DEF 14A 1 a19-2536_1def14a.htm DEF 14A

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934  (Amendment No.        )

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Filed by a Party other than the Registrant  o

Check the appropriate box:

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o  Definitive Additional Materials

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International Business Machines Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

 


 

 


 

 

 

 

 

 

Armonk, New York

March 11, 2019

 

 

 

 

 

Dear Fellow Stockholders:

 

 

 

 

 

 

 

 

 

 

On behalf of the IBM Board of Directors, you are cordially invited to attend the Annual Meeting of Stockholders on Tuesday, April 30, 2019 at 10 a.m. at the Charleston Area Convention Center in Charleston, South Carolina.

 

Our Board is proud of the relationships we have built with our stockholders over the years. In 2018, we continued our long-standing practice of engaging with you to hear your perspectives and feedback. For the past few years, our independent Lead Director, the chairs of each Board committee, and members of IBM management, including myself, have reached out to and engaged with investors that own more than half of the shares that vote at the Annual Meeting. During these meetings, we have discussed IBM’s strategy, corporate governance, board composition and refreshment, executive compensation practices, and our corporate responsibility and sustainability leadership. Through these conversations, we have gained insight into our investors’ perspectives on matters of critical importance. We very much appreciate the time our investors spent with us, and the thoughtful feedback we have received. This feedback helps us to continuously enhance and refresh our policies, practices, and disclosure.

 

In 2019, we have continued our active Board refreshment with two new additions: Dr. Martha Pollack, President of Cornell University and renowned artificial intelligence researcher and technologist, and Admiral Michelle Howard, cybersecurity expert, the first woman to become a four-star admiral in the United States Navy, and the first woman and African American to be named Vice Chief of Naval Operations. With these additions, our Board continues to reflect and refine the skills and technology expertise, as well as the diversity of thought, experience, and background, that are necessary to oversee and support our strategy over the long term.

 

Your ownership and your vote are important to us. For the 2019 Annual Meeting, for every stockholder account that votes, IBM will make a $1 charitable donation to AnitaB.org, a global nonprofit organization that connects, inspires, and guides women in technology. IBM is proud to partner with AnitaB.org to drive forward our shared vision toward an inclusive future for technology and society.

 

On behalf of the Board of Directors, thank you for your continued investment and support of IBM.

 

Very truly yours,

 

 

Virginia M. Rometty

Chairman of the Board

 


 

 

 

 

 

 

Armonk, New York

March 11, 2019

 

 

 

 

 

A Message from Our Lead Director:

 

 

 

 

 

 

 

 

 

 

 

Each year, the Proxy Statement gives the Board an opportunity to provide stockholders with an update on IBM’s corporate governance. This year, as IBM’s independent Lead Director, I would like to take the opportunity to share my perspective on the IBM Board, on the robustness and efficacy of our governance structures and processes, and on the Board’s role in helping the Company drive long-term stockholder value.

 

·            The IBM Board: Our Board is comprised entirely of independent directors and our CEO. The Board is an experienced group of global thought and business leaders attentive to the value of diversity in thought, experience and perspective. We are continuously focused on ensuring that IBM has an optimal Board structure and composition. Each time we evaluate our leadership structure, add a new director, or change the composition of our Board committees, we do so in a thoughtful manner to ensure that the right skills, experiences, and perspectives are brought to our meetings and discussions.

 

·            Independent Board Leadership: As IBM’s independent Lead Director, I am responsible for helping to ensure that the Board exercises prudent judgment, independently from Company management. To that end, I perform a variety of duties described in this Proxy, including presiding over an executive session of the Independent Directors at every Board meeting, without management present. I also approve all Board meeting schedules, agendas and materials. I have the authority to call meetings of the independent directors and am available for discussion with our stockholders.

 

·            Strategic Oversight: Our Board rigorously oversees the Company’s strategy, monitors the execution of strategy by IBM management and ensures that the Company’s corporate culture aligns with its long-term strategy. Our Board takes these duties very seriously. Our strategic oversight role includes evaluating a changing landscape, challenging current assumptions, balancing short and long-term strategic planning, and helping to ensure the Company is continuously transforming for the future.

 

·            Stockholder Engagement: A vital part of our role as IBM directors is understanding the perspectives of you, IBM’s owners. As part of these engagements, I, along with several of my colleagues on the Board, have met directly with many investors over the years, gaining valuable insight into investors’ views, and creating an opportunity for us to share our perspectives about the Company. Through the years, the Board has adopted numerous strong governance practices for the benefit of IBM’s stockholders. In 2018, in response to your feedback, IBM implemented proxy access. And this year, IBM became a signatory of the Commonsense Principles 2.0 and endorsed the Investor Stewardship Group’s corporate governance principles. Additionally, we continue to enhance our disclosure, providing additional information on Board oversight processes and practices and other key investor focus areas, including cybersecurity, corporate responsibility and sustainability.

 

Our Board continues to be focused on strategy, best-in-class governance, and active engagement with our stockholders. We believe this is the best way to drive success and create value for stockholders.

 

We look forward to our continued engagement with you. On behalf of the Board, thank you for your investment in, and support of, IBM.

 

Very truly yours,

 

 

Michael Eskew

Lead Director

 


 

 

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement

1

 

Report of the Audit Committee of the

 

 

 

 

 

Board of Directors

70

 

Proxy Summary

2

 

 

 

 

 

 

 

Audit and Non-Audit Fees

71

 

IBM Board of Directors

7

 

 

 

 

 

 

 

2. Ratification of Appointment of Independent

 

 

1. Election of Directors for a Term of One Year

10

 

Registered Public Accounting Firm

72

 

 

 

 

 

 

 

Board and Governance

16

 

3. Management Proposal on Advisory Vote on

 

 

 

 

 

Executive Compensation (Say on Pay)

73

 

Committees of the Board

16

 

 

 

 

 

 

 

4. Approval of Long-Term Incentive Performance

 

 

Corporate Governance

19

 

Terms for Certain Executives for Awards Eligible

 

 

 

 

 

for Transitional Relief Pursuant to Section 162(m)

 

 

Certain Transactions and Relationships

26

 

of the Internal Revenue Code

74

 

 

 

 

 

 

 

2018 Director Compensation Narrative

26

 

5. Stockholder Proposal on the Right to Act by

 

 

 

 

 

Written Consent

77

 

2018 Director Compensation Table

27

 

 

 

 

 

 

 

6. Stockholder Proposal to Have an Independent

 

 

Section 16(a) Beneficial Ownership

 

 

Board Chairman

78

 

Reporting Compliance

28

 

 

 

 

 

 

 

Frequently Asked Questions

81

 

Ownership of Securities

28

 

 

 

 

 

 

 

Appendix A – Non-GAAP Financial Information

 

 

2018 Executive Compensation

30

 

and Reconciliations

85

 

 

 

 

 

 

 

Report of the Executive Compensation and

 

 

Corporate Responsibility &

 

 

Management Resources Committee of the

 

 

Sustainability at IBM

89

 

Board of Directors

30

 

 

 

 

 

 

 

 

 

 

2018 Compensation Discussion and Analysis

31

 

 

 

 

 

 

 

 

 

 

2018 Summary Compensation Table and

 

 

 

 

 

Related Narrative

46

 

 

 

 

 

 

 

 

 

 

2018 Grants of Plan-Based Awards Table

51

 

 

 

 

 

 

 

 

 

 

2018 Outstanding Equity Awards at Fiscal
Year-End Table and Related Narrative

52

 

 

 

 

 

 

 

 

 

 

2018 Retention Plan Narrative

55

 

 

 

 

 

 

 

 

 

 

2018 Pension Benefits Narrative

58

 

 

 

 

 

 

 

 

 

 

2018 Nonqualified Deferred Compensation Narrative

61

 

 

 

 

 

 

 

 

 

 

2018 Potential Payments Upon Termination Narrative

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement

 

 

 

 

 

Items of business:

 

The Annual Meeting of Stockholders of International Business Machines Corporation will be held on Tuesday, April 30, 2019 at 10 a.m. at the Charleston Area Convention Center, 5000 Coliseum Drive, North Charleston, South Carolina 29418. The items of business are:

 

1. Election of directors proposed by IBM’s Board of Directors for a term of one year, as set forth in this Proxy Statement.

 

2. Ratification of the appointment of PricewaterhouseCoopers LLP as IBM’s independent registered public accounting firm.

 

3. Advisory Vote on Executive Compensation.

 

4. Approval of Long-Term Incentive Performance Terms for Certain Executives for Awards Eligible for Transitional Relief Pursuant to Section 162(m) of the Internal Revenue Code.

 

5. Two stockholder proposals, if properly presented at the meeting.

 

These items are more fully described in the following pages, which are a part of this Notice.

