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> Of course, the appearance of the situation, in the eyes of employees and the public, is not being helped by the fact amid IBM’s actions comes the board’s anno

by Jgrubb 12y ago

> Of course, the appearance of the situation, in the eyes of employees and the public, is not being helped by the fact amid IBM’s actions comes the board’s announcement on Friday of a big raise for CEO Ginni Rometty.

spacemanmatt 12y ago
I'm sure that there is a perfectly good explanation for that.
- smackfu 12y ago
  It's easy to forget that IBM still made $5.5B profit in the most recent quarter.
  - jordan0day 12y ago
    A naive person might then ask, "$5.5 in profit? So why lay off all those people?"
    - vertex-four 12y ago
      Because if they lay off all those people, they might make even more profit. A public company with outside shareholders can't generally say "oh, we're making enough money, we'll leave it there" - it's got to constantly grow and constantly make more and more profit to please the shareholders which expect it to do so. If you care about your employees, you don't let random people have a say in how your company is run for their own profit.
    - hyperliner 12y ago
      Why not? Don't you spend less on things when you want to save more? Do you spend all of your savings?
      - jordan0day 12y ago
        So you're telling me that when I buy the store brand toilet paper, I'm wreaking sudden havoc with the lives of thousands of families, all for the sake of saving some money? I guess I better start buying Charmin. The $0.37 of savings totally isn't worth that! I mean, who could possibly have a clear conscience about leaving thousands of people in the lurch over a little bit of money?
  - johnward 12y ago
    I'm no financial analyst but I see a lot of "downs" in the Q4 earnings report: http://www-03.ibm.com/press/us/en/pressrelease/45884.wss http://www-03.ibm.com/press/us/en/pressrelease/45884.wss
  - dreaminvm 12y ago
    Even easier to misinterpret the $5.5B profit without the context of 6% decline in revenue, and net income decline by 27%.
    - bduerst 12y ago
      It's even worse when consider how much their markets have grown in the past year. A 6% decline in revenue is understandable if the target markets go down 6%, but when there's growth it's even worse.
      - deleted 12y ago
        [deleted]
  - forgotAgain 12y ago
    Inertia in it's client base mainly. As drag forces continue to slow it down those profits will disappear.
- TeMPOraL 12y ago
  There always is. It might just not be what we'd want it to be.
e40 12y ago
There's a direct correlation between the two events, I'd wager. She's being rewarded for taking decisive action and also being given an incentive to stay and see it through, where "it" is fixing IBM. EDIT: yes, I used the wrong pronoun originally. The reaction... wow. No disrespect was intended, and I'd think that leeway would be given here on HN. Oh, well.
- encoded 12y ago
  I think you mean "she".
- jes 12y ago
  With respect, the CEO of IBM is a woman.
- vegabook 12y ago
  Concur. Hold onto her while she does the dirty work, but her days are numbered once Chrome is done. She's the hatchet (wo)man - and nobody will want her around post-cull. They'll want fresh untainted vision, buy-in from the survivors. She might as well give herself a post-dated 2016 3-score.
  - sgt101 12y ago
    or $30,000,000 as it's other wise known in CEO world
  - crag 12y ago
    Which is exactly why she got the raise/bonus. It was probably agreed too before she ever took the job. She'll do the dirty work, get paid VERY WELL for it, so the firm itself can save face. She'll leave next year with a few mill in her pocket. AND IBM will blame their woes on "her" plan.
  - acdha 12y ago
    That sounded familiar and a quick search turned up a paper about it: “The current study relies on a unique dataset of all CEO transitions in Fortune 500 companies over a 15-year period. We find that occupational minorities are more likely than white men to be promoted CEO of weakly performing firms; and when firm performance declines during their tenure, occupational minority CEOs are likely to be replaced by white men, a phenomenon we term the ‘savior effect.’” http://onlinelibrary.wiley.com/doi/10.1002/smj.2161/abstract http://onlinelibrary.wiley.com/doi/10.1002/smj.2161/abstract Full copy: http://big.assets.huffingtonpost.com/glassceiling.pdf http://big.assets.huffingtonpost.com/glassceiling.pdf
winslow 12y ago
Jesus... That is pretty awful. I understand cutting down your workforce since your business is struggling like hell but don't give your crappy CEO a massive bonus and pay raise.
- johnward 12y ago
  Reinstating bonuses for execs after several years of poor performance...
jobu 12y ago
The article linked in from that bit is pretty good too: "IBM redefines failure as 'success,' gives underachieving CEO huge raise" - http://www.latimes.com/business/hiltzik/la-fi-mh-ibm-redefines-20150202-column.html http://www.latimes.com/business/hiltzik/la-fi-mh-ibm-redefin... "The company has posted lower revenue for 11 quarters in a row." She gets a raise for successfully shrinking the company?
- sgt101 12y ago
  In an alien world a million billion miles away a general marshalling forces after defeat after defeat offers it's sword (or other death dealing device) to the star marshals and is told, "no, not now" but inconsolable the resignation is re-tendered, so now the star marshals give it a medal, and a pay rise and a nice pat on the heat, and it agrees to remain in charge. If I could reduce and organisation to zarg-jelly by resigning I would extract similar geld I guess..
  - rspeer 12y ago
    Your analogy is hard to follow.
    - TeMPOraL 12y ago
      Well, I guess the GP meant that if you could inflict significant harm on the company by resigning, the shareholders won't let you do that, so you can just start extorting them for money.
- sgt101 12y ago
  In an alien world a million billion miles away a general marshalling forces after defeat after defeat offers it's sword (or other death dealing device) to the star marshals and is told, "no, not now" but inconsolable the resignation is re-tendered, so now the star marshals give it a medal, and a pay rise and a nice pat on the heat, and it agrees to remain in charge. If I could reduce and organisation to zarg-jelly by resigning I would extract similar geld I guess..
- rodgerd 12y ago
forgotAgain 12y ago
One reasoning I read was that the board does not want a CEO transition during this time. It would adversely affect the stock price further. And at this point what corporate leader with enough positive recognition to advance the stock price would want the job.

