back to article IBM turnover shrinks $28bn in 6 years but execs laugh all the way to the bank

IBM lost $28bn in revenues in the past six years but that made not one jot of difference the salary and bonuses the top execs got paid. The message from Wall Street? Ever-shrinking sales are not sustainable. Unlike hardware rival Hewlett Packard Enterprise and other tech giants Apple and HP Inc, Big Blue's leaders are not …

  1. Anonymous Coward
    Anonymous Coward

    You get the behaviour you reward

    Or if you're at that level of management, you reward the behaviour you exhibit.

    Imagine how IBM would have performed if executive pay was tied to customer satisfaction, technology innovation and revenue growth.

    1. Anonymous Coward
      Anonymous Coward

      Re: You get the behaviour you reward

      Imagine how IBM would have performed if executive pay was tied to customer satisfaction, technology innovation and revenue growth.

      A lot better than it actually has. Although I assume that "nice, even teeth" was a KPI for Ginni, and probably the rest of the executives.

      1. Anonymous Coward
        Anonymous Coward

        Re: You get the behaviour you reward

        IBM is a great metaphor for the Western world in general. Run by those who have had it all, are raking it in, and are systematically destroying it all for their children and grandchildren.

        1. emmanuel goldstein

          Re: You get the behaviour you reward

          Word.

    2. macjules Silver badge

      Re: You get the behaviour you reward

      Exactly.

      IBM might have faced "structural headwinds", but the "lack of incentives for management to drive revenue growth may have also contributed to poor total company revenue growth and stock performance".

      Or, “We could have made a lot more if we had been paid better.”

      1. Anonymous Coward
        Anonymous Coward

        Re: You get the behaviour you reward

        Or, “We could have made a lot more if we had been paid better.”

        No, the quote is from a Wall Street analyst, and they are taking a tilt not at how much directors and officers were paid, but what they were paid for. IBM has become Indian Business Machinations precisely because the incentives have encouraged that, but did nothing to encourage growth.

        1. Anonymous Coward
          Anonymous Coward

          Re: You get the behaviour you reward

          She looks as old as IBM itself

        2. WatAWorld

          Re: You get the behaviour you reward

          Far be it from any Wall Street analyst to advocate for over all lower salaries amongst corporate executives, since their salaries and Wall Street analyst salaries are mis-incentivised to similar levels.

          Look at problems the FTC has found with IPOs, bubbles, and misleading company and government audit statements and bond ratings over the years.

          [i]No, the quote is from a Wall Street analyst, and they are taking a tilt not at how much directors and officers were paid, but what they were paid for. IBM has become Indian Business Machinations precisely because the incentives have encouraged that, but did nothing to encourage growth.[/i]

  2. This post has been deleted by its author

  3. Blockchain commentard Silver badge

    Nice gig if you can get it (see their directors aren't that incompetent).

    1. Anonymous Coward
      Anonymous Coward

      @Blockhead

      I have to post this anon for the obvious reasons.

      Rometty was put in charge because everyone knows she'll fail to turn things around and will take the blame. However, the truth is that Sam cut deep and to the bone so that he made the numbers look good. Off-shored back office to cheaper locations even though it added 24-48 hours to get deals processed/completed. So as long as they bought back shares and signed large deals, then under performed they made short term profits. Only to lose ground in the next negotiations.

      IBM knew how to farm, but not hunt when it came to sales. They would sign incredibly stupid deals that lost money, but sales reps were paid on revenue, not profits. They would make promises and when the SHTF, lab services came in to fix things and level set customer expectations.

      Rometty cut profitable lines of business. She had to in order to get things turned around. However, she and her peers lacked the imagination and there were so many incompetent heritage IBMers that they forced out and RIF'd many who came on board from their acquisitions.

      Free clue... when you consistently over promise, over sell your brand, and then under deliver people don't want to work with you.

      They never understood 'Big Data' and how to play in the cloud space or deliver on infrastructure changes. They know how to make pretty pictures, but lack the vision to design an actual solution, and then fail to deliver.

      Yeah, I still remember my serial number. I also still remember my friends who've retired, been RIF'd and the few still sitting inside the borg.

      Rometty could have turned things around, but now its getting harder and harder. She's surrounded herself with Yes men/women and incompetent fucks.

      Yes for a tech company, they're behind the curve and they still have their expensive sacred cow. The mainframe.