 

Stockholders of record can vote their shares by using the Internet or the telephone. Instructions for using these convenient services are set forth on the proxy card or the notice of Internet availability of proxy materials. If you received your materials by mail, you also may vote your shares by marking your votes on the enclosed proxy card, signing and dating it, and mailing it in the enclosed envelope. If you will need special assistance at the meeting because of a disability, please contact the Office of the Secretary, International Business Machines Corporation, 1 New Orchard Road, Armonk, NY 10504.

 

 

Christina M. Montgomery

Vice President and Secretary

 

 

 

 

 

 

The proxy materials, including this Proxy Statement, the IBM 2018 Annual Report, which includes the consolidated financial statements, and the proxy card, or the notice of Internet availability of proxy materials, as applicable, is being distributed beginning on or about March 11, 2019 to all stockholders entitled to vote.

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on April 30, 2019: the Proxy Statement and the Annual Report to Stockholders are available at www.ibm.com/investor/material/.

 

Websites throughout this Proxy Statement are provided for reference only. Websites referred to herein are not incorporated by reference into this Proxy Statement.

 

 

 

2019 Notice of Annual Meeting & Proxy Statement     1

 

 


 

 

 

 

 

Proxy Summary

 

 

 

 

 

Voting matters     Stockholders will be asked to vote on the following matters at the Annual Meeting:

 

 

 

Items of Business

Board’s recommendation

Where to find details

 

1.  Election of twelve directors

FOR all nominees

pp. 10–15

 

2.  Ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm

FOR

p. 72

 

3.  Advisory Vote on Executive Compensation

 

FOR

 

p. 73

 

 

4.  Approval of Long-Term Incentive Performance Terms for Certain Executives for Awards Eligible for Transitional Relief Pursuant to Section 162(m) of the Internal Revenue Code

FOR

pp. 74–76

 

5.  Stockholder Proposal on the Right to Act by Written Consent

AGAINST

pp. 77–78

 

6.  Stockholder Proposal to Have an Independent Board Chairman

AGAINST

pp. 78–80

 

 

 

 

 

 

 

Governance highlights (PAGE 19)

 

 

 

Effective Board leadership and independent oversight

·     Election of two new directors in 2019   NEW

·     Independent Lead Director with robust and well-defined responsibilities

·     Executive session led by independent Lead Director at each Board meeting

·     Focus on proactive Board and Committee refreshment

·     Annual review of the Board leadership structure

 

Overview of IBM’s corporate governance

·  Annual election of all directors

·  Majority voting for directors in uncontested elections

·  Stockholder special meeting right

·  Proxy access

·  No stockholder rights plan

·  Robust year-round stockholder engagement process

·  Signatory of Commonsense Principles 2.0   NEW

·  Endorser of Investor Stewardship Group Principles   NEW

 

 

 

 

 

 

 

 

2     2019 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

 

 

 

 

 

 

 

 


 

 

 

 

IBM Board of Directors (PAGE 7)

 

Director nominees

 

IBM’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders. All of our directors are independent, with the exception of Virginia Rometty, IBM’s CEO.

 

 

 

Director

Age

Primary Occupation

Director
Since

Committee
Memberships

Audit
Committee
Financial
Expert

 

Michael L. Eskew
Lead Director

69

Retired Chairman and Chief Executive Officer, United Parcel Service, Inc.

2005

 

David N. Farr

64

Chairman and Chief Executive Officer, Emerson Electric Co.

2012

 

Alex Gorsky

58

Chairman and Chief Executive Officer, Johnson & Johnson

2014

 

Michelle Howard

58

Retired Admiral, United States Navy

2019

 

Shirley Ann Jackson

72

President, Rensselaer Polytechnic Institute

2005

 

Andrew N. Liveris

64

Retired Executive Chairman, DowDuPont Inc. and Retired Chairman and Chief Executive Officer, The Dow Chemical Company

2010

 

Martha E. Pollack

60

President, Cornell University

2019

 

Virginia M. Rometty

61

Chairman, President and Chief Executive Officer, IBM

2012

 

Joseph R. Swedish

67

Senior Advisor and Retired Chairman, President and Chief Executive Officer, Anthem, Inc.

2017

 

Sidney Taurel

70

Chairman Emeritus, Eli Lilly and Company Chairman, Pearson plc

2001

 

Peter R. Voser

60

Retired Chief Executive Officer, Royal Dutch Shell plc Chairman, ABB Ltd.

2015

 

Frederick H. Waddell

65

Retired Chairman and Chief Executive Officer, Northern Trust Corporation

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of meetings held in 2018

10

4

5

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audit:

 

 

 

Directors & Corporate Governance:

 

 

 

Executive Compensation & Management Resources:

 

 

 

Executive:

 

 

 

Audit Committee Financial Expert:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary     3

 

 

 


 

 

 

 

 

Optimal mix of skills and experience of director nominees

 

IBM’s directors collectively contribute significant experience in the areas most relevant to overseeing the Company’s business and strategy.

 

 

 

Strong Board Diversity

 

 

The Board represents a deliberate mix of members who have a deep understanding of our business and members who bring new skills and fresh perspectives. This mix of new and tenured directors reflects our commitment to ongoing and proactive Board refreshment.

 

 

 

 

 

 

Tenure of Director Nominees

 

·   The Board represents a deliberate mix of members who have a deep understanding of our business and members who bring new skills and fresh perspectives.

 

·   Mix of new and tenured directors reflecting our commitment to ongoing and proactive Board refreshment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4     2019 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

Stockholder engagement highlights

 

 

 

Why We Engage

 

Stockholder engagement is a core IBM practice that is a significant part of our ongoing review of our corporate governance and executive compensation programs. These discussions ensure that our stockholders understand our key decisions and that we understand their priorities and concerns.

 

 

 

How We Engage

 

Our investor outreach program is a year-round process that includes discussion of IBM’s business and long-term strategy, executive compensation programs and practices, Board compensation and refreshment, corporate governance, and corporate responsibility and sustainability.

 

 

 

 

 

 

Proxy Season

 

· Every year, we reach out to over 100 of our largest investors, representing more than 70% of our institutional ownership.

 

 

Off Season

 

· Since the 2018 Annual Meeting, representatives from senior management and the Board offered to engage with investors representing more than 50% of the shares that voted at the 2018 Annual Meeting and have met with investors that own, in the aggregate, more than 30% of the shares that voted at the 2018 Annual Meeting.

 

 

· Our process also includes outreach to more than 250,000 registered and beneficial stockholders, which represents a majority of our retail stockholder base.

 

 

· IBM attendees engage to address investors’ specific focus areas:

 

 

 

 

 

° Corporate Governance

° Business Strategy

° Finance

° Human Resources and Executive Compensation

° Corporate Environmental Affairs

° Corporate Citizenship

 

 

 

· Held an investor webcast devoted entirely to corporate responsibility and sustainability to provide investors with a deep dive on IBM’s sustainability programs.

 

· Periodic outreach upon specific governance, compensation or strategic announcements, such as the addition of new directors.

 

 

 

 

 

 

 

Outcomes of Engagement

 

We continue to see the benefits of our investor engagement process in our governance practices, executive compensation program and disclosure, and corporate social responsibility efforts. For example, the following are some specific outcomes from recent investor engagements.

 

 

 

 

 

 

Governance

·  Changed Presiding Director title to Lead Director

·  Continued focus on active Board refreshment and diversity

·  Committee chair and member rotation

 

 

 

 

 

 

 

 

 

 

Compensation

·  Added total IBM revenue metric to the Annual Incentive Program beginning in 2019, replacing Strategic Imperatives revenue

·  Adopted relative ROIC modifier for PSUs granted in 2018, which may increase or decrease the number of shares paid out based on IBM’s relative ROIC performance

·  Reduced maximum Annual Incentive Program opportunity for the CEO to two times target

 

 

 

 

 

 

 

 

 

 

Corporate Social Responsibility

·  Ensured that IBM attendees with specific areas of sustainability expertise were available for dialogue with investors

·  Held an investor webcast devoted entirely to sustainability topics, including corporate citizenship, diversity and inclusion, supply chain, environment, and governance

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement     |     Proxy Summary  

5

 

 

 

 

 


 

 

 

 

 

 

 

 

 

Business highlights

 

 

 

 

 

IBM returned to growth in 2018 and is well positioned to accelerate performance, advancing our leadership as a Cloud and Cognitive Solutions company.