by Jgrubb 12y ago

spacemanmatt 12y ago

I'm sure that there is a perfectly good explanation for that.

smackfu 12y ago
It's easy to forget that IBM still made $5.5B profit in the most recent quarter.
- jordan0day 12y ago
  A naive person might then ask, "$5.5 in profit? So why lay off all those people?"
  - vertex-four 12y ago
    Because if they lay off all those people, they might make even more profit. A public company with outside shareholders can't generally say "oh, we're making enough money, we'll leave it there" - it's got to constantly grow and constantly make more and more profit to please the shareholders which expect it to do so. If you care about your employees, you don't let random people have a say in how your company is run for their own profit.
  - hyperliner 12y ago
    Why not? Don't you spend less on things when you want to save more? Do you spend all of your savings?
    - jordan0day 12y ago
      So you're telling me that when I buy the store brand toilet paper, I'm wreaking sudden havoc with the lives of thousands of families, all for the sake of saving some money? I guess I better start buying Charmin. The $0.37 of savings totally isn't worth that! I mean, who could possibly have a clear conscience about leaving thousands of people in the lurch over a little bit of money?
- johnward 12y ago
  I'm no financial analyst but I see a lot of "downs" in the Q4 earnings report: http://www-03.ibm.com/press/us/en/pressrelease/45884.wss http://www-03.ibm.com/press/us/en/pressrelease/45884.wss
- dreaminvm 12y ago
  Even easier to misinterpret the $5.5B profit without the context of 6% decline in revenue, and net income decline by 27%.
  - bduerst 12y ago
    It's even worse when consider how much their markets have grown in the past year. A 6% decline in revenue is understandable if the target markets go down 6%, but when there's growth it's even worse.
    - deleted 12y ago
      [deleted]
- forgotAgain 12y ago
  Inertia in it's client base mainly. As drag forces continue to slow it down those profits will disappear.
TeMPOraL 12y ago
There always is. It might just not be what we'd want it to be.

