IBM’s Most Highly Compensated Executives In 2021

IBM CEO Arvind Krishna’s total compensation for fiscal year 2021 reached almost $18 million. Here’s what you need to know about some of the most highly compensated executives at IBM.

IBM CEO Arvind Krishna’s total compensation for fiscal year 2021 reached almost $18 million as the company took steps to better position itself as the dominant hybrid cloud provider, according to a recent filing from the tech giant with the U.S. Securities and Exchange Commission.

Krishna’s total compensation for fiscal year 2021 was a 3 percent increase over the prior year, according to the SEC documents.

His base pay of $1.5 million in fiscal year 2022 stays the same year over year. It had increased by 11 percent from fiscal year 2020 to fiscal year 2021. The data comes before IBM’s annual shareholders meeting April 26.

CRN has reached out to IBM for comment. Along with Krishna, some of IBM’s top earners for 2021 include Chief Financial Officer James Kavanaugh, Vice Chairman Gary Cohn, Senior Vice President of IBM Software and Chairman of North America Tom Rosamilia plus Michelle Browdy, IBM’s senior vice president of legal and regulatory affairs general counsel.

Also disclosed in the SEC documents is that IBM investors were unhappy with a one-time equity award given to former President Jim Whitehurst in March 2020.

Whitehurst announced his departure from IBM in the summer. He has stayed on as an adviser with the Armonk, N.Y.-based tech giant, and will continue that role until May 31, according to the SEC documents. Whitehurst joined IBM in 2020 through the acquisition of Red Hat, where he served as CEO.

The award was “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,” according to the documents.

Also discussed in the SEC documents are the introduction this year of stock options as part of the equity pay mix for executives.

The goal is to incentivize executives in generating value through IBM’s stock price, according to the documents.

Here’s what else you need to know about some of the most highly compensated executives at IBM.

6. Jim Whitehurst

Although Jim Whitehurst stepped down as IBM president in July 2021, his work as a senior adviser continues until May 31, according to SEC documents.

IBM investors voiced concern over Whitehurst receiving a one-time equity award in March 2020, according to the regulatory filing. The award was in connection with a non-compete agreement (NCA). As a result of stepping down, Whitehurst did not receive a 2022 annual long term incentive award and forfeited any outstanding equity awards, including the final tranche of his one-time award.

In meetings with IBM investors, the company “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,” according to the SEC documents.

“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,” according to the documents. “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.”

Whitehurst can’t provide services to a competitor or solicit clients for one year following his separation, according to the documents.

“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,” according to the documents. “The Compensation Committee’s philosophy is that ongoing compensation programs, including AIP (annual incentive program) 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.”

5. Michelle Browdy

Michelle Browdy, IBM’s senior vice president of legal and regulatory affairs and general counsel, has a 2022 cash salary rate of $936,000 with a $1.26 million annual incentive target. Her base pay increased by about 5 percent year over year.

Last year, she received $6.65 million in total compensation. That includes her $894,000 base pay and $4.35 million in stock awards.

Her total compensation also includes $1.27 million in an annual incentive payout, according to SEC documents.

Browdy, 57, received the incentive because of her work around the spinoff of Kyndryl, her work enhancing IBM’s cybersecurity and privacy posture globally and for refreshing IBM’s intellectual property legal strategy to better protect the company.

Browdy’s total compensation includes $135,000 in other compensation. Factoring into other compensation is personal financial planning and other personal expenses.

Her 2022 long-term incentive award includes $3 million of performance share units, $1 million of restricted stock units and $1 million of stock options.

Browdy joined IBM in 2006, according to her LinkedIn.

4. Tom Rosamilia

Tom Rosamilia, the senior vice president of IBM Software and chairman of North America, will receive $894,000 in 2022 cash salary rate, according to SEC documents. That’s a raise of about 8 percent.

Rosamilia reported a total of $8.1 million in total compensation for 2021, according to SEC documents.

The compensation includes $830,000 in salary and $5.96 million in stock awards, according to SEC documents.

It also includes a $1.06 million incentive payout for 2021, according to SEC documents.

Rosamilia, 61, received the incentive for aligning the company’s software strategy to support hybrid multi-cloud, for leading fourth quarter software revenue growth and growth in Cloud Pak deployments and for positioning mainframe as a core part of hybrid cloud architecture.

His total compensation also includes $250,000 in other compensation. Factored into his other compensation was personal financial planning; ground transportation; personal security; an annual executive physical; family attendance at business-related events; personal travel on company aircraft; which was valued at $60,570 and other personal expenses.

Rosamilia has worked at IBM for more than 38 years, according to his LinkedIn account.