 

 

 

 

 

2018 Performance Highlights

 

 

 

 

 

 

 

 

 

 

Revenue

$79.6B

Returned to revenue growth for the full year, delivering the best performance since 2011

· Achieved ~$40 billion in Strategic Imperatives revenue, representing 50% of IBM revenue

· $19.2 billion of Cloud revenue, growing 12% year to year fueled by Cloud as-a-Service with an exit run-rate of $12.2 billion, up 18% year to year

· IBM Z most successful product cycle to date

· Global Business Services delivered full year growth, led by high value consulting services

· Strong demand for hybrid cloud, analytics, and AI offerings drove growth in Software revenue in the fourth quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

46.4%

 

Stabilized gross margin in 2018 with improvements throughout the year, culminating in year-on-year expansion in the second half

Performance led by Services which expanded gross margins on the full year resulting from a continued shift to higher value offerings, productivity, and operating leverage from revenue growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income

$11.3B

 

 

Generated over $11 billion in GAAP pre-tax income (operating non-GAAP pre-tax income of $13.7 billion), our best year-to-year performance since 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash from Operations

$15.2B

 

 

GAAP cash from operations of over $15 billion was down year-over-year from global financing receivables, growth in cash taxes, and mainframe cycle-driven receivables dynamics

Delivered nearly $12 billion in free cash flow with realization of 111% (excluding charges taken for the enactment of U.S. tax reform), returning over $10 billion to stockholders through dividends and share repurchases

 

 

 

 

 

 

 

 

 

 

Compensation highlights (PAGE 30)

 

 

 

Our compensation strategy supports IBM’s high value business model

 

 

 

 

 

 

 

 

 

What We Do

 

What We Don’t Do

 

 

 

 

 

 

 

 

 

   Tie a significant portion of pay to Company performance

   Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions

   Require significant share ownership by the Chairman and CEO and Senior Vice Presidents

   Utilize noncompetition and nonsolicitation agreements for senior executives

   Remove impact of share repurchase on executive incentives

 

  No individual severance or change-in-control agreements for executive officers

  No excise tax gross-ups

  No dividend equivalents on unearned RSUs/PSUs

  No hedging/pledging of IBM stock

  No stock option repricing, exchanges or options granted below market value

  No guaranteed incentive payouts

  No accelerated vesting of equity awards for executive officers

  No above-market returns on deferred compensation plans

 

 

 

 

 

 

 

 

6

2019 Notice of Annual Meeting & Proxy Statement     |    Proxy Summary

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

IBM Board of Directors

 

 

 

 

 

Composition of the Board

 

IBM’s Board of Directors is responsible for supervision of the overall affairs of IBM. To assist it in carrying out its duties, the Board has delegated certain authority to several committees. Following the Annual Meeting in 2019, the Board will consist of 12 directors, all of whom are independent, with the exception of Mrs. Rometty, IBM’s Chairman and CEO. In the interim between Annual Meetings, the Board has the authority under the by-laws to increase or decrease the size of the Board and to fill vacancies.

 

 

 

Director Selection Process

 

The Directors and Corporate Governance Committee is responsible for leading the search for qualified individuals for election as directors to ensure the Board has the optimal mix of skills, expertise, and diversity of background. The Committee recommends candidates to the full Board for election.

 

 

 

 

The Board believes that the following core attributes are key to ensuring the continued vitality of the Board and excellence in the execution of its duties:

 

 

·  experience as a leader of a business, firm or institution;

·  mature and practical judgment;

·  the ability to comprehend and analyze complex matters;

 

·  effective interpersonal and communication skills; and

·  strong character and integrity.

 

 

 

 

 

 

The Committee and the Board also focus on ensuring that the Board reflects a diversity of backgrounds (including gender and ethnicity), talents and perspectives.

 

 

 

 

 

 

 

The Committee and the Board identify candidates through a variety of means, including:

 

 

·   information the Committee requests from the Secretary of IBM;

·   recommendations from members of the Committee and the Board;

 

·  suggestions from IBM management; and

·  a third-party search firm, from time to time.

 

 

 

Any formal invitation to a director candidate is authorized by the full Board. The Committee also considers candidates recommended by stockholders. Stockholders wishing to recommend director candidates for consideration by the Committee may do so by writing to the Secretary of IBM, giving the recommended candidate’s name, biographical data and qualifications.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement     |     IBM Board of Directors  

7

 

 

 

 

 


 

 

 

 

Director Skills and Qualifications

 

The IBM Board is composed of a diverse group of members, all leaders in their respective fields. All of the current directors have leadership experience at major domestic and international organizations with operations inside and outside the United States, at academic or research institutions, or in government. Directors also have deep industry expertise as leaders of organizations within some of the Company’s most important client industries and constituents.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building the Right Board for IBM: Key Director Attributes

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Operation, Innovation, and Transformation Experience

 

100% of IBM Directors have led complex organizations

 

For over a century, IBM has continuously reinvented itself to help its clients move from one era to the next. The ability to comprehend and analyze complex matters is key to the IBM Board’s oversight of the Company’s innovation and transformation. All IBM directors have led large organizations, crucial experience for understanding and overseeing the scale, scope, and complexity of IBM’s business.

 

 

 

 

Industry Expertise

 

Director-wide industry experience includes:

 

·   Technology

·   Financial Services

·   Healthcare

·   Pharmaceuticals

·   Energy

·   Chemicals

·   Transport & Logistics

·   Manufacturing

·   Private Equity

·   Research & Development

·   Government

 

IBM uniquely combines innovative technology with deep industry expertise, underpinned by security, trust, and responsible stewardship. IBM’s directors have experience leading organizations in a variety of industries that enhance the Board’s knowledge. Their perspectives on contemporary business issues and experience running data-intensive organizations are an asset to the Company and to our shareholders.

 

 

 

 

Global Perspective

 

Every IBM Director has international experience

 

IBM conducts business around the globe. Our business success is derived from an understanding of diverse business environments and economic conditions, and a broad perspective on global business opportunities. The Board’s diverse and international experience is crucial for IBM, which operates in more than 175 countries around the world.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Directors and Corporate Governance Committee and the Board believe that the above-mentioned attributes, along with the leadership skills and other experiences of the Board members described below, provide IBM with the perspectives and judgment necessary to guide IBM’s strategies and oversee their execution.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

2019 Notice of Annual Meeting & Proxy Statement     |    IBM Board of Directors

 

 

 

 

 

 


 

 

 

 

 

 

IBM BOARD OF DIRECTORS — EXPERIENCE AND SKILLS OF DIRECTOR NOMINEES

 

 

 

 

 

 

Director Experience

 

 

 

 

 

 

 

 

 

 

 

Government/

 

 

 

 

 

Organizational

 

 

 

Specific Risk

 

 

Regulatory,

 

 

 

 

Client

Leadership

U. S.

Global

 

Oversight/Risk

Technology,

 

Business

 

Gender/

 

 

Industry

and

Business

Business

 

Management

Cybersecurity

 

Associations or

Public

Ethnic

 

Director

Expertise

Management

Operations

Operations

CFO

Exposure

or Digital

Academia

Public Policy

Board

Diversity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael L. Eskew

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David N. Farr

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alex Gorsky

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michelle Howard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shirley Ann Jackson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andrew N. Liveris

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martha Pollack

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virginia M. Rometty

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph R. Swedish

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sidney Taurel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter R. Voser

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frederick H. Waddell

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following client industries provide a snapshot into the many key and diverse industries in which our directors have relevant experience. Many of our directors have experience in multiple client industries.

Healthcare:

Energy:

Government:

Financial Services:

Manufacturing:

Information Technology:

Transport & Logistics:

Research & Development:

Chemicals:

 

 

 

 

 

 

 

2019 New Directors:

 

Admiral Michelle Howard

 

Admiral Howard is a former United States Navy officer, the first woman to become a four-star admiral, and the first African American and first woman to be named Vice Chief of Naval Operations. Her experience with cybersecurity and technology in the digital age will benefit IBM stockholders.

 

 

 

 

Dr. Martha Pollack

 

Dr. Pollack is a computer scientist and leader in the field of artificial intelligence, key skills and expertise for IBM. Her perspectives on education and the use of technology to improve lives provide value to IBM and its stockholders.

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement     |     IBM Board of Directors  

9

 

 

 

 

 


 

 

 

 

1. Election of Directors for a Term of One Year

 

 

The Board proposes the election of the following director nominees for a term of one year. Below is information about each nominee, including biographical data for at least the past five years. If one or more of these nominees become unavailable to accept a nomination or election as a director, the individuals named as proxies on the proxy card will vote the shares that they represent for the election of such other persons as the Board may recommend, unless the Board reduces the number of directors.

 

 

 

THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED BELOW.

 

 

 

 

Director since: 2005

 

Age: 69

 

Committees:

 

 Audit (Chair)

 

 Executive

 

 

Michael L. Eskew

 

Retired Chairman and Chief Executive Officer, United Parcel Service, Inc., a provider of specialized transportation and logistics services

 

 

Qualifications

 

·         Global business and technology experience as chairman and chief executive officer of United Parcel Service, Inc.

 

·         Outside board experience as a director of Allstate Corporation, Eli Lilly and Company and 3M Company

 

·         Chairman of a charitable organization

 

 

Relevant experience

 

Mr. Eskew, 69, is IBM’s independent Lead Director. Mr. Eskew joined United Parcel Service in 1972. He was named corporate vice president for industrial engineering in 1994, group vice president for engineering in 1996, executive vice president in 1999, vice chairman in 2000, and he was chairman and chief executive officer from 2002 until his retirement at the end of 2007. Mr. Eskew remained on the board of United Parcel Service until the end of 2014. He is a director of Allstate Corporation, Eli Lilly and Company and 3M Company. In addition, he is chairman of the Annie E. Casey Foundation.