      Even though I left over a decade ago, I still hear things from friends. Sorry but Rometty is getting paid to fail and then retire rich.

      1. Anonymous Coward
        Anonymous Coward

        revenue vs profits (vs earnings vs income)

        "sales reps were paid on revenue, not profits."

        What could possibly go wrong? Especially when there's an apparent unwillingness in the corporate world to call a profit/loss a profit/loss, these days it's apparently preferable to hide the truth behind a variety of not quite equivalent (and massively less clear) alternative names. Income? Earnings?

        Sympathy with anyone caught up in the UK TSB fiasco this week, but the idea from the top TSB man of "I've called IBM, they'll fix it" was laughable. Predictably clueless, but probably had a few nice lunches back in the day.

  4. Anonymous Coward
    Anonymous Coward

    Didn't Warren Buffett take a bath on IBM shares ?

    1. Maverick

      he bailed

  5. Anonymous Coward
    Anonymous Coward

    PBC

    Strange I can remember being told that the company shares, and lost revenue affected me, even if it was abroad..

    1. Anonymous Coward
      Anonymous Coward

      Re: PBC

      Wow.

      PBC title and your comment have very little in common.

      Hitting your PBC was a way to help rate you. Of course there's also a catch. Suppose you're on a team of all successful people. Your FLM then is told that he could only have X #1 rankings, Y #2 rankings and then the rest. So even if you crushed your targets, you could still be ranked down the food chain and if you had a bad quarter, you could still be cut even though you were a #1 team player.

      PBCs also weren't always yours. Your FLM would be told what you needed to say and to make sure it was in there and you were responsible for it.

  6. Anonymous Coward
    Anonymous Coward

    Hang on that's not how it worked for the rest of us.

    Sorry, there's no bonus this year because the country didn't hit its GP target.

    Sorry, there's no bonus this year because the account didn't hit its revenue target.

    Sorry, there's no bonus this year because the region didn't hit its sales target.

    Sorry, there's no bonus this year because the whole company didn't hit its growth target.

    That's how remuneration and company performance are linked at IBM.

    1. Anonymous Coward
      Anonymous Coward

      If people stay with a company like that, surely they know what to expect, then?

      And by staying, they condone the whole rotten structure, as well as voting that it is OK for the proles to get no bonus, whilst Ginni showers in dollars, dries herself off on dollars, wipes her arse with dollars, burns dollars to keep warm, and probably has a string of houses built of dollars.

      And even that sad, feudal loyalty of the proles won't be enough to stop Ginni having them all sacked so that their jobs (but not hers) can be sent to some offshore shithole.

      1. Anonymous Coward
        Anonymous Coward

        If people stay with a company like that, surely they know what to expect, then?

        Sometimes there isn't an option. Especially if you're in a state whose murderous taxes and regulation have already driven out any potential alternative employers.

        1. midcapwarrior

          "Sometimes there isn't an option. Especially if you're in a state whose murderous taxes and regulation have already driven out any potential alternative employers"

          And that would be the state of denial

      2. kain preacher Silver badge

        Um IBM US employees 130,000 people. Were are 130,000 people just up and going to find new jobs ?

        1. Anonymous Coward
          Anonymous Coward

          "Were are 130,000 people just up and going to find new jobs ?"

          Delivering hot food?

          1. Yet Another Anonymous coward Silver badge

            "Were are 130,000 people just up and going to find new jobs ?"

            Delivering hot food?

            Can you imagine if IBM delivered pizza?

            Delivered 3 years late, costs $1M/slice and the only flavor is pineapple and anchovie

            1. IT's getting kinda boring

              ...and they forget to include the pizza base.

              1. Yet Another Anonymous coward Silver badge

                The RFQ only specified a crust - it didn't say anything about the base. A base could be implemented in a future stage for a mere aditional $Bn

    2. Anonymous Coward
      Anonymous Coward

      That's how remuneration and company performance are linked at IBM.

      You're looking at it wrong. At IBM, your "bonus" is that you're still employed at the end of the year.

    3. Mark 85 Silver badge

      Simple logic. If manglement bonuses are to a different goal than employees, then there's a problem. But being "different'" allows management get bonuses by not paying the troops' bonuses. Simple math that works for the board.

