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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 ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
International Business Machines Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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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.

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Armonk, New York
March 6, 2023
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 25, 2023.
Building a Stronger IBM
In the past year, we took decisive steps to build a stronger IBM and helped our clients turn business challenges into opportunities. The market recognizes hybrid cloud and AI as the two most transformational technologies of our time and, for clients, they serve as fundamental sources of competitive advantage. Our consulting teams have brought these technologies to life for our clients to accelerate their digital transformations and enterprise automation journeys. We also continued a steady pace of acquisitions to bolster our portfolio, delivered innovations in infrastructure, strengthened our software portfolio, streamlined our go-to-market strategy, and expanded our ecosystem of partners.
I am proud of the progress we have made as a company and I am especially proud of the IBMers who have made it possible. We believe our success depends on the caliber of our talent and the engagement and inclusion of IBMers in the workplace.
As a focused hybrid cloud and AI company, we are well positioned to deliver greater value to you, our stockholders.
Engaging with our Stockholders
Stockholder engagement is a core IBM value. The feedback we receive during our year-round engagement is integral to the Board’s decision-making process and informs important practices and policies in our corporate governance, executive compensation and ESG programs.
As you will read in this Proxy Statement, we continue to expand our investor outreach program to reach more of you each year. I once again participated in these outreach efforts, along with our independent Lead Director Alex Gorsky and members of our senior management. We are committed to listening to our investors and ensuring your interests remain a priority. This year, we also continued our established history of responding to stockholder proposals that receive majority support.
Making an Impact
Corporate social responsibility has been a hallmark of IBM’s culture for more than a century. Today we continue to pursue the highest standards of corporate social responsibility. This is reflected in how we empower employees, work with clients and our ecosystem of partners, and run our company.
IBMers have always applied their time, talent, and technology to make a meaningful impact on business and society, evolving the nature of their work over time to meet the most urgent needs of our time. This is true in both IBM’s core business and in the many ways IBMers engage with the global community. In 2022, we launched our IBM Impact framework that reflects how the company aspires to create a more sustainable, equitable, and ethical future, with a thoughtful and balanced approach.
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This includes:

Environmental Impact — We have continued IBM’s long tradition of conserving natural resources and reducing pollution, using renewable energy, and developing solutions to climate change. We are helping clients leverage data and AI to measure, monitor, and predict environmental outcomes, assess climate risk, and simplify ESG reporting.

Equitable Impact — IBM is proud of its inclusive culture and the programs we have established globally to provide wider access to critical skills and training. This focus on inclusivity extends across our business.

Ethical Impact — As a responsible steward of technology, IBM is focused on developing policies and practices that prioritize ethics, trust, transparency and accountability.
As we approach the Annual Meeting of Stockholders, I am incredibly proud of the progress IBMers have achieved to advance our business, help our clients thrive and make an impact.
On behalf of the Board of Directors, thank you for your continued investment and support of IBM.
Very truly yours,
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Arvind Krishna
Chairman of the Board
 

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Armonk, New York
March 6, 2023
A Message from our Lead Director:
2022 was an exciting year of growth for our Company and its stakeholders. As IBM’s independent Lead Director, let me share my perspective on our work over the past year, and highlight how the Board continues to ensure effective oversight of your Company.

Independent Board Leadership. As your independent Lead Director, I am responsible for ensuring the Board exercises prudent judgment, independent from the management team of the Company. I perform many duties, described further in this Proxy Statement, including regular contact with members of the Board and meeting individually with each independent director; leading the Board’s annual self-evaluation process; approving the Board’s meeting schedules, agendas and materials; and presiding over an executive session of the independent directors at each Board meeting, without management present.

The IBM Board. We are continuously focused on ensuring that IBM has an optimal Board structure and composition, and have refreshed half the Board in the last four years. The Board is a diverse group of global thought and business leaders with a wide array of technological, strategic and business skills. 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 a diverse mix of skills, experiences, and perspectives in our meetings and discussions.

Strategy and Risk Oversight.Your Board believes that engaged oversight of Company strategy is essential to the Company’s creation of long-term sustainable value. Part of this responsibility is ensuring the Board provides active risk oversight so IBM is prepared for emerging risks while also addressing and mitigating current risks. Our risk assessment incorporates both internal and external perspectives. Anticipating for and factoring risks into IBM’s strategy allows IBM to be both prepared and agile as IBM continues to accelerate its strategy as a leading hybrid cloud and AI company.

