Ginni Rometty, the chairperson and CEO of International Business Machines Corp. (NYSE:IBM) is set to get a big increase in her annual bonus as the head of the company despite the fact that the company has perfumed poorly. According to the filings made by the Securities and Exchange Commission, the board at IMB has decided to give Rometty a staggering $4.6 million as the annual bonus for her work. This is a huge increase in the $3.6 million bonus that she was given by the board for her work at the company last year.
By all indications, the performance of IBM has not been good. In general, the company has been facing a decline in sales. This has been reflected in the form of a sharp decline in its revenue over the recent past. Further, the profits of the company have taken a beating from the changing business environment and the decline in sales. This has culminated in a fall in the share price of the company over the past few years.
Since Rometty took over at the helm of the company, nothing with regard to the financial performance of the company has changed much. For example, after she took over the leadership of the company back in 2012, the net profit of the company flickered briefly when it reached $16.2 billion for the year.
However, it suddenly slumped to $14.7 billion by the end of 2015. Similarly, the share price of the company was $185 back in 2012 when Rometty stepped it. Briefly, her leadership appeared to be working magic when the share price of the company rose to $215 back towards the end of 2014. However, this brief performance has been overshadowed by the fact that the stock of the company is now trading at an unimpressive price of $124.
But many believe that the problems of IBM are complex. And going by the approach that Rometty has employed at the company since 2012, it can be seen that the company has been working hard to reorient its business model. For example, since she came into the picture, Rometty has led the company to change its business completely.
The company has broken ranks with the demands of the old technology firms of the 20th century. It has channelled its energies into the emerging fields of cloud computing, data analytics and information security. This is the reason as to why the company has been swallowing up many small start-ups that are dedicated to these new industries. What remains to be seen is whether Rometty’s approach will over the long term prove to be worth all the money she is taking home as a bonus.