/21/20236,80827,23046,291
NameGrant DateThresholdTargetMaximum
A. Krishna12/17/2019143,910179,888215,866
06/08/202018,74074,960127,432
06/08/202115,98063,918108,661
J.J. Kavanaugh06/08/202010,56342,25071,825
06/08/20219,58838,35165,197
G. Cohn01/04/20213,13312,53321,306
01/04/20214,74818,99032,283
T. Rosamilia06/08/20208,17832,71055,607
06/08/20217,55430,21651,367
M.H. Browdy06/08/20205,99723,98840,780
06/08/20215,52022,08137,538
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (Column(Column (j))
The amounts in this column are the values of PSU and RPSU awards disclosed in column (i), calculated by multiplying the number of units by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 20212023 fiscal year ($133.66)163.55).
5220222024 Notice of Annual Meeting & Proxy Statement   |   20212023 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative





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2023 Outstanding Equity Awards at Fiscal Year-End Table
Option AwardsStock Awards
Number of
Securities
Underlying
Unexercised
Options
Number of
Securities
Underlying
Options
(#)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Option
Exercise
OptionNumber
of Shares
or Units
That Have
Market Value
of Shares
or Units
That Have
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units
or Other
Rights
That Have
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights
That Have
Name(#)OptionsPrice(2)ExpirationNot Vested(3)Not Vested(4)Not Vested(5)Not Vested(4)
(a)ExercisableUnexercisable(1)(#)($)DateType ofGrant(#)($)Type ofGrant(#)($)
Grant Date(b)(c)(d)(e)(f)AwardDate(g)(h)AwardDate(i)(j)
A. Krishna
02/21/2236,134108,403N/A$124.5102/20/32RSU06/08/2010,091$1,650,383PSU02/21/2261,963$10,134,049
02/21/230146,923N/A133.0002/20/33RSU06/08/2117,2102,814,696PSU02/21/2373,47612,017,000
RSU02/21/2215,4922,533,717
RSU02/21/2324,4924,005,667
Total36,134255,32667,285$11,004,463135,439$22,151,049
J.J. Kavanaugh
02/21/2223,65170,955N/A$124.5102/20/32RSU06/08/205,688$930,272PSU02/21/2240,558$6,633,261
02/21/23085,777N/A133.0002/20/33RSU06/08/2110,3261,688,817PSU02/21/2342,8977,015,804
RSU02/21/2210,1401,658,397
RSU02/21/2314,2992,338,601
Total23,651156,73240,453$6,616,08783,455$13,649,065
R.D. Thomas
02/21/2218,39555,188N/A$124.5102/20/32RRSU02/11/2036,782$6,015,696PSU02/21/2231,545$5,159,185
02/21/23074,758N/A133.0002/20/33RSU06/08/203,673600,719PSU02/21/2337,3876,114,644
RSU06/08/216,8851,126,042
RSU02/21/227,8871,289,919
RSU02/21/2312,4632,038,324
Total18,395129,94667,690$11,070,70068,932$11,273,829
G. Cohn
02/21/2219,05257,159N/A$124.5102/20/32RSU01/04/2110,226$1,672,462PSU02/21/2232,672$5,343,506
02/21/23062,659N/A133.0002/20/33RSU02/21/228,1691,336,040PSU02/21/2331,3365,125,003
RSU02/21/2310,4461,708,443
Total19,052119,81828,841$4,716,94564,008$10,468,509
M.H. Browdy
02/21/2213,13939,420N/A$124.5102/20/32RSU06/08/203,231$528,430PSU02/21/2222,532$3,685,109
02/21/23054,448N/A133.0002/20/33RSU06/08/215,945972,305PSU02/21/2327,2304,453,467
RSU02/21/225,634921,441
RSU02/21/239,0771,484,543
Total13,13993,86823,887$3,906,71949,762$8,138,576
2021 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option AwardsStock Awards
Number of
Securities
Underlying
Unexercised
Options
Number of
Securities
Underlying
Unexercised
Options
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Option
Exercise
Option
Number
of Shares
or Units
of Stock
That Have
Market Value
of Shares
or Units
of Stock
That Have
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units
or Other
Rights
That Have
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights
That Have
Name(#)(#)OptionsPriceExpirationNot Vested(1)Not Vested(2)Not Vested(3)Not Vested(2)
(a)
Grant Date
Exercisable
(b)
Unexercisable
(c)
(#)
(d)
($)
(e)
Date
(f)
Type of
Award
Grant
Date
(#)
(g)
($)
(h)
Type of
Award
Grant
Date
(#)
(i)
($)
(j)
A. Krishna
RSU06/08/183,108$415,415RPSU12/17/1988,602$11,842,543
RRSU12/11/1866,6568,909,241RPSU12/17/1991,28612,201,287
RSU06/07/198,0421,074,894PSU06/08/2074,96010,019,154
RSU06/08/2030,2734,046,289PSU06/08/2163,9188,543,280
RSU06/08/2134,4184,600,310
Total00142,497$19,046,149318,766$42,606,264
J.J. Kavanaugh
RSU06/08/182,968$396,703PSU06/08/2042,250$5,647,135
RSU06/07/197,7741,039,073PSU06/08/2138,3515,125,995
RSU06/08/2017,0632,280,641
RSU06/08/2120,6512,760,213
Total0048,456$6,476,63080,601$10,773,130
G. Cohn
RRSU12/28/2050,510$6,751,167PSU01/04/2112,533$1,675,161
RSU01/04/2120,4512,733,481PSU01/04/2118,9902,538,203
Total0070,961$9,484,64831,523$4,213,364
T. Rosamilia
RSU06/08/183,108$415,415PSU06/08/2032,710$4,372,019
RSU06/07/197,7741,039,073PSU06/08/2130,2164,038,671
RSU06/08/2013,2101,765,649
RSU06/08/2116,2712,174,782
Total0040,363$5,394,91962,926$8,410,690
M.H. Browdy
RSU06/08/182,148$287,102PSU06/08/2023,988$3,206,236
RSU06/07/195,764770,416PSU06/08/2122,0812,951,346
RSU06/08/209,6881,294,898
RSU06/08/2111,8901,589,217
Total0029,490$3,941,63346,069$6,157,582
Type of Award:
PSU = Performance Share Unit
RPSU = Retention Performance Share Unit
RSU = Restricted Stock Unit
RRSU = Retention Restricted Stock Unit
(1)

The stock option awards granted vest 25% per year on the first through fourth anniversaries of the respective grant dates, provided the individual remains employed through each vesting date, unless they meet certain requirements to be eligible for continued vesting.
(2)
The exercise prices shown in this column are equal to the high and low prices of IBM common stock on the New York Stock Exchange as of the grant date.
(3)
The amounts shown in column (g) of the 20212023 Outstanding Equity Awards at Fiscal Year-End Table are unvested RSU and RRSU awards. See the 20212023 Compensation Discussion and Analysis and the 20212023 Summary Compensation Table Narrative for additional information on these types of awards. Mr. Krishna’s and Mr. Cohn’sThomas’ RRSU awards vestaward vests on the anniversary of the grant date in 20222024 and 2023 according to the vesting schedule in the table below,2025 provided they arehe is an employee of IBM on each vesting date. The Vesting Schedule for Unvested RSUs table below shows the vesting schedules for these outstanding awards. In 2018, 2019, 2020, 2021, 2022, and 2021,2023, each named executive officer other than Mr. Cohn received RSU awards that vest 25% per year on the first through the fourth anniversaries of the grant date (Mr. Cohn was hired inat the end of 2020, so his RSU granted in January 2021 vests 25% per year on the first through the fourth anniversaries of the grant date).
(2)
(4)
Values in these columns are calculated by multiplying the number of units by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 20212023 fiscal year ($133.66)163.55).
(3)
(5)
The amounts shown in column (i) of the 20212023 Outstanding Equity Awards at Fiscal Year-End Table are PSU and RPSU awards that have not yet vested. See the 20212023 Compensation Discussion and Analysis and the Summary Compensation Table Narrative for additional information on PSU and RPSU awards. The Vesting Schedule for Unvested PSUs and RPSUs table below shows the vesting schedules for these outstanding PSU and RPSU awards (reflecting Target payout). PSUs and RPSUs for all Named Executive Officers are paid out in February following the end of the respective performance period.
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VESTING SCHEDULE FOR UNVESTED RSUs2023 Option Exercises and RRSUsStock Vested Table
Vesting Schedule
NameType of AwardGrant Date2022202320242025
A. KrishnaRSU06/08/20183,108
RRSU12/11/201833,32833,328
RSU06/07/20194,0204,022
RSU06/08/202010,09110,09110,091
RSU06/08/20218,6048,6048,6048,606
J.J. KavanaughRSU06/08/20182,968
RSU06/07/20193,8853,889
RSU06/08/20205,6875,6885,688
RSU06/08/20215,1625,1635,1635,163
G. CohnRRSU12/28/202027,35923,151
RSU01/04/20215,1125,1135,1125,114
T. RosamiliaRSU06/08/20183,108
RSU06/07/20193,8853,889
RSU06/08/20204,4034,4034,404
RSU06/08/20214,0674,0684,0684,068
M.H. BrowdyRSU06/08/20182,148
RSU06/07/20192,8802,884
RSU06/08/20203,2283,2293,231
RSU06/08/20212,9722,9732,9722,973
VESTING SCHEDULE FOR UNVESTED PSUs and RPSUs
Vesting Schedule
NameGrant DateDec-2022Dec-2023
A. Krishna12/17/201988,602
12/17/201991,286
06/08/202074,960
06/08/202163,918
J.J. Kavanaugh06/08/202042,250
06/08/202138,351
G. Cohn01/04/202112,533
01/04/202118,990
T. Rosamilia06/08/202032,710
06/08/202130,216
M.H. Browdy06/08/202023,988
06/08/202122,081
2021 OPTION EXERCISES AND STOCK VESTED TABLE
Option Awards
Stock Awards(1)
Option Awards
Stock Awards(1)
Name
(a)
Number of
Shares
Acquired
on Exercise
(#)
(b)
Value
Realized
on Exercise
($)
(c)
Number of
Shares
Acquired
on Vesting
(#)
(d)
Value
Realized
on Vesting
($)
(e)
Name
(a)
Number of
Shares
Acquired
on Exercise
(#)
(b)
Value
Realized
on Exercise
($)
(c)
Number of
Shares
Acquired
on Vesting
(#)
(d)
Value
Realized
on Vesting
($)
(e)
A. Krishna0$0151,030$20,242,361A. Krishna0$0206,185$32,883,416
J.J. Kavanaugh0032,0364,496,542J.J. Kavanaugh0050,3357,701,524
G. Cohn0037,6764,993,179R.D. Thomas0043,6496,509,506
T. Rosamilia0031,4304,406,151G. Cohn0046,9387,489,153
M.H. Browdy0023,0113,223,290M.H. Browdy0029,5114,504,848
(1)

Amounts shown in these columns reflect PSU, RPSU, RSU, and RRSU awards that vested during 2021.2023. The PSU and RPSU award for the 2019-20212021-2023 performance period vested on December 31, 2021,2023, and paid out to each named executive officer on February 1, 2022;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 Compensation Discussion and Analysis and the 20212023 Summary Compensation Table for details on these types of awards.
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20212023 Retention Plan Narrative
General Description and Purpose
During the mid-1990s, IBM faced challenges that many thought put its very existence at risk. Some key leaders were recruited away from IBM at this time and a retention plan, formally called the “IBM Supplemental Executive Retention Plan” ​(Retention Plan), was created to help retain the caliber of senior leaders needed to turn IBM around, preserve its long-term viability and position it for growth in the future.
The Retention Plan was closed to new participants effective May 1, 2004, and future accruals under the Retention Plan stopped on December 31, 2007. A participant’s Retention Plan benefit does not consider pay earned or service performed after such date, and 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.
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,participant satisfies the age, service, pay, and the amounts below are separately presented in the 2021 Retention Plan Table and are not included in the 2021 Pension Benefits Table.
The 2021 Retention Plan Table shows each eligible named executive officer’s 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. Mr. Kavanaugh and Mr. Rosamilia areis eligible for a benefit under the Retention Plan. Mr. Krishna, Mr. Cohn and Ms. Browdy are not eligible for a benefit under the Retention Plan.
Description of Retention Plan benefit.

The Retention Plan provides for payment of an annual benefit as long as the participant satisfies the age, service, pay,was closed to new participants effective May 1, 2004, and job level requirements.

future accruals stopped on December 31, 2007. Effective July 1, 1999, IBM amended the Retention Plan was amended to provide a new benefit formula, but allowed participants who met certain age, service, and pay level conditions as of June 30, 1999 to continue to earn benefits under the prior formula if the prior formula provides a greater benefit.

Retention Plan benefits are subject to forfeiture and rescission if an executive is terminated for cause or engages in competitive or other activity detrimental to IBM during or following employment. The Retention Plan is separately presented in the 2023 Retention Plan Table and is not included in the 2023 Pension Benefits Table.
Material Terms and Conditions: 1995 Retention Plan


The benefits provided under the Retention Plan benefit for Mr. Kavanaugh areis determined under the Retention Plan formula in effect prior to the July 1, 1999 amendment (1995 Retention Plan).


Benefits are available under the 1995 Retention Plan 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.$160,000.


The benefit provided under the 1995 Retention Plan is payable only as an annuity beginning on the first day of the
month following termination of employment (subject to a six-month delay for “specified employees” as required under Section 409A of the Internal Revenue Code).

While Mr. Kavanaugh’s benefit is determined under the 1995 Retention Plan, he was partially grandfathered under this formula which means that his accruals stopped December 31, 2003 and the threshold to determine his benefit is $233,400 instead of $311,400 for fully grandfathered participants .participants. If Mr. Kavanaugh terminates employment on or after age 60, his Retention Plan benefit expressed as an annual single life annuity is equal to:
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If the participant terminates employment before age 60, the annual single life annuity resulting from the sum of the amounts specified in (1) through (4) is reduced as specified in the Retention Plan. 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%.

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.
Material Terms and Conditions: 1999 Retention Plan

The benefits provided under the Retention Plan to Mr. Rosamilia are determined under the Retention Plan formula in effect on and after the July 1, 1999 amendment (1999 Retention Plan).

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 January 1, 2007 and immediately prior to termination or death, and either:

Terminates employment for any reason other than cause or dies, in each case after attaining age 60 and completing at least five years of service; or

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 IBM’s long-term disability plan), or if approved by the Board
2022 Notice of Annual Meeting & Proxy Statement   |   2021 Retention Plan Narrative 55


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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).

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:
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In no event will the sum of the amounts in (1) and (2) exceed 65% times final average pay times a fraction (no greater than 1), the numerator of which is the participant’s years of service and the denominator of which is 35.

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) and (2) by 0.5% for each month that the benefit commencement date precedes age 60.
Compensation Elements Included in Calculations


The definitions of eligible final average pay and eligible compensation for purposes of the Retention Plan have the same meanings as under the Pension Credit Formula in the IBM Personal Pension Plan.
Funding

The Retention Plan is unfunded and maintained as a book reserve (notional) account.

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.
Policy Regarding Extra Years of Credited Service


Generally, a participant’s years of credited service for benefits are based on the years an employee participated in the IBM Personal Pension Plan through December 31, 2007, the date accrual of future benefits stopped.
Available Forms of Payment


A participant’s benefit is only payable in the form of an annuity with monthly benefit payments beginning on the first day of the month following termination of employmentseparation from service (subject to a six-month delay for “specified employees” as
required under Section 409A of the Internal Revenue Code)tax law). Lump sum payments are not available under the Retention Plan.

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.
Annual Retention Plan Benefit


The annual Retention Plan benefit that was earned as of December 31, 2007 and that is payable as a single life annuity beginning at the earliest unreduced retirement age (as defined in the next subsection) for each eligible named executive officerMr. Kavanaugh is detailed in the table below.
Name
Annual Retention Plan Benefit at
Earliest Unreduced Retirement Age
NameAnnual Retention Plan Benefit at
Earliest Unreduced Retirement Age
J.J. Kavanaugh$18,757J.J. Kavanaugh$10,097
T. Rosamilia87,795
Present Value of Accumulated Benefit


The present value of accumulated benefit shown in the 20212023 Retention Plan Table below is the value as of December 31, 20212023 of the annual Retention Plan benefit that was earned as of December 31, 2007.


The 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 December 31, 2021, Mr. Rosamilia reached the earliest unreduced retirement age. Because Mr. Kavanaugh did not attain age 60 by December 31, 2021, 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.

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 20212023 Pension Benefits Table.
2021 RETENTION PLAN TABLE2023 Retention Plan Table
Number of
Years
Credited
Present
Value of
Accumulated
Payments
During
Last
Number
of Years
Credited
Present
Value of
Accumulated
Payments
During
Last
Service(1)Benefit(2)Fiscal YearService(1)Benefit(2)Fiscal Year
Name
(a)
Plan Name
(b)
(#)
(c)
($)
(d)
($)
(e)
Name
(a)
Plan Name
(b)
(#)
(c)
($)
(d)
($)
(e)
J.J. KavanaughRetention Plan12$309,586$0J.J. KavanaughRetention Plan12$131,110$0
T. RosamiliaRetention Plan251,584,2850
(1)

Reflects years of credited service as of December 31, 2007, which was the date accruals under the Retention Plan stopped. Each of the eligible named executive officers in this table2007. Mr. Kavanaugh has 1416 additional years of service with IBM after that date.
(2)

While the accruals under the Retention Plan stopped on December 31, 2007, the value of the Retention Plan benefit for the eligible named executive officers will continue to change based on their ages, the assumptions used to calculate the present value of the accumulated benefit, and the benefit that would be provided under the IBM Personal Pension Plan. For assumptions used to calculate the present value, see the “Assumptions used to determine present value as of December 31, 2021 for each eligible named executive officer’2023” immediately following the 20212023 Pension Benefits table.
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20212023 Pension Benefits Narrative
The 20212023 Pension Benefits Tables show the number of 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. As of December 31, 2023 Messrs. Krishna, Kavanaugh and Rosamilia haveThomas had pension benefits under the U.S. defined benefit pension plan. Neither Mr. Cohn nor Ms. Browdy have a benefit under any IBM defined benefit pension plan.
U.S. Qualified Plan and Nonqualified Plan Descriptions — General
The IBM Personal Pension Plan consists of a tax-qualified plan and a non-tax qualified plan. Effective January 1, 2008, the non-tax qualified plan was renamed the IBM Excess Personal Pension Plan and is referred to herein as the Nonqualified Plan, and the tax-qualified plan is referred to as the Qualified Plan. The combined plan is referred to herein as the IBM Personal Pension Plan. Effective January 1, 2005, the IBM Personal Pension Plan was closed to new participants.
Plan Description


Effective July 1, 1999, 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 June 30, 1999, to elect to continue to earn benefits under the prior formulas, including the Pension Credit Formula.

Accrual of future benefits under the IBM Personal Pension Plan stopped on December 31, 2007. Accordingly, a participant’s pension benefit does not consider pay earned and service credited after such date.

The Qualified Plan provides funded, tax-qualified benefits up to the limits on compensation and benefits under the Internal Revenue Code.


The Nonqualified Plan provides unfunded, nonqualified benefits in excess of the limits on compensation.