 

 

 

 

 

 

 

 

 

 

Director since: 2012

 

Age: 64

 

Committees:

 Audit

 

 

David N. Farr

 

Chairman and Chief Executive Officer, Emerson Electric Co., a diversified manufacturing and technology company

 

 

Qualifications

 

·         Global business and technology experience as chairman and chief executive officer of Emerson Electric Co.

 

·         Affiliation with leading business and public policy association (director of the U.S.-China Business Council)

 

·         Outside board experience as former director of Delphi Corporation

 

 

Relevant experience

 

Mr. Farr, 64, joined Emerson in 1981 and subsequently held various executive positions. He was named senior executive vice president and chief operating officer in 1999, chief executive officer in 2000 and chairman and chief executive officer in 2004. Mr. Farr was named chairman, president and chief executive officer in 2005 and chairman and chief executive officer in 2010. He just completed his tenure as the chairman of the National Association of Manufacturers and is currently a director of the U.S.-China Business Council.

 

 

 

 

 

 

 

10     2019 Notice of Annual Meeting & Proxy Statement   |   1. Election of Directors

 

 

 


 

 

 

 

 

 

Director since: 2014

 

Age: 58

 

Committees:

 Executive Compensation & Management Resources (Chair)

 Executive

 

 

Alex Gorsky

 

Chairman and Chief Executive Officer, Johnson & Johnson, a global healthcare products company

 

 

Qualifications

 

·         Global business and technology experience as chairman and chief executive officer of Johnson & Johnson

 

·         Affiliation with leading business and public policy associations (member of the Business Roundtable and The Business Council)

 

·         Experience as a university trustee

 

Relevant experience

 

Mr. Gorsky, 58, joined Johnson & Johnson in 1988. In 2003, he was named company group chairman of the Johnson & Johnson pharmaceutical business in Europe, the Middle East and Africa. Mr. Gorsky left Johnson & Johnson in 2004 to join the Novartis Pharmaceuticals Corporation, where he served as head of the company’s pharmaceutical business in

 

 

North America. Mr. Gorsky returned to Johnson & Johnson in 2008 as company group chairman for Ethicon. In early 2009, he was appointed worldwide chairman of the Surgical Care Group and member of the executive committee. In September 2009, he was appointed worldwide chairman of the Medical Devices and Diagnostics Group. Mr. Gorsky became vice chairman of the executive committee in January 2011. He was named chief executive officer and joined the board of directors in April 2012, and was named chairman in December 2012. Mr. Gorsky is a member of the Business Roundtable’s Board of Directors and Chairman of its Corporate Governance Committee. Mr. Gorsky also serves on the boards of the Travis Manion Foundation, Congressional Medal of Honor Foundation, the National Academy Foundation and the Wharton Board of Overseers.

 

 

 

 

 

 

 

 

 

 

Director since: 2019

 

Age: 58

 

Committees:

 Directors & Corporate Governance

 

 

Michelle Howard

 

Retired Admiral, United States Navy

 

 

Qualifications

 

·         Leadership and policy experience as the U.S. Navy’s first woman four-star admiral

 

·         Operational experience as commander of U.S. Naval Forces in Europe and Africa

 

·         Global operations and technology experience as Vice Chief of Naval Operations, with focus on cybersecurity and information technology in the digital age

 

·         Leadership and teaching positions in government and academia

 

Relevant experience

 

Admiral Michelle J. Howard, 58, is a retired United States Navy officer. Admiral Howard began serving in the United States Navy in 1982, after graduating from the U.S. Naval Academy. During her 35 years of service, she led sailors and marines as, at various times, the Commander of a ship, an Expeditionary Strike Group, a Task Force, and a Naval theater. In 1999, she became the first African American woman to command a ship in the United States Navy. In 2014, she was the first woman to become a four-star

 

 

admiral in the U.S. Navy and the first woman and African American to be appointed to the position of Vice Chief of Naval Operations, the second-highest ranking uniformed officer in the branch. Responsible for the Navy’s day-to-day operations, she focused on cyber culture and information security in the digital age, as well as gender integration. In 2016, Admiral Howard was appointed by the President to serve as commander of U.S. Naval Forces in Europe and Africa and the Allied Joint Forces Command in Naples, Italy, making her the first woman four-star admiral to command operational forces. She retired from the Navy in 2017.

 

Admiral Howard’s distinguished career in national defense has included both at-sea and ashore posts, placing her in key leadership positions within the areas of engineering, operations, and strategic planning, and policy. Admiral Howard is a graduate of the U.S. Naval Academy and the U.S. Army Command and General Staff College. She is currently the J.B. and Maurice C. Shapiro Professor of International Affairs at the Elliott School of International Affairs at George Washington University, where she teaches in the areas of cybersecurity and international policy.

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   1. Election of Directors     11

 

 

 


 

 

 

 

 

 

Director since: 2005

 

Age: 72

 

Committees:

 Directors & Corporate Governance (Chair)

 Executive

 

 

Shirley Ann Jackson

 

President, Rensselaer Polytechnic Institute, a leading science and technology university that brings technological innovation to the marketplace

 

 

Qualifications

 

·         Leadership and technology experience as president of Rensselaer Polytechnic Institute

 

·         Industry and research experience as a theoretical physicist at the former AT&T Bell Laboratories

 

·         U.S. Government service (former chairman of the U.S. Nuclear Regulatory Commission and co-chair of the President’s Intelligence Advisory Board, former member of the International Security Advisory Board to the United States Secretary of State, and the President’s Council of Advisors on Science and Technology)

 

·         Regulatory experience (former member of the board of governors of the Financial Industry Regulatory Authority (FINRA))

 

·         Affiliation with leading business and public policy associations (member of the Council on Foreign Relations, former university vice chair of the Council on Competitiveness, and former member of the board of the World Economic Forum USA)

 

·         Outside board experience as a director of FedEx Corporation and Public Service Enterprise Group Incorporated

 

·         Tenured professor at Rensselaer Polytechnic Institute, and formerly at Rutgers University

 

 

Relevant experience

 

Dr. Jackson, 72, was a theoretical physicist at the former AT&T Bell Laboratories from 1976 to 1991, professor of theoretical physics at Rutgers University from 1991 to 1995, and chairman of the U.S. Nuclear Regulatory Commission from 1995 until she assumed her current position of president of Rensselaer Polytechnic Institute in 1999. Dr. Jackson is a director of FedEx Corporation and Public Service Enterprise Group Incorporated. She has been co-chair of the President’s Intelligence Advisory Board and a member of the International Security Advisory Board to the United States Secretary of State. Dr. Jackson is a fellow of the Royal Academy of Engineering (U.K.), the American Academy of Arts and Sciences, and a member of the National Academy of Engineering and the American Philosophical Society. Dr. Jackson is a recipient of the National Medal of Science, the highest award in science and engineering awarded by the U.S. Government. Dr. Jackson is a member of the Council on Foreign Relations. She is a Regent Emerita and former Vice-Chair of the Board of Regents of the Smithsonian Institution, a past president of the American Association for the Advancement of Sciences, and an honorary trustee of the Brookings Institution. Additionally, during the past five years, she served as a director of Marathon Oil Corporation and Medtronic plc.

 

 

 

 

 

 

 

 

 

 

Director since: 2010

 

Age: 64

 

Committees:

 Executive Compensation & Management Resources

 

 

Andrew N. Liveris

 

Retired Executive Chairman, DowDuPont Inc. and Retired Chairman and Chief Executive Officer, The Dow Chemical Company, a materials, polymer, chemicals, and biological sciences enterprise

 

 

Qualifications

 

·         Global business and technology experience as chairman, president and chief executive officer of The Dow Chemical Company and executive chairman of DowDuPont Inc.

 

·         U.S. and international government service (former chairman of the President’s American Manufacturing Committee, member of the President’s Task Force on Apprenticeship Expansion, member of the Australian government’s Industry Growth Centres Advisory Committee and Thailand’s Board of Investment)

 

·         Affiliation with leading business and public policy associations (vice chairman of the executive committee of the Business Roundtable and executive committee member and former chairman of The Business Council)

 

·         Experience as a university trustee

 

 

Relevant Experience

 

Mr. Liveris, 64, joined Dow in 1976 and subsequently held various executive positions, including vice president of specialty chemicals from 1998 to 2000, business group president for performance chemicals from 2000 to 2003, and president and chief operating officer from 2003 to 2004. Mr. Liveris was named president and chief executive officer of Dow in 2004 and chairman in 2006. In 2016, he transitioned the president role and continued as chairman and chief executive officer of Dow until late 2017, when he transitioned to the position of executive chairman of DowDuPont, a position he held until his retirement in July 2018. Mr. Liveris is a director of WorleyParsons, Saudi Aramco and NOVONIX Limited. Additionally, Mr. Liveris served as chairman of the President’s American Manufacturing Committee and now serves as a member of the President’s Task Force on Apprenticeship Expansion. Mr. Liveris also serves as vice chairman of the Executive Committee of the Business Roundtable, and as an Executive Committee member and former chairman of The Business Council. Mr. Liveris is also a trustee of The King Abdullah University of Science and Technology (KAUST), the California Institute of Technology and the United States Council for International Business (USCIB).

