Shareholders Vote To Make IBM Expense Stock Options

The company also voted to boost its annual dividend and inked an extension of its services deal with Morgan Stanley.
IBM shareholders voted Tuesday to require the company to treat stock options as a business expense. IBM also said it has raised its quarterly dividend and reached an extension of its IT services agreement with Morgan Stanley.

The nonbinding options proposal was put forward at the company's annual shareholders meeting in Providence, R.I., by a large union pension fund and won the support of 54% of stockholders. When the vote was announced, chairman and CEO Sam Palmisano responded that IBM would expense options when the Financial Accounting Standards Board officially requires it.

The standards board has proposed that publicly held companies begin treating all stock-based compensation as an expense. The rule could take effect for fiscal years beginning after Dec. 15. IBM's fiscal year begins Jan. 1.

IBM said its board raised its per-share dividend to 18 cents from 16 cents, payable on June 10 to stockholders of record as of May 10. It's the ninth time since 1996 that the company has increased its quarterly dividend.

Under terms of the five-year extension with Morgan Stanley, IBM will implement a technology infrastructure that automatically draws computing power as needed from a shared pool of data-center resources. The approximately $575 million contract will facilitate Morgan Stanley's drive toward realizing an on-demand computing infrastructure for its Individual Investor Group and Discover Financial Services. Once Morgan Stanley moves to the new infrastructure, it will pay only for the back-end computing power it uses, offering the potential of millions of dollars in savings, IBM says.

IBM will also provide help-desk and desk-side support as a managed service to approximately 20,000 employees in Morgan Stanley's Individual Investor Group.

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