3. Gary Cohn

Gary Cohn, who joined IBM as vice chairman in January 2021, reported $1.17 million in base salary starting April 1, according to SEC documents. That’s the same base pay as last year. His annual incentive target is $1.58 million.

Cohn reported total compensation for 2021 of $9.9 million, including $1.17 million in salary and a $1 million cash sign-on payment on Dec. 31. Cohn will have to repay his bonus if his employment with IBM ends within the year, barring death, disability or termination without cause.

His total compensation for 2021 also includes $6.18 million in stock awards and a $1.55 million incentive payout.

Cohn, 61, received the incentive for helping with the divestiture of IBM’s health care data and analytics assets that are part of Watson Health, for developing partnerships with clients to expand hybrid cloud and artificial intelligence brand awareness and for working with client teams on account planning and client relationship management.

He also “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.”

Cohn’s 2021 total compensation also includes $2,000 in other compensation.

Cohn’s 2022 long-term incentive awards include $4.35 million in performance share units, $1.45 million in restricted stock units and $1.45 million in stock options.

Before joining IBM, Cohn worked as chief economic advisor to President Donald Trump from 2017 to 2018. As director of the National Economic Council and assistant to the president for economic policy, Cohn “managed the administration’s economic policy agenda and led the successful effort to grow the US economy, create jobs and increase wages through tax and regulatory reform,” according to his LinkedIn.

He also served as chief operating officer and president of Goldman Sachs from 2006 to 2016.

2. James Kavanaugh

Starting April 1, IBM Senior Vice President and Chief Financial Officer James Kavanaugh will receive a 2022 salary rate of $1.06 million, a raise of about 10 percent over his base pay the previous year, according to SEC documents. His annual incentive target is $1.44 million.

Kavanaugh, 55, received a total of $10.17 million for 2021, which includes his $968,000 salary and $7.56 million in stock awards, according to SEC filings.

That total also includes $1.44 million in non-equity incentive plan compensation and $201,000 in other compensation.

Other compensation included tax reimbursements of $15,000; IBM contributions to defined contribution plans of $172,000; an annual executive physical; family attendance at business-related events and other personal expenses

His incentive plan compensation came due to his work accelerating revenue growth, completing 15 acquisitions in 2021 for $3 billion, returning $6 billion to stockholders and for reducing debt by $10 billion in 2021, according to SEC documents. He also received credit for his work spinning out Kyndryl from Big Blue.

Kavanaugh’s 2022 long-term incentive award includes $5.4 million of performance share units, $1.8 million of restricted stock units and $1.8 million of stock options.

1. Arvind Krishna

IBM CEO and Chairman Arvind Krishna, 59, will receive a salary rate for 2022 of $1.5 million, the same as last year, according to the SEC documents. His annual incentive target is $3 million.

Krishna’s total pay in 2021, including salary and stock awards, was $17.56 million, according to SEC documents.

Most of that money was in the form of stock awards, totaling $12.61 million in 2021, according to SEC documents. That amount also includes $2.94 million in non-equity incentive plan compensation and $505,000 in other compensation.

Other compensation included tax reimbursements of $31,826; IBM contributions to defined contribution plans of $294,000; personal financial planning; ground transportation; family attendance at business-related events; personal travel on company aircraft, which was valued at $128,000 and other personal expenses

Krishna received the incentive payout in part for restructuring IBM into four reporting segments – consulting, software, infrastructure and financing – and spinning off the managed infrastructure services business as the independent, publicly traded company Kyndryl.

Other accomplishments under his watch include IBM closing 15 acquisitions in 2021 and deploying the Eagle 127-Qubit system, the first quantum chip to break the 100-qubit barrier.

Under Krishna’s watch, IBM also improved its executive diversity, with representation of women executives globally improving by one percentage point, Black executives in the U.S. by 1.5 points and Hispanic executives in the U.S. by 0.4 points.

His 2022 long-term incentive award – granted on Feb. 21 – includes $8.25 million in performance share units, $2.75 million in restricted stock units and $2.75 million in stock options, according to the documents.

The number of performance share units and restricted stock units is based on the average of IBM’s closing stock price for the 30 active trading days before the grant date.

The performance share units will be paid out in February 2025. The restricted stock units and stock options will vest 25 percent per year on each anniversary of the grant date.

The board credited Krishna with helping IBM reach $57.4 billion in revenue for the year and growing IBM Hybrid Cloud revenue to more than $20 billion. Hybrid Cloud is 35 percent of IBM’s revenue.

More than 3,800 clients use Hybrid Cloud, an increase of more than 1,000 year over year. Under Krishna’s leadership, the company also reduced its debt by $10 billion in 2021, down $21 billion since the Red Hat acquisition.