Accrual of future benefits under the IBM Personal Pension Plan stopped on December 31, 2007, and a participant’s pension benefit does not consider pay earned and service credited after such date.
IBM U.S. Personal Pension Plan

(Qualified Plan)
Purpose of the Qualified Plan


The Qualified Plan was designed to provide tax-qualified pension benefits that arewere generally available to all U.S. regular employees.


The cessation of accruals under the Qualified Plan and the continued IBM contributions under the tax-qualified defined contribution plan, the IBM 401(k) Plus Plan, reflects IBM’s desire to provide appropriate benefits for its employees, consistent with the changing needs of IBM’s workforce and the changing nature of retirement benefits provided by IBM’s current competition.
The benefits under the Qualified Plan are determined either under the Pension Credit Formula (for those who met certain eligibility criteria in 1999) or the Personal Pension Account described below. TheAs the named executive officers’ benefits under the Qualified Plan are determined under the Personal Pension Account formula, and therefore this disclosure will only address the material terms of such formula under the IBM Personal Pension Plan.
formula.
Material Terms and Conditions: Personal Pension Account Formula under the Qualified Plan


Messrs. Krishna’s, Kavanaugh’s, and Rosamilia’sThomas’s benefit under the Qualified Plan is determined under the Personal Pension Account formula, which is a cash balance formula.


According to the terms of the Qualified Plan, underUnder the Personal Pension Account formula prior to 2008, the eligible named executive officers 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 officers’ eligible compensation 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
receive their benefit under the Personal Pension Account formula at any time following termination of employment, but may not defer the commencement of the benefit later than normal retirement age. If the eligible named executive officers’ benefit begins to be paid before normal retirement age, it will be reduced when compared to the benefit that would commence at normal retirement age. The eligible named executive officers may receive their benefit in the 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.
Compensation Elements Included in Calculations


Prior to 2008, eligible compensation was generally equal to the total amount that is included in income including:


Salary;


Recurring payments under any form of variable compensation plan (excluding Stock Options and other equity awards); and


Amounts deducted from salary and variable compensation under IBM’s Internal Revenue Code Section 125 plan (cafeteria plan), and amounts deferred under IBM’s 401(k) Plus Plan and Excess 401(k) Plus Plan.


Equity compensation — Stock Options, RSUs, RRSUs, and PSUs — was excluded from eligible compensation.

Compensation for a year was limited to the compensation limit under the Internal Revenue 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 20212023 was $230,000$265,000 payable as an annual single life annuity beginning at normal retirement age).
Qualified Plan Funding

Benefits under the Qualified Plan are funded by an irrevocable tax-exempt trust.

A participant’s benefits under the Qualified Plan are payable from the assets held by the tax-exempt trust.
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Policy Regarding Extra Years of Credited Service


Generally, a participant’sThe years of credited service are based only on the years an employee participates in the Qualified Plan.

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.Plan, through December 31, 2007.
IBM U.S. Excess Personal Pension Plan (Nonqualified Plan)
Purpose of the Nonqualified Plan


The Nonqualified Plan provides Qualified Plan participants with benefits that may not be provided under the Qualified Plan because of the tax limits on eligible compensation.


The benefit provided to a participant is payable following a separation from service from IBM (subject to the six-month delay for “specified employees” as required under Section 409A of the Internal Revenue Code)tax law).
Material Terms and Conditions of the Nonqualified Plan


The Nonqualified Plan provides a benefit 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 Funding
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The Nonqualified Plan is unfunded and maintained as a book reserve (notional) account.


No funds are set aside in a trust or otherwise; participants in the Nonqualified Plan are general unsecured creditors of IBM with respect to the payment of their Nonqualified Plan benefits.
Policy Regarding Extra Years of Credited Service


The years of credited service for the eligible named executive officers are based only on their service whilethe years an employee was eligible for participation in the Qualified Plan. Because accruals under the Nonqualified Plan stopped on December 31, 2007, service performed after such date is not counted.
Available Forms of Payment
Personal Pension Account

Under the terms of the Qualified Plan, the entire benefit may be paid as a lump sum.


Messrs. Krishna, Kavanaugh, and RosamiliaThomas have elected to receive their Nonqualified Plan benefit in a lump sum immediately following separation from service.


The maximum lump sum amount that the eligible named executive officers could have elected to receive under the
Qualified Plan and Nonqualified Plan, as of January 1, 20222024 if they had a separation from service from IBM on December 31, 20212023 was equal to:
NameMaximum Lump Sum
Qualified
Plan
Nonqualified
Plan
Total Available
Lump Sum
A. Krishna$262,694$82,835$345,529
J.J. Kavanaugh177,40876,765254,173
T. Rosamilia467,847146,543614,390
NameMaximum Lump Sum
Qualified
Plan
Nonqualified
Plan
Total Available
Lump Sum
A. Krishna$224,528$87,850$332,378
J.J. Kavanaugh118,14881,412269,560
R.D. Thomas92,47127292,743


A participant may elect to receive his or her entire benefit, or the portion of the benefit that is not paid as a lump sum, in the form of a single life annuity or in certain other actuarially equivalent forms of payment.
Annual Pension Benefits


The annual pension benefit that was earned as of December 31, 2007, and that is payable as a single life
annuity beginning at normal retirement age for each of the eligible named executive officers is below. Because Messrs. Krishna, Kavanaugh, and RosamiliaThomas will receive a lump sum payment for their Nonqualified Plan benefits, no amount is represented for them in the Nonqualified Plan column below:
NameAnnual Pension Benefit at Normal
Retirement Age
Qualified
Plan
Nonqualified
Plan
Total Benefit
A. Krishna$24,891N/A$24,891
J.J. Kavanaugh21,962N/A21,962
R.D. Thomas14,605N/A14,605
Name
Annual Pension Benefit at Normal
Retirement Age
Qualified
Plan
Nonqualified
Plan
Total Benefit
A. Krishna$20,769N/A$20,769
J.J. Kavanaugh12,546N/A12,546
T. Rosamilia34,552N/A34,552
Present Value of Accumulated Benefit


The present value of accumulated benefit is the value as of December 31, 20212023 of the annual pension benefit that was earned as of December 31, 2007.


The annual pension benefit is the benefit that is payable for the named executive officer’s life beginning at his normal retirement age.


The normal retirement age is defined as the later of age 65 or the completion of one year of service.


Certain assumptions were used to determine the present value of accumulated benefits. Those assumptions are described immediately following the 20212023 Pension Benefits Table.
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57



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2023 Pension Benefits Table
2021 PENSION BENEFITS TABLE
As noted in the General Description and Purpose to the 20212023 Retention Plan Narrative, the 20212023 Pension Benefits Table does not include amounts reflected in the 20212023 Retention Plan Table.
Number of YearsPresent Value ofPayments DuringNumber of YearsPresent Value ofPayments During
Credited Service(1)Accumulated Benefit(2)Last Fiscal YearCredited Service(1)Accumulated BenefitLast Fiscal Year
Name
(a)
Plan Name
(b)
(#)
(c)
($)
(d)
($)
(e)
Name
(a)
Plan Name
(b)
(#)
(c)
($)
(d)
($)
(e)
A. KrishnaQualified Plan17$283,895$0A. KrishnaQualified Plan17$245,597$0
Nonqualified Plan75,9220Nonqualified Plan86,0860
Total Benefit$359,817$0Total Benefit$331,683$0
J.J. KavanaughQualified Plan12$155,881$0J.J. KavanaughQualified Plan12$180,497$0
Nonqualified Plan66,5780Nonqualified Plan76,4130
Total Benefit$222,459$0Total Benefit$256,910$0
T. RosamiliaQualified Plan25$499,374$0R.D. ThomasQualified Plan9$80,293$0
Nonqualified Plan137,9900Nonqualified Plan2320
Total Benefit$637,364$0Total Benefit$80,525$0
(1)

Reflects years of credited service as of December 31, 2007, 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 1416 additional years of service with IBM after that date.
(2)
While the accruals under the Qualified Plan and the Nonqualified Plan stopped on December 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.
Assumptions to determine present value as of December 31, 20212023 for each eligible named executive officer:


Measurement date: December 31, 20212023


Interest rate for present value: 2.6%5.00%


To determine Personal Pension Account benefit:


Interest crediting rate: 1.1%6.4% for 20222024 and 3.80% for 2025 and after


Interest rate to convert Personal Pension Account balance to single life annuity: 0.7433%5.6000% for years 1 – 5, 2.5967%1-5, 5.7733% for years 6 – 20,6-20, and 3.1133%5.7267% for year 21 and after


Mortality table to convert Personal Pension Account balance to single life annuity is 20222024 Pension Protection Act Optional Combined Unisex Table


Mortality (pre-commencement): None


Mortality (post-commencement):


Base Table: Modified RP-2014PRI-2012 White Collar sex-distinct annuitant tables with adjustment to 2006 by backing out MP-2014 improvement and further adjusting the mortality ratesfor retirees adjusted by a factor of 1.0160.762 with improvement from 2012 to December 31, 2023.


Improvement Scale: A modified Scale MP-2021 projection table starting in 2006 for healthy mortality. The modified table is based on the MIM 2021 model, with the same 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 115table.


Withdrawal rates: None


Retirement rates: None prior to Assumed Retirement Age


Normal Retirement Age: Age 60 for Retention Plan, Age 65 for IBM Personal Pension Plan


Assumed Retirement Age: Later of Age 60 for Retention Plan, Age 65 for IBM Personal Pension Plan, or current age


Accumulated benefit is calculated based on credited service and compensation history as of December 31, 2007


In the case of the qualified Personal Pension Account formula, the benefit is payable as a 90% lump sum/10%
annuity for Messrs. Krishna, and Kavanaugh, and a 50% lump sum/50% annuity for Mr. Rosamilia,Thomas beginning on the first day of the month following a separation from service from IBM. The Excess Plan’s Personal Pension Plan Account formula benefit for Messrs. Krishna, Kavanaugh and RosamiliaThomas is payable as a lump sum. The six-month delay under the Nonqualified Plan for “specified employees” as required under Section 409A of the Internal Revenue Code was disregarded for this purpose


All results shown are estimates only; actual benefits will be based on precise credited service and compensation history, which will be determined at separation from service from IBM
Assumptions to determine present value as of December 31, 2020:2022:


The column titled Change in Pension Value in the 20212023 Summary Compensation Table quantifies the change in the present value of the pension benefit from December 31, 20202022 to December 31, 20212023


To determine the present value of the pension benefit as of December 31, 2020,2022, the same assumptions that are described above to determine the present value as of December 31, 20212023 were used, except (1) a (1) 2.2%5.3% interest rate, and Modified MP-2020 improvement scale, andPRI-2012 White Collar sex-distinct tables for retirees adjusted by a factor of 0.762 (2) to determine the Personal Pension Account benefit, the following were used:


Interest crediting rate: 1.1%4.90% for 20212023 and 4.40% for 2024 after


Interest rate to convert Personal Pension Account balance to single life annuity: 0.5233%4.4567% for years 1 – 5, 2.3033%1-5, 5.2367% for years 6 – 20,6-20, and 3.1533%5.1467% for year 21 and after


Mortality table for Personal Pension Account balance conversion: 20212023 Pension Protection Act Optional Combined Unisex Table
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20212023 Nonqualified Deferred Compensation Narrative
IBM Excess 401(k) Plus Plan — U.S.
General Description and Purpose


Effective January 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) Plus Plan. The purpose of the Excess 401(k) Plus Plan is to provide eligible employees with the opportunity to save for retirement on a tax-deferred basis and provide benefits that would be provided under the qualified IBM 401(k) Plus Plan if the compensation limits did not apply. Eligibility is based on those 401(k) participants whose eligible pay is expected to exceed the Internal Revenue Code compensation limit for the applicable plan year.


The 2021 Nonqualified Deferred Compensation Table shows the employee deferrals (executive contributions), IBM match (registrant contributions), automatic contributions (registrant contributions), and investment gain or loss (aggregate earnings) for each named executive officer during 2021.

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.

Account balances in the Excess 401(k) Plus Plan are comprised of cash amounts that were deferred by the participant or contributed by IBM (Basic Account), and all deferred shares, comprised of shares that were deferred by the participant (Deferred IBM Shares). Generally, amounts deferred and vested prior to January 1, 2005 are not subject to Section 409A of the Internal Revenue Code, while amounts deferred and vested on and after January 1, 2005 are subject to Section 409A of the Internal Revenue Code.


The Excess 401(k) Plus Plan is an unfunded plan and a participant’s account balance is not paid to, and cannot be accessed by, the participants until afteronly payable once a separationparticipant separates from service fromwith IBM.


With respect toCertain IBM matching and automatic contributions madeare subject to a participant’s account after March 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.

Effective January 1, 2024, the IBM information or solicitation of401(k) Plus Plan was renamed the IBM clients or employees),401(k) Plan and the Excess 401(k) Plus Plan allows for clawback of any such contributions made inwas renamed the 12- month period prior to such detrimental activity through separation of employment.IBM Excess Savings Plan.
Compensation Eligible for Deferral under Excess 401(k) Plus Plan


An eligible employeeParticipants may elect to defer up to 80% of salary and eligible performance pay, which includes annual incentive program payments.

In both cases, the Internal Revenue Code requires the deferral elections to be made before the calendar year in which the compensation is earned.
Deferred IBM Shares


Prior to January 1, 2008, 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 December 31, 2007, under IBM’s Long-Term Performance Plan (LTPP). Such deferral occurred when the awards vested.


In addition, in accordance with Internal Revenue Service rules, an executive could have also elected to defer receipt of shares of IBM stock that otherwise would be paid on or before February 1, 2008, as a result of the vesting of Performance Share Unit (PSU) awards under IBM’s LTPP.


There are no outstanding deferral elections that would result in any future deferral of stock.

Dividend equivalents on Deferred IBM Shares are paid in cash at the same rate and on the same date as the dividends paid to IBM stockholders and are contributed to the Basic Account.
Excess 401(k)Plus Plan Funding

The Excess 401(k) Plus Plan is unfunded and maintained as a book reserve (notional) account.

No funds are set aside in a trust or otherwise; participants in the plan are general unsecured creditors of IBM for payment of their Excess 401(k) Plus Plan accounts.
IBM Matching Contributions


Through December 31, 2023, IBM 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.


The matching contributions equal the percentage of the sum of:of (i) a participant’s match rate times the amount the participant elects to defer under the Excess 401(k) Plus Plan; and (ii) the participant’s match rate times the eligible compensation after reaching the Internal Revenue Code compensation limits. The maximum matching contribution percentage for a participant is the same as the participant’s percentage under the IBM 401(k) Plus Plan. Generally, participants hired or rehired by IBM U.S. before January 1, 2005 arewere eligible for up to 6% matching contributions; generally, participants hired or rehired by IBM U.S. on or after January 1, 2005, and who complete one year of service, arewere eligible for up to 5% matching contributions. Mr. Krishna, Mr. Kavanaugh, and Mr. Rosamilia areThomas were eligible for a 6% matching contribution. Mr. Cohn and Ms. Browdy arewere eligible for a 5% matching contribution. Effective January 1, 2016, the matching contributions equal the sum of: (i) a participant’s match rate times the amount the participant elects to defer under the Excess 401(k) Plus Plan; and (ii) the participant’s match rate times the eligible compensation after reaching the Internal Revenue Code compensation limits.
IBM Automatic Contributions


Effective January 1, 2008,Through December 31, 2023 IBM creditscredited automatic contributions each pay period to the Basic Account of each eligible participant.


The automatic contributions equal a percentage of the sum of: (i) the amount the participant elects to defer under the Excess 401(k) Plus Plan; and (ii) the participant’s eligible compensation after reaching the Internal Revenue Code compensation limits. The automatic contribution percentage for a participant is the participant’s automatic
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contribution percentage under the IBM 401(k) Plus Plan. Generally, the percentage is 2% or 4% if the participant was hired or rehired by IBM U.S. before January 1, 2005 (dependingbased on thea participant’s pensionretirement plan eligibility onas of December 31, 2007), or 1% if the participant was2007. In addition, for participants hired or rehired by IBM U.S. on or after January 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 participant’s eligible pay excludes the amount the participant elects to defer under the Excess 401(k) Plus Plan. The automatic contribution percentage is;was: 2% for Messrs. Krishna, Kavanaugh and Rosamilia;Thomas; and 1% for Mr. Cohn and Ms. Browdy.

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 December 15 of the plan year. However, if a participant separates from service (including going on long-term disability) prior to December 15, and the participant has:

At least 30 years of service;

At least 15 years of service and is at least age 55;

At least 5 years of service and is at least age 62; or

At least 1 year of service and is at least age 65;
or, if a participant dies prior to December 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 Credits

Effective for the period of January 1, 2008 through June 30, 2009, IBM credited transition credits to an eligible participant’s Basic Account for those employees who were receiving transition credits in their Personal Pension Account under the Qualified Plan as of December 31, 2007. Under the terms of the IBM 401(k) Plus Plan, Messrs. Krishna, Kavanaugh and Rosamilia were eligible to receive transition credits.
Earnings Measures


A participant’s contributions to the Basic Account are adjusted for earnings and losses, until it has been completely distributed, based on investment choices selected by the participant.


IBM does not pay guaranteed, above-market or preferential earnings in the Excess 401(k) Plus Plan.


The available investment choices are the same as the primary investment choices available under the IBM 401(k) Plus Plan, which are as follows (with 2021 annual rates of return indicated for each):includes the IBM Stock Fund.


Target Retirement 2020 Fund (7.62%)

Target Retirement 2025 Fund (9.64%)

Target Retirement 2030 Fund (11.75%)

Target Retirement 2035 Fund (13.76%)

Target Retirement 2040 Fund (15.79%)

Target Retirement 2045 Fund (17.05%)

Target Retirement 2050 Fund (17.20%)

Target Retirement 2055 Fund (17.23%)

Target Retirement 2060 Fund (17.23%)

Target Retirement 2065 Fund (17.28%)

Income Plus Fund (6.07%)

Conservative Fund (8.98%)

Moderate Fund (12.13%)

Aggressive Fund (16.58%)

Interest Income Fund (2.21%)

Inflation Protected Bond Fund (5.88%)

Total Bond Market Fund (-1.69%)

High Yield & Emerging Markets Bond Fund (-.35%)

Total Stock Market Index Fund (25.66%)

Total International Stock Market Index Fund (8.52%)

Global Real Estate Stock Index Fund (29.51%)

Long-Term Corporate Bond Fund (-1.18%)

Large Company Index Fund (28.69%)

Large-Cap Value Index Fund (25.16%)

Large-Cap Growth Index Fund (27.58%)

Small/Mid-Cap Stock Index Fund (12.83%)

Small-Cap Value Index Fund (28.28%)

Small-Cap Growth Index Fund (2.90%)

European Stock Index Fund (16.63%)

Pacific Stock Index Fund (2.85%)

Emerging Markets Stock Index Fund (.93%)

Real Estate Investment Trust Index Fund (43.66%)

International Real Estate Index Fund (10.54%)

IBM Stock Fund (16.63%)*
*
Performance includes dividend equivalent reinvestment

A participant may change the investment selections for new payroll deferrals as frequently as each semi-monthly pay cycle and may change investment selections for existing account balances daily, subject to excessive trading restrictions.


Effective January 1, 2008, the IBM match under the Excess 401(k) Plus Plan is notionally invested in the investment options in the same manner participant contributions are notionally invested.