e40 12y ago

There's a direct correlation between the two events, I'd wager. She's being rewarded for taking decisive action and also being given an incentive to stay and see it through, where "it" is fixing IBM. EDIT: yes, I used the wrong pronoun originally. The reaction... wow. No disrespect was intended, and I'd think that leeway would be given here on HN. Oh, well.

encoded 12y ago
I think you mean "she".
jes 12y ago
With respect, the CEO of IBM is a woman.
vegabook 12y ago
Concur. Hold onto her while she does the dirty work, but her days are numbered once Chrome is done. She's the hatchet (wo)man - and nobody will want her around post-cull. They'll want fresh untainted vision, buy-in from the survivors. She might as well give herself a post-dated 2016 3-score.
- sgt101 12y ago
  or $30,000,000 as it's other wise known in CEO world
- crag 12y ago
  Which is exactly why she got the raise/bonus. It was probably agreed too before she ever took the job. She'll do the dirty work, get paid VERY WELL for it, so the firm itself can save face. She'll leave next year with a few mill in her pocket. AND IBM will blame their woes on "her" plan.
- acdha 12y ago
  That sounded familiar and a quick search turned up a paper about it: “The current study relies on a unique dataset of all CEO transitions in Fortune 500 companies over a 15-year period. We find that occupational minorities are more likely than white men to be promoted CEO of weakly performing firms; and when firm performance declines during their tenure, occupational minority CEOs are likely to be replaced by white men, a phenomenon we term the ‘savior effect.’” http://onlinelibrary.wiley.com/doi/10.1002/smj.2161/abstract http://onlinelibrary.wiley.com/doi/10.1002/smj.2161/abstract Full copy: http://big.assets.huffingtonpost.com/glassceiling.pdf http://big.assets.huffingtonpost.com/glassceiling.pdf

winslow 12y ago

Jesus... That is pretty awful. I understand cutting down your workforce since your business is struggling like hell but don't give your crappy CEO a massive bonus and pay raise.

johnward 12y ago
Reinstating bonuses for execs after several years of poor performance...

jobu 12y ago

The article linked in from that bit is pretty good too: "IBM redefines failure as 'success,' gives underachieving CEO huge raise" - http://www.latimes.com/business/hiltzik/la-fi-mh-ibm-redefines-20150202-column.html http://www.latimes.com/business/hiltzik/la-fi-mh-ibm-redefin... "The company has posted lower revenue for 11 quarters in a row." She gets a raise for successfully shrinking the company?

sgt101 12y ago
In an alien world a million billion miles away a general marshalling forces after defeat after defeat offers it's sword (or other death dealing device) to the star marshals and is told, "no, not now" but inconsolable the resignation is re-tendered, so now the star marshals give it a medal, and a pay rise and a nice pat on the heat, and it agrees to remain in charge. If I could reduce and organisation to zarg-jelly by resigning I would extract similar geld I guess..
- rspeer 12y ago
  Your analogy is hard to follow.
  - TeMPOraL 12y ago
    Well, I guess the GP meant that if you could inflict significant harm on the company by resigning, the shareholders won't let you do that, so you can just start extorting them for money.
sgt101 12y ago
In an alien world a million billion miles away a general marshalling forces after defeat after defeat offers it's sword (or other death dealing device) to the star marshals and is told, "no, not now" but inconsolable the resignation is re-tendered, so now the star marshals give it a medal, and a pay rise and a nice pat on the heat, and it agrees to remain in charge. If I could reduce and organisation to zarg-jelly by resigning I would extract similar geld I guess..
rodgerd 12y ago

forgotAgain 12y ago

One reasoning I read was that the board does not want a CEO transition during this time. It would adversely affect the stock price further. And at this point what corporate leader with enough positive recognition to advance the stock price would want the job.