IBM Workers Get $1,000 Stock Bonuses

Record sales and profits provide an unexpected windfall for Big Blue's rank and file employees.

Paul McDougall, Editor At Large, InformationWeek

January 21, 2011

2 Min Read

Fresh off a quarter in which it posted record revenue and net income, IBM this week said it will grant $1,000 in stock incentives to all non-executive employees whose performance has helped the company meet its strategic objectives.

"We are continuing to outperform the market and our competitors and to make encouraging progress against our strategic growth initiatives," said IBM chairman and CEO Sam Palmisano, in an e-mail to employees. "Our long-term success is the product of the work, innovation and superior execution of more than 400,000 IBMers," wrote Palmisano.

The stocks will not vest until 2015. It was not immediately clear exactly how many IBMers are in line for the bonus.

The stock award could provide a morale boost for IBM's U.S. workforce, which has been downsized in recent years as the company aggressively moves customer support work to low-cost locations in India, South America and other emerging markets. IBM's U.S. workforce has shrunk from about 134,000 employees in 2005 to roughly 105,000 in 2009, according to Alliance@IBM, a group that is opposed to IBM's offshoring strategy.

IBM itself no longer provides geographical breakouts of its employee base.

IBM earlier this week said revenues for the fourth quarter of 2010 increased 7%, to $29 billion, while net income grew 9%, to $5.3 billion—both quarterly records for the company. For the full year, revenue was up 4%, to $99.9 billion, while net income gained 10%, to $14.8 billion. Free cash flow was $16.3 billion.

"We completed an outstanding year, with record profit and free cash flow, and exceeded the high end of our 2010 earnings per share roadmap objective," said Palmisano, in a statement.

"We also capped a decade in which our shift to high-value businesses, our global integration of IBM, our investment in research and development of almost $60 billion and our acquisition of 116 companies have helped us to nearly triple our EPS and return more than $100 billion to shareholders," said Palmisano, whose total compensation package was worth $21.2 million in 2009, the most recent year for which IBM has published data on executive pay.

IBM's push into new markets, along with aggressive cost controls, have powered the company's stock price to new heights over a period when most investors were happy just not to lose money. IBM's share price has almost doubled over the past five years, while an S&P tracking fund would have returned 0% over the same period.

IBM shares were flat, at $155.74, in midday trading Friday.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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