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Because Deferred IBM Shares are credited, maintained, and ultimately distributed only as shares of IBM’s common stock, they may not be transferred to any other investment choice at any time.


On a quarterly basis, dividend equivalents are credited to a participant’s account with respect to all or a portion of such account that is deemed to be invested in the IBM Stock Fund at the same rate as dividends to IBM stockholders. A dividend equivalent for the Kyndryl distribution, was credited to participant’s account with respect to the portion of such account that was deemed to be investing in the IBM Stock Fund at the same rate as dividends to IBM stockholders.


Aggregate earnings on Deferred IBM Shares during the last fiscal year, as reported in column (d) of the 20212023 Nonqualified
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Deferred Compensation Table are calculated as the change in the price of IBM’s common stock between December 31, 20202022, and December 31, 20212023, for all Deferred IBM Shares that were contributed prior to 2021.Shares.


Aggregate earnings reflect an $8 quarterly administrative fee.
Payouts, Withdrawals, and Other Distributions


No payouts, withdrawals or other distributions from the Basic Account are permitted prior to a separation from service from IBM.


At termination, the balance in an eligible executive’s Basic Account that was deferred prior to January 1, 2005, is paid to the executive in an immediate lump sum unless: (a) the balance exceeds $25,000; and (b) the executive satisfies the following age and service criteria:


At least age 55 with 15 years of service;


At least age 62 with 5 years of service;


At least age 65 with 1 year of service;


Any age with at least 30 years of service, provided that, as of June 30, 1999, the executive had at least 25 years of service or was at least age 40 with 10 years of service; or


Commencing benefits under the IBM Long-Term Disability Plan.


As of December 31, 2021,2023, Messrs. Krishna Kavanaugh and RosamiliaKavanaugh had satisfied the age and service criteria.


If the participant has satisfied the age, service, and account balance criteria at termination, but has not made a valid advance election of another form of distribution, the amount of the participant’s Basic Account that was deferred prior to January 1, 2005, is paid in a lump sum in February of the year following separation.


If the participant has satisfied the age, service, and account balance criteria at termination and has made a valid
advance election, the amount of the participant’s Basic Account that was deferred prior to January 1, 2005, is paid as elected by the participant from among the following choices:
1.
1.
Lump sum upon termination;
2.

Lump sum in February of the year following termination; or
3.

Annual installments (beginning February 1 of the year following termination) for a number of years (between two and ten) elected by the participant.


The participant’s Basic Account with respect to amounts deferred on or after January 1, 2005, may be distributed in the following forms as elected by the participant:
1.
1.
Lump sum upon separation;
2.

Lump sum in February of the year following separation; or
3.

Annual installments (beginning February 1 of the year following separation) for a number of years (between two and ten) elected by the participant.
However, if the participant has elected annual installments and the total balance of the participant’s Basic Account upon a separation from service from IBM is less than 50% of the applicable Internal Revenue Code compensation limit (in 2021,2023, 50% of this limit was $145,000)$165,000), the amounts deferred on or after January 1, 2005 are distributed in a lump sum on the date installments would have otherwise begun.


Distribution elections may be changed in advance of separation, in accordance with Internal Revenue Code rules.


Distribution elections apply to both the Basic Account and the Deferred Shares Account. Further, within the Basic Account and the Deferred Shares Account, different distribution elections are permitted to be made for the amounts that were deferred before January 1, 2005, and the amounts that were deferred on or after January 1, 2005.

At December 31, 2021, the named executive officers had the following distribution elections on file:

Mr. Krishna — Lump sum paid in February of the year following separation for pre-2005 amounts, and immediate lump sum for post-2004 amounts.

Mr. Kavanaugh — 2 annual installments for pre-2005 amounts, and lump sum in February of the year following separation for post-2004 amounts.

Mr. Cohn — 10 annual installments for all amounts

Mr. Rosamilia — lump sum in February of the year following separation for all amounts

Ms. Browdy — immediate lump sum following separation for all amounts

Deferred IBM Shares are distributed only in the form of shares of IBM’s common stock.


These distribution rules are subject to Section 409A of the Internal Revenue Code, including, for example, the rule that a “specified employee” may not receive a distribution of post-2004 deferrals until at least six months following a separation from service from IBM. All named executive officers were “specified employees” under Section 409A at the end of the last fiscal year.
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2023 Nonqualified Deferred Compensation Table
2021 NONQUALIFIED DEFERRED COMPENSATION TABLE
Executive
Contributions
Registrant
Contributions
Aggregate
Earnings in
Aggregate
Withdrawal/
Aggregate
Balance at
Executive
Contributions
Registrant
Contributions
Aggregate
Earnings in
Aggregate
Withdrawal/
Aggregate
Balance at
in Last FY(1)in Last FY(2)Last FY(3)DistributionsLast FYE(4)in Last FY(1)in Last FY(2)Last FY(3)DistributionsLast FYE(4)
Name
(a)
Plan
($)
(b)
($)
(c)
($)
(d)
($)
(e)
($)
(f)
Name
(a)
Plan($)
(b)
($)
(c)
($)
(d)
($)
(e)
($)
(f)
A. KrishnaBasic Account$203,460Match$203,460$525,047$0$6,176,682A. KrishnaBasic Account$279,000Match$279,000$764,356$0$7,928,063
Automatic67,820Automatic93,000
Deferred IBM Shares00000Deferred IBM Shares00000
Total$203,460$271,280$525,047$0$6,176,682Total$279,000$372,000$764,356$0$7,928,063
J.J. KavanaughBasic Account$242,000Match$111,258$1,049,138$0$6,906,210J.J. KavanaughBasic Account$45,481Match$45,481$1,599,006$0$7,965,280
Automatic37,086Automatic48,475
Deferred IBM Shares001,159019,915Deferred IBM Shares003,376024,369
Total$242,000$148,344$1,050,297$0$6,926,125Total$45,481$93,956$1,602,382$0$7,989,649
G. CohnBasic Account$0Match$0$(8)$0$480R.D. ThomasBasic Account$81,893Match$81,893$165,799$1,250,762
Automatic488Automatic41,300
Deferred IBM Shares00000Deferred IBM Shares00000
Total$0$488$
(8)
$0$480Total$81,893$123,193$165,799$0$1,250,762
T. RosamiliaBasic Account$92,880Match$92,880$483,034$0$4,296,187���G. CohnBasic Account$1,466,240Match$133,640$436,883$0$3,085,784
Automatic30,960Automatic26,728
Deferred IBM Shares00000Deferred IBM Shares00000
Total$92,880$123,840$483,034$0$4,296,187Total$1,466,240$160,368$436,883$0$3,085,784
M.H. BrowdyBasic Account$85,676Match$85,676$104,557$0$1,794,757M.H. BrowdyBasic Account$103,612Match$103,612$180,156$0$2,500,562
Automatic17,135Automatic20,722
Deferred IBM Shares00000Deferred IBM Shares00000
Total$85,676$102,811$104,557$0$1,794,757Total$103,612$124,334$180,156$0$2,500,562
(1)

A portion of the amount reported in this column (b) for each named executive officer’s Basic Account is included within the amount reported as salary for that officer in column (c) of the 20212023 Summary Compensation Table. These amounts are: $72,600$70,200 for Mr. Krishna; $242,000$45,480 for Mr. Kavanaugh; $32,400$39,885 for Mr. Rosamilia;Thomas; $0 for Mr. Cohn; and $30,200$30,300 for Ms. Browdy.
(2)

For each of the named executive officers, the entire amount reported in this column (c) is included within the amount reported in column (i) of the 20212023 Summary Compensation Table. The amounts reported as IBM contributions to defined contribution plans in footnote 98 to the 20212023 Summary Compensation Table except for Mr. Cohn, are larger because the amounts reported in that footnote also include IBM’s contributions to the IBM 401(k) Plus Plan.
(3)

None of the amounts reported in this column (d) are reported in column (h) of the 20212023 Summary Compensation Table because IBM does not pay above-market or preferential earnings on deferred compensation.
(4)

Amounts reported in this column (f) for each named executive officer include amounts previously reported in IBM’s Summary Compensation Table in previous years when earned if that officer’s compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, salary, and incentive and IBM matching and automatic contributions. This total reflects the cumulative value of each named executive officer’s deferrals, IBM contributions and investment experience, including an $8 quarterly administrative fee.
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61



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20212023 Potential Payments Upon Termination Narrative
Introduction
IBM does not have any plans, programs, or agreements under which payments to any of the named executive officers are triggered by a change of control of IBM, a change in the named executive officer’s responsibilities or a constructive termination of the named executive officerofficer.
The only payments or benefits that would be provided by IBM to a named executive officer following a termination of employment would be provided under the terms of IBM’s existing compensation and benefit programs (as described below).
The 20212023 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.
As explained below, certain of these payments and benefits are enhanced by or dependent upon the named executive officer’s attainment of certain age and service criteria at termination. Additionally, certain payments or benefits are not available following a termination for cause and/or may be subject to forfeiture and clawback if the named executive officer engages in certain activity that is detrimental to IBM (including but not limitedIBM. In addition, performance pay paid to competitive business activity, disclosure of confidential IBM information or solicitation of IBM clients or employees).executive officers, including each named executive officer, are subject to repayment under IBM’s recovery policy.
This 20212023 Potential Payments Upon Termination Narrative and the 20212023 Potential Payments Upon Termination Table do not reflect payments that would be provided to each named executive officer under (i) the Qualified Plan; (ii) the Nonqualified Plan; (iii) the IBM 401(k) Plus Plan orPlan; (iv) the IBM Individual Separation Allowance PlanPlan; or (v) 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 2021 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 2021 Pension Benefits Table.
The 2021 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 officers’ eligibility for such benefits is described below. The 20212023 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.
Annual Incentive Program (AIP)


The AIP may provide a lump sum, cash payment in 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.


This payment is not triggered by termination; the existence and amount of any AIP payment is determined under the terms of the AIP applicable to all executives eligible to participate,executives, who are employed through December 31 of the previous year.


AIP payments to executive officers are subject to clawback as described in Section 4 of the 2021 Compensation Discussion and Analysis.clawback.


For purposes of the 20212023 Potential Payments Upon Termination Table below, it is assumed that the AIP payment made to each named executive officer following termination
of employment on the last business day of the fiscal year end would have been the same as the actual payment made in March 2022.April 2024.
IBM Long-Term Performance Plans (LTPP)


The named executive officers have certain outstanding equity grants under the LTPP including:


Stock Options;


Restricted Stock Units (RSUs);


Retention Restricted Stock Units (RRSUs); and/or


Performance Share Units (PSUs) or retention Performance Share Units (RPSUs).


The LTPP and/or the named executive officers’ equity award agreements contain the following terms:


Generally, unvested Stock Options, RSUs, RRSUs, PSUs and RPSUs are cancelled upon termination; and


Vested Stock Options may be exercised only for 90 days following termination.


Payment of these awards is not triggered by termination of employment (because the awards would become payable under the terms of the LTPP if the named executive officer continued employment), but if he or she resigns, retires or is involuntarily terminated without cause after attaining age 55 with at least 15 years of service, the following terms apply:


Vested Stock Options continue to be exercisable for the remainder of their ten-year term if approved by the Board, Compensation Committee or other appropriate senior management;term; and


IBM prorates a portion of unvested PSU awards to continue to vest under their original vesting schedules.


If an executive dies, outstanding Stock Options, RSU awards and RRSU awards would vest immediately, and outstanding PSU and RPSU awards would remain outstanding and continue to vest under their original vesting schedules.


If an executive becomes disabled, outstanding Stock Options, RSUs and RRSUs would continue to vest under
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their original vesting schedules, and outstanding PSUs and RPSUs would remain outstanding and continue to vest under their original vesting schedules.


In cases other than death or disability, certain executives may be eligible for continued vesting of these awards after separation.


To ensure that the interests of the members of the Performance Team are aligned with IBM’s long-term interests as these leaders approach retirement, these executives, including the named executive officers, may be eligible to receive payouts of their full unvested PSU and RSU awards upon termination, and effective for Stock Options granted after 2021, unvested Stock Options may continue to vest upon termination, if the following criteria are met for our named executive officers:met:


The executive is on the Performance Team at the time of departure;


For RSU awards and Stock Options, at least one year has passed since the award grant date; and for PSU awards, at least one year has passed in the performance period;

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The executive has reached age 55 with 15 years of service at the time of departure; and


The payout has been approved by appropriate senior management, the Compensation Committee, or the Board, in their discretion.


The Chairman and CEO is also eligible for the payouts described upon termination, but instead must reach age 60 with 15 years of service, and the payout must be approved by the Board, in its discretion.


Payouts of PSU awards after termination as described above will be made in February after the end of the three-year performance period 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. Unvested Stock Options will continue to vest and vested Stock Options (including those that vest after termination of employment) will be exercisable for the remainder of the original contractual term of the Stock Option.


The 20212023 Potential Payments Upon Termination Table assumes the following:


Amounts shown include the payout of the 20192021 PSU awards calculated using the actual performance achieved for the 2019-20212021-2023 performance period and the 20212023 fiscal year-end closing price of $133.66 for$163.55 or IBM common stock; and


Outstanding 20202022 and 20212023 PSU awards were not included because there is no guarantee of payment on these awards as they are subject to meeting threshold performance criteria.


Amounts shown include the value of 2018, 2019,2020, 2021 and 20202022 RSU awards and 2022 Stock Options, if the required retirement criteria is met, at the fiscal year-end closing price of $133.66$163.55 for IBM common stock because the one-year service requirement from grant has been completed; and


Outstanding 20212023 RSU awards and Stock Options are not included because the required service of at least one year since the award date of grant has not been completed.


LTPP awards for executive officers are subject to forfeiture and rescission if an executive is terminated for cause or engages in activity that is detrimental to IBM prior to or within 12 months following release, exercise, or payment (or within 36 months for RRSU awards). LTPP awards for executive officers also contain a covenant that the recipient will not solicit IBM clients for a period of one year or employees for a period of two years following termination of employment. In addition, PSU payouts to executive officers are subject to clawback as described in Section 4 of the 2023 Compensation Discussion and Analysis.
IBM Supplemental Executive Retention Plan (Retention Plan)


Payments under the Retention Plan are triggered by resignation, retirement, or involuntary termination without cause after attainment of eligibility criteria.


Eligibility criteria are described in the 20212023 Retention Plan Narrative.


Retention Plan payments are paid as an annuity beginning on the first day of the month following termination of employment (subject to a six-month delay for “specified employees” as required under Section 409A of the Internal Revenue Code).


At termination, the executive chooses either a single life annuity or an actuarially equivalent joint and survivor annuity.


The 20212023 Potential Payments Upon Termination Table reflects the annual amount payable as a single life annuity.


This table does not reflect the following provisions that would apply in accordance with Section 409A of the Internal Revenue Code:


The payment would be delayed six months following termination; and


Amounts not paid during the delay would be paid (with interest) in July 2022.2024.


Retention Plan payments are subject to forfeiture and rescission if an executive is terminated for cause or engages in activity that is detrimental to IBM at any time prior to or following commencement of Retention Plan payments.
IBM Excess 401(k) Plus Plan


As described in the 20212023 Nonqualified Deferred Compensation Narrative, payment of the named executive officers’ Excess 401(k) Plus Plan accounts (Basic Accounts and any Deferred IBM Shares) is triggered by resignation, retirement, or involuntary termination.


With respect to IBM matching and automatic contributions made to a participant’s account after March 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.


The 20212023 Potential Payments Upon Termination Table indicates the estimated amount and the time and form of payment, determined by either the executive’s distribution election in effect, if any, or the plan’s default distribution provision.
2022 Notice of Annual Meeting & Proxy Statement   |   2021 Potential Payments Upon Termination Narrative 65



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Estimated payments were calculated using the aggregate account balance as of the last business day of the fiscal year end, without assumptions for the following between such date and the distribution date(s):


Investment gains and losses on the Basic Account (including dividend equivalent reinvestment for the IBM Stock Fund); and


Fluctuations in the market price of IBM stock for Deferred IBM Shares.


The tables do not reflect:


That payment of amounts deferred after December 31, 2004 (and the associated earnings) are subject to a six-month delay for “specified employees” as required under Section 409A of the Internal Revenue Code; or


Any other restriction on such payments imposed by the requirements of Section 409A of the Internal Revenue Code.
Retiree Medical and Life Insurance
General Description
Benefits under IBM’s retiree medical and life insurance programs are triggered by a named executive officer’s 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 IBM’s 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)

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.

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:

Hired before January 1, 2004;

Not within five years of earliest retirement eligibility under the prior IBM Retirement Plan on June 30, 1999; and

At termination they have attained 30 years of service (regardless of age) and were eligible for an opening balance on July 1, 1999, or have attained at least age 55 with 15 years of service. An employee was eligible for an opening balance on July 1, 1999 if the employee was at least age 40 and completed at least one year of service on June 30, 1999.

Messrs. Krishna, Kavanaugh, and Rosamilia would have been eligible for this benefit following a separation from service on the last business day of the fiscal year end.
Access to Group Health Care Coverage

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.

Generally, all regular full-time or part-time U.S. IBM employees who meet the following criteria are eligible to purchase such coverage:

Hired on or after January 1, 2004, and meet the following age and service requirements at separation from service:

At least age 55, with at least five years of service; and either

The employee’s age and years of service equal 65; or

Withdrawal-eligible for the Future Health Account and the funds in the account have been fully depleted.

Hired prior to January 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 employee’s age and years of service equal at least 65.

Ms. Browdy would have been eligible for this benefit following a separation from service on the last business day of the fiscal year end.

