SAN FRANCISCO – IBM's top 50 executives have agreed to forego any salary increase until business at the world's largest computer company recovers, its chief executive told IBM shareholders on Tuesday.
Sam Palmisano (search), chairman and chief executive of Armonk, N.Y.-based IBM, said in response to an employee question at the company's annual shareholder meeting in North Charleston, South Carolina, that IBM's Worldwide Management Council would defer a salary increase until IBM's business gets back on track.
International Business Machines Corp. (IBM) dropped an earnings bombshell earlier this month when it reported quarterly results that were far short of Wall Street expectations. It blamed economic weakness in Japan and some European markets and difficulties closing some services deals, among other factors.
Spokesman John Bukovinsky also said that six independent shareholder proposals had been voted down by a majority of the votes cast at the annual meeting. Votes representing 80.6 percent of IBM's outstanding shares were cast at the meeting.
The proposal attracting the most votes was one put forward by Donald Parry. It called on IBM to exclude income earned from its pension plan for calculating executive compensation, which can artificially inflate payouts for non-operating reasons.
The IBM spokesman said the issue has been moot since 2002 as the pension-plan costs have outweighed income.
The change mustered 38.1 percent of votes cast at the meeting, just shy of a majority. A second proposal that called on IBM to make its executive compensation reports easier to understand only managed to attract 17.5 percent of votes.
Another of the six proposals put forward by shareholder Michael Saville called on IBM, the world's largest provider of computer services, to study the dangers of outsourcing U.S. jobs to offshore locations such as India. Only 9.5 percent of votes cast were in favor, versus 90.5 percent against.
Shares of IBM rose 1.5 percent, or $1.17 to $75.78, up from 2-1/2-year lows for the stock set in the past week.
The stock was buoyed by news that IBM planned to boost its dividend 11 percent, its 10th annual consecutive rise, and that its board had approved a $5 billion buyback of IBM's shares, which has the effect of boosting earnings per share.
Earlier, IBM also announced plans to buy privately held Healthlink of Houston, the largest U.S. independent health-care consulting company, for undisclosed terms.