      1. shawnfromnh

        Should make it so everyone from manager up gets a 10% pay cut next year if they miss sales but a pay increase for as much as sales and profits are up. That way they just don't expect a bonus and just laying off people to cut costs has got to go because laying off smart technical staff that are fully trained just so managers can get a bonus is just retarded since you have to hire and train a new person that could do a lot of damage if they are not blessed with common sense.

  7. Lt.Kije

    So what's important?

    So what's more important, share price (total market capitalization), or the health of the company?

    I'd argue shareholders are generally parasitic (share trading does not provide capital to the company)

    I'd rather have a company that takes care of it's healthy businesses and invests in promising new businesses.

    IBM looks ok to me.

    1. Anonymous Coward
      Anonymous Coward

      Re: So what's important?

      share trading does not provide capital to the company

      The trading doesn't, the shareholders do. If your shareholders don't like what the company is doing, the share price will eventually fall relative to other companies, and some activist investor will come in and force the company to do things differently.

      In that respect, share trading and the secondary market share price is very important, both as a threat, and a signal to management. How well it works is another matter.

      1. Lt.Kije

        Re: So what's important?

        Undoutedly true that the markets provide essential liquidity for securties, but there is no direct benefit to the company when a share sold at initial issue for $1 is later traded on the stock market for $10.

        The last few years have amply demonstrated the Ills of chasing share price growth at expense of long term viabiliy.

    2. sprograms

      Re: So what's important?

      While you called "shareholders" parasitic, you then explained that share trading provides no capital to IBM.

      Investors who hold the shares are what makes it possible for IBM to raise capital, whether borrowed or from selling more shares. If the performance is poor, if the shares are being diluted at a rate in excess of profit/asset growth, investors will sell. Aside from Fed Reserve actions, shareholder faith directly affects IBM's cost of capital.

      Trading is an incidental business related more to market behavior than corporate performance.

    3. Yes Me Silver badge
      Joke

      Re: So what's important?

      "IBM looks ok to me."

      Great. How many of my shares would you like to buy?

  8. Anonymous Coward
    Anonymous Coward

    Rometty has been at IBM for over 30 years. She's rich enough. It's time for her to retire.

    1. Lt.Kije

      She has a long way to go to catch Bezos who thumbed his nose at "Grow the share price now" crowd for many early years while he grew and broadened Amazon.

  9. TVU

    IBM turnover shrinks $28bn in 6 years but execs laugh all the way to the bank

    Something is very wrong with the corporate model when failure and decline are actually rewarded with extra bonuses.

    I'm looking forward now to reading about the TSB mega bonuses...

    1. Anonymous Coward
      Anonymous Coward

      Re: IBM turnover shrinks $28bn in 6 years but execs laugh all the way to the bank

      I'm looking forward now to reading about the TSB mega bonuses...

      Maybe TSB and IBM need to merge? Then they can both die at the same time.

  10. Anonymous Coward
    Anonymous Coward

    Does the person know how to read?

    I find articles like this amusing and disappointing in combination. By stating "A company with declining revenues (especially one with high marginal contribution like IBM) risks falling into a spiral of perennial cost cutting if it fails to grow revenues (something we witnessed before with Sun Microsystems)." Toni Sacconaghi Jnr.clearly shows that the past 10 years of constant reorganization and lay-offs that have been widely publicized have not been included in the 'analysis.' It is no longer a risk when it is actively happening. The cost cutting spiral will continue until all the looting has been completed, and the bones whiten in the sun.

  11. DJO Silver badge

    In Japan the average CEO earns 11 times that of their average employee.

    In Europe the average ranges from 20 to 35 times.

    In America it's around 350 times as much.

    Unbridled greed is not a successful business strategy unless your aims are to milk the company while destroying it then clean up in the fire sale.

  12. Anonymous Coward
    Anonymous Coward

    We view IBM as still in the throes of a turnaround

    I think they completed the 180 degree turnaround at apogee and are accelerating downward.

  13. Anonymous Coward
    Anonymous Coward

    Time to move on

    It's time for Ginni to retire and had over the reigns to someone new. For IBM, hopefully someone like Satya Nadella at Microsoft.

    1. Anonymous Coward
      Anonymous Coward

      Re: Time to move on

      "It's time for Ginni to retire and had over the reigns to someone new. For IBM, hopefully someone like Satya Nadella at Microsoft."