Mr. Cohn 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 Insurance

Employees who retire on or after January 1, 2016 will have the option to purchase life insurance at preferred rates, paid solely at their expense.
6620222024 Notice of Annual Meeting & Proxy Statement   |   20212023 Potential Payments Upon Termination Narrative

63



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2023 Potential Payments Upon Termination Table
2021 POTENTIAL PAYMENTS UPON TERMINATION TABLE
LTPP
Nonqualified Deferred Compensation
Excess 401(k)(6)
LTPP
Nonqualified Deferred Compensation
Excess 401(k)
(6)
Annual IncentiveStockStockRetentionBasicDeferred IBMAnnual IncentiveStockStockRetentionBasicDeferred IBM
TerminationProgram(2)Options(3)Awards(4)Plan(5)AccountSharesTerminationProgram(2)Options(3)Awards(4)Plan(5)AccountShares
NameScenario($)($)($)($)($)($)NameScenario($)($)($)($)($)($)
A. Krishna
Termination(1)
$2,940,000$0$14,317,392N/A$6,176,682(7)$0(7)A. Krishna
Termination(1)
$3,510,000$5,642,724$30,709,784N/A$7,928,063(7)$0
For Cause000N/A5,905,402(7)0(7)For Cause000N/A7,556,063 (7)0
J.J. Kavanaugh
Termination(1)
1,437,70006,108,79714,6786,446,735(8)19,915(8)J.J. Kavanaugh
Termination(1)
1,730,4303,693,4189,546,250$10,5037,473,182 (8)24,369(8)
For Cause00006,298,390(8)19,915(8)For Cause00007,379,226 (8)24,369(8)
G. Cohn
Termination(1)
1,548,4000535,175N/A488(9)0R.D. Thomas
Termination(1)
1,552,500718,1413,512,563N/A1,250,762(9)0
For Cause000N/A0(9)0For Cause000N/A1,127,569 (9)0
T. Rosamilia
Termination(1)
1,064,00005,612,51787,7954,296,187(10)0G. Cohn
Termination(1)
1,848,600743,7902,608,950N/A308,578(10)0
For Cause00004,172,347(10)0For Cause000N/A148,210 (10)0
M.H. Browdy
Termination(1)
1,266,30004,126,084N/A1,794,757(11)0M.H. Browdy
Termination(1)
1,516,8002,051,9035,455,701N/A2,500,562(11)0
For Cause000N/A1,691,946(11)0For Cause000N/A2,376,228 (11)0
(1)

Termination generally includes the following separation scenarios: resignation, retirement, and involuntary termination without cause (in all cases, assuming the executive is not entering into competitive or other activity detrimental to IBM).
(2)

Assumes that the AIP payment made to each named executive officer following termination of employment on the last business day of the fiscal year end would have been the same as the actual payment made in March 2022.April 2024.
(3)

Assumes each named executive officer exercised all vested, in-the-moneyWhile unvested 2022 Stock Options are included if required requirement criteria are met and assuming exercise at $133.66 (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).award date of grant had not been completed.
(4)

Assumes IBM released each named executive officer’s PSU award, granted in 20192021 according to its policy, for the three-year performance period ending December 31, 2021.2023. 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 2018, 20192020, 2021 and 20202022 RSU awards are included if required retirement criteria is met, 20212023 RSU awards are not included because the required service of at least one year since the award date of grant hashad not been completed.
(5)

Reflects the Retention Plan benefit payable for eligible named executive officers as an immediate annual single life annuity. See the IBM Supplemental Executive Retention Plan section above for more details.
(6)

Estimated payments to each named executive officer were calculated using the aggregate account balance as of the last business day of the fiscal year end.end, and are based on their distribution elections under the plan. See the IBM Excess 401(k) Plus Plan section above for more details.
(7)

The amount deferred prior to January 1, 2005 is payable in a lump sum in February 2022.2024. The amount deferred on or after January 1, 2005 is payable in a lump sum immediately following separation. Deferred shares are paid as shares of IBM 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 20212023 Nonqualified Deferred Compensation Table.
(8)

Sum of the approximate annual amount of Basic Account deferred prior to January 1, 2005 payable for 2 years starting in February 20222024 ($479,391)516,466) and the amount of the Basic Account deferred on or after January 1, 2005 payable in a lump sum in February 20222024 ($5,967,344)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; the forfeiture causes a decrease in the payout of amounts that were deferred on or after January 1, 2005. See column (c) in 2021 Nonqualified Deferred Compensation Table.
(9)
Amount payable as a lump sum because Mr. Cohn’s balance is not greater than the threshold amount of $152,000 required to have amount paid in installments under the plan. For Cause, the termination payment from the Basic Account is reduced to $0, to reflect forfeiture of Automatic Contribution made during the last 12 months under plan terms. Mr. Cohn’s balance consists of automatic contributions and earning thereon. See column (c) in 2021 Nonqualified Deferred Compensation Table.
(10)
Payable in a lump sum in February 2022. 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 20212023 Nonqualified Deferred Compensation Table.
(11)
(9)
Payable in an immediate lump sum following separation. For Cause, the termination payment from the Basic Account is reduced to reflect forfeiture of Match and Automatic Contribution made during the last 12 months under plan terms. See column (c) in 20212023 Nonqualified Deferred Compensation Table.
(10)
Payable in 10 annual installments starting in February 2024. 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.
(11)
Payable in an immediate lump sum following separation. For Cause, the termination payment from the Basic Account is reduced to reflect forfeiture of Match and Automatic Contribution made during the last 12 months under plan terms. See column (c) in 2023 Nonqualified Deferred Compensation Table.
Pay Ratio
The ratio of the CEO’s annual total compensation to that of the median employee’s annual total compensation is 312:1. This ratio is based on annual total compensation of $20,398,426 for the CEO (as reported in the Summary Compensation Table) and $65,463 for the median employee. The base salary for the median employee was $45,197. The median employee used for the pay ratio disclosure was determined as of October 1, 2021 using annual base pay for IBM employees on that date; all foreign currencies were converted to U.S. dollars.
2022642024 Notice of Annual Meeting & Proxy Statement   |   20212023 Potential Payments Upon Termination Narrative67





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Pay Versus Performance
 Year
 (a)
Summary
Compensation
Total for the
Principal
Executive
Officer
(“PEO”)
Compensation
Actually Paid
to the PEO
Summary
Compensation
Total for the
Principal
Executive
Officer
(“PEO”)
Compensation
Actually Paid
to the PEO
Average
Summary
Compensation
Table Total
for Non-PEO
Named
Executive
Officers
(“Non-PEO
NEOs”)
Average
Compensation
Actually Paid
to Non-PEO
NEOs
Value of Initial Fixed $100
Investment Based on:
Total
Shareholder
Return
Peer Group
Total
Shareholder
Return
Net
Income
(in $M)
Revenue
(in $M)
(b)(1)(c)(1)(7)(b)(2)(c)(2) (7)(d)(3)(e)(3) (7)(f)(g)(4)(h)(5)(i)(6)
 2023$20,398,426$32,769,352N/AN/A$9,916,713$14,444,039$156$167$7,502$61,860
 202216,580,07523,935,007N/AN/A8,318,19310,496,9011281151,63960,530
 202117,550,95923,798,901N/AN/A8,706,3019,116,4351151795,74357,350
 202017,009,68213,997,217$21,062,593$15,778,83112,913,98210,795,062991325,59055,179
(1)
Mr. Krishna was the PEO for all four years in the table. For 2023, amounts deducted from the PEO’s Summary Compensation Table (“SCT”) total to calculate Compensation Actually Paid (“CAP”) to the PEO include ($14,823,369) for the date of grant fair value of stock awards and stock options, as well as ($23,183) for Change in Pension Value in 2023. Amounts added to (or subtracted from) the PEO’s SCT total for 2023 also include: $19,555,003 for the fair value of stock awards and stock options that were granted in 2023 and which remained outstanding at the end of 2023; $2,859,266 for the change in fair value of stock awards and stock options that were granted in prior years and which remained outstanding at the end of 2023; and $4,803,209 for the change in fair value of stock awards and stock options that were granted in prior years and vested in 2023.
(2)
Ms. Rometty was the PEO from April 5, 2020 (when she became Executive Chairman) through her retirement from IBM on December 31, 2020.
(3)
The Non-PEO NEOs were, for 2023, Mr. Kavanaugh, Mr. Thomas, Mr. Cohn, and Ms. Browdy; for 2021 and 2022, Mr. Kavanaugh, Mr. Cohn, Mr. Rosamilia and Ms. Browdy; and for 2020, Mr. Kavanaugh, Ms. Browdy, Mr. James Whitehurst, and Dr. John Kelly. Amounts subtracted from the average SCT totals for the Non-PEO NEOs (“Average Non-PEO SCT”) to calculate Average CAP to the Non-PEO NEOs (“Average Non-PEO CAP”) for 2023 include ($7,003,082) for the average value at the date of grant of stock awards and stock options granted in 2023 as well as ($4,609) for the average Change in Pension and Retention Plan Values in 2023. Amounts added to (or subtracted from) the Average Non-PEO SCT to calculate Average Non-PEO CAP for 2023 also include: $8,878,110 for the average fair value of stock awards and stock options that were granted in 2023 and which remained outstanding at the end of 2023; $1,670,606 for the average change in fair value of stock awards that were granted in prior years and which remained outstanding at the end of 2023; and $625,723 for the average change in fair value of stock awards that were granted in prior years and vested during 2023.
(4)
Peer Group Total Shareholder return is calculated based on IBM’s Proxy Peer Group that was disclosed in the Compensation, Discussion & Analysis section of IBM’s Proxy Statement for each respective year shown in the table, weighted based on the Peer Group’s Market Capitalization as of December 31, 2019. Due to Broadcom’s acquisition of VMware in November 2023, Total Shareholder Return for VMware is as of November 2023. As disclosed in IBM’s 2022 Proxy Statement, the Company updated its Peer Group in 2022 to increase the weighting of peers in the technology industry, reflect IBM’s increased orientation as a hybrid cloud and AI company, and align the 2022 Peer Group with the size and scope of IBM following the separation of Kyndryl on November 3, 2021. If IBM used the 2021 Peer Group in 2022, the cumulative Total Shareholder Return from 12/31/2019 to 12/31/2022 would have been $129 (compared to $115 for the 2022 Peer Group) and if the 2021 Peer Group was used in 2023, the cumulative Total Shareholder Return from 12/31/2019 to 12/31/2023 would have been $182 (compared to $167 for the 2023 Peer Group).
(5)
Net Income in 2021 and 2020 includes the Managed Infrastructure business, which separated from IBM on November 3, 2021 as Kyndryl. Net Income from Continuing Operations, which would have excluded the Managed Infrastructure business, would have been $4,712 million and $3,932 million for 2021 and 2020, respectively. Net Income in 2022 included a one-time, non-cash pension settlement charge of approximately $4.4 billion, net of tax.
(6)
Revenue metric reflects Revenue from Continuing Operations to provide for consistent comparison before and after the separation of the Managed Infrastructure business as Kyndryl on November 3, 2021.
(7)
The fair value of stock awards and stock options included in CAP to the PEO and Average Non-PEO CAP are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in IBM’s Annual Report. Any changes to stock award fair values from the grant date (for current year grants) and from prior year-end (for prior year grants) are based on IBM’s stock price at the respective measurement dates (less the present value of foregone dividends), and the performance metric scoring projections (if applicable) at the respective measurement dates. Changes to stock option fair values are based on IBM’s stock price at the respective measurement dates, in addition to an updated expected option term, volatility of the company’s stock over the updated expected option term, expected dividend yield, and risk-free rate assumptions. For each of 2022 and 2023, the year-end stock option fair value increased meaningfully from the fair value on the grant date, primarily driven by an increase in IBM’s stock price, and, for 2022, an increase in the risk-free interest rate to approximately 4% at year-end from approximately 2% on the grant date.
2024 Notice of Annual Meeting & Proxy Statement   |   Pay Versus Performance 65



Relationship between Compensation Actually Paid disclosed in the Pay Versus Performance table, and other table elements
Both CAP to Mr. Krishna and cumulative total shareholder return increased over the prior year in each of 2023, 2022 and 2021. As there were no changes to Mr. Krishna’s base salary, target annual incentive, or target equity grant planned value since Mr. Krishna became CEO in April 2020 through 2022, the increase in PEO CAP was largely the result of the increase in IBM’s stock price over that same time period. In addition to IBM’s stock price increase from 2022 to 2023, the PEO CAP increase in 2023 also resulted from the increase in Mr. Krishna’s 2023 target equity grant, which was in line with the median of the 2023 benchmark group. The average Non-PEO NEO CAP increase in each of 2022 and 2023 is also largely the result of IBM’s increased stock price in each of those years. The average non-PEO CAP decreased in 2021, primarily because of the change in Non-PEO NEOs compared to 2020.
The increase in IBM’s stock price that largely contributed to the increased PEO CAP also drove the increase in IBM’s Total Shareholder Return (“TSR”) in 2023, 2022 and 2021. While the TSR increased over the four-year period, the average non-PEO NEO CAP decreased in 2021 for the reasons noted above.
IBM’s Revenue from Continuing Operations increased in 2023, 2022 and 2021 and was directionally aligned with PEO CAP for the reported period. Net Income also increased in 2023 and 2021, directionally in line with the PEO CAP. Net Income in 2022, which included a one-time non-cash pension settlement charge of $4.4 billion (net of tax), decreased in 2022. Without this charge, 2022 Net Income would have increased from 2021 to 2022 as well.
Tabular List of IBM’s most important metrics that link Compensation Actually Paid to the PEO and other NEOs
We consider the list below to be IBM’s most important metrics that link CAP to our Named Executive Officers to IBM’s performance, as they are the key metrics that determine the payout of IBM’s Annual Incentive Program and Performance Stock Units.
Revenue
Operating Cash Flow
Operating EPS
Free Cash Flow
662024 Notice of Annual Meeting & Proxy Statement   |   Pay Versus Performance



Report of the Audit Committee of the Board of Directors
The Audit Committee hereby reports as follows:
1.

Management has the primary responsibility for the financial statements and the reporting process, including the system of internal accounting controls. The Audit Committee, in its oversight role, has reviewed and discussed the audited financial statements with IBM’s management.
2.

The Audit Committee has discussed with IBM’s internal auditors and IBM’s independent registered public accounting firm the overall scope of, and plans for, their respective audits. The Audit Committee has met with the internal auditors and independent registered public accounting firm, separately and together, with and without management present, to discuss IBM’s financial reporting process and internal accounting controls in addition to other matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB).
3.

The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP (PwC) required by applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence.
4.

The Audit Committee has an established charter outlining the practices it follows. The charter is available on IBM’s website at http://www.ibm.com/investor/att/pdf/auditcomcharter.pdf.
5.

IBM’s Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, IBM’s independent registered public accounting firm. At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type, and scope of service contemplated and the related fees, to be rendered by the firm during the year. In addition, pursuant to authority delegated by the Audit Committee, the Audit Committee chair may approve engagements that are outside the scope of the services and fees approved by the Audit Committee, which are later presented to the Committee. For each category of proposed service, the independent registered public accounting firm is required to confirm that the provision of such services does not impair its independence. Pursuant to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted in the table below were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described herein.
6.

Based on the review and discussions referred to in paragraphs (1) through (5) above, the Audit Committee recommended to the Board of Directors of IBM, and the Board has approved, that the audited financial statements be included in IBM’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2023, for filing with the Securities and Exchange Commission.
P.R. Voser(chair)

D.N. Farr


M.J. Howard


F.W. McNabb III
682022 Notice of Annual Meeting & Proxy Statement   |   Report of the Audit Committee of the Board of Directors


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Audit and Non-Audit Fees
Set forth below are the fees for services provided to IBM by its independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC) for the fiscal periods indicated.
(Dollars in millions)20212020(Dollars in millions)20232022
Audit Fees$53.7$52.8Audit Fees$49.9$48.9
Audit Related Fees48.842.6Audit Related Fees22.521.3
Tax Fees1.21.3Tax Fees0.90.8
All Other Fees0.70.5All Other Fees0.80.6
Total$104.4$97.2Total$74.1$71.6
Description of Services
Audit Fees: comprise fees for professional services necessary to perform an audit or review in accordance with the standards of the Public Company Accounting Oversight Board, including services rendered for the audit of IBM’s annual financial statements (including services incurred with rendering an opinion under Section 404 of the Sarbanes-Oxley Act of 2002) and review of quarterly financial statements. Also includes fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as comfort
letters, statutory audits, attest services, consents, and review of documents filed with the SEC.
Audit-Related Fees: comprise fees for services that are reasonably related to the performance of the audit or review of IBM’s financial statements, including the support of business acquisition and divestiture activities, independent assessments for service organization control reports, and audit and review of IBM’s retirement and other benefit-related programs. For 2021,2023 and 2022, these services included approximately $28$16 million, respectively, for independent assessments for service organization control reports and approximately $15 million associated with the spin-off of IBM’s managed infrastructure services business. For 2020, these services included approximately $26 million for independent assessments for service organization control reports and approximately $10 million associated with the spin-off of IBM’s managed infrastructure services business.reports.
Tax Fees: comprise fees for tax compliance, tax planning and tax advice. Corporate tax services encompass a variety of permissible services, including technical tax advice related to U.S. international tax matters; assistance with foreign income and withholding tax matters; assistance with sales tax, value-added tax and equivalent tax-related matters in local jurisdictions; preparation of reports to comply with local tax authority transfer pricing documentation requirements; and assistance with tax audits.
All Other Fees: comprise fees primarily in connection with technical accounting and other software licenses, training services, certain benchmarking work, and other permissible advisory services, including general information services.
20222024 Notice of Annual Meeting & Proxy Statement   |   Report of the Audit and Non-Audit Fees69

Committee of the Board of Directors 67



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2. Ratification of Appointment of Independent
Registered Public Accounting Firm
IBM’s Audit Committee is directly responsible for the appointment, compensation (including advance approval of audit and non-audit fees), retention and oversight of the independent registered public accounting firm that audits IBM’s consolidated financial statements and its internal controls over financial reporting. In accordance with its charter, the Audit Committee has selected the firm of PricewaterhouseCoopers LLP (PwC), an independent registered public accounting firm, to be IBM’s auditors for the year 2022.2024. 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 2021.2023.
Independent Auditor Engagement
The Audit Committee annually reviews PwC’s independence and performance in deciding whether to retain PwC or engage a different independent auditor. Prior to the selection of the independent auditor, the Committee considers many factors, including:


PwC’s capability and expertise in addressing and advising on the breadth and complexity of IBM’s global operations;


PwC’s independence and tenure as IBM’s auditor;


PwC’s strong performance on the IBM audit, including the extent and quality of PwC’s communications with the Audit Committee and the results of an internal, worldwide survey of PwC’s service and quality;


Analysis of known litigation or regulatory proceedings involving PwC;


Public Company Accounting Oversight Board reports (PCAOB); reports;


Appropriateness of PwC’s fees for audit and non-audit services; and


PwC’s reputation for integrity and competence in the fields of accounting and auditing.
Auditor Independence Controls
The Audit Committee and IBM management have robust policies and procedures in place to monitor and verify PwC’s independence from IBM on a continual basis. These policies and procedures include:


Private meetings between the Audit Committee and PwC throughout the year;


Annual evaluation by the Audit Committee;


Pre-approval by the Audit Committee of non-audit services;


Lead engagement partner rotation at least every 5 years; the Audit Committee selects a new lead audit engagement partner after a rigorous process, including candidate interviews;


Concurring audit partner rotation at least every 5 years;


Auxiliary engagement partner rotation at least every 7 years;


Hiring restrictions for PwC employees at IBM; and


Internal quality reviews by, or of, PwC, including the performance of procedures to monitor and assess PwC’s independence from its audit clients, as well as the results of peer reviews by other public accounting firms and PCAOB inspections.
Accountability to Stockholders


PwC’s representative will be present at the annual meeting and will have an opportunity to make a statement and be available to respond to appropriate questions.
Benefits of Long-Tenured Auditor
PwC has been the independent auditor of IBM since 1958. From 1923 until 1958, the independent auditors of IBM were firms that were ultimately acquired by PwC. The Audit Committee believes that having a long-tenured auditor is in the best interests of IBM and its stockholders in consideration of the following:


Institutional knowledge and deep expertise necessary for a large, multinational company with IBM’s breadth of global operations and business;


Higher audit quality developed through experience with more than 250 annual statutory audits in almost 100 countries; and


No onboarding or educating a new auditor, which would require a significant time commitment and expense, and distract from management’s focus on operational execution, financial reporting and internal controls.
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THE IBM BOARD OF DIRECTORS AND THE AUDIT COMMITTEE RECOMMEND A VOTE FOR THIS PROPOSAL.
702022682024 Notice of Annual Meeting & Proxy Statement   |   2. Ratification of Appointment of Independent Registered Public Accounting Firm