Comprehensive Stockholder Engagement. Engagement with you, IBM’s owners, is an essential part of the Board’s decision-making process. We are committed to an open dialogue to ensure that your voices are heard. In 2022, we continued to expand our engagement program to ensure we captured your input on matters important to you as stockholders. We offered engagement to investors representing 57% of the shares that voted at the 2022 Annual Meeting, meeting with more than 43% of the shares that voted. Together with the Chairman and CEO and other senior management, I met with investors representing more than 28% of the shares that voted at our 2022 Annual Meeting. We discussed matters ranging from company strategy to board and governance matters to ESG.
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Commitment to Sustainability and an Ethical Business Culture. We know you value IBM’s legacy of corporate responsibility, trust and transparency, and the Company’s balanced viewpoint. The Board agrees and is actively engaged in overseeing the Company’s ESG efforts and providing disclosure of our progress. We continue to strive to meet, and, in certain circumstances, beat, our ambitious environmental goals. In addition, we are working towards our goal of skilling 30 million people by 2030. Our new IBM Impact report, which consolidates our comprehensive ESG reports into one, cohesive report, details these achievements and progress. You can also read more in the dedicated “ESG at IBM” section of this Proxy Statement.
Your Board believes that an ongoing commitment to good corporate governance enhances sustainable stockholder value, particularly over the long term.
We appreciate your investment in IBM and hope that you vote at our Annual Meeting on April 25, 2023.
Very truly yours,
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Alex Gorsky
Lead Director
 

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Table of Contents
   
1
Proxy Summary
2
5
IBM Board of Directors
7
1. Election of Directors for a Term of One Year
10
Governance and the Board
16
16
18
19
23
24
24
25
27
2022 Executive Compensation
31
31
32
47
50
51
54
56
59
63
66
Report of the Audit Committee of the Board of Directors
68
69
2. Ratification of Appointment of Independent Registered Public Accounting Firm
70
3. Advisory Vote on Executive Compensation
(Say on Pay)
71
4. Advisory Vote Regarding the Frequency of the Advisory Vote on Executive Compensation
72
5. Stockholder Proposal to Have an Independent Board Chairman
73
6. Stockholder Proposal Requesting a Public Report on Lobbying Activities
76
7. Stockholder Proposal Requesting a Public Report on Congruency in China Business Operations and ESG Activities
79
81
84
87
ESG HIGHLIGHTS
At IBM, trust and corporate responsibility are integral to our business — and our ESG efforts are reflected throughout this Proxy Statement. Key topics include:
2
5
9
23
27
27
28
29
30
 

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2023 Notice of Annual Meeting
and Proxy Statement
Items of Business:
The Annual Meeting of Stockholders of International Business Machines Corporation will be held on Tuesday, April 25, 2023 at 10 a.m. Eastern Time in a virtual format. 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.
Advisory vote regarding the frequency of the advisory vote on executive compensation.
5.
Four 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 for the meeting because of a disability, please contact the Office of the Secretary, International Business Machines Corporation, 1 New Orchard Road, Armonk, NY 10504.
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Frank Sedlarcik
Vice President and Secretary
Date:
April 25, 2023
Time:
10 a.m. Eastern Time
Virtual
Meeting
Site:
www.virtualshareholdermeeting.com/IBM2023
Your vote is important.
Please vote by following the instructions on your proxy card or voting instruction form.
To express our appreciation for your
participation, IBM will make a $1 charitable
donation to Water.org on behalf of every
stockholder account that votes this year.
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Water.org empowers people in need with lasting access to safe water and sanitation, giving women hope, children health and families a bright future
The proxy materials, including this Proxy Statement, the IBM 2022 Annual Report, which includes the consolidated financial statements, and the proxy card, or the notice of Internet availability of proxy materials, as applicable, are being distributed beginning on or about March 6, 2023 to all stockholders entitled to vote.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on April 25, 2023: 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.
2023 Notice of Annual Meeting & Proxy Statement 1
 