      Do you mean 'someone new', or do you mean 'someone competent'?

      If 'someone competent', then competent at what?

      What would Nadella do?

      Bear in mind that the interests of board level corporate execs in the 'greed is good' world are rarely aligned with the medium term interests of the company's customers or the workforce.

      Long term we're all f***ed. Even the board. But they're gonna 'spend spend spend' (on themselves and their peers) while they can.

      Ain't market forces great.

  14. This post has been deleted by its author

  15. Wolfclaw
    WTF?

    Nothing new, fat cats in the boardroom doing bugger all to justify their massive pay packets and the grass roots suffering from jobs losses, no pay rises and pension cuts. Seems par for the course for IT companies around the globe !

  16. Anonymous Coward
    Anonymous Coward

    incentives must match desired behaviour

    To be clear, I don't think IBM are healthy and I don't think their management are competent.

    That said... shrinking revenues can be healthy. If you are shrinking or exiting a low- or no-margin business (especially one that is in secular decline) and investing in high-margin and/or high-growth businesses instead, that is healthy behaviour. It's sensible to reward that, to a point: the revenue declines shouldn't exceed the revenue produced by the businesses the directors wish to exit. At the same time, if management are doing what's desired, margins should be rising (not happening at IBM) and growth in new businesses should be increasing (a mixed bag at IBM). To go along with this sort of comp plan, the directors need to be clear and explicit about their plans: we're going to exit these businesses, reduce investment in these others, etc. The usual corporate-speak "exploring all opportunities to improve our business" will not cut it. Worst of all for IBM, this approach shouldn't have much impact on profitability; if what you're cutting is crap, you should still be making about as much money as before. IBM aren't, not by a long shot. Once again, the directors have to be explicit about that: if profits are expected to decline (perhaps due to rapid investment in new businesses or accounting losses as unprofitable ones are wound down), they need to say so up front and put a timeline on concrete improvement. IBM have done neither. The end result is what you see: the downward spiral of despair, in which management keeps trying to arrest declines in profit by firing hordes of employees while revenue keeps shrinking. The exciting new businesses, however well they may do, simply aren't large enough to make up for the enormous declines elsewhere.

    On another point, however, I must disagree with the idea that share price should be factored into management comp plans. Over even a 10 or 15 year executive career, the share price will often be determined more by stock market fashions, macroeconomic trends, and central bank policy than by the performance of the business (yes, on a *relative* basis your company's share price may fare better than others', but nearly all comp plans are tied to absolute share price). An honest manager has little or no control over the share price, and knows it. Meanwhile, a dishonest manager can and will see to it that quarterly results are manipulated to boost the share price artificially so that he or she can cash in on options or restricted shares. You might imagine that this isn't sustainable, and in the limit it isn't, but if you look at a case like GE in the US, it can certainly go on long enough for senior managers to rake in millions in undeserved compensation. It's much better to establish the *right* operating metrics to match your strategic vision, tie management comp to them effectively, and let the share price take care of itself. And of course, one must understand that it may well take 20-50 years for that to happen, which is why the wise investor is only interested in dividends anyway: a properly capitalised and operationally healthy business generates cash and responsible directors see that it's paid out to shareholders. Unlike the share price, neither of these is influenced by the whims of traders, VC panics, or overenthusiastic mortgage lending in the US. Reward managers for what they can properly control, not for lucky timing or shady accounting. And by all means penalise them for failing to execute the board's plan or underperforming competitors.

    IBM do not appear to have a plan, and that's on the directors. Without a plan, no management comp strategy can be effective because the desired results are unspecified. Clever managers will manipulate this situation to exceed their proper scope of authority and implement a strategic plan of their own designed primarily to maximise their own profit, not the shareholders'. That's exactly what's happened at IBM, and it's 100% the fault of the directors. Merely changing the comp formula won't solve anything. Many listed companies have this problem: the directors are a bunch of retired CEOs with little or no ownership stake; they have no vision for the company and no interest in its success. They're happy to see the CEO rake in the cash, because that's how they themselves got rich (and may again, should they be called out of retirement). Once Rometty retires, she'll keep this gravy train going as a director of other companies. The entire model is unsalvageable; management comp is merely the most visible symptom of its failure. Until the owners of the company take control and start treating management like the hired help they properly are, nothing will improve.