 

 

 

 

 

12     2019 Notice of Annual Meeting & Proxy Statement   |   1. Election of Directors

 

 

 


 

 

 

 

 

 

NEW Director since: 2018

 

Age: 60

 

Committees:

 Executive Compensation & Management Resources

 

 

Martha E. Pollack

 

President, Cornell University, a leading research university that creates new technologies and achieves fundamental breakthroughs in understanding and improving lives around the world

 

 

Qualifications

 

·         Organizational leadership, management and risk oversight, and management experience as president of Cornell University

 

·         Research experience as a computer scientist with expertise in artificial intelligence as a professor of computer science, information science, and linguistics

 

·         U.S. Government service as a former member of the advisory committee for the National Science Foundation’s Computer and Information Science and Engineering Division

 

·         Healthcare experience as a former member of the Board of Directors of the University of Michigan Hospitals and Health Center, and as a member (ex officio) of the board of overseers of Weill Cornell Medicine

 

·         Technology experience as a fellow of the Association for Computing Machinery, a former president of the Association for the Advancement of Artificial Intelligence, a former board member of the Computing Research Association, and a former member of the technical staff in the Artificial Intelligence Center at SRI International

 

 

Relevant experience

 

Dr. Pollack, 60, is the president of Cornell University and a professor of computer science, information science and linguistics. She took office in 2017. From 2000 to 2017, Dr. Pollack held various positions at the University of Michigan with increasing responsibility, including dean of the School of Information, vice provost for academic and budgetary affairs, and finally, provost and executive vice president for academic affairs. Dr. Pollack is a fellow of the American Association for the Advancement of Science, the Association for Computing Machinery and the Association for the Advancement of Artificial Intelligence. Dr. Pollack has served as editor-in-chief of the Journal of Artificial Intelligence Research, a former president of the Association for the Advancement of Artificial Intelligence, a former member of the technical staff in the Artificial Intelligence Center at SRI International, a member of the advisory committee for the National Science Foundation’s Computer and Information Science and Engineering Division, and a former member of the board of directors of the Computing Research Association. Dr. Pollack also served on the Steering Committee of the Jacobs Technion-Cornell Institute, the academic partnership between Cornell and Technion-Israel Institute of Technology at Cornell Tech.

 

 

 

 

 

 

 

 

 

 

Director since: 2012

 

Age: 61

 

Committees:

 Executive (Chair)

 

 

Virginia M. Rometty

 

Chairman, President and Chief Executive Officer, IBM

 

 

Qualifications

 

·         Global business and technology experience as chairman, president and chief executive officer of IBM

 

·         Affiliation with leading business and public policy associations (member of the Business Roundtable, the Council on Foreign Relations and the Peterson Institute for International Economics)

 

·         U.S. Government service (former member of the President’s Export Council)

 

·         Experience as a university trustee

 

 

Relevant Experience

 

Mrs. Rometty, 61, joined IBM in 1981. She was elected senior vice president of Global Business Services in 2005, senior vice president of Sales and Distribution in 2009, senior vice president and group executive of Sales, Marketing, and Strategy in 2010, president and chief executive officer of IBM in early 2012 and chairman in late 2012. She is a member of the Business Roundtable, the Council on Foreign Relations, the Board of Trustees of Northwestern University and the Board of Overseers and Managers of Memorial Sloan-Kettering Cancer Center, and formerly served on the President’s Export Council.

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   1. Election of Directors     13

 

 

 


 

 

 

 

 

 

Director since: 2017

 

Age: 67

 

Committees:

 Executive Compensation & Management Resources

 

 

Joseph R. Swedish

 

Senior Advisor and Retired Chairman, President and Chief Executive Officer, Anthem, Inc., a leading health benefits provider

 

 

Qualifications

 

·         Global business and technology experience as executive chairman, president, and chief executive officer of Anthem, Inc.

 

·         Affiliation with leading business and public policy associations (former member of the Business Roundtable and graduate member of The Business Council)

 

·         Outside board and technology experience as a director of CDW Corporation

 

·         Experience as the chairman of a university oversight board

 

Relevant experience

 

Mr. Swedish, 67, joined Anthem in 2013 as chief executive officer and was named chairman of Anthem’s board in 2015. He was the chairman, chief executive officer and president until late 2017 when he retired and became the executive chairman, a position he held until his retirement in May 2018.

 

 

Prior to joining Anthem, he was the division president of Hospital Corporation of America from 1993 to 1998, president and chief executive officer of Centura Health from 1999 to 2004 and then served as president and chief executive officer of Trinity Health Corporation from 2004 to 2013. Mr. Swedish is a director of Centrexion Therapeutics and Mesoblast Limited. He also served as a director of the Blue Cross Blue Shield Association, the National Institute for Health Care Management, the Central Indiana Corporate Partnership, Inc. and as a member of the Business Roundtable. Mr. Swedish currently serves as chairman of the Board of Visitors of Duke University’s Fuqua School of Business and was the past chairman of America’s Health Insurance Plans. He is a graduate member of The Business Council and a member of the Duke Margolis External Advisory Board. He is also a director of CDW Corporation and Proteus Digital Health, Inc. Mr. Swedish also serves as Co-Founder & Partner at Concord Health Partners, a private equity firm focused on strategic investing in healthcare portfolio companies.

 

 

 

 

 

 

 

 

 

 

Director since: 2001

 

Age: 70

 

Committees:

 Directors & Corporate Governance

 

 

Sidney Taurel

 

Chairman Emeritus, Eli Lilly and Company, a pharmaceutical company Chairman, Pearson plc, a provider of digital education products and services

 

 

Qualifications

 

·         Global business experience as chairman of Pearson plc and chairman and chief executive officer of Eli Lilly and Company

 

·         Private equity management and investment banking experience as former senior advisor of Capital Royalty L.P. and senior advisor of Moelis & Company

 

·         U.S. Government service (former member of the Homeland Security Advisory Council, the President’s Export Council and the Advisory Committee for Trade Policy and Negotiations)

 

·         Affiliation with leading business association (graduate member of The Business Council)

 

·         Outside board experience as a director of McGraw Hill Financial, Inc.

 

·         Member of a university oversight board

 

 

Relevant experience

 

Mr. Taurel, 70, joined Eli Lilly in 1971 and held management positions in the company’s operations in South America and Europe. He was named president of Eli Lilly International Corporation in 1986, executive vice president of the Pharmaceutical Division in 1991, executive vice president of Eli Lilly and Company in 1993, and president and chief operating officer in 1996. He was named chief executive officer of Eli Lilly and Company in 1998 and chairman in 1999. Mr. Taurel retired as chief executive officer in early 2008 and as chairman in late 2008. He became chairman of Pearson plc in 2016. He is also a member of the Board of Overseers of the Columbia Business School, a graduate member of The Business Council and a trustee of the Indianapolis Museum of Art. Additionally, during the past five years, he was a director of McGraw Hill Financial, Inc.

 

 

 

 

 

 

 

 

 

 

14     2019 Notice of Annual Meeting & Proxy Statement   |   1. Election of Directors

 

 

 


 

 

 

 

 

Director since: 2015

 

Age: 60

 

Committees:

 Audit

 

 

Peter R. Voser

 

Retired Chief Executive Officer, Royal Dutch Shell plc, a global group of energy and petrochemical companies; Chairman, ABB Ltd., a global group of power and automation companies

 

 

Qualifications

 

·         Global business and technology experience as chairman of ABB Ltd. and chief executive officer of Royal Dutch Shell plc

 

·         Affiliation with leading business and public policy associations (former member of the European Round Table of Industrialists and a former member of The Business Council)

 

·         Outside board experience as a director of Roche Holding Limited and Temasek

 

 

Relevant experience

 

Mr. Voser, 60, joined Shell in 1982 and held a variety of finance and business roles including chief financial officer of Oil Products. In 2002, he joined the Asea Brown Boveri (ABB) Group of Companies as chief financial officer and a member of the ABB Group executive committee. Mr. Voser returned to Shell in 2004, becoming a managing director of The Shell Transport and Trading Company, p.l.c. and chief financial officer of the Royal Dutch/Shell Group. He was appointed chief executive officer of Royal Dutch Shell plc in 2009 and held that position until his retirement in late 2013. Mr. Voser was named chairman of ABB Ltd. in 2015. He is a director of Roche Holding Limited, Temasek, as well as PSA International Pte Ltd, Singapore, a Temasek subsidiary. Mr. Voser is also active in a number of international and bilateral organizations.