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Proxy Summary
Voting MattersStockholders 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 12 Directors
FOR all nominees
P. 10-15
2.
Ratification of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm
FOR
P. 70
3.
Advisory Vote on Executive Compensation
FOR
P. 71
4.
Advisory Vote Regarding the Frequency of the Advisory Vote on Executive Compensation
EVERY YEAR
P. 72
5.
Stockholder Proposal to Have an Independent Board Chairman
AGAINST
P. 73-75
6.
Stockholder Proposal Requesting a Public Report on Lobbying Activities
AGAINST
P. 76-78
7.
Stockholder Proposal Requesting a Public Report on Congruency in China Business Operations and ESG Activities
AGAINST
P. 79-80
8.
Stockholder Proposal Requesting a Public Report on Harassment and Discrimination Prevention Efforts
AGAINST
P. 81-83
What’s new?
We continue to enhance our governance, compensation, and sustainability practices and disclosures. Among many other items, since last year, IBM has:

Published a report responsive to the stockholder proposal on the Company’s use of concealment clauses, which can be found at: https://www.ibm.com/impact/pdf/Concealment%20Clause%20Report.pdf

Enhanced disclosure regarding Board structure and the leadership role of the independent Lead Director, including our enhanced Board self-evaluation process

Introduced IBM’s new ESG framework, IBM Impact, and published our consolidated ESG report, in April 2022

Expanded disclosure of the Board’s role in risk oversight
Governance Highlights
Effective Board leadership, independent oversight and strong corporate governance

Independent Lead Director with robust and well-defined responsibilities

Committee sessions with key strategic leaders from senior management

Annual Board self-evaluations led by the independent Lead Director NEW

Executive session led by independent Lead Director at each Board meeting

Proactive Board and committee refreshment with focus on diversity and the optimal mix of skills and experience

Annual review of the Board leadership structure

Confidential voting
Stockholder rights and accountability

Annual election of all directors

Majority voting for directors in uncontested elections

Stockholder special meeting right

Proxy access

No stockholder rights plan

No supermajority voting provisions

Robust year-round stockholder engagement process

Signatory of Commonsense Principles 2.0

Endorser of Investor Stewardship Group Principles

Signatory to the Business Roundtable Statement on the Purpose of a Corporation

Stockholder right to remove directors
22023 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary
 

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IBM Board of Directors
Director Nominees
IBM’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders.
Director
Age
Primary Occupation
Director
Since
Committee
Memberships
Audit
Committee
Financial
Expert
Thomas Buberl
49
Chief Executive Officer, AXA S.A.
2020
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David N. Farr
68
Retired Chairman and Chief Executive Officer, Emerson Electric Co.
2012
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Alex Gorsky
62
Former Chairman and Chief Executive Officer, Johnson & Johnson
2014
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Michelle J. Howard
62
Retired Admiral, United States Navy
2019
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Arvind Krishna
60
Chairman and Chief Executive Officer, IBM
2020
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Andrew N. Liveris
68
Retired Chairman and Chief Executive Officer, The Dow Chemical Company
2010
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F. William McNabb III
65
Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc.
2019
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Martha E. Pollack
64
President, Cornell University
2019
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Joseph R. Swedish
71
Retired Chairman, President and Chief Executive Officer, Anthem, Inc.
2017
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Peter R. Voser
64
Retired Chief Executive Officer, Royal Dutch Shell plc, and Chairman, ABB Ltd.
2015
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Frederick H. Waddell
69
Retired Chairman and Chief Executive Officer, Northern Trust Corporation
2017
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Alfred W. Zollar
68
Executive Advisor, Siris Capital Group, LLC
2021
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Number of meetings held in 2022
10
4
5
0
Audit:
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Directors and Corporate Governance:
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Executive Compensation and Management Resources:
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Executive:
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Audit Committee Financial Expert:
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2023 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary3
 

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Optimal Mix of Skills and Experience of Director Nominees
IBM’s directors collaboratively contribute significant experience in the areas most relevant to overseeing the Company’s business and strategy.
The skills and experience of our Board include, but is not limited to:

Industry leaders with deep executive and oversight experience;

Global operational experience to oversee a business of IBM’s scale, scope, and complexity;

Technology, cybersecurity and digital transformation experience;

Key insight into IBM’s regulatory environment; and

Diversity of backgrounds and experiences.
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Independent and Diverse Board
The Board includes directors who have a deep understanding of our business and members who bring new skills and fresh perspectives. We have a deliberate mix of age and tenure on the Board, which reflects our commitment to ongoing and proactive Board refreshment.
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42023 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary
 

