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IBM's top execs are forgoing their bonuses this year after a five per cent drop in sales and a per cent dip in net profit. Chief executive Ginni Rometty and other senior management will graciously eschew their presumably performance-related bonuses since the company's performance has not been all that great, particularly in its …

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Silver badge

$4 Million slithers down into the underworld

Oh well I guess I won't be getting that invitation to cruise on her NOT soon to be new yacht..... Saves me from having to buy the Champagne....

Strange I don't rememer my bonus as having been in the 7 digit region.....

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Anonymous Coward

Surely the bonus structure ought to have returned a big fat zero if things were so bad, therefore no need for voluntarily turning it down.

Am I being naive here?

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JDX
Gold badge

A bit. It's just how these things are worded, it's understood that part of your bonus is actually just part of your salary under another name. I don't know if that's done for tax reasons or because it's paid in stock, but it's more "how things are done" than anything untoward.

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Bronze badge

Why minimal bonus is not zero

At IBM the bonus is in a range between some minimum and some maximum that depend on where you are in the food chain. The actual annual figure is calculated according to a formula that is a combination of your personal success, your division's success, and IBM's success. If on all three levels the year was very successful you will get the maximal bonus (or close). If the year was lousy for your division and for IBM in general AND you are deemed a slacker by your boss(es) you will get the minimal bonus (or close).

Why minimum != 0? Basically, it reduces your "base salary" that is used to calculate various benefits that IBM may or may not pay you in various jurisdictions. Any payment that is a percentage of your salary is computed from the base pay only (typical example: severance pay in case of termination).

If there are additional tax or other considerations for IBM I don't know. I assume that in most places base+bonus is the employee's income and is therefore taxed in the same way.

The above is for many (all? dunno...) regular IBM employees. I suppose the top executives like to pretend that they are just like the common folk, and their bonus structure is similar (it may be a larger proportion of the overall pay - I don't know). Thus, forgoing any bonus and taking home just the base salary and the associated payments/benefits is understood by poor Joe Q. Ibmer without detailed explanation, regardless of what he might think of the significance of the step.

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Re: Why minimal bonus is not zero

If your bonus comes as cash, yes it would be treated as income. At that level, I've never seen bonus delivered as all cash. A more typical structure is they give you the bonus in stock options, and pay you enough cash to cover the taxes on the stock options plus the taxes on the cash bonus.

What happens after that involves a lot of mucking about in hyperspace with accountants, lawyers, and waiters all haggling over stuff until the final bill for the meal is determined.

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Anonymous Coward

Bonuses?

Surely the question should be asked: if the performance is poor, how did the IBM top brass qualify for any bonuses in the first place? And I dare say they will still be taking share options, so they won't be going without!

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How about.....

How about a 5 percent pay cut while they're at it?

(Former IBMer)

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Re: How about.....

Why not 10 percent?

Every year at the stockholders meeting IBM ask for complete autonomy in granting bonus money so why not 10 percent?

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Anonymous Coward

All about earnings per share - if they can financially engineer it up to $20 by 2015, the top brass are rolling in it. Skipping the bonus and showing willingness is just a plea to be left in their well paid executive positions until the 2015 pay-out. *Then* they'll be willing to be paid-off for their abject failure of leadership.

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Silver badge

Bah!

What is this "bonus" you speak of? I have also heard of "raises" and "cost of living increments" but I can't remember having seen one in years.

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One wonders if it includes the CEO. They tend to be exempt because of contracts etc...

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Anonymous Coward

It doesn't bode well for the rest of the IBM workforce, who haven't had payrises or bonuses for the previous 'disappointing results' commonly associated with 'consecutive quarters of double digit growth'. If they can't even justify their own bonuses, what chance have we got?

Does anybody manage using carrots instead of sticks anymore?

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Silver badge

Does anybody manage using carrots instead of sticks anymore?

Sure, but first there have to be some carrots in the carrot bin. Right now all they have is sticks.

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Anonymous Coward

Only the top performers get a reward this time round

She has been very clear. Only a top top performer will get any bonus this year. Everyone else it s fat $/£0.

No doubt when we hit the $20 target yet still have no increase in profits or revenue again the workers will get sod all while the guys at the top will get immensely (2/3 figure millions) reward for achieving the goal (while screwing over the company)

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