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3. Management Proposal on Advisory Vote on Executive Compensation (Say
(Say
on Pay)
IBM is asking that you APPROVE the compensation of the named executive officers as disclosed in this Proxy Statement.
IBM delivered $57.4B$61.9 billion in revenue and $12.8B$13.9 billion cash from operations.(1) The separation of Kyndryl on November 3, 2021 helped optimize our portfolio and allow Revenue increased for the Company to focus on its hybrid cloud and AI growth strategy. Revenue growththird consecutive year, growing 3% at constant currency(2) accelerated in 2021, exiting the 4th quarter at 8.6% including(1). The Company’s portfolio mix reinforces our high value business model, with approximately 3.5 points75% of revenue coming from incremental external sales to Kyndryl. Hybrid Cloud Revenue grew 19% at constant currency,(2)our higher growth businesses of Software and now makes up 35%Consulting. Overall, about 50% of IBM revenue.IBM’s revenue is recurring, with 67% of that recurring revenue coming from Software. The companyCompany also returned $6B$6 billion to stockholders through dividends, and reduced debt $10Bended the year with $13.5 billion in 2021 ($21B since acquiring Red Hat)cash and marketable securities (up over $4.6 billion year-to-year).
These results reflect the significant actions we have taken to strategically position IBM for high-value, sustainable growth.
In 2021,2023, we increased our investor outreachonce again engaged in a robust program to ensure we fully understood our investors’ feedbackgather investor feedback. IBM’s Chairman and concerns following the vote on our 2021 say on pay proposal. The CompanyCEO, and independent Lead Director, participated in this engagement along with members of IBM’s senior management. IBM once again offered to engage with investors representing 55%more than 57% of the shares that voted on Say on Pay at the 2021its 2023 Annual Meeting, and ultimately metMeeting. Through our discussions with investors representing more than 35% of voted shares. Throughand our formal Say on Pay vote results, investors reaffirmed their feedback, we learnedsupport for the Company’s compensation policies and programs, which focus on long-term financial performance that they generally remained supportive of our pay programs, with the exception of the one-time equity grant to James Whitehurst in connection with him signing an IBM non-compete agreement. We discussed the uniqueness of the business situation related to the award for Mr. Whitehurst, and reassured stockholders that one-time awards for named executive officers are not a common practice, and that no one-time awards were provided to any named executive officers in 2021.drives stockholder value.
In the context of investor feedback, pay decisions continued to be made based on our financial performance relative to our goals, while taking into consideration the significant reshaping of IBM’s portfolio as a hybrid cloud and AI Company.company.
The Company’s performance metrics that were revamped in 2021 to reinforce the strategic focus on sustainable revenue growth and strong cash generation were maintained for the 2022 Annual Incentive Program and the 2022-2024
Performance Share Unit program. In addition, beginning in 2022, Stock Options were introduced as part of the overall equity pay mix for IBM executives, to ensure a portion of their equity does not generate value unless IBM’s stock price increases.
IBM’s named executive officers are identified in the 20212023 Summary Compensation Table, and pages 32-6732-66 describe the
compensation of these officers. Beginning in 2022, with the introduction of Stock Options, 77%In 2024, approximately 78% of target pay for the Chairman and CEO, and 74%75% of target pay for the other Named Executive Officers,named executive officers, is at risk and subject to rigorous performance targets and stock price growth. The rigor of these targets is evident in the payouts.
For 20212023 performance, the Board approved an annual incentive payment of $2.940$3.51 million for Mr. Krishna, which was 98%117% of target and in line with the Company annual incentive score. ThisIn making this award, is based onthe Committee also considered Mr. Krishna’s overall performance against his objectives, which included strong free cash flow generation, sustainable revenue generation (at constant currency), and the continued optimization of the Company’s portfolio, with an increased mix of higher growth software and consulting revenue. In addition, the Committee considered Mr. Krishna’s personal leadership in optimizing the Company’s portfolio by successfully separting Kyndryl on November 3, 2021; returning IBM to sustainable revenue growth; driving the ongoing improvement in IBM’s diverse leadership representation; industry-leading innovationAI and research in quantum computing, and AI; anddriving IBM’s high performance culture, as well as continued improvementbest in class employee engagement in a year of significant change.engagement.
For the reasons expressed above and discussed in the Compensation Discussion and Analysis, the Executive Compensation and Management Resources Committee and the IBM Board of Directors believe that our compensation policies and programs are aligned with the interests of our stockholders and designed to reward for performance.
We are therefore requesting your nonbinding vote on the following resolution:
“Resolved, that the compensation of the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables and the narrative discussion, is approved.”
(1)

Cash from operations is presented on a consolidated basis, which includes activity from discontinued operations related to the separation of Kyndryl.
(2)
Non-GAAP financial metrics.metric. See Appendix A for information on how we calculate thesethis performance metrics.metric.
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THE IBM BOARD OF DIRECTORS RECOMMENDS

A VOTE
FOR THIS PROPOSAL.
Note: The Company is providing this advisory vote as required pursuant to Section 14A of the Securities Exchange Act (15 U.S.C. 78n-1). The stockholder vote will not be binding on the Company or the Board, and it will not be construed as overruling any decision by the Company or the Board or creating or implying any change to, or additional, fiduciary duties for the Company or the Board.
20222024 Notice of Annual Meeting & Proxy Statement   |   3. Management Proposal on Advisory Vote on Executive Compensation (Say on Pay)71

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Stockholder Proposals
Some of the following stockholder proposals contain assertions about IBM that we believe are incorrect. We have not attempted to refute all of these inaccuracies.
Your Board of Directors opposes the following threefive proposals for the reasons stated after each proposal.
4. Stockholder Proposal Requesting a Public Report on Stockholder Special Meeting RightLobbying Activities
Management has been advised that John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, CA 90278, the owner of at least 25 shares of IBM stock, intends to submit the following proposal at the meeting:meeting, which is co-sponsored by Reynders McVeigh Capital Management:
Proposal 4 — Special Shareholder Meeting ImprovementTransparency in Lobbying
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Whereas, full disclosure of IBM’s lobbying activities and expenditures is needed to assess whether IBM’s lobbying is consistent with IBM’s expressed goals and stockholder interests.
Resolved, IBM stockholders request the preparation of a report, updated annually, disclosing:
1.
Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
2.
Payments by IBM used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
3.
Description of management’s decision-making process and the Board’s oversight for making payments described above.
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the steps necessarylegislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which IBM is a member.
Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.
The report shall be presented to amend the appropriateAudit Committee and posted on IBM’s website.
Supporting Statement
IBM spent $67 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 €1,750,000-1,999,999 on lobbying in Europe for 2021.
IBM deserves credit for refraining from making political contributions. But companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity. These groups may be spending “at least double what’s publicly reported.”1 Unlike many of its peers, IBM fails to disclose its payments to trade associations and social welfare organizations, or the amounts used for lobbying, to stockholders. IBM belongs to the Business Roundtable and US Chamber Commerce, which together have spent over $2.2 billion on federal lobbying since 1998.
IBM’s lack of disclosure presents reputational risk when its lobbying contradicts company governing documentpublic positions. For example, IBM believes in addressing climate change, yet the Business Roundtable lobbied against the Inflation Reduction Act2 and the Chamber reportedly has been a “central actor” in dissuading climate legislation over a two-decade period.3 IBM has attracted scrutiny for avoiding federal income taxes,4 as the Business Roundtable has lobbied against a new minimum corporate tax.5 And while IBM does not belong to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting.
It is important to have a more reasonable stock ownership percentage to call for a special shareholder meeting to help make up for the fact that we do not have a right to act by written consent. Many companies give shareholders both the right to call a special meeting and a right to act by written consent.
IBM shareholders are in favor of a right to act by written consent. IBM shareholders gave 42% support to a shareholder proposal for a right to act by written consent in 2020.
This 42% support most likely represents a majority of the shares that have access to proxy voting advice that is independent of our biased managementcontroversial American Legislative Exchange Council, which is adamantly against additional rights for shareholders which in turn would mean greater management accountability when our stockattacking “woke” investing,6 it is downrepresented by its trade association, with the Chamber sitting on its Private Enterprise Advisory Council. Reputational damage stemming from $180 in 2017.these misalignments could harm stockholder value.
Our biased management is thus getting a free ride on the backs of small shareholders who have no recourse butLast year, this proposal exceeded 48% support at IBM. Thus, I urge IBM to rely on the biased view of management. And 40% of IBM stock is held by non-institutional investors who are the smaller IBM shareholders who lack independent proxy voting advice.
Our management is best served by providing the means for 10% of shareholders to bring emerging opportunities or solutions to problems to the attention of management and all shareholders.
Also shareholder engagement is a toothless way to introduce new ideas to management. And management can abruptly discontinue or drastically restructure any shareholder engagement program if it fails to give less than cheerleading support to management.
It is important to have a more reasonable stock ownership percentage to call for a special shareholder meeting to help make up for the fact that we have no right to act by written consent and IBM shareholders are in favor of a right to act by written consent.
Please vote yes:
Special Shareholder Meeting Improvement — Proposal 4expand its lobbying disclosure.
7220221
https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/.
2
https://www.theguardian.com/environment/2022/aug/19/top-us-business-lobby-group-climate-action-business-roundtable.
3
https://www.washingtonpost.com/politics/2023/08/02/climate-group-pushes-big-tech-exit-nations-largest-business-lobby/.
4
https://www.axios.com/2019/12/16/fortune-500-companies-corporate-income-tax.
5
https://www.washingtonpost.com/business/2023/08/14/biden-corporate-tax/.
6
https://www.wbur.org/hereandnow/2023/03/22/esg-investing-fossil-fuels.
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
This proposal does not properly consider IBM’s 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.
Independent Third Parties Consistently Recognize IBM as a Leader in Lobbying and Political Spending Disclosure
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 Accountability’s 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.
IBM Already Provides the Disclosure Requested by This Proposal
This proposal requests disclosure of IBM’s policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. It also requests disclosure of IBM’s lobbying activities and expenditures, including payments made by IBM for lobbying activities. IBM already provides the disclosure requested on the Company’s public policy website (https://www.ibm.com/policy/philosophy-and-governance-new/).
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 IBM’s 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 “indirect lobbying” 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.
Finally, this proposal requests a description of management’s decision-making process and the Board’s oversight of lobbying activities and expenditures. The Company provides this information on IBM’s 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 IBM’s public policy website.
To be clear, IBM’s 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.
IBM Does Not Make Political Contributions of Any Kind
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.
IBM’s Lobbying Activities Support Growth and Innovation in the Digital Economy and Comply with All Applicable Laws
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 — a globally integrated function providing public policy and government relations expertise in support of IBM’s business operations worldwide — and must comply with applicable law and IBM’s 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.
IBM Prohibits Trade Associations from Using IBM Funds to Engage in Political Expenditures
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.
2024 Notice of Annual Meeting & Proxy Statement   |   Stockholder Proposals 71



The Board and Management Exercise Strong Oversight of Public Policy Efforts
As part of the Board’s oversight function, the Company’s management periodically reports to its Board about IBM’s policies and practices in connection with governmental relations, public policy and related expenditures. IBM’s 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.
Conclusion
For the reasons described above, 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 IBM’s shares to call a special meeting, can be foundand therefore not in Article II, Section 3 of IBM’s by-laws at https://www.ibm.com/investor/att/pdf/IBM_Bylaws.pdf.
The current 25% threshold is consistent with market practice and already accurately reflects the preference of IBM’s stockholders. At IBM’s 2010, 2017 and 2018 Annual Meetings, the same proponent presented this same proposal seeking to lower the 25% threshold to 10%. On each occasion, a majoritybest interests of the votes cast voted against lowering the threshold, clearly demonstrating the stockholders’ support for the 25% threshold.
The Board believes that maintaining the 25% ownership threshold strikes an appropriate balance between allowing shareholders the right to call a special meetingCompany and avoiding unnecessary financial burdens and corporate disruptions associated with a minority of shareholders calling a special meeting. 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% ofits stockholders. Reducing the ownership threshold to 10% could enable a small minority of shareholders (currently, as few as two) to call a special meeting at any time on any topic, constrained by no fiduciary obligations. IBM’s current 25% threshold helps to ensure that any special meeting will be in the interests of more than just a few stockholders. Further, a lower threshold is not necessary in light of IBM’s history of strong governance practices and shareholder rights, including its independent Lead Director and existing procedures giving stockholders the ability to communicate with the Board.
Therefore, the Board believes that the proponent’s proposal is counterproductive to IBM’s already well-respected corporate governance practices. Additionally, this same proposal has already been reviewed and rejected by a majority of the votes cast at three 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 BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
5. Stockholder Proposal Requesting a Public Report on Congruency in China Business Operations and ESG Activities
Management has been advised that National Center for Public Policy Research, 2005 Massachusetts Ave. NW, Washington, DC 20036, the owner of at least 13 shares of IBM stock, intends to submit the following proposal at the meeting:
Congruency Proposal
Resolved: Shareholders request that the Board of Directors commission and publish a third-party review within the next year (at reasonable cost, omitting proprietary information) of whether the Company’s activities and expenditures related to doing 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 risks presented by any misaligned activities and expenditures and the Company’s plans, if any, to mitigate these risks, such as detailing its plans to shift these activities and expenditures to less repressive and hostile regimes.
Supporting Statement: IBM’s 2022 ESG report touts its environmental and ethical impacts.1 It advertises the Company’s goals of reducing pollution and reaching net-zero greenhouse gas emissions by 2030, as well as policies and practices that it says prioritize qualities such as ethics and accountability.2 The ESG report also highlights the Company’s commitment to human rights and its Human Rights Statement of Principles.3
But nothing about doing business in China, which is controlled by the dictatorial and oppressive Chinese Communist Party (CCP), does anything to further these ideals.
China is the world’s largest emitter of greenhouse gases, emitting more greenhouse gases than the entire U.S. and the developed world combined.4 Exceeding more than 27 percent of the world’s total global emissions, China’s emissions have more than tripled over the last three decades.5
Furthermore, China has an abhorrent human rights record. Its abuses against the Uyghurs and other ethnic minorities in Xinjiang has sparked outrage, as evidence of forced labor programs, forced sterilizations, and torture at the hands of the CCP are undeniable.6 A report by the Office of the United Nations High Commissioner for Human Rights into Xinjiang concluded that “serious human rights violations” against the Uyghur and “other predominantly Muslim communities” have been committed by the country.7
U.S. Customs and Border Protection, the agency responsible for enforcing the U.S.’s Uyghur Forced Labor Prevention Act (UFLPA), has detained nearly $2 billion in goods under the UFLPA since June 2022.8 The largest amount of goods seized under the UFLPA comes from the electronics industry, with 2,529 shipments detained. Nearly half of all shipments detained (44 percent) have been denied.9
IBM nonetheless conducts significant business in China. According to reports, IBM facilitates the Chinese regime’s mass surveillance program.10 It also conducts business in China despite China leading the world in greenhouse gas emissions and committing genocide against ethnic minorities — actions counter to everything that IBM’s ESG report says the company stands for. Therefore, it is critical that the Board commission and publish a third-party review that includes experts who are fully aware of the dangers that China poses to the U.S. and its allies around the world, including its military-civil fusion strategy11 and environmental and human rights abuses, to ensure that IBM’s actions as a company live up to its words.
20221
https://www.ibm.com/impact/files/reports-policies/2022/IBM_2022_ESG_Report_and_Addendum.pdf
2
Id.
3
https://www.ibm.com/ibm/responsibility/ibm_humanrightsprinciples.html
4
https://www.cnbc.com/2021/11/01/india-targets-2070-for-net-zero-emissions-china-makes-no-new-commitments.html; https://www.cnbc.com/2021/05/06/chinas-greenhouse-gas-emissions-exceed-us-developed-world-report.html; https://rhg.com/research/chinas-emissions-surpass-developed-countries/
5
https://rhg.com/research/chinas-emissions-surpass-developed-countries/
6
https://www.state.gov/forced-labor-in-chinas-xinjiang-region/; https://www.bbc.com/news/world-asia-china-59595952; https://www.state.gov/wp-content/uploads/2022/07/Forced-Labor-The-Hidden-Cost-of-Chinas-Belt-and-Road-Initiative.pdf
7
https://www.ohchr.org/sites/default/files/documents/countries/2022-08-31/22-08-31-final-assesment.pdf
8
https://www.cbp.gov/newsroom/stats/trade/uyghur-forced-labor-prevention-act-statistics
9
https://www.cbp.gov/newsroom/stats/trade/uyghur-forced-labor-prevention-act-statistics
10
https://www.top10vpn.com/research/huawei-china-surveillance-state/; https://theintercept.com/2019/07/11/china-surveillance-google-ibm-semptian/
11
https://www.state.gov/wp-content/uploads/2020/05/What-is-MCF-One-Pager.pdf
722024 Notice of Annual Meeting & Proxy Statement   |   Stockholder Proposals73





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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
This Board believes adoption of this proposal is unnecessary and would not provide additional useful information to the Company’s stockholders. This proposal was overwhelmingly rejected by IBM stockholders in 2023 with more than 90% of stockholders voting AGAINST.
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.
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.
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 IBM’s own operations. And our suppliers must establish goals, disclose results, cascade IBM’s requirements to their next-tier suppliers, and more.
In addition to the above, IBM has robust processes in place to ensure that our technology is not used in ways that would conflict with our values, our commitment to uphold basic human rights and freedoms, and our long-standing focus on responsible stewardship of powerful innovations. These robust processes are underpinned by our longstanding values relating to ethics and responsible business practices as well as our Principles for Trust and Transparency and include:

Annual employee certification to the IBM Business Conduct Guidelines;

IBM’s AI Ethics Board, which supports a centralized governance, review, and decision-making process for IBM ethics policies, practices, communications, research, products and services; and

Technology ethics training programs provided to IBM business partners.
In conclusion, we see no conflict between IBM’s business activities in China, which accounts for only a small fraction of IBM’s total global revenue, and our commitments to corporate responsibility.
Conclusion
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.
THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.