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Integrated Approach to Stockholder Engagement
Robust Engagement and Dialogue
Stockholder feedback is integral to the Board’s decision-making process and informs the Company’s policies, practices and disclosures. IBM customizes its engagements by aligning discussion topics with stockholders’ areas of interest, ensuring that stockholders have an opportunity for an open dialogue with the Company to provide feedback. It is essential to IBM’s Board and senior management that stockholders are afforded a chance to provide their thoughts on topics of interest. This year, the topics stockholders expressed interest in learning more about included: IBM’s consolidated ESG report, IBM Impact; the diversity modifier added to IBM’s Annual Incentive Program; policies and practices regarding director overboarding; and IBM’s response to the majority supported stockholder proposal at our 2022 Annual Meeting.
Off-Season Engagement
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Offered engagement to stockholders owning 57% of shares that voted at the 2022 Annual Meeting
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Met with stockholders owning 43% of shares that voted at the 2022 Annual Meeting
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IBM’s independent Lead Director, as well as IBM’s senior management, met with stockholders owning over 28% of shares that voted at the 2022 Annual Meeting.
Topics and Outcomes of Engagement
EXECUTIVE
COMPENSATION

Continued our Annual Incentive Program and Performance Share Unit metrics that were established in 2021

Updated our 2022 Compensation Peer Group to increase the weighting of peers in the technology industry, reflect IBM’s increased orientation as a hybrid cloud and AI company, and align with the size and scope of IBM following the separation of our managed infrastructure business

Introduced stock options in 2022 as part of the overall equity pay mix for executives, which ensures a portion of equity does not generate value unless IBM’s common stock price increases over the price when granted

Disclosed the 2022 diversity modifier results in the “2022 Annual Incentive Program” section of this Proxy Statement
BOARD AND
GOVERNANCE

Continued focus on Board diversity with 2 women directors and 3 ethnically diverse directors added in the last 4 years

Active Board refreshment with 50% of the Board new in the last 4 years

Published a report responsive to the stockholder proposal on the Company’s use of concealment clauses, which can be found at: https://www.ibm.com/impact/pdf/Concealment%20Clause%20Report.pdf
ESG REPORTING AND THE ENVIRONMENT

Published our IBM Impact report, consolidating our various ESG reports into one comprehensive and cohesive report

Provided stakeholders with comparable ESG data by reporting under the Sustainability Accounting Standards Board (SASB) framework

Published EEO-1 data

Continued pursuit of our goals to use more renewable electricity, reduce our greenhouse gas emissions, and achieve net zero operational greenhouse gas emissions by 2030
2023 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary5
 

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Business Highlights
In 2022, IBM continued to take meaningful actions to strengthen its position as a leader in hybrid cloud and AI. IBM delivered revenue growth above its mid-single digit model and solid cash generation, fueling business investments and stockholder returns through dividends.
2022 Performance Highlights
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Compensation Highlights
Our compensation strategy supports IBM’s high value business model
What We Do
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Tie a significant portion of pay to Company performance
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Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions
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Require significant share ownership by the Chairman and CEO, Vice Chairman and Senior Vice Presidents
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Utilize noncompetition and nonsolicitation agreements for senior executives
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Remove impact of share repurchase on executive incentives
What We Don’t Do
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No individual severance or change-in-control agreements for executive officers
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No excise tax gross-ups for executive officers
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No dividend equivalents on unearned RSUs/PSUs
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No hedging/pledging of IBM stock
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No stock option repricing, exchanges or stock options granted below market value
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No guaranteed incentive payouts for executive officers
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No accelerated vesting of equity awards for executive officers
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No above-market returns on deferred compensation plans
62023 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary
 

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IBM Board of Directors
Overview
IBM’s Board of Directors is responsible for supervision of the overall affairs of IBM. Following the Annual Meeting in 2023, the Board will consist of 12 directors. In 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, experience, and diversity of backgrounds. 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:
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The Committee and the Board identify candidates through a variety of means, including:

recommendations from members of the Committee and the full Board

information the Committee requests from the Secretary of IBM

suggestions from IBM management

a third-party search firm, from time to time
2023 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors7
 

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Director Skills and Qualifications
The IBM Board is composed of a diverse group of members, all leaders in their respective fields. All 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 constituencies.
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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.
82023 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors
 