    1. a_yank_lurker Silver badge

      Re: incentives must match desired behaviour

      Itsy Bitsy Morons do not have a proactive strategy but reactive strategy. What you are outlining is proactive strategy to deal with the market place. Do they have a workable plan and more importantly do they know where they are going. I doubt they have the latter so any plan is fundamentally pointless. Being reactive, they are always behind the trend and are playing catch up with others.

    2. Anonymous Coward
      Anonymous Coward

      Re: incentives must match desired behaviour

      Maybe Michael Dell had it right after all then?

      1. Anonymous Coward
        Anonymous Coward

        Re: incentives must match desired behaviour

        Mr. Dell certainly had the right idea. The owner-manager model aligns incentives better than any other. However he also lacked the capital to realise his own vision. Whether private equity acts like an owner-manager or a trader depends on the people involved, the macro environment, the whims of the market, and much else. For many years private equity were excoriated as raiders, looking only to flip their over-levered investments at the first chance. No doubt they will act like that again in future. If you want to own something, you must buy it. Mr. Dell did not.

    3. ByTheSea

      Re: incentives must match desired behaviour

      Deja Vu. In the 90's I often commented at the lunch table that we (IBM) appeared to be doing the some old things with less people. I was rebuked by some colleagues in that "Lou G has increased the share price 5 times". IBM has been a work in progress for almost 30 years.

    4. Anonymous Coward
      Anonymous Coward

      Re: incentives must match desired behaviour

      "management keeps trying to arrest declines in profit by firing hordes of employees while revenue keeps shrinking. "

      What role do dividends have in this picture?

      Sensible people will agree that "the entire model is unsalvageable; management comp is merely the most visible symptom of its failure." but I'd like to understand what is the role of the dividend, in the current picture and in one where things worked in the interest of people outside the boardroom as well as people in it.

      Many other things to think about too, including the destructive role of the Wall Street "mergers and acquisitions" (and demergers and deacquisitions) advisers, who are apparently paid on an "as much as we can get away with" basis rather than on a medium term financially justifiable basis.

  17. IGnatius T Foobar

    India Business Machines?

    Weren't they some sort of old 20th Century technology company? I didn't know they were still around.

    1. Anonymous Coward
      Anonymous Coward

      Re: India Business Machines?

      No, you're thinking of Yahoo. Its founder Jerry Yang declined Ballmer's offer of $44.6 billion in 2008. It was eventually sold in 2017 for $4.4 billion. What is it worth a year later I wonder?

  18. Anonymous Coward
    Anonymous Coward

    Just replace her with Meg Whitman and it all will be better.

    1. BebopWeBop Silver badge

      You could always bring back Carly F. Trebles all round?

      1. kain preacher Silver badge

        Low blow BebopWeBop

        .

      2. Anonymous Coward
        Anonymous Coward

        "You could always bring back Carly F."

        Yep, putting a woman in charge does seem to be a popular way of screwing up a company these days.

  19. Dave 13

    Hollow

    IBM has hollowed itself out with the knife of "shareholder value" while stiffing its employees and customer base. It's not difficult to see where this is going, and it's not going to be pretty.

    1. WatAWorld

      Imagine if grunts acted against the interests of the company unless specially incentivesed

      Imagine if grunts acted that way, needing special incentives to take action for the good of the company.

      A knowledge company is only as valuable as the knowledge and work-ethic of its employees.

      Shareholders temporarily own the company (because they can freely buy and sell shares), but in a knowledge company it is employees who are the company.

  20. Nursing A Semi

    Myopic?

    IBM are suffering from an interesting eye condtion effecting their ability to see past this years bonuses.

    IBM were good with software and hosting, so they ramp up the margins on software causing their customers to look at alternatives and they tell all their hosting customers that cloud is the answer to all their problems then offer them an unreliable still in development cloud offering pushing them to either Amazon or Googles mature and feature rich services. Can't see any flaws with this myself, I am sure IBM have a long and healthy future.

    1. CFtheNonPartisan

      Re: Myopic?

      IBM good with software? They 'donated' their OS to Japan Inc decades ago, and set Japan Inc back a decade by doing so. There are many governments around the world who signed big contracts with IBM only to be embarrassed by the incompetence delivered. IBM points to government trail bosses, but governments hired IBM to get it done and they did not know how or could not execute. Industry? They would never admit how bad it could be. I once visited a major 'IBM supported site' as a privileged guest and was invited into all sorts of meetings - until the weekly pow wow with IBM when I was asked to leave the room. Enough written?