5.6. Stockholder Proposal Requesting a Right to Have an Independent Board ChairmanAct by Written Consent
Management has been advised that Kenneth Steiner, 14 Stoner Ave., Great Neck, NY 11021, the owner of at least 100 shares of IBM stock, intends to submit the following proposal at the meeting:
Proposal 56 — Independent Board ChairmanShareholder Right to Act by Written Consent
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Shareholders request that our board of directors adoptundertake such steps as a policy, and amend the governing documents asmay be necessary to requirepermit written consent by shareholders entitled to cast the Chairminimum number of votes that would be necessary to authorize the Boardaction 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.
Technically 25% of Directors to be an independent member of the Board. If an independent director is not available then a non independent director, other than the CEO,all IBM shares outstanding can be named as Chairmancall for a term of 3 months to 6 months. This policy could be phased in when there is a contract renewal for our currect CEO or for the next CEO transition.
This proposal won 52% support at Boeing and 54% at Baxter International in 2020. Boeing then adopted this proposal topic in June 2020. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.
This proposal won 41% shareholder support at the 2021 IBM annual meeting. This 41% support could represent more than 51% support from the share that have access to independent proxy voting advice. IBM management resistant to this proposal topic may be getting a free ride on the backs of small shareholders who do not have access to independent proxy voting advice. For a large company IBM seems to have a greater than usual percentage of small shareholders who do not have access to independent proxy voting advice.
The role of the CEO and management is to run the company.
The role of the Board of Directors is to provide independent oversight of management and the CEO.
Thus there is a potential conflict of interest for a CEO to have the oversight role of Chairman.
A CEO serving as Chair can result in excessive management influence on the Board and weaker oversight of management. The CEO becomes his own boss. With the current CEO serving as Chair that means giving up a substantial check and balance safeguard that can only occur with an independent Board Chairman. A lead director is no substitute for an independent board chairman. A lead director cannot call a special shareholder meeting and cannot evenbut unfortunately this translates into 40% of the shares that cast ballots at the annual meeting because many IBM shareholders do not vote. It would be hopeless to expect that the shares that do not have time to vote would have the time for the bureaucratic requirements to call for a special meeting of the board.shareholder meeting.
The lack of an independent Board Chairman is a great way to discourage new outside ideas and a great way to encourage the CEO to pursue projectes that would not stand up to effective oversight.
In an example from a company whose share price went from $130 to $200 in 10 months,This proposal topic won 42%-support at the 2020 Lowe’sIBM annual meeting proxy said Lowe’s independent directors determined that having a separate Chairman and Chief Executive Officers affords the CEO the opportunity to focus his time and energy on managing the business and allows the Chairman to devote his time and attention to Board oversight and governance.
Meanwhile IBM stock is in a hole compared to its $180 price in 2017.
Please vote yes:
Independent Board Chairman — Proposal 5meeting.
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The 42%-support was all the more impressive because it takes much more IBM shareholder conviction of the merits of a proposal to support a shareholder proposal, and thereby reject the Board of Director’s position, than to simply go along with the Board’s position.
Written consent can also have the safeguard that all shareholders are given notice.
Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director. For instance Mr. 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 well-performing directors. A shareholder right to act by written consent could give IBM directors more of an incentive to improve their performance.
The IBM Board of course said it preferred a special shareholder meeting to 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.
It is also appropriate that the corporate governance of IBM be improved with this proposal given that IBM stock has been in decline for more than a decade from its $200 price in 2013.
Please vote yes:
Shareholder Right to Act by Written Consent — Proposal 6
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The Board’s flexibilityYour Board of Directors believes that action by written consent without prior notice to determine the appropriate Board leadership structureall stockholders is essential.
One of the most important tasks undertaken by a board is to select the leadership of the board and the company. In order to execute this critical function most effectively andnot in the best interestsinterest of the stockholders and recommends a board must maintain the flexibility to determine the appropriate leadership in light of the circumstances at a given time. Because one size does not fit all situations, your Board has altered its structure at various times in response to the particular circumstances at that time. For example, your Board split the Chairman and CEO roles during the last two CEO transitions to ensure a seamless and successful leadership transition. The transitions have served as a model for public company succession planning. Limiting the candidate pool as suggested by the proponent will inhibit the ability of the Board to exercise its fiduciary obligation to identify the best leadership for IBM.
The Company’s Lead Director role is robust and ensures effective independent oversight at all times.vote AGAINST this proposal.
An essential partThis proposal has been repeatedly rejected by IBM stockholders, most recently in 2021. This year’s version of our current leadership structure is the independent Lead Director position.proposal once again inaccurately describes the number of shares required to call a special meeting of the stockholders of IBM. IBM’s corporate governance provisions call for a threshold of 25% of stockholders to call a special meeting, not 40% of shares that cast ballots at the annual meeting. The Company’s Lead Director role is robust and ensures effective independent oversightby-laws plainly state that “Special meetings of the stockholders, unless otherwise provided by law, may be called at all times. After a rigorous reviewany time by the Directors and Corporate Governance Committee and the Board, the Lead Director is elected by the independent membersChairman of the Board on an annual basis. The Lead Director hasor by the following robustBoard, and meaningful responsibilities servingshall be called by the Board upon written request delivered to ensure a strong, independent, and active Board by enhancing the contributions of IBM’s independent directors. In particular, the Lead Director:

presides at all meetingsSecretary of the BoardCorporation by the holder(s) with the power to vote and dispose of at which the Chairman is not present, including executive sessionsleast 25% of the independent directors, which are held at every meetingoutstanding shares of the Board;

serves as liaison between the Chairman and the independent directors;

approves information sent to the Board;

in collaboration with the Chairman, creates and approves meeting agendas for the Board;

approves meeting schedules to assure that there is sufficient time for discussion of all agenda items;

has authority to call meetings of the independent directors; and

if requested by major stockholders, ensures that he or she is available, as necessary after discussions with the Chairman, for consultation and direct communication.
Corporation” ​(emphasis added). The Board recommends a vote against this proposal.
IBM has long demonstrated its commitment to sound principles of corporate governance, working to ensure that its practices protect and further the interests of its stockholders. In addition to these core responsibilities, the Lead Director engages in other regular activities including:stockholders’ right to call a special meeting, IBM has:


one-on-one debriefs with the Chairman after each meeting;a proxy access by-law provision;


spending time with senior management outsideannual election of Board meetingsdirectors by majority vote;

the right to ensure a deep understandingremove directors without cause;

no supermajority provisions in our charter documents;

annually-enhanced proxy disclosure that gives stockholders extensive insight into the Board’s oversight of the business and strategy of the Company;management; and


occasionally attending meetings of each of the Board’s committees.best-in-class, year-round engagement with our stockholders.
IBM’s current leadership structure is optimal forpractices 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 Company atowners 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 time.proposal would not be in the best interests of its stockholders.
The DirectorsCurrently, any matter that IBM or its stockholders wishes to present for a stockholder vote must be noticed in advance and Corporate Governance Committeepresented 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 IBM’s 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 continuously evaluate thedoes not believe that such a written consent right is an appropriate leadership structure for IBM. After its most recent review, in consideration of the strength of its independent Board and corporate governance practices, the full Board has determined that the existing board leadership structure of havingmodel for a management director serve as Chairman, alongside a robust and independent Lead Director, best serves the needs of the Company and the stockholders at this time. Among other factors, the Board considered and evaluated:

the importance of consistent, unified leadership to execute and oversee the Company’s strategy;

the strength of Mr. Krishna’s vision for the Company and the quality of his leadership;

the strong and highly independent composition of the Board;

the views and feedback heard from our investors through our ongoing engagement program throughout the years expressing support for IBM’s leadership structure; and

the meaningful and robust responsibilities of the independent Lead Director, as discussed above.
The Board strongly believes that this current structure strikes the right balance of allowing our Chairman to promote a clear, unified vision for the Company’s strategy and to provide 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.widely-held public company like IBM.
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In sum, the Board concludes that adoption of this proposal is unnecessary for the following reasons:

IBM’s strong, independent Board andlong demonstrated history of commitment to goodhigh standards of corporate governance adds further supportand accountability;

The belief that holding meetings with proper notice whereby all stockholders may deliberate and discuss the proposed actions, receive and consider the Company’s position, and then vote their shares is the most transparent and fair way for stockholders to take action;

The safeguards around the ability to act by a special or annual meeting both promote and protect stockholders’ interests; and

As described in this Proxy Statement, the Company has an established process by which stockholders may communicate directly with IBM’s Board leadership structure.or non-management directors throughout the year on any topics of interest to stockholders.
Continued enhancement of the Lead Director position is just one example of IBM’s ongoing commitment to strong corporate governance. Independent directors comprise roughly 90% 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 independent directors of the Board meet in executive session, with the independent directors’ session chaired by the Lead Director.Conclusion
In contrast to the exemplary performance and quality of the IBMThe Board over the years, the proponent provides no evidence demonstrating thatviews the proposal would resultcalling for action by written consent without prior notice to all stockholders as unnecessary and not in enhanced oversight, let alone increased value for IBM stockholders. Additionally, this proposal has been rejected by a majority of shareholder votes each time it has been voted on by IBM stockholders, most recently last year. In light of this lack of empirical support, IBM’s strong and independent Board, the Lead Director’s robust responsibilities and, most importantly, the support of our structure by our stockholders, 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.interests of its stockholders.
THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
7. Stockholder Proposal Requesting a Public Report on Climate Lobbying
Management has been advised that James McRitchie, 9295 Yorkship Court, Elk Grove, CA 95758, the owner of at least 15 shares of IBM stock, intends to submit the following proposal at the meeting:
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Proposal 7 — Report Climate Lobbying Alignment
Resolved: Shareholders request the Board of International Business Machines (“IBM” or “Company”) annually analyze and report to shareholders (at reasonable cost, omitting proprietary information) on whether and how IBM is aligning its lobbying and policy influence activities and positions, both direct and indirect (through trade associations, coalitions, alliances, and other organizations) with its target of net-zero emissions 2030, including the activities and positions analyzed, the criteria used to assess alignment, and involvement of stakeholders, if any, in the analytical process.
In evaluating the degree of alignment between the Company’s emissions goals and its lobbying, IBM should consider not only its policy positions and those of organizations of which it is a member but also the actual lobbying activities, such as legislative comment submissions.
The proponent believes this request is consistent with investor expectations described in the Global Standard on Responsible Climate Lobbying,1 a valuable resource for implementation.
Supporting Statement:
The United Nations Framework Convention on Climate Change asserts that greenhouse gas emissions must decline 45 percent from 2010 by 2030 to limit global warming to 1.5 degrees Celsius. If that goal is not met, even more rapid reductions, at greater cost, will be required to compensate for the slow start on the path to global net- zero emissions.2
IBM has publicly committed to achieving net-zero emissions by 2030, supports the Paris Agreement’s goals, and believes that all society sectors must participate in climate change solutions.3 However, IBM does not describe its direct and indirect federal or state lobbying efforts to engage in climate-related policy issues. Corporate lobbying inconsistent with the Paris Agreement and companies’ net zero targets presents increasingly material risks to companies and their shareholders.
IBM has disclosed that it spent over $25 million since 2018 on federal lobbying. This does not include certain undisclosed state lobbying expenditures. IBM provides direct links on its public policy website to where it files quarterly lobbying activity and expenditure reports. Enhancing this by reporting how the company’s lobbying activities align with its net-zero targets would fill critical disclosure gaps for shareholders.
Even with the recent passage of the Inflation Reduction Act, critical gaps remain between the United States’ 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.
Of particular concern are trade associations that say they speak for business but too often present forceful obstacles to addressing climate change. IBM is a member of trade associations, such as the Business Roundtable, engaging with largely negative climate policy positions. Although IBM states that it will share its dissenting views with trade associations in public when it helps the policy debate, stockholders have yet to see such disclosure on climate policy. Shareholders discount hypocritical companies.
Add Value: Vote For Proposal 7
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https://climate-lobbying.com
2
https://unfccc.int/news/updated-ndc-synthesis-report-worrying-trends-confirmed
3
https://www.ibm.com/about/environment/energy-climate
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The Board has reviewed and considered this proposal and determined that it is unnecessary given IBM’s history on environmental matters, current disclosures and policies.
IBM Has a Long History of Actively Addressing Environmental Matters
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 IBM’s 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 America’s Climate Leaders 2023.
IBM Already Publicly Discloses its Climate Policy and Positions
IBM’s public policy advocacy spans a range of issues relevant to our business, clients, stockholders, employees, communities and other stakeholders. We engage policymakers and leaders globally to promote ideas that can help spur growth and innovation with new technologies or address societal challenges, such as building a skilled and diverse workforce. We do this by developing innovative policy ideas that are aligned with national agendas, through building trusted relationships with government leaders, and through partnerships with academia and civil society. With regards to environmental matters, IBM is committed to addressing climate change through the company’s energy conservation and climate protection programs. IBM’s climate change policy and positions are already publicly available at our website and in our annual Impact Report: (https://www.ibm.com/about/environment/energy-climate).
As an example of our public disclosure of our climate change policy and positions, IBM publicly endorsed the plan outlined by the Climate Leadership Council that would put a tax on carbon dioxide emissions, with the proceeds of that tax — a “carbon dividend” — to be returned to citizens. We did this because we are convinced this represents the most realistic and appropriate opportunity to get a majority of people to agree on a public policy towards carbon emissions that is mindful of both the environment and the economy. This plan would put in place strong economic incentives for energy companies to reduce carbon emissions and for energy consumers to reduce their own energy consumption. More information on this topic is available at our website (https://www.ibm.com/policy/climate-change/).
IBM Already Provides Robust Disclosure on its Lobbying Activities and it is Recognized for its Transparency by Independent Third Parties
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 Accountability’s 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.
The additional, prescriptive annual report requested by the proponent focused on a single issue is unnecessary given the extent of IBM’s existing lobbying disclosures: (https://www.ibm.com/policy/philosophy-and-governance-new/). For example, IBM’s disclosures already identify those trade organizations that IBM is a member of and are directly engaged in U.S. lobbying through annual payments of $50,000 or higher. Moreover, the website also provides direct links to where IBM regularly files periodic reports with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives. These reports detail IBM’s U.S. federal lobbying activities (including environmental) and expenditures (including expenditures for “indirect lobbying” via trade associations, as required by law). The reports further display the European Union Transparency Register, which details IBM’s lobbying activities and expenditures with European Union institutions. Furthermore, IBM files reports with state and municipal governments where required.
Conclusion
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.
THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
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6.8. Stockholder Proposal Requesting a Public Report on the UseAdoption of Concealment ClausesGreenhouse Gas Emissions Targets
Management has been advised that Jay Stanley Weisfeld Trust, P.O Box 158, Rochester, VT 05767,Green Century Capital Management, Inc., on behalf of the Green Century Equity Fund, 114 State St. Suite 200, Boston, Massachusetts 02109, the owner of at least 150 shares of IBM stock, intends to submit the following proposal at the meeting:
Resolved:Target to Reduce Full Operational and Value Chain Greenhouse Gas Emissions
Shareholders of International Business Machines Corporation (“IBM”) ask that the Board of Directors prepare a public report assessing the potentialWhereas: Climate change is creating systemic risks to the company associatedeconomy, and immediate, sharp emissions reduction is required of all market sectors and industries.1 Publicly traded corporations both contribute emissions that augment climate change and are subject to multiple risks created by climate change. Lack of comprehensive efforts to curtail emissions threatens investor value, particularly for diversified holders, for whom climate change poses an undiversifiable and unhedgeable risk.2
In response to this systemic risk, more than 6,000 companies, representing a broad range of industries, have set or committed to set science-based greenhouse gas reduction targets covering their Scopes 1-3 emissions aligned with a 1.5 degrees Celsius scenario with the Science Based Targets initiative (SBTi). SBTi provides third-party validation of corporate targets.
IBM has declined to set comparably comprehensive targets or seek third-party validation for its useexisting targets, raising concerns about the credibility of concealment clausesits commitments. Rather, it has adopted a 2030 net zero target narrowly focused on its operational emissions and a single category of Scope 3 emissions. Of the emissions IBM discloses for 2022, its target covers only half of its carbon footprint.
Meanwhile, Company peers Accenture, Microsoft, Hewlett Packard Enterprise, Salesforce, and SAP have set or committed to set near-term science-based 1.5 degree Celsius-aligned targets with SBTi inclusive of their full Scopes 1-3 emissions. Additionally, Accenture, Hewlett Packard Enterprise, and Microsoft, have committed to set ambitious long-term 1.5 degree Celsius-aligned net-zero by 2050 targets, vetted by SBTi.
IBM’s opposition to setting an emissions reduction target verified by a third party creates business and reputational risks. For example, the Company markets and sells end-to-end sustainability solutions including cloud-based software, Envizi ESG Suite, which helps customers calculate and report Scope 3 emissions, and it notes in a Wall Street Journal ad that, “Companies need tools that can help them do detailed carbon accounting…”3
However, in its recent CDP climate report, IBM chooses not to disclose a number of Scope 3 emissions categories indicating that there is no reliable data for reporting the contextemissions, controverting its stated capabilities of harassment, discrimination and other unlawful acts. Theproviding detailed carbon accounting. Further, IBM describes Envizi as valuable for customers reporting greenhouse gas emissions data to CDP, or who have committed to the SBTi.
Regrettably, IBM disparages SBTi in its 2022 CDP climate report should be prepared at reasonable cost and omit proprietary and personal information.as “a self-appointed arbiter for judging a company’s goals,” undermining the value of its own services.
Supporting Statement: Concealment clauses are defined as any employment or post-employment agreement, such as arbitration, non-disclosure or non-disparagement agreements,Resolved: Shareholders request that IBM asks employees or contractorsadopt independently verified short-, medium- and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to sign which would limit their abilityachieve net zero emissions by 2050 in line with the Paris Agreement’s goal of limiting global temperature rise to discuss unlawful acts in the workplace, including harassment and discrimination.1.5 degrees Celsius.
Whereas:
IBM wisely uses concealment clauses in employment agreements to protect corporation information, such as intellectual capital and trade secrets. However, IBM has not excluded from these clauses their workers’ rights to speak openly about harassment, discrimination and other unlawful acts. Given this, investors cannot be confident in their knowledge of IBM’s workplace culture.
A healthy workplace culture is linked to strong returns. McKinsey found that companies in the top quartile for workplace culture post a return to shareholders 60 percent higher than median companies and 200 percent higher than organizations in the bottom quartile.1 A study by Wall Street Journal found that over a five-year period, the 20 most diverse companies in the S&P 500 had an average annual stock return that was almost six percentage points higher than the 20 least diverse companies.2
In contrast, a workplace that tolerates harassment invites legal, brand, financial and human capital risk. Companies may experience reduced morale, lost productivity, absenteeism and challenges in attracting and retaining talent.3 Employees who engage in harmful behavious may also be shielded from accountability.
Pinterest paid $22.5 million to settle a gender discrimination lawsuit brought by a former executive after years of binding employees who settled discrimination claims to concealment agreements. Shareholders ultimately sued Pinterest executives alleging a breach of fiduciary duty by “perpetrating or knowingly ignoring the long-standing and systemic culture of discrimination and retaliation.”4 Similarly, in 2020, Alphabet agreed to limit confidentiality restrictions associated with harassment and discrimination cases as part of a $300 million settlement of shareholder lawsuits alleging the company created a toxic work environment.5 In 2021 a jury found that IBM had wrongfully terminated an employee who raised concerns about racial bias in compensation.6 In recent years, IBM has also paid settlements related to allegations of gender discrimination and the EEOC has found that the company “engaged in systemic age discrimination7. Investors seek assurance that more missteps are not occuring at IBM, hidden from view via the use of concealment clauses.
California law prohibits concealment clauses in employment agreements involving recognized forms of discrimination and unlawful activity. IBM works under a patchwork of state laws related to the use of concealment clauses and may benefit from consistent practices across all employees and contractors
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
This proposal is unnecessarily prescriptive and does not properly consider IBM’s 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.
IBM Has a Long History of Actively Addressing Environmental Matters
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 IBM’s 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
1

https://www.mckinsey.com/business-functions/organization/our-insights/the-organization-blog/culture-4-keys-to-why-it-mattersreport.ipcc.ch/ar6wg3/pdf/IPCC_AR6_WGIII_FinalDraft_FullReport.pdf
2

https://www.wsj.com/articles/the-business-case-for-more-diversity-11572091200www.unepfi.org/fileadmin/documents/universal_ownership_full.pdf. Pg4.
3
Https://conference.iza.org/conference_files/LaborMarkets_2021/sockin_j28322.pdf
4