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IBM Board of Directors – Experience and Skills of Director Nominees
Director
Thomas
Buberl
David N.
Farr
Alex
Gorsky
Michelle J.
Howard
Arvind
Krishna
Andrew N.
Liveris
F. William
McNabb III
Martha E.
Pollack
Joseph R.
Swedish
Peter R.
Voser
Frederick H.
Waddell
Alfred W.
Zollar
Client Industry Expertise
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Organizational Leadership
and Management
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Global Operations
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CFO
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Specific Risk Oversight/
Risk Management Exposure
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Technology, Cybersecurity
or Digital
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Academia
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Government/Regulatory,
Business Associations
or Public Policy
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Public Board
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Gender Identity
Male
Male
Male
Female
Male
Male
Male
Female
Male
Male
Male
Male
Race and/or Ethnicity
White/Caucasian
White/Caucasian
White/Caucasian
Black/African American
Asian/Pacific Islander
White/Caucasian
White/Caucasian
White/Caucasian
White/Caucasian
White/Caucasian
White/Caucasian
Black/African American
Born Outside the U.S.
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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.
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Healthcare
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Manufacturing
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Energy
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Information Technology
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Government
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Research & Development
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Financial Services & Insurance
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Chemicals
2023 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors9
 

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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.
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Thomas Buberl
Chief Executive Officer, AXA S.A., a multinational insurance firm
Director since: 2020
Age: 49
Committee:
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Directors and Corporate Governance
Qualifications

Global business experience as chief executive officer of AXA S.A.

Affiliation with leading business and public policy associations (member of the Climate Finance Leadership Initiative and former chair of Pan-European Insurance Forum)

Acknowledged leader in digital transformation

Outside board experience as a member of the supervisory board of Bertelsmann VerwaltungsGesellschaft
Relevant experience
Mr. Buberl, 49, joined Winterthur in 2005, which became a subsidiary of AXA in 2006. In 2008, he joined Zurich Insurance
Group as chief executive officer for Switzerland. Mr. Buberl returned to AXA in 2012 as chief executive officer for AXA Konzern AG (Germany) and he became a member of AXA’s executive committee. In 2015, Mr. Buberl became the chief executive officer of AXA’s health business and a member of AXA’s group management committee. Mr. Buberl was additionally appointed chief executive officer of AXA’s global business line for life and savings and deputy chief executive officer of AXA in early 2016. He was named chief executive officer and joined the board of directors of AXA in September 2016. He is a member of the supervisory board of Bertelsmann, a member of the Climate Finance Leadership Initiative and the former chair of the Pan-European Insurance Forum. Additionally, during the past five years, he was a director of AXA Equitable Holdings, Inc., a former subsidiary of AXA S.A.
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David N. Farr
Retired Chairman and Chief Executive Officer, Emerson Electric Co., a diversified manufacturing and technology company
Director since: 2012
Age: 68
Committee:
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Audit
Qualifications

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

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

Outside board experience as former director of Delphi Corporation
Relevant experience
Mr. Farr, 68, 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, positions he held until his retirement in 2021. He is the former chairman of the National Association of Manufacturers and is a former director of the U.S.-China Business Council.
102023 Notice of Annual Meeting & Proxy Statement   |   Election of Directors
 

TABLE OF CONTENTS
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Alex Gorsky
Former Chairman and Chief Executive Officer, Johnson & Johnson, a global healthcare products company
Director since: 2014
Age: 62
Committee:
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Executive
Qualifications

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

Affiliation with leading business and public policy associations (former Chair of the Business Roundtable’s Corporate Governance Committee and former member of the Business Council Executive Committee)

Leader in diversity & inclusion and veterans’ issues

Member of an advisory board at an academic institution
Relevant experience
Mr. Gorsky, 62, is the former chairman and chief executive officer of Johnson & Johnson, and one of just seven leaders to have served in the dual role of chairman and chief executive officer since the company was listed on the New York Stock Exchange in 1944. He joined Johnson & Johnson in 1988 as a sales representative with Janssen Pharmaceutica.
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, and 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 of the board of directors in December 2012. Mr. Gorsky remained chief executive officer until he transitioned to executive chairman at the end of 2021. He currently sits on the boards of Apple, JPMorgan Chase and NewYork-Presbyterian Hospital, and the Travis Manion Foundation, and serves on the Wharton School of the University of Pennsylvania Board of Advisors.
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Michelle Howard
Retired Admiral, United States Navy
Director since: 2019
Age: 62
Committee:
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Audit
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, 62, 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 addition to oversight of a multi-billion dollar budget and the establishment of an auditing framework. 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 was the J.B. and Maurice C. Shapiro Professor of International Affairs at the Elliott School of International Affairs at George Washington University from 2018 to 2020, where she taught in the areas of cybersecurity and international policy. In 2022, she was appointed by the President to the Board of Visitors of the U.S. Naval Academy.
2023 Notice of Annual Meeting & Proxy Statement   |   Election of Directors 11
 