      1. WatAWorld

        Re: Myopic?

        Government of Canada is going through that with its Phoenix Payroll system.

        Strange thing is that IBM's sales people are so good that they've persuaded Canadian civil servants that the changing specifications due to inadequate analysis are the government's fault.

        It is so cliche, the civil servants apologizing for the mess they got IBM into.

  21. Stephen McLaughlin

    Mixed Bag from Customer Perspective

    Having worked in many IBM environments over the years I can say their support hardware & software has continually gotten worse. Don't bother calling them with a complex Spectrum Protect issue if you expect a quick resolution. It can take days before you connect with a competent support engineer.

    I will say, at least they are improving in the sales department. They used to focus on a single product, for example, an XIV sales team would ONLY sell XIV arrays and no other IBM storage products. So at times, we would have multiple IBM teams competing with each other on proposals. Now at least they are starting to combine the product lines so our local sales team can now sell anything Server and Storage related.

    Still, frustrated with horrible support, we are looking elsewhere for tech refreshes.

    1. WatAWorld

      Re: Mixed Bag from Customer Perspective

      IBM has always had the best sales people. And more and more over the past 2 decades that is what has kept them afloat.

      With products and services like theirs, they totally rely on having the best sales people in the industry to persuade customers to go with them as a supplier or a prime contractor.

  22. CujoDeSoque

    Funny, Cringely claimed this some time ago...

    "The analyst described Big Blue's growth in its SIs as "very strong" but also noted criticism from investors that the "disposition and composition" of those tech areas was "discretionary and opaque, and executives have conceded in that part of the growth in SI has been a shift in revenues from 'old IBM'."

    So basically the "Strategic Imperatives" are being propped up by other departments. Why would anyone trust a company who cannot honestly describe how they make money? This is how Enron worked.

  23. sanmigueelbeer Silver badge
    Happy

    IF IBM delivered pizza ...

    Delivered 3 years late

    Oh, you want it NOW?

    costs $1M/slice

    Plus $0.5mil shipping fee ($2mil/gram/hour if delivered by big blue helicopter -- limit to 2km from the office)

    only flavor is pineapple

    I ordered vegetarian.

    and anchovie

    And I ordered Frutti di Mare.

  24. James Anderson Silver badge

    Shameless gaming of the incentive scheme.

    ".....executives have conceded in that part of the growth in SI has been a shift in revenues from 'old IBM'."

    By reclassifing existing business as cloudy.

    Or just plain buying up businesess they don't know how to run such as the "weather channel" to boost thier "social" revenues. These acquisitions will share the fate of all companies borked by IBM -- long term decline and irrelevance.

  25. Anonymous Coward
    Anonymous Coward

    This makes happy reading - enjoy

    https://www.reuters.com/finance/stocks/insider-trading/IBM?symbol=&name=&pn=3&sortDir=&sortBy=

    1. WatAWorld

      Re: This makes happy reading - enjoy

      LOL

      https://www.reuters.com/finance/stocks/insider-trading/IBM?symbol=&name=&pn=3&sortDir=&sortBy=

      A quick glance shows their executives have accurately measured IBM's value -- they only buy at a price of $0.00.

      (Of course those are stock options. But that is the only time they buy.)

  26. Anonymous Coward
    Anonymous Coward

    Reports of my demise have been much exaggerated

    So long as IBM can create cash flow for it's owners it does not matter what business it is in. A shame really as they could be capable of great things.

  27. waynecarr30

    In short, Rometty and the other sheisters need firing, preferably sooner rather than later.

  28. ST4096

    As they ask in IBM, what are the next steps?

    As good as the article and Mr Sacconaghi's note is, the real question is: who can get her and the top three levels of cronies out the exit door in a precise surgical way? Buffett was clearly out of his depth, he got outsmarted by Ms Rometty and skulked away with a bitter pill. For all we know, Rommety and the top five levels of cronies might be the top block of shareholders in which case, we are all screwed anyways.