 

 

 

 

 

 

 

 

 

 

Director since: 2017

 

Age: 65

 

Committees:

 Audit

 

 

Frederick H. Waddell

 

Retired Chairman and Chief Executive Officer, Northern Trust Corporation, a financial services company

 

 

Qualifications

 

·         Global business and technology experience as chairman and chief executive officer of Northern Trust Corporation

 

·         Outside board experience as a director of AbbVie Inc.

 

·         Experience as a university trustee

 

 

Relevant experience

 

Mr. Waddell, 65, joined Northern Trust Corporation in 1975 and served as the chairman of the board from November 2009 until his retirement in January 2019. He previously served as chief executive officer from 2008 through 2017, as president from 2006 through 2011 and again from October to December 2016, and as chief operating officer from 2006 to 2008. Additionally, Mr. Waddell is a member of the Board of Trustees of Northwestern University and a director of AbbVie Inc.

 

 

 

 

 

 

 

Hutham S. Olayan and James W. Owens are not nominees for election, and their terms on the Board will end in April 2019.

 

 

 

 

THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED ABOVE.

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   1. Election of Directors     15

 

 

 


 

 

 

 

 

Board and Governance

 

 

 

 

 

Committees of the Board

 

 

 

Members of the Audit Committee, Directors and Corporate Governance Committee, and the Executive Compensation and Management Resources Committee are non-management directors who, in the opinion of the Board, satisfy the independence criteria established by the Board, and the standards of the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE).

 

 

 

 

 

 

 

Directors &

Executive Compensation &

 

 

Director

 

Audit

 

Corporate Governance

 

Management Resources

 

Executive

 

 

 

 

 

 

 

 

Michael L. Eskew

Chair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David N. Farr

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alex Gorsky

 

 

Chair

 

 

 

 

 

 

 

 

 

 

 

 

 

Michelle J. Howard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shirley Ann Jackson

 

Chair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andrew N. Liveris

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martha E. Pollack

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virginia M. Rometty

 

 

 

Chair

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph R. Swedish

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sidney Taurel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter R. Voser

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frederick H. Waddell

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Board Committee Refreshment

 

 

 

On at least an annual basis, the Directors and Corporate Governance Committee reviews committee assignments and discusses whether rotation of Committee members and Committee Chairs is appropriate to introduce fresh perspectives and to broaden and diversify the views and experiences represented on the Board’s Committees. In 2018, the Board rotated several committee positions. Mr. Taurel rotated from the Executive Compensation and Management Resources Committee to the Directors and Corporate Governance Committee, and Mr. Swedish rotated from the Directors and Corporate Governance Committee to the Executive Compensation and Management Resources Committee. Additionally, Mr. Gorsky was appointed as the chair of the Executive Compensation and Management Resources Committee. In 2019, Mr. Waddell joined the Audit Committee, Dr. Pollack joined the Executive Compensation Management Resources Committee, and Admiral Howard joined the Directors and Corporate Governance Committee.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16     2019 Notice of Annual Meeting & Proxy Statement   |   Committees of the Board

 

 

 

 

 


 

 

 

 

 

 

 

Audit Committee

 

 

 

 

 

 

 

 

 

Members:

 

Michael Eskew

(Chair)

David Farr

Peter Voser

Frederick Waddell

 

Audit Committee Financial Experts:

 

Michael Eskew

David Farr

Peter Voser

Frederick Waddell

 

Number of meetings in 2018: 10

 

Key Responsibilities:

 

The Audit Committee is responsible for reviewing reports of IBM’s financial results, audit results, internal controls, and adherence to IBM’s Business Conduct Guidelines in compliance with applicable laws and regulations, including federal procurement requirements. Concurrent with that responsibility, set out more fully in the Charter, the Audit Committee performs many other functions, including:

 

 

 

·   selecting the independent registered public accounting firm and reviewing its selection with the Board;

 

·   annually preapproving the proposed services to be provided by the accounting firm during the year;

·   reviewing the procedures of the independent registered public accounting firm for ensuring its independence with respect to the services performed for IBM; and

 

·   meeting with management prior to each quarterly earnings release.

 

 

The Audit Committee chair, pursuant to authority delegated by the Audit Committee, may approve engagements with the independent registered public accounting firm that are outside the scope of the services and fees approved by the Committee, which are later presented to the Committee.

 

The Board has determined that each member of the Committee qualifies as an Audit Committee Financial Expert as defined by the rules of the SEC.

 

Charter: http://www.ibm.com/investor/governance/audit-committee-charter.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors and Corporate Governance Committee

 

 

 

 

 

 

 

 

 

Members:

 

Shirley Ann

Jackson (Chair)

Michelle Howard

Sidney Taurel

 

Number of meetings in 2018: 4

 

Key Responsibilities:

 

The Directors and Corporate Governance Committee is devoted primarily to the continuing review and articulation of the governance structure and practices of the Board. Concurrent with that responsibility, set out more fully in the Charter, the Directors and Corporate Governance Committee performs many other functions, including:

 

 

 

·   recommending qualified candidates to the Board for election as directors of IBM, including the slate of directors that the Board proposes for annual election by stockholders at the Annual Meeting, and planning for future Board and Committee refreshment actions;

 

·   advising and making recommendations to the Board on all matters concerning directorship practices, and on the function and duties of the committees of the Board;

 

·   making recommendations to the Board on compensation for non-management directors;

·   reviewing and considering IBM’s position and practices on significant public policy issues, such as protection of the environment, corporate social responsibility, sustainability, and philanthropic contributions; and

 

·   reviewing and considering stockholder proposals, including those dealing with issues of public and social interest.

 

 

 

 

As discussed above, the Committee is responsible for recommending qualified candidates to the Board for election as directors of IBM. The Committee recommends candidates based on their business or professional experience, the diversity of their background (including gender and ethnic diversity), and their talents and perspectives.

 

Charter: http://www.ibm.com/investor/governance/director-and-corporate-governance.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   Committees of the Board     17

 

 

 

 

 

 


 

 

 

 

 

 

 

Executive Compensation and Management Resources Committee 

 

 

 

 

 

 

 

 

 

Members:

 

Alex Gorsky

(Chair)

Andrew Liveris

Martha Pollack

Joseph Swedish

 

Number of meetings in 2018: 5

 

Key Responsibilities:

 

The Executive Compensation and Management Resources Committee has responsibility for defining and articulating IBM’s overall executive compensation philosophy, and administering and approving all elements of compensation for elected corporate officers. Concurrent with that responsibility, set out more fully in the Charter, the Executive Compensation and Management Resources Committee performs many other functions, including:

 

 

 

·   reviewing and approving the corporate goals and objectives relevant to the Chairman and CEO’s compensation, evaluating her performance in light of those goals and objectives and, together with the other independent directors, determining and approving the Chairman and CEO’s compensation based on this evaluation;

 

·   reviewing IBM’s management resources programs, including overseeing, along with the full Board, the succession-planning process of the CEO and other senior management positions;

 

·   approving, by direct action or through delegation, participation in and all awards, grants, and related actions under IBM’s various equity plans;

·   reviewing changes in IBM’s pension plans primarily affecting corporate officers;

 

·   managing the operation and administration of the IBM Supplemental Executive Retention Plan;

 

·   reviewing the compensation structure for IBM’s officers and providing oversight of management’s decisions regarding performance and compensation of other employees; and

 

·   monitoring compliance with stock ownership guidelines.

 

 

 

 

 

The Committee reports to stockholders as required by the SEC (see 2018 Report of the Executive Compensation and Management Resources Committee of the Board of Directors below).

 

Members of the Committee are not eligible to participate in any of the plans or programs that the Committee administers.

 

Charter: http://www.ibm.com/investor/governance/executive-compensation-and-management-resources.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Committee Interlocks and Insider Participation: None

 

Messrs. Gorsky, Liveris, McNerney, Taurel, and Swedish each served as members of the Executive Compensation and Management Resources Committee in 2018. All members of the Committee were independent directors, and no member was an employee or former employee of IBM. During 2018, none of our executive officers served on the compensation committee or board of directors of another entity whose executive officer served on our Executive Compensation and Management Resources Committee or Board. Therefore, there is no relationship that requires disclosure as a Compensation Committee interlock.

 

 

 

 

 

 

Executive Committee

 

 

 

 

 

 

 

 

 

 

The Executive Committee is empowered to act for the full Board in intervals between Board meetings, with the exception of certain matters that by law may not be delegated. The Committee meets as necessary, and all actions by the Committee are reported at the next Board of Directors meeting. The Committee did not meet in 2018.