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Arvind Krishna
Chairman and Chief Executive Officer, IBM
Director since: 2020
Age: 60
Committee:
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Executive (Chair)
Qualifications

Global business and organizational leadership experience as chairman and chief executive officer of IBM

Research experience as Director of IBM Research and a computer scientist with expertise in key IBM technologies such as artificial intelligence, cloud and quantum computing

Technology experience as general manager of IBM’s Systems and Technology group and Senior Vice President for IBM’s Cloud and Cognitive Software

Outside business experience as a director of the Federal Reserve Bank of New York
Relevant experience
Arvind Krishna, 60, became the chief executive officer of IBM, and a member of the Board of Directors in April 2020. He was elected chairman of the Board of Directors in December 2020. Mr. Krishna joined IBM in 1990. Mr. Krishna led the IBM Cloud and Cognitive Software business unit from 2017 to April 2020 and was a principal architect of the acquisition of Red Hat, the largest acquisition in the Company’s history. Mr. Krishna also served as the director of IBM’s Research division from 2015 to 2020. Previously, he was general manager of IBM’s Systems and Technology Group, IBM’s development and manufacturing organization. Prior to that, he built and led many of IBM’s data-related businesses. In 2022, he became a director of the Federal Reserve Bank of New York. He is also a director of Northrop Grumman Corporation. He has an undergraduate degree from the Indian Institute of Technology, Kanpur, and a PhD. in electrical engineering from the University of Illinois at Urbana-Champaign.
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Andrew N. Liveris
Retired Chairman and Chief Executive Officer, The Dow Chemical Company, a materials, polymer, chemicals, and biological sciences enterprise
Director since: 2010
Age: 68
Committees:
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Directors and Corporate Governance (Chair)
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Executive
Qualifications

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

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

Affiliation with leading business and public policy associations

Experience as a university trustee
Relevant experience
Mr. Liveris, 68, joined Dow in 1976 and subsequently held various executive positions before being 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 Worley, Saudi Aramco, NOVONIX Limited and chairman of the board of Lucid Motors. Mr. Liveris is stepping down as chairman of Lucid Motors in April; he also will step down as a director in another public company within the next 12 months. Additionally, Mr. Liveris is a former Executive Committee member of The Business Council, the former chairman of The Business Council and the former vice chairman of the Executive Committee of the Business Roundtable. Mr. Liveris is also a trustee of the Minderoo Foundation of Australia, and The King Abdullah University of Science and Technology (KAUST), and is a former trustee of the California Institute of Technology and the United States Council for International Business. He is also the president of the Brisbane 2032 Olympic and Paralympic Games Organizing Committee.
122023 Notice of Annual Meeting & Proxy Statement   |   Election of Directors
 

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Frederick William McNabb, III
Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc., one of the world’s largest investment management companies
Director since: 2019
Age: 65
Committee:
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Audit
Qualifications

Global business and technology experience as chairman and chief executive officer of The Vanguard Group, Inc.

Outside board experience as a director of UnitedHealth Group

Member of several advisory boards at academic institutions
Relevant experience
Mr. McNabb, 65, served as chairman of The Vanguard Group, Inc. from 2008 until his retirement in 2018 and served as chief executive officer from 2008 to 2017. He joined Vanguard in 1986. In 2010, he became chairman of the board of directors and the board of trustees of the Vanguard group of investment companies.
Earlier in his career, Mr. McNabb led each of Vanguard’s client facing business divisions. Mr. McNabb served as the vice-chairman of the Investment Company Institute’s Board of Governors and served as its chairman from 2013 to 2016. He is a director of UnitedHealth Group and serves as the chair of its audit committee. He is also a director of Axiom. Mr. McNabb is the former chairman of the board of the Zoological Society of Philadelphia, chairman of the USRowing Foundation, and former chairman of Ernst & Young’s Independent Audit Quality Committee. Mr. McNabb also serves on the Wharton Leadership Advisory Board, the Advisory Board of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia University and is also a board member of CECP: The CEO Force for Good.
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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
Director since: 2019
Age: 64
Committee:
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Executive Compensation and Management Resources
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, 64, 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 former 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. She is currently a board member of the American Association of Universities, and a Trustee of Ithaka. In 2022, Dr. Pollack was elected as a member of the American Academy of Arts & Sciences.
2023 Notice of Annual Meeting & Proxy Statement   |   Election of Directors 13
 