https://www.institutionalinvestor.com/article/b1phvnsfffr2bp/Retirement-System-Sues-Pinterest-Board-and-Execs-Over-Discrimination
5
https://www.nytimes.com/2020/09/25/technology/google-sexual-harassment-lawsuit-settlement.html
6
https://prnewswire.com/news-releases/milberg-wins-11-1-million-verdict-for-ibm-sales-manager-fired-after-reporting-bias-301270316.html
https://www.propublica.org/article/the-u-s-equal-employment-opportunity-commission-confirms-a-pattern-of-age-discrimination-at-ibm
7
https://www.protocol.com/bulletins/ibm-pay-discrimination-settlementpartners.wsj.com/ibm/tackling-tough-business-challenges-together/making-sustainability-goals-achievable-with-the-help-of-data/
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.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 America’s Climate Leaders 2023.
IBM’s Climate Change Goals Are Transparent, Authentic and Factually Based on Science
Since its first carbon dioxide emissions reduction goal in 2000, IBM’s 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.
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 IBM’s goals is to reduce the company’s 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 IBM’s 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 “Special Report: 1.5 C°” indicated that anthropogenic carbon dioxide emissions must decrease 45% between 2010 and 2030 to limit Earth’s warming to 1.5 degrees Celsius above pre-industrial levels. This translates to an annual rate of reduction of 2.25%, while IBM’s 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.
IBM’s Climate Change Goals Already Include Our Value Chain
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 company’s customers, and all of a company’s employees as those employees commute to a workplace. These entities are collectively referred to as a company’s “value chain.” 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 company’s indirect, estimated Scope 3 emissions. As such, these estimated emissions are typically counted multiple times.
Determining Scope 3 emissions in a factual manner across a company’s 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.
IBM has been a leader in corporate diversitybelieves real reductions of emissions are directly and inclusion for decades anddemonstrably achieved when the organization generating the emission takes action to do so. That is deeplywhy we are committed to fostering a healthy, safe,achieve net-zero operational GHG emissions by 2030 that includes our Scope 1 and productiveScope 2 emissions, as well as Scope 3 emissions associated with IBM’s electricity consumption (which we control) at co-location data centers. IBM does not, however, include in its operational goals estimates of its global suppliers’ and global clients’ 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 Division’s work environmentto accelerate the discovery of new materials for all IBMers. We do not believe this proposal is necessarycarbon removal; IBM’s Environment Intelligence Suite software for the reasons stated below.complex modeling of potential climate impacts; IBM’s Envizi software for energy and greenhouse gas emissions management; and IBM’s philanthropic Sustainability Accelerator program.
At the same time, we remain closely engaged with our suppliers and clients. Since 2010, IBM DOES NOT PREVENT EMPLOYEES FROM DISCUSSING THE TERMS AND CONDITIONS OF THEIR EMPLOYMENT AND DOES NOT REQUIRE EMPLOYEES TO AGREE TO ARBITRATION AS A CONDITION OF EMPLOYMENThas 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 April 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 Earth’s warming to 1.5°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.
IBM does not require employees to sign any documents agreeing to arbitration as a condition of employment in the United States. Outside of the United States, our agreements may vary based on relationships with works councils or other local requirements.Conclusion
IBM also doesThere 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 preclude employees from discussingin the terms and conditions of their employment. While IBM does require its employees to enter into a confidentiality agreement to protect its proprietary and confidential information and intellectual property, this agreement does not prevent employees from discussing their own experiences with non-inclusive behavior.
Where mutually agreed by the parties and legally permitted, IBM may use confidentiality provisions in limited circumstances, such as in settlements of lawsuits, or as part of voluntarily agreed exit agreements. Notably, these provisions do not prevent employees from filing claims with or participating in investigations conducted by the Equal Employment Opportunity Commission or otherwise reporting to a government agency.
IBM DOES NOT TOLERATE DISCRIMINATION OR HARASSMENT AND HAS IN PLACE CLEAR POLICIES, PROCEDURES AND PRACTICES TO PROTECT AND SUPPORT THE IBMER
Safe and Productive Work Environment
IBM’s Business Conduct Guidelines, which apply to all IBM employees, speak directly to maintaining a safe and productive work environment. IBM strives to maintain for its employees a healthy, safe, and productive work environment free from discrimination and harassment, whether based on race, color, religion, gender, gender identity or expression, sexual orientation, pregnancy, national origin, genetics, disability, age or any other factors that are unrelated to IBM’s legitimate business interests. IBM will not tolerate sexual advances or comments, racial or religious slurs or jokes, or any other conduct, such as bullying, that creates or encourages an offensive or intimidating work environment. To foster a diverse and inclusive culture that supports a healthy, safe, and productive work environment, IBM provides several trainings related to preventing discrimination and harassment as well as several communication channels for employees to express concerns regarding non-inclusive behaviors.
Global Mandatory Training
On an annual basis, IBM conducts global mandatory trainings on the Business Conduct Guidelines, sexual harassment, and bullying prevention. IBM has also significantly bolstered employee education programs that strengthen IBMer advocacy for women and minorities by addressing sexism, racism, bias mitigation, allyship, covering, leading with inclusivity, and other related topics. These offerings are regularly refreshed.
Communication Channels and Resources
IBM provides several communication channels for employees to express concerns regarding non-inclusive behaviors (such as bullying, harassment, or discrimination). An employee is free to choose the communication channel that works best for them — their manager, senior management, human resources, or they can utilize IBM’s Open-Door policy, the Talk It Over@IBM team, or Employee Concerns. Employees are also able to report their complaints externally to the U.S. Equal Employment Opportunity Commission or other state agencies. IBM also uses a companywide instant messaging system, with several channels dedicated to diversity, inclusion, and workplace culture to facilitate communications. The goal of these channels is to foster engagement and encourage reporting of concern over non-inclusive behaviors.
IBM promptly and thoroughly reviews reports of non-inclusive behavior and will not tolerate threats or acts of retaliation against employees for any such report.
THE BOARD AND ITS COMMITTEES MAINTAIN STRONG OVERSIGHT OF IBM’S CULTURE AND WORK ENVIRONMENT
IBM’s Audit Committee oversees implementation of and compliance with the Business Conduct Guidelines through employee education and certification. The Audit Committee also regularly receives and discusses reports from IBM’s Chief Trust and Compliance Officer relating to human resources investigations, including any employment-related matters such as harassment and discrimination. Additionally, IBM’s Executive Compensation and Management Resources Committee oversees IBM’s human capital management and diversity and inclusion programs, including various communication channels, programs and practices, or training and education focused on the prevention of harassment, discrimination, bullying or retaliation. Finally, employees may directly contact IBM’s independent directors through email or mail.
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CONCLUSION
IBM does not tolerate discrimination or harassment. Given the strength of IBM’s culture, policies, practices, and anti-discrimination and anti-harassment resources, we do not believe the limited useinterests of the clauses described by the proponent poses a significant risk to the companyCompany and do not believe that the requested report would add meaningful value to the policies, processes, practices, and resources that are already in place at IBM.its stockholders.
THEREFORE, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
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Frequently Asked Questions
1.

What is a “stockholder of record”?
A stockholder of record or registered stockholder (“record owner”)(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 “street name,” and the record owner of your shares is usually your bank, broker or other intermediary. If you are not a record owner, please understand that IBM does not know that you are a stockholder, or how many shares you own.
2.

I want to attend the 20222024 Annual Meeting. What procedures must I follow?
The Annual Meeting will be conducted virtually. All stockholders will be able to attend the Annual Meeting via webcast by entering the 16-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 www.virtualshareholdermeeting.com/IBM2022 (“AnnualIBM2024 (Annual Meeting Website”)Website). If you do not have a control number, you will be able to register as a guest; however, you will not be able to vote or submit questions before or during the meeting.
No recording of the Annual Meeting is allowed, including audio and video recording.
3.

What can I do if I need technical assistance during the Annual Meeting?
If you encounter any difficulties accessing the Annual Meeting webcast, please call the technical support number that will be posted on the Annual Meeting Website log-in page.
4.

Are there rules of conduct for the Annual Meeting?
Yes, the rules of conduct for the Annual Meeting will be available on the Annual Meeting Website on the date of the Annual Meeting. The Rulesrules of Conductconduct will provide information on regarding the rules and procedures for participating in the Annual Meeting.
5.

What is the “record date” for the Annual Meeting?
February 25, 2022.March 1, 2024.
6.

Which IBM shares will be entitled to vote at the Annual Meeting?
IBM’s common stock ($0.20 par value capital stock) is the only class of security entitled to vote at the Annual Meeting. Each 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.
7.

Which IBM shares are included in the proxy card?
For 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.
For stockholders who are participants in the IBM Stock Fund investment alternative under the IBM 401(k) 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.
For holders in street name: You will receive a voting instruction form directly from your bank, broker or other intermediary containing instructions on how you can direct your record holder to vote your shares. Contact your bank, broker or other intermediary if you have any questions regarding your IBM stock holdings as of the record date.
8.

May I vote my shares in person at the Annual Meeting?
Yes. However, we encourage you to vote by proxy card, the Internet or by telephone even if you plan to attend the meeting. To vote during the Annual Meeting, log into the Annual Meeting Website with your 16-digit control number (found on your Notice of Internet Availability of Proxy Materials, your proxy card, or your instructions that accompanied your proxy materials).
9.

Can I vote my shares without attending the Annual Meeting?
Yes. Whether or not you attend the meeting, we encourage you to vote your shares promptly.
For 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 Directors’ 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.
You can also vote your shares over the Internet, or by calling a designated telephone number. These Internet and telephone voting procedures are designed to authenticate your identity in order to allow you to provide your voting instructions, and to confirm that your instructions have been recorded properly. The procedures that have been put in place are consistent with the requirements of applicable law. Specific instructions for stockholders of record who wish to use the Internet or telephone voting procedures are set forth on the proxy card.
For participants in the IBM Stock Fund investment alternative under the IBM 401(k) 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 11:59 p.m. EDTET on April 24, 2022,28, 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 11:59 p.m. EDTET on April 24, 2022,28, 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) 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.
For holders in street name: 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
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intermediary, following the specific instructions that have been provided to you by your bank, broker or other intermediary.
10.
2024 Notice of Annual Meeting & Proxy Statement   |   Frequently Asked Questions 79



10.
May I change or revoke my proxy?
For 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.
For holders in street name: Yes. You must follow the specific voting directions provided to you by your bank, broker or other intermediary to change or revoke any instructions you have already provided to your bank, broker or other intermediary.
11.

How can I contact IBM’s transfer agent?
Contact our transfer agent either by writing Computershare Trust Company, N.A., P.O. Box 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).
12.

Other than the items in the proxy statement, what other items of business will be addressed at the Annual Meeting?
Management knows of no other matters that may be properly presented at the meeting. If other proper matters are introduced at the meeting, the individuals named as proxies on the proxy card are also authorized to vote upon those matters utilizing their own discretion.
13.

During the question period at the Annual Meeting, what topics will be discussed?
This part of the meeting is for stockholders to ask questions to the Chairman about Company matters. It is not the appropriate forum to raise personal grievances.
14.

How can I ask questions during the Annual Meeting?
Stockholders of record may submit questions either before (by going to www.proxyvote.com) or during the meeting (by going to the Annual Meeting Website) and logging in using your 16-digit control number and following the instructions to submit a question. Additionally, each year IBM provides a portal through which stockholders may submit questions in advance of the Annual Meeting. To submit a question via the IBM portal, please visit https://www.ibm.com/investor/services/annual-meeting-of-stockholders.
If you do not have a control number, you will be able to register for the Annual Meeting as a guest; however, you will not be able to vote or submit questions on the Annual Meeting Website before or during the meeting.
15.

Who tabulates the votes?
Votes are counted by employees of Broadridge Corporate Issuer Solutions, Inc., IBM’s tabulator, and certified by the Inspectors of Election, (who are employees of First Coast Results, Inc.).
16.

I understand that a “quorum” of stockholders is required in order for IBM to transact business at the Annual Meeting. What constitutes a quorum?
A majority of all “outstanding” shares of common stock having voting power, in person or represented by proxy and entitled to vote, constitutes a quorum for the transaction of business at the meeting.
17.

How many shares of IBM stock are “outstanding”?
As of February 11, 2022,9, 2024, there were 899,309,986916,744,848 shares of common stock outstanding and entitled to be voted.
18.

What is the voting requirement for electing IBM’s directors?
To be elected in an uncontested election, each director must receive a majority of the votes cast. In a contested election, a nominee receiving a plurality of the votes cast at such election shall be elected.
19.

What is “broker discretionary voting”?
This refers to the NYSE rule allowing brokers to vote their customers’ shares on certain “routine” matters in the Proxy Statement at the brokers’ discretion when they have not received timely voting instructions from their customers. The NYSE rules on broker discretionary voting prohibit banks, brokers, and other intermediaries from voting uninstructed shares on certain matters, including the election of directors. Therefore, if you hold your stock in street name and you do not 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.
20.

Are abstentions and broker non-votes counted as votes cast?
No. Under the laws of New York State, IBM’s state of incorporation, “votes cast” at a meeting of stockholders by the holders of shares entitled to vote are determinative of the outcome of the matter subject to vote. Abstentions and broker non-votes will not be considered “votes cast” based on current New York State law requirements and IBM’s certificate of incorporation and by-laws.
21.

Assuming there is a proper quorum of shares represented at the Annual Meeting, how many shares are required to approve the proposals being voted upon in this proxy statement?
The table below reflects the vote required in accordance with the laws of New York State:
Proposal
Vote

Required
Do

abstentions


count as


votes cast?
Is broker

discretionary


voting


allowed?
Election of Directors
Majority of

votes cast
NoNo
Ratification of Appointment of PricewaterhouseCoopers LLP
Majority of

votes cast
NoYes
Management Proposal of Advisory Vote on Executive Compensation*
Majority of

votes cast
NoNo
Stockholder Proposals*
Majority of

votes cast
NoNo
*

Advisory and non-binding
22.

Where can I find the voting results of the Annual Meeting?
IBM intends to publish the final voting results on its website and will disclose the final voting results on a Form 8-K shortly after the Annual Meeting.
23.

Will my votes be confidential?
Yes. All stockholder meeting proxies, ballots, and tabulations that identify individual stockholders are kept confidential and
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are not available for examination. In addition, the identity or the vote of any stockholder is not disclosed except as required by law.
24.
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24.
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 at https://www.ibm.com/investor/help/consent-for-materials-online, and select “Help,” click on “Consent for materials online” and follow the instructions to enroll.
25.

How do I submit a proposal for inclusion in IBM’s 20232025 proxy material?materials?
Stockholder proposals may be submitted for IBM’s 20232025 proxy materialmaterials after the 20222024 Annual Meeting and must be received at our corporate headquarters no later than November 7, 2022.11, 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.
Management carefully considers all proposals and suggestions from stockholders. When adoption is clearly in the best interest of IBM and stockholders, and can be accomplished without stockholder approval, the proposal is implemented without inclusion in the Proxy Statement. Examples of stockholder proposals and suggestions that have been adopted over the years include stockholder ratification of the appointment of an independent registered public accounting firm, improved procedures involving dividend checks and stockholder publications, and changes or additions to the proxy materials concerning matters like abstentions from voting, appointment of alternative proxy, inclusion of a table of contents, proponent disclosure and secrecy of stockholder voting.
26.

How do I submit an item of business for the 20232025 Annual Meeting?
Stockholders who intend to present an item of business at the 20232025 Annual Meeting of Stockholders (other than a proposal submitted for inclusion in IBM’s Proxy Statement), including nominations for election to the Board of Directors pursuant to the Company’s proxy access by-law provision, must provide notice of such business to IBM’s Secretary no earlier than October 8, 202212, 2024 and no later than November 7, 2022,11, 2024, as set forth more fully in, and in compliance with, IBM’s by-laws. In addition, to comply with universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also provide the additional information required by Rule 14a-19 under the Securities Exchange Act of 1934 by no later than March 1, 2025.
27.

I did not receive a copy of the Annual Report. How can I get one?
Stockholders of record who did not receive an IBM Annual Report or who previously elected not to receive one for a specific account may request that IBM mail its Annual Report to that account by writing to our transfer agent, Computershare Trust Company, N.A. (address and phone number in Question 11 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.

What is “householding” and does IBM do this?
Householding is a procedure approved by the SEC under which stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of a company’s proxy statement and annual report from a company, bank, broker or other intermediary, unless one or more of these stockholders notifies
the company, bank, broker or other intermediary that they wish to continue to receive individual copies. At the present time, IBM does not “household” for any of our stockholders of record. However, as explained below, your bank, broker or other intermediary may be householding your account if you hold your shares in street name.
29.

If I am a holder in street name, how may I obtain a separate set of proxy materials?
If you hold shares in street name, your bank, broker or other intermediary may be delivering only one copy of our Proxy Statement and the IBM Annual Report to multiple stockholders of the same household who share the same address, and may continue to do so, unless your bank, broker or other intermediary has received contrary instructions from one or more of the affected stockholders in the household. If you are such a beneficial holder, contact your bank, broker or other intermediary directly in order to receive a separate set of our proxy materials.
30.

Members of our household own IBM shares through a number of different brokerage firms. Will we continue to receive multiple sets of materials?
Yes. If you and others sharing a single address hold IBM shares through multiple brokers, you will continue to receive at least one set of proxy materials from each broker.
31.

I received a noticeNotice of internet availabilityInternet Availability of proxy materials.Proxy Materials. What does this mean?
Consistent with common practice and in accordance with SEC rules, IBM is distributing proxy materials to some stockholders over the Internet by sending a Notice of Internet Availability of Proxy Materials that explains how to access our proxy materials and vote online. If you received a notice and would like a printed copy of the proxy materials (including the Annual Report, Proxy Statement and a proxy card in the case 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.
32.

I previously consented to receive electronic delivery of my proxy materials. Can you send me a hard copy of these proxy materials?
For 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 11 above).
For holders in street name: You must contact your bank, broker or other intermediary to receive copies of these materials.
33.