 

 

 

Members:

Virginia M. Rometty (Chair)

Michael L. Eskew

Alex Gorsky

Shirley Ann Jackson

Number of meetings in 2018: 0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18     2019 Notice of Annual Meeting & Proxy Statement   |   Committees of the Board

 

 

 

 

 

 


 

 

 

 

Corporate Governance

 

IBM’s Corporate Governance Principles

 

IBM’s Board of Directors has long adhered to governance principles designed to ensure the continued vitality of the Board and excellence in the execution of its duties. Since 1994, the Board has had in place a set of governance guidelines reflecting these principles, including the Board’s policy of requiring a majority of the Board to be comprised of independent directors, the importance of equity compensation to align the interests of directors and stockholders, and the practice of regularly scheduled executive sessions, including sessions of non-management directors without members of management. The IBM Board Corporate Governance Guidelines reflect IBM’s principles on corporate governance matters. These guidelines are available at https://www.ibm.com/investor/governance/corporate-governance-guidelines.html.

 

 

 

 

 

Developments:

 

·   Changed Presiding Director title to Lead Director

 

·   Signatory of Commonsense Principles 2.0

 

·   Endorser of Investor Stewardship Group Principles

 

 

 

 

 

 

 

IBM also has a code of ethics for directors, executive officers, and employees. The Business Conduct Guidelines are available on our website at https://www.ibm.com/investor/att/pdf/BCG_English_Accessible_2018.pdf. Any amendment to, or waiver of, the Business Conduct Guidelines that applies to one of our directors or executive officers may be made only by the Board or a Board committee, and would be disclosed on IBM’s website.

 

The process by which stockholders and other interested parties may communicate with the Board or non-management directors of IBM is available at http://www.ibm.com/investor/governance/contact-the-board.html.

 

Independent Board

 

Under the IBM Board Corporate Governance Guidelines, the Directors and Corporate Governance Committee and the full Board annually review the financial and other relationships between the independent directors and IBM as part of the assessment of director independence. The Directors and Corporate Governance Committee makes recommendations to the Board about the independence of non-management directors, and the Board determines whether those directors are independent. In addition to this annual assessment of director independence, independence is monitored by the Directors and Corporate Governance Committee and the full Board on an ongoing basis.

 

The independence criteria established by the Board in accordance with NYSE requirements and used by the Directors and Corporate Governance Committee and the Board in their assessment of the independence of directors is available at http://www.ibm.com/investor/governance/director-independence-standards.html.

 

Applying those standards to the non-management directors, including those not standing for election, as well as former non-management directors who served during 2018, the Committee and the Board have determined that each of the following directors has met the independence standards: K.I. Chenault, M.L. Eskew, D.N. Farr, M. Fields, A. Gorsky, M.J. Howard, S.A. Jackson, A.N. Liveris, W.J. McNerney, Jr., H.S. Olayan, J.W. Owens, M.E. Pollack, J.R. Swedish, S. Taurel, P.R. Voser and F.H. Waddell. Mr. Eskew’s son is employed by IBM and is not an executive officer. He was hired over a year before Mr. Eskew joined IBM’s Board, and his compensation and other terms of employment are determined on a basis consistent with IBM’s human resources policies. Based on the foregoing, the Board has determined that this relationship does not preclude a finding of independence for Mr. Eskew.

 

Director Attendance

 

In 2018, the Board held nine meetings and the committees collectively met 19 times. The Board and the Directors and Corporate Governance Committee recognize the importance of director attendance at Board and committee meetings. In 2018:

 

·  Overall attendance at Board and committee meetings was over 95%; and

 

·  Attendance was at least 75% for each director.

 

In addition, each director nominee attended IBM’s 2018 Annual Meeting of Stockholders. IBM’s policy with regard to Board members’ attendance at annual meetings of stockholders is available at http://www.ibm.com/investor/governance/director-attendance-at-annual-meeting.html.

 

Executive Session

 

Regularly scheduled executive sessions, including sessions of independent directors without members of management, chaired by the Lead Director, are held at each Board meeting. Additionally, executive sessions of the independent directors are led by the Chairs of the Directors and Corporate Governance, Executive Compensation and Management Resources, and Audit Committees, respectively, at least once per year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance     19

 

 

 

 

 

 


 

 

 

 

Independent Leadership Structure

 

The Directors and Corporate Governance Committee is responsible for the continuing review of the governance structure of the Board, and for recommending to the Board those structures and practices best suited to IBM and its stockholders. The Committee and the Board recognize that different structures may be appropriate under different circumstances. Mrs. Rometty serves as IBM’s Chairman and CEO and Mr. Eskew serves as IBM’s independent Lead Director, a structure that the Directors and Corporate Governance Committee and the full Board believe is currently in the best interests of IBM and its stockholders. A strong, independent Lead Director with clearly defined duties and responsibilities further enhances the contributions of IBM’s independent directors, which have been and continue to be substantial. Mr. Eskew, the Lead Director, has significant global business, technology, leadership, and oversight experience as the former chairman and chief executive officer of United Parcel Service, Inc.

 

 

 

 

The Board strongly believes that its leadership structure strikes the right balance of allowing our Chairman and CEO to promote a clear, unified vision for the Company’s strategy and to provide the leadership critical for effectively and efficiently implementing the actions needed to ensure strong performance over the long term, while ensuring robust, independent oversight by the Board and Lead Director.

 

 

 

 

 

Role of the Lead Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mr. Eskew, the Lead Director, has the following core responsibilities:

 

  preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, which are held at every Board meeting;

 

  serve as liaison between the Chairman and the independent directors;

 

  approve information sent to the Board;

 

  approve meeting agendas for the Board;

 

  approve meeting schedules in collaboration with the Chairman to ensure there is sufficient time for discussion of all agenda items;

 

  authority to call meetings of the independent directors; and

 

  if requested by major stockholders, ensure that he is available, as necessary after discussions with the Chairman and Chief Executive Officer, for consultation and direct communication.

 

 

 

 

In addition to these core responsibilities, the Lead Director engages in other regular activities, including:

 

  one-on-one debriefs with the Chairman after each meeting;

 

  analyze CEO performance in Executive Session in conjunction with the Executive Compensation & Management Resources Committee chair;

 

  review feedback from the Board and committee evaluation process, working with the Directors and Corporate Governance Committee chair on enhancements to Board processes and practices;

 

  spend time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of the Company; and

 

  attend other Directors and Corporate Governance and Executive Compensation and Management Resources Committee meetings in addition to the committee he chairs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The full Board reviews our leadership structure at least annually to ensure the allocation of responsibilities remains appropriate.

 

 

 

 

 

 

 

 

In 2019, following each of their self-assessments and annual reviews, the Directors and Corporate Governance Committee and the Board as a whole continue to believe that this leadership structure provides IBM with the benefits of combining the leadership role of Chairman and CEO and the unique strengths and capabilities of the Lead Director and the other independent Board members.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20     2019 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance

 

 

 

 

 

 

 


 

 

 

 

 

Board Evaluation Process

 

IBM’s Board utilizes a comprehensive, multi-part process for its ongoing self-evaluation to ensure that the Board is operating effectively and that its processes reflect best practices. Each year, IBM’s Directors and Corporate Governance Committee oversees the evaluation process to ensure that the full Board and each committee conduct an assessment of their performance and solicit feedback for enhancement and improvement.

 

1

 

 

 

 

 

 

The Board conducts an annual self-evaluation to review the effectiveness of the Board and its committees,

 

led by the Chair of the Directors and Corporate Governance Committee. In this comprehensive review, the

 

 

self-evaluation focuses on:

 

 

 

 

 

 

 

·   The composition and performance of the Board, including the size, mix of skills and experience and director refreshment practices;

 

·   The quality and scope of the materials distributed in advance of meetings;

 

·   The Board’s access to Company executives and operations;

 

·   The promotion of rigorous decision making by the Board and the committees;

 

·   The effectiveness of the Board and committee evaluation processes; and

 

·   The overall functioning of the Board and its committees.

 

 

 

 

 

 

2

 

 

 

 

 

 

Each committee also performs a self-evaluation in executive session on an annual basis.

 

·   The Audit Committee’s evaluation, for example, includes individual, one-on-one interviews between IBM’s internal General Auditor and each member of the Committee.

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

The Chairman and CEO holds individual, one-on-one interviews with each IBM director to obtain his or her candid assessment of director performance, Board dynamics and the effectiveness of the Board and its committees.

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

The Chairman shares insights from each of these meetings with the Lead Director, the Chair of the Directors and Corporate Governance Committee, and the full Board.

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

The Board meets in executive session to discuss the results of the evaluation and any other issues that directors may want to raise.

 

 

 

 

 

 

 

6

 

 

 

 

 

 

Self-evaluation items requiring follow-up and execution are monitored on an ongoing basis by the Board, each of the committees, and by IBM management. While this formal self-evaluation is conducted on an annual basis, directors share perspectives, feedback, and suggestions continuously throughout the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance     21

 

 

 

 

 


 

 

 

 

 

Succession Planning

 

 

IBM has long been recognized for its leadership and talent development. As part of this, one of the Board’s most important responsibilities is to ensure that IBM has the appropriate management to execute the Company’s long-term strategy. To fulfill this responsibility, the full Board meets at least annually to actively review and plan the succession of the CEO and other senior management positions.