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Joseph R. Swedish
Retired Chairman, President and Chief Executive Officer, Anthem, Inc., a leading health benefits provider
Director since: 2017
Age: 71
Committee:
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Executive Compensation and Management Resources
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, 71, 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 became a director of Mesoblast Limited in 2018 and was named its chairman in March 2019. He is also a director of Centrexion Therapeutics and CDW Corporation. 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 is currently a member and past 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 past member of the Duke Margolis External Advisory Board. Mr. Swedish also serves as Co-Founder and Partner at Concord Health Partners, a private equity firm focused on strategic investing in healthcare portfolio companies.
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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
Director since: 2015
Age: 64
Committees:
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Audit (Chair)
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Executive
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 Temasek
Relevant experience
Mr. Voser, 64, 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 and was the interim chief executive officer from April 2019 until February 2020. He is a director of Temasek Holdings (Private) Limited, as well as Group Chairman of the Board of PSA International Pte Ltd, Singapore, a Temasek subsidiary. Mr. Voser is also active in a number of international and bilateral organizations. Additionally, from 2011 until 2019, he was a director of Roche Holding Limited.
142023 Notice of Annual Meeting & Proxy Statement   |   Election of Directors
 

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Frederick H. Waddell
Retired Chairman and Chief Executive Officer, Northern Trust Corporation, a financial services company
Director since: 2017
Age: 69
Committees:
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Executive Compensation and Management Resources (Chair)
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Executive
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, 69, 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 the Art Institute of Chicago, the Chicago Symphony Orchestra, and Northwestern University, and a director of AbbVie Inc.
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Alfred W. Zollar
Executive Advisor, Siris Capital Group LLC, a private equity firm
Director since: 2021
Age: 68
Committee:
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Directors and Corporate Governance
Qualifications

Global business and leadership experience as an executive partner and executive advisor at Siris Capital Group

Deep technology experience with more than 40 years in systems and software, including as director of Red Hat

Outside board experience as a director of Nasdaq, Bank of New York Mellon, and Public Service Enterprise Group
Relevant experience
Mr. Zollar, 68, has served as an executive advisor at Siris Capital Group, a private equity group specializing in technology
and telecom investments, since March 2021; previously, Mr. Zollar was an executive partner from 2014 through March 2021. While at Siris Capital Group, Mr. Zollar has worked closely with cloud-based technology providers, leading providers of enterprise security solutions and other technology and software-as-a-service companies. He served as a director of Red Hat from 2018 until 2019 and is currently a director of Nasdaq Inc., Bank of New York Mellon Corp, and Public Service Enterprise Group. He is also a lifetime member of the National Society of Black Engineers. Mr. Zollar retired from IBM in 2011 following a 34-year career during which he held a variety of senior management positions in IBM’s systems and software groups.
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THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES INTRODUCED ABOVE.
2023 Notice of Annual Meeting & Proxy Statement   |   Election of Directors 15
 

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Governance and the Board
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).
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Director
Audit
Directors and
Corporate Governance
Executive Compensation
and Management Resources
Executive
Thomas Buberl
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David N. Farr
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Alex Gorsky
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Michelle J. Howard
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Arvind Krishna
Chair
Andrew N. Liveris
Chair
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F. William McNabb III
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Martha E. Pollack
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Joseph R. Swedish
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Peter R. Voser
Chair
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Frederick H. Waddell
Chair
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Alfred W. Zollar
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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 2022, the Board rotated several committee positions. Admiral Howard rotated from the Directors and Corporate Governance Committee to the Audit Committee, Mr. Liveris rotated from the Executive Compensation and Management Resources Committee and became the chair of the Directors and Corporate Governance Committee, Mr. Waddell rotated from the chair of the Directors and Corporate Governance Committee and became the chair of the Executive Compensation and Management Resources Committee, and Mr. Voser became the chair of the Audit Committee. In addition, Mr. Gorsky became Lead Director. In 2023, Mr. Gorsky rotated off the Executive Compensation and Management Resources Committee. As independent Lead Director, this provides Mr. Gorsky with additional opportunities to participate in meetings of all Board committees.
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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 2022.
Members:
Arvind Krishna (Chair)
Alex Gorsky
Andrew N. Liveris
Peter R. Voser
Frederick H. Waddell
Number of meetings in 2022: 0
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Audit Committee [MISSING IMAGE: ic_audit-pn.gif]
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Members:
Peter R. Voser
(Chair)