Who is making this proxy solicitation and approximately how much will these solicitation activities cost?
Solicitation of proxies is being made by IBM through the mail, in person and by telecommunications. The cost of this solicitation will be borne by IBM. In addition, management has retained Innisfree M&A Incorporated, to assist in soliciting proxies for a fee of approximately $50,000, plus reasonable out-of-pocket expenses.
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Frank Sedlarcik

Vice President and Secretary


March 7, 2022
11, 2024
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Appendix A — Non-GAAP Financial Information and Reconciliations
The rationale for management’s use of non-GAAP information in the Compensation Discussion and Analysis and Proxy Statement is as follows:
Operating (non-GAAP) Earnings Per Share and Related Income Statement Items
In an effort to provide better transparency into the operational results of the business, supplementally, managementthe 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, certain impacts from the Kyndryl separation and their related tax effects.impacts. Due to the unique, non-recurring nature of the enactment of the U.S. Tax Cuts and Jobs Act (U.S. tax reform), managementthe company characterizes the one-time provisional charge recorded in the fourth quarter of 2017 and adjustments to that charge as non-operating. Adjustments primarily include true-ups, accounting elections and any changes to regulations, laws, and audit adjustments etc. that affect the recorded one-time charge. Management also characterizes direct and incremental charges incurred related to the Kyndryl separation as non-operating given their unique and non-recurring nature. TheseIn 2022, these charges include applicable employee awards and tax impactsprimarily related to any net gains or losses on the separation. Given its unique and temporary nature, management has also characterized the unrealized gain on 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 non-operating. The gain reflects fair value changes in the shares that were retained byStatement. As of November 2, 2022, the company immediately following the separation, with the intent to dispose of such shares within twelve months after the distribution.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, tax charges related to acquisition 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 significantly impacted by the size, type and frequency of the company’s 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 company’s 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. The impact of acquisitions over the prior 12 month period may be a driver of higher expense year to year. For retirement-related costs, managementthe company characterizes certain items as operating and others as non-operating, consistent with GAAP. We includeThe company includes defined benefit plan and nonpension postretirement benefit plan service costs, multi-employer plan costs and the cost of defined contribution plans in operating earnings. Non-operating retirement-related costs 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 $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022 and 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 the company considers these costs to be outside of the operational performance of the business.
Overall, managementthe 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 the company’s pension plans; improves visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows the company to provide a long-term strategic view of the business going forward. In addition, these non-GAAP measures provide a perspective consistent with areas of interest wethe company routinely receivereceives from investors and analysts. OurThe company’s reportable segment financial results reflect pre-tax operating earnings from continuing operations, consistent with ourthe company’s management and measurement system.
Free Cash Flow/Operating Cash Flow
The company uses free cash flow as a measure to evaluate its operating results, plan stockholdershareholder return levels and strategic investments and assess its ability and need to incur and service debt. Free cash flow and operating cash flow are presented on a consolidated basis, including activity from discontinued operations related to the separation from Kyndryl. The entire free cash flow amount is not necessarily available for discretionary expenditures. The company defines free cash flow as net cash from operating activities less the change in Financing receivables and net capital expenditures, including the investment in software. A key objective of the Financing business is to generate strong returns on equity, and our Financing receivables are the basis for that growth. Accordingly, management considers Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency. Therefore, management presents both free cash flow excludingand net cash from operating activities that exclude the effect of Financing receivables.
Constant Currency
When the company refers to 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 period’s currency conversion rate. This approach is used for
822024 Notice of Annual Meeting & Proxy Statement   |   Appendix A — Non-GAAP Financial Information and Reconciliations



countries where the functional currency is the local currency. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.
Return on Invested Capital (ROIC)
For the 2021-2023 performance period, ROIC equals consolidated net operating profits after tax (consolidated GAAP net income plus after-tax interest expense) excluding the settlement charge resulting from the U.S. pension risk transfer, divided by the sum of the average debt and average total stockholders’ equity over the period, excluding goodwill associated with the Red Hat acquisition in years 2021 and 2022. In September 2022, NoticeIBM transferred $16 billion of Annual Meeting & Proxy Statement   |   Appendixits defined benefit pension obligations and related plan assets to two insurers. A — Non-GAAP Financial Informationnon-cash settlement charge of $4.4 billion net of tax related to this transfer was excluded given its unique and Reconciliations83


non-recurring nature. Due to the significant nature of the Red Hat acquisition, the Company utilizes a computation of ROIC excluding goodwill associated with the acquisition. The goodwill that was generated is primarily attributable to the assembled workforce of Red Hat and the increased synergies expected to be achieved over time from the integration of Red Hat products into the Company’s various integrated solutions.
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Key performance metrics are used to monitor the performance of the business and are viewed as useful decision-making information for management and stockholders, including:
Annual Recurring Revenue (ARR)
ARR is a key performance metric management uses to assess the health and growth trajectory of the Hybrid Platform & Solutions sub-segmentbusiness within IBM Software. ARR is calculated by estimating the current quarter’s recurring, committed value for certain types of active contracts as of the period-end date and then multiplying that value by four. This value is based on each arrangement’s contract value and start date, mitigating fluctuations during the contract term, and includes the following consumption models: (1) software subscription agreements, including committed term licenses, (2) as-a-service arrangements (SaaSsuch as SaaS and PaaS)PaaS (3) maintenance and support contracts, and (4) and security managed services contracts. ARR should be viewed independently of revenue as this performance metric and its inputs may not represent the amount of revenue recognized in the period and therefore is not intended to represent current period revenue or revenue that will be recognized in future periods.
The tables below provide reconciliations of the Company’s income statement results as reported under GAAP to its operating earnings presentation, which is a non-GAAP measure.
($ in millions except per share amount)
For the year ended December 31, 2021
GAAP
Acquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Tax
Reform
Impacts
Kyndryl
Related
Impacts
Operating
(Non-GAAP)
($ in millions except per share amount)
For the year ended December 31, 2023
GAAPAcquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Tax
Reform
Impacts
Kyndryl
Related
Impacts
Operating
(Non-GAAP)
Gross Profit$31,486$719$$$$32,205Gross Profit$34,300$631$$$$34,931
Gross Profit Margin54.9%1.3PtsPtsPtsPts56.2%Gross Profit Margin55.4%1.0PtsPtsPtsPts56.5%
S,G&A$18,745$(1.160)$$$(8)$17,577S,G&A$19,003$(1,039)$$$$17,964
R,D&E6,4886,488Other (Income) & Expense*(914)1039(866)
Other (Income) & Expense873(2)(1,282)126(285)Total Expense & Other (Income)25,610(1,029)3924,620
Total Expense & Other (Income)26,649(1,162)(1,282)11824,324Pre-tax Income from Continuing Operations8,6901,660(39)10,311
Pre-tax Income from Continuing Operations4,8371,8811,282(118)7,881Pre-tax Income Margin from Continuing Operations14.0%2.7Pts(0.1)PtsPtsPts16.7%
Pre-tax Income Margin from Continuing Operations8.4%3.3Pts2.2PtsPts(0.2)Pts13.7%Provision for/(benefit from) Income Taxes**$1,176$368$(8)$(95)$$1,441
Provision for Income Taxes*$124$457$251$(89)$(37)$706Effective Tax Rate13.5%1.4Pts0.0Pts(0.9)PtsPts14.0%
Effective Tax Rate2.6%5.2Pts2.8Pts(1.1)Pts(0.4)Pts9.0%Income from Continuing Operations$7,514$1,292$(30)$95$$8,870
Income from Continuing Operations$4,712$1,424$1,031$89$(81)$7,174Income Margin from Continuing Operations12.1%2.1Pts0.0Pts0.2PtsPts14.3%
Income Margin from Continuing Operations8.2%2.5Pts1.8Pts0.2Pts(0.1)Pts12.5%Diluted Earnings Per Share: Continuing Operations$8.15$1.40$(0.03)$0.10$$9.62
Diluted Earnings Per Share: Continuing Operations$5.21$1.57$1.14$0.10$(0.09)$7.93
*

Acquisition-Related Adjustments includes a gain of $12 million on foreign exchange call option contracts related to the company’s planned acquisition of StreamSets and webMethods from Software AG.
**
The tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
($ in millions except per share amount)
For the year ended December 31, 2020
GAAP
Acquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Tax
Reform
Impacts
Kyndryl
Related
Impacts
Operating
(Non-GAAP)
Gross Profit$30,865$726$$$$31,591
Gross Profit Margin55.9%1.3PtsPtsPtsPts57.3%
S,G&A$20,561*$(1,117)$$19,445*
R,D&E6,2626,262
Other (Income) & Expense802(2)(1,073)(273)
Total Expense & Other (Income)28,293*(1,119)(1,073)26,101*
Pre-tax Income from Continuing Operations2,572*1,8451,0735,490*
Pre-tax Income Margin from Continuing Operations4.7%3.3Pts1.9PtsPtsPts9.9%
Provision for Income Taxes**$(1,360)$411$208$110$$(630)
Effective Tax Rate(52.9)%25.3Pts14.1Pts2.0PtsPts(11.5)%
Income from Continuing Operations$3,932*$1,434$864$(110)$$6,120*
Income Margin from Continuing Operations7.1%2.6Pts1.6Pts(0.2)PtsPts11.1%
Diluted Earnings Per Share: Continuing Operations$4.38*$1.60$0.96$(0.12)$$6.82*
2024 Notice of Annual Meeting & Proxy Statement   |   Appendix A — Non-GAAP Financial Information and Reconciliations83



($ in millions except per share amount)
For the year ended December 31, 2022
GAAPAcquisition-
Related
Adjustments
Retirement-
Related
Adjustments*
Tax
Reform
Impacts
Kyndryl
Related
Impacts
Operating
(Non-GAAP)
Gross Profit$32,687$682$$$$33,370
Gross Profit Margin54.0%1.1PtsPtsPtsPts55.1%
S,G&A$18,609$(1,080)$$$$17,529
Other (Income) & Expense5,803(3)(6,548)(351)(1,099)
Total Expense & Other (Income)31,531(1,083)(6,548)(351)23,549
Pre-tax Income from Continuing Operations1,1561,7656,5483519,821
Pre-tax Income Margin from Continuing Operations1.9%2.9Pts10.8PtsPts0.6Pts16.2%
Provision for/(benefit from) Income Taxes**$(626)$436$1,615$70$0$1,495
Effective Tax Rate(54.2)%14.2Pts52.6Pts0.7Pts1.9Pts15.2%
Income from Continuing Operations$1,783$1,329$4,933$(70)$351$8,326
Income Margin from Continuing Operations2.9%2.2Pts8.1Pts(0.1)Pts0.6Pts13.8%
Diluted Earnings Per Share: Continuing Operations$1.95$1.46$5.41$(0.08)$0.38$9.13
*

Includes a $1.5one-time, non-cash, pre-tax pension settlement charge of $5.9 billion pre-tax charge for structural actions in the fourth quarter resulting in an impact of ($1.33) to diluted earnings per share from continuing operations and diluted operating (non-GAAP) earnings per share.4.4 billion after tax).
**

The tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
842022 Notice of Annual Meeting & Proxy Statement   |   Appendix A — Non-GAAP Financial Information and Reconciliations


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($ in millions except per share amount)
For the year ended December 31, 2019
GAAP
Acquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Tax
Reform
Impacts
Kyndryl
Related
Impacts
Operating
(Non-GAAP)
($ in millions except per share amount)
For the year ended December 31, 2021
GAAPAcquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Tax
Reform
Impacts
Kyndryl
Related
Impacts
Operating
(Non-GAAP)
Gross Profit$31,533$540$$$$32,073Gross Profit$31,486$719$$$$32,205
Gross Profit Margin54.6%0.9PtsPtsPtsPts55.6%Gross Profit Margin54.9%1.3PtsPtsPtsPts56.2%
S,G&A$18,724$(1,024)$$$$17,700S,G&A$18,745$(1,160)$$$(8)$17,577
R,D&E5,910(53)5,857Other (Income) & Expense873(2)(1,282)126(285)
Other (Income) & Expense(1,012)152(576)(1,436)Total Expense & Other (Income)26,649(1,162)(1,282)11824,324
Interest Expense1,344(228)1,116Pre-tax Income from Continuing Operations4,8371,8811,282(118)7,881
Total Expense & Other (Income)24,327(1,154)(576)22,598Pre-tax Income Margin from Continuing Operations8.4%3.3Pts2.2PtsPts(0.2)Pts13.7%
Pre-tax Income from Continuing Operations7,2061,6935769,475Provision for Income Taxes*$124$457$251$(89)$(37)$706
Pre-tax Income Margin from Continuing Operations12.5%2.9Pts1.0PtsPtsPts16.4%Effective Tax Rate2.6%5.2Pts2.8Pts(1.1)Pts(0.4)Pts9.0%
Provision for Income Taxes*$60$358$110$(146)$$382Income from Continuing Operations$4,712$1,424$1,031$89$(81)$7,174
Effective Tax Rate0.8%3.6Pts1.1Pts(1.5)PtsPts4.0%Income Margin from Continuing Operations8.2%2.5Pts1.8Pts0.2Pts(0.1)Pts12.5%
Income from Continuing Operations$7,146$1,335$466$146$$9,093Diluted Earnings Per Share: Continuing Operations$5.21$1.57$1.14$0.10$(0.09)$7.93
Income Margin from Continuing Operations12.4%2.3Pts0.8Pts0.3PtsPts15.8%
Diluted Earnings Per Share: Continuing Operations$8.00$1.50$0.52$0.16$$10.18
*

The tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
842024 Notice of Annual Meeting & Proxy Statement   |   Appendix A — Non-GAAP Financial Information and Reconciliations



The table below provides a reconciliation of 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 cash flow are non-GAAP measures.
($ in billions)
For the year ended December 31:
202120202019($ in billions)
For the year ended December 31:
20232022*2021
Net cash from operating activities per GAAP*$12.8$18.2$14.8Net cash from operating activities per GAAP**$13.9$10.4$12.8
Less: the change in Financing receivables3.94.30.5Less: the change in Financing receivables1.2(0.7)3.9
Net cash from operating activities, excluding Financing receivables8.913.814.3Net cash from operating activities, excluding Financing receivables12.711.28.9
Capital expenditures, net(2.4)(3.0)(2.4)Capital expenditures, net(1.5)(1.9)(2.4)
Free Cash Flow6.5**10.811.9Free Cash Flow+11.29.36.5
Acquisitions(3.3)(0.3)(32.6)Acquisitions(5.1)(2.3)(3.3)
Divestitures0.10.51.1Divestitures(0.0)1.30.1
Share Repurchase(1.4)Dividends(6.0)(5.9)(5.9)
Common stock repurchases for tax withholdings(0.3)(0.3)(0.3)Non-Financing Debt5.51.9(1.2)
Dividends(5.9)(5.8)(5.7)Other (includes Financing receivables and Financing debt)++(1.0)(2.9)(3.0)
Non-Financing Debt(1.2)0.222.8Change in cash, cash equivalents and short-term marketable securities$4.6$1.3$(6.7)
Other (includes Financing receivables and Financing debt)(2.7)0.21.0
Change in cash, cash equivalents and short-term marketable securities$(6.7)+$5.3$(3.2)
*

Includes immaterial cash flows from discontinued operation.
**
2021 includes cash flows of discontinued operations of $1.6 billion $4.4 billion and $4.5 billion in 2021, 2020 and 2019, respectively.
**
+
Includes2021 includes cash impacts of approximately $1.4 billion for Kyndryl-related structural actions and separation charges.
+
+
Includes2021 includes the distribution from Kyndryl of $0.9 billion.
2022 Notice of Annual Meeting & Proxy Statement   |   Appendix A — Non-GAAP Financial Information and Reconciliations85


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The tables below provide reconciliation of revenue growth rates presented on a continuing operations basis and as reported under GAAP to revenue adjusting for constant currency (@CC), which is a non-GAAP measure.
2021
GAAP@CC
Reconciliation of Revenue Growth Rates:
Software5%4%
Consulting10%8%
Business Transformation15%13%
Technology Consulting11%10%
Hybrid Cloud20%19%
GAAP@CC
Reconciliation of IBM Revenue Growth Rates:
1Q 20211.8%(1.3)%
2Q 20214.5%0.7%
3Q 20212.4%1.8%
4Q 20216.5%8.6%
4Q 2021
GAAP@CC
Reconciliation of IBM Revenue Growth Rates:
Software8%10%
2023
GAAP@CC
Reconciliation of Revenue Growth Rates:
Software5%5%
Hybrid Platform & Solutions5%5%
Red Hat9%9%
Consulting5%6%
GAAP@CC
Reconciliation of Total Revenue Growth Rates:
20232.2%2.9%
20225.5%11.6%
20213.9%2.7%
8620222024 Notice of Annual Meeting & Proxy Statement   |   Appendix A — Non-GAAP Financial Information and Reconciliations

85



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SCAN TOVIEW MATERIALS & VOTE INTERNATIONAL BUSINESS MACHINES CORPORATION 1 NEW ORCHARD RD, MD 325ARMONK, NY 10504 VOTESCAN TO VIEW MATERIALS & VOTEVOTE BY INTERNETBefore The Meeting - Go to www.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 25, 2022,29, 2024, for shares held directly and by 11:59 p.m. Eastern Time on April 24, 2022,28, 2024, for shares held in the 401(k) Plus 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/IBM2022YouIBM2024You may attend the meeting 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 instructions. Vote by 11:59 p.m. Eastern Time on April 25, 2022,29, 2024, for shares held directly and by 11:59 p.m. Eastern Time on April 24, 2022,28, 2024, for shares held in the 401(k) Plus 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 Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote by telephone or Internet, please DO NOT mail back this Proxy Card. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D66478-P64849 KEEPV28926-P04943KEEP THIS PORTION FOR YOUR RECORDS THISRECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACHDATED.DETACH AND RETURN THIS PORTION ONLY IBM'sONLYINTERNATIONAL BUSINESS MACHINES CORPORATIONIBM's Directors recommend a vote FOR each director (please mark your vote for each director separately).1.Election of Directors for a Term of One YearNominees:ForAgainstAbstain1a. ThomasYear Nominees:For Against Abstain1a.Marianne C. Brown!!!1b.Thomas Buberl!!!1b. David1c.David N. Farr!!!1d.Alex Gorsky!!!1e.Michelle J. Howard!!!1f.Arvind Krishna!!!1g.Andrew N. Liveris!!!1h.F. William McNabb III!!!1i.Michael Miebach!!!1j.Martha E. Pollack!!!1k.Peter R. Voser!!!1l.Frederick H. Waddell!!!1m.Alfred W. Zollar!!! IBM's Directors recommend a vote FOR proposals 2 and 3.ForAgainstAbstain1c. Alex Gorsky!!!2.Ratification3.2.Ratification of Appointment of Independent Registered!!!1d. Michelle J. Howard!!!Registered Public Accounting Firm 3.Advisory Vote on Executive Compensation.!!!1e. Arvind Krishna!!!Compensation IBM's Directors recommend a vote AGAINST proposalsForAgainstAbstain1f. Andrew N. Liveris!!!4.Stockholderproposals 4, 5, 6, 7 and 8.4.Stockholder Proposal to Lower Special Meeting Right!!!1g.F. William McNabb III!!!Requesting a Public Report on Lobbying Activities 5.Stockholder Proposal to Have An IndependentBoard Chairman.!!!1h.Martha E. Pollack!!!Requesting a Public Report on Congruency in China Business Operations and ESG Activities 6.Stockholder Proposal Requesting a Right to Act by Written Consent 7.Stockholder Proposal Requesting a Public Report on Climate Lobbying 8.Stockholder Proposal Requesting the useAdoption of Concealment Clauses.Greenhouse Gas Emissions Targets For Against Abstain! ! !! ! !For Against Abstain! !1i.Joseph R. Swedish! !! ! !! !1j.Peter R. Voser! !! ! !! !1k.Frederick H. Waddell!!!1l.Alfred W. Zollar!!! Please sign exactly as your name appears hereon, date, and return in the enclosed envelope. If acting as executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please sign the full corporate name by duly authorized officer. If shares are held jointly, each stockholder named should sign.Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date


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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice of Meeting, Proxy Statement and Annual Report are available at www.ibm.com/investor/materialD66479-P64849Internationalmaterial/ or www.proxyvote.com.V28927-P04943International Business Machines Corporation AnnualCorporationAnnual Meeting of StockholdersThis proxy is solicited by the Board of DirectorsArvind Krishna, James J. Kavanaugh, Michelle H. Browdy and 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/IBM2022IBM2024 at 10:1:00 a.m.p.m. Eastern Time on Tuesday, April 26, 2022,30, 2024, or any adjournment or postponement thereof.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 THE 20222024 ANNUAL MEETING AND PROXY STATEMENT.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 20222024 ANNUAL MEETING AND PROXY STATEMENT.UNLESS YOU USE THE INTERNET OR THE TELEPHONE TO VOTE YOURTHESE SHARES, YOU MUST SIGN AND RETURN THIS PROXY FOR YOURTHESE SHARES TO BE VOTED.ContinuedVOTED. Continued and to be signed on reverse side


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