    The challenge with big public companies like IBM, HP etc run by journeymen/women management there are rarely (as far as I can tell) clear big blocks of vested ownership that can unite to force a quick change and initiate a real turnaround. Once Ms Rometty and her cronies floated into their chairs, dislodging them seems a herculean task, they clearly have no real shame or conscience. That's why I prefer investing in actively owner-led companies, Nvidia, Google, VMware of old, Dell, Facebook (yes, even FB) where there is a product vision and passion vs IBM, Apple (Cook is another journeyman!!) etc. It is a bit like having despots/tin-pots in banana republics, it takes a lot of bombing, aerial strikes and significant collateral damage to dislodge them. The corporate world needs to come up with a better way !!

  29. Anonymous Coward
    Anonymous Coward

    Does 'Revenue Growth' really warrant bonuses ?

    Revenue growth that this woman and her 'cohorts' have used to shower themselves in bonuses is a slap in the face for all those 'kicked into touch' over recent years, and a falsehood. Revenue (or stock value) growth is not true growth if it is only arrived at by disposing of staff, shelving parts of the business, and purchasing companies to artificially 'bump up' your stock value. IBM's customer base is shrinking, IBM's skill base is shrinking, IBM's value - the cash value of the company - is shrinking. A shrinking company on all fronts except Rometty and her fellow 'robber barons' where it seems obvious to all except those that have the power to remove them that they are out for one thing and one thing only. To fleece the company of all it's moral & financial value. A once great company driven into oblivion.

  30. JLV Silver badge

    there really is a crisis in capitalism

    Yes, yes, lots of left-leaning will chime in and agree whole-hardheartedly. But that's not what I am talking about.

    Why are shareholders, who after all own the company, albeit in a diluted way, forced to massively remunerate failure? Why does a CEO need $50M pay to do a good job, rather than say $5M, which is already plenty? Why - and that does veer to the left - do we think it's a good idea for a top employee to get paid 300 times more than the average employee in his company? Why does a manager get $10M good year/bad year?

    Politically, if this trend toward winner-takes-all continues we will have more and more calls to replace free markets with managed economies. Or the election of demagogues. We need a way to keep competitive free markets without creating a class of ultra-privileged nobility who decide on their own paycheck, which is what we have been having for 30-40 years. Some European countries which embrace free markets and have a strong social consensus to keep executive pay under the $5-10M - Germany, the Nordic countries - do not seem to have unduly suffered*.

    Also, while I agree that it is incredibly hard for women to achieve top executive levels in companies, I wonder if they get held to account as much as men, perhaps because no one wants to be seen as sexist and call out the likes of Carla Fiorina, Whitman, Marissa Mayer and yes, Rometty, for being massive failures. IBM is not just an IBM failure, it's a failure of IBM under Rometty.

    Not that the men preceding and following them haven't also dropped the ball. They have. But rightly celebrating women rising to the top of multinationals does not absolve them from having to do a good job once they get there. To be fair, while those are egregious cases, there is so much greed and failure at the top level of executives everywhere that it might be unfair to focus on their gender.

    * a friend of mine once quipped that the Daimler-Chrysler merger, disastrous as it was, served very well to expose its German managers to American remuneration levels.

    1. WatAWorld

      Re: there really is a crisis in capitalism

      I was thinking about that when I read about the TBS scandal/crisis.

      The CEO is taking personal charge. The company is totally at risk and the CEO is useless to prevent it or fix it. The company's survival totally relies on people making 5 and 6 figure incomes giving the right advise up the ladder, and doing a good job going down the ladder.

      The top of the ladder is no more useful than a flagpole.

      Mega overpaid CEOs are more a liability, due to how they misguide the company to maximize their own profits.

  31. WatAWorld

    And yet when TBS has problems it calls in IBM

    Had IBM previously done any work at TBS?

    1. Anonymous Coward
      Anonymous Coward

      Re: And yet when TBS has problems it calls in IBM

      Fwiw (which ought to be not a lot, next quarter): it's TSB, as in Trustee Savings Bank (or was, till carpetbagging directors and shareholders ensured it got borged in with the corporates of the banking world).

      https://en.wikipedia.org/wiki/Trustee_Savings_Bank

  32. Martin 63

    I seem to recall old IBM adverts saying that the future was either Java, or flipping burgers. Neither of which are IBM services AFAIK.

  33. J27 Bronze badge

    They're in a death spiral. They should fire their entire executive team. Might work, might not, but keeping the same dead wood around definitely won't.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019