 

 

 

 

 

 

During these reviews, at least annually, the Board discusses:

 

 

 

 

 

 

·   Succession process and timeline;

 

·   Profile and candidate assessments, both internal and external, for the CEO and other senior leadership positions;

·   Leadership pipeline and development plans for the next generation of senior leadership; and

 

·   Diversity, inclusion, and Company culture.

 

 

 

 

 

 

The Executive Compensation and Management Resources Committee also regularly reviews succession planning and the Company’s management resources programs.

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholder Rights and Accountability

 

At IBM, we routinely evaluate our governance practices to maintain strong Board and management accountability and to promote stockholder rights through transparent policies that enhance investor and public trust. We believe that sound corporate governance is critical to achieving business success and serves the best interests of our stockholders.

 

 

 

 

 

 

 

 

 

 

Highlights of our commitment to stockholder rights include:

 

 

 

 

 

 

 

·   Annual election of all Directors

 

·   Majority voting for Directors

 

·   Stockholder ability to call Special Meetings

 

·   Proxy access rights for stockholders owning at least 3% of outstanding shares for 3 years

·   Robust stockholder engagement program

 

·   No stockholder rights plan or poison pill provisions

 

·   No supermajority voting provisions

 

·   Confidential voting

·   NEW  Signatory of Commonsense Principles 2.0

 

·   NEW  Endorser of Investor Stewardship Group Principles

 

 

 

 

 

 

 

 

 

 

 

 

Political Contributions and Lobbying

 

IBM is committed to meaningful management, oversight, and accurate reporting with respect to our engagement with government officials, and we consistently seek to provide our stockholders with relevant data regarding our public policy engagement.

 

 

 

Political Contributions:

 

IBM has a long-standing policy not to make contributions of any kind (money, employee time, goods or services), directly or indirectly, to political parties or candidates, including through intermediary organizations, such as political action committees, campaign funds, or trade or industry associations. This policy applies equally in all countries and across all levels of government, even where such contributions are permitted by law.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBM does not have a Political Action Committee and does not engage in independent expenditures or electioneering communications as defined by law.

 

 

 

 

 

 

 

 

Lobbying:

 

IBM engages in lobbying activities in accordance with applicable law and the requirements of IBM’s Business Conduct Guidelines. All IBM lobbying activities, including by third parties on behalf of IBM, require the prior approval of the IBM Office of Government and Regulatory Affairs.

 

IBM files periodic reports with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives detailing its U.S. federal lobbying activities and expenditures, with U.S. state and municipal governments, where required, and with the European Union Transparency Register.

 

 

 

22     2019 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance

 

 

 

 


 

 

 

 

 

 

Trade Associations:

 

 

 

IBM joins trade and industry associations that add value to IBM, its stockholders and employees. These groups have many members from a wide variety of industries, and cover broad sets of public policy and industry issues. As a result, there may be occasions where the views of a particular association on one or more specific issues are different than IBM’s views.

 

IBM conducts due diligence on trade associations before making contributions to be sure that the association is reputable and has no history of malfeasance. Company policy restricts trade and industry associations from using IBM funds to engage in political expenditures. IBM has procedures to ensure that IBM payments to trade or industry associations comply with this policy.

 

The IBM Board of Directors, as part of its oversight function, periodically receives reports from senior management relating to IBM’s policies and practices regarding governmental relations, public policy, and any associated expenditures.

 

IBM’s senior management, under the leadership of the IBM Office of Government and Regulatory Affairs, closely monitors all public policy advocacy efforts, as well as any lobbying activities.

 

 

 

 

 

 

 

The Center for Political Accountability’s 2018 Report on Corporate Political Disclosure and Accountability gave IBM a score of 98.6 out of 100, placing IBM in the “First Tier” of companies whose political disclosure and spending practices were evaluated.

 

 

 

 

 

 

 

 

IBM’s policies and practices with regard to public policy matters, including lobbying activities and expenditures, are available on its website: http://www.ibm.com/investor/governance/public-policy-matters.html.

 

Insurance and Indemnification

 

IBM has renewed its directors and officers indemnification insurance coverage. This insurance covers directors and officers individually where exposures exist other than those for which IBM is able to provide indemnification. This coverage runs from June 30, 2018 through June 30, 2019, at a total cost of approximately $4.9 million. The primary carrier is XL Specialty Insurance Company.

 

Strategy Oversight

 

The Board actively oversees IBM’s long-term business strategy and is actively engaged in ensuring that IBM’s culture reflects its longstanding commitment to integrity, compliance, and inclusion. The Board is continuously engaged with management on these topics. For example, each year, the Board holds a two-day strategy session, which includes presentations from many senior executives across the Company’s business units. Additionally, at Board meetings, the Board routinely engages with senior management on critical business matters that tie to the Company’s overall strategy. In addition, the Board periodically travels to key IBM facilities, both domestically and internationally, to obtain a first-hand look at the Company’s operations in strategically important business units and geographic areas. During this past year, the Board visited four different locations. Furthermore, the Board regularly meets with IBMers who represent the next generation of leadership at the Company to ensure that the Company’s leadership pipeline remains diverse and inclusive, and is linked to its long-term strategy.

 

Risk Oversight

 

In recent years, much attention has been given to the subject of risk and how companies assess and manage risk across the enterprise. At IBM, we believe that innovation and leadership are impossible without taking risks. We also recognize that imprudent acceptance of risk or the failure to appropriately identify and mitigate risk could be destructive to stockholder value.

 

In addition, an overall review of risk is inherent in the Board’s consideration of IBM’s long-term strategies and in the transactions and other matters presented to the Board, including capital expenditures, acquisitions and divestitures, and financial matters. The Board’s role in risk oversight of IBM is consistent with IBM’s leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing IBM’s risk exposure, and the Board and its committees providing oversight in connection with those efforts.

 

The Board is responsible for overseeing management in the execution of its responsibilities and for assessing IBM’s approach to risk management. The Board exercises these responsibilities regularly as part of its meetings and also through the Board’s three committees, each of which examines various components of enterprise risk as part of their responsibilities. The full Board regularly reviews IBM’s enterprise risk management framework and processes.

 

The Audit Committee continuously reviews financial and audit risks identified through IBM’s enterprise management framework.

 

The Executive Compensation and Management Resources Committee is responsible for assessing risks relating to IBM’s compensation programs and employee engagement as an indicator of Company culture, as well as IBM’s evolving demands for talent.

 

 

 

 

 

2019 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance     23

 

 

 

 

 


 

 

 

 

The Directors and Corporate Governance Committee oversees risks associated with government and industry regulations, as well as corporate social responsibility, sustainability, environmental, and other societal and governance matters.

 

IBM’s senior management is responsible for assessing and managing IBM’s various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. IBM has developed a consistent, systemic and integrated approach to risk management, including the enterprise risk management framework, to help determine how best to identify, manage, and mitigate significant risks throughout IBM. Management regularly reports to the Board and the committees on a variety of risks.

 

 

 

 

 

 

 

 

 

Cybersecurity

 

 

 

 

 

 

Cybersecurity is a critical part of risk management at IBM. To more effectively address cybersecurity threats, IBM has a dedicated CISO whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes. The CISO is part of IBM’s Enterprise & Technology Security group, which works across all of the organizations within the Company to protect IBM, its brand and its clients against cybersecurity risks.

 

Cybersecurity oversight consists of the Board and Audit Committee each receiving regular updates from senior management, including the CISO, as well as from cybersecurity experts in areas such as rapidly evolving cybersecurity threats, cybersecurity technologies and solutions deployed internally and with IBM clients, major cyber risks areas and policies and procedures to addresses those risks, and cybersecurity incidents.

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental and Climate Change Risk

 

 

 

 

 

 

Identification and management of environmental and climate-related risks is an aspect of IBM’s overall enterprise risk management processes. Environmental and climate-related risks are assessed and managed by IBM senior management, who provide regular updates to the Board and to the Directors and Corporate Governance Committee. In addition, IBM has established internal objectives and targets for energy conservation, procurement of renewable energy, carbon dioxide emissions reduction and other key environmental performance indicators. Performance against these objectives and targets is routinely monitored, and results are reviewed annually by the Directors and Corporate Governance Committee. Details on IBM’s performance against key environmental performance indicators can be found in our Annual Environmental Report at https://www.ibm.com/ibm/environment/annual/reporting.shtml.

 

 

 

 

 

 

 

 

 

 

 

 

For the past 28 consecutive years, IBM has voluntarily published a Corporate Environmental Report providing detailed information on our environmental programs and performance. IBM’s uninterrupted annual