David N. Farr
Michelle J. Howard
F. William McNabb III
Audit Committee
Financial Experts:
David N. Farr
Michelle J. Howard
F. William McNabb III
Peter R. Voser
Number of meetings in 2022: 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 its 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;

receiving and discussing reports relating to key controls and processes, including cybersecurity;

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

meeting with management prior to each quarterly earnings release; and

regular private sessions with IBM’s Chief Trust and Compliance Officer.
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/att/pdf/auditcomcharter.pdf
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Members:
Andrew N. Liveris
(Chair)

Thomas Buberl
Alfred W. Zollar
Number of meetings in
2022: 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 its 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:
https://www.ibm.com/investor/att/pdf/IBM-Directors-and-Corporate-Governance-Committee-Charter.pdf
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Executive Compensation and Management Resources Committee [MISSING IMAGE: ic_compnsat-pn.gif]
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Members:
Frederick H. Waddell
(Chair)

Martha E. Pollack
Joseph R. Swedish
Number of meetings in 2022: 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 its 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 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 human capital management, diversity and inclusion and other 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;

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 2022 Report of the Executive Compensation and Management Resources Committee of the Board of Directors in this Proxy Statement).
Members of the Committee are not eligible to participate in any of the plans or programs that the Committee administers.
Charter: https://www.ibm.com/investor/att/pdf/Executive_Compensation_and_Management_Resources_Committee_Charter.pdf
Compensation Committee Interlocks and Insider Participation: None
Messrs. Gorsky, Swedish, and Waddell and Dr. Pollack each served as members of the Executive Compensation and Management Resources Committee in 2022. All members of the Committee were independent directors, and no member was an employee or former employee of IBM. During 2022, 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.
Certain Transactions and Relationships
Under IBM’s written related person transactions policy, information about transactions involving related persons is assessed by the independent directors on IBM’s Board. Related persons include IBM directors and executive officers, as well as immediate family members of directors and officers, and beneficial owners of more than five percent of IBM’s common stock. If the determination is made that a related person has a material interest in any IBM transaction, then IBM’s independent directors would review, approve or ratify it, and the transaction would be required to be disclosed in accordance with the SEC rules. If the related person at issue is a director of IBM, or a family member of a director, then that director would not participate in those discussions. In general, IBM is of the view that the following transactions with related persons are not significant to investors because they take place under IBM’s standard policies and procedures: the sale or purchase of products or services in the ordinary course of business and on an arm’s-length basis; the employment by IBM where the compensation and other terms of employment are determined on a basis consistent with IBM’s human resources policies; and any grants or contributions made by IBM under one of its grant programs and in accordance with IBM’s corporate contributions guidelines.
From time to time, IBM may have employees who are related to our executive officers or directors. A daughter of Mr. R.F. Del Bene (General Manager, IBM Technology Lifecycle Services, and former Vice President and Controller) is employed by IBM in a non-executive position, and is not an executive officer of IBM. The employee mentioned above received compensation in 2022 between $120,000 and $290,000. The compensation and other terms of employment of the family member employee noted above is determined on a basis consistent with IBM’s human resources policies.
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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. For more than 25 years, 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 led by IBM’s independent Lead Director. The IBM Board Corporate Governance Guidelines reflect IBM’s principles on corporate governance matters. These guidelines are available at https://www.ibm.com/investor/att/pdf/IBM-Board-Corporate-Governance-Guidelines.pdf.
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/IBM_Business_Conduct_Guidelines.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 https://www.ibm.com/investor/governance/contact-the-board.
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, director independence is monitored by the Directors and Corporate Governance Committee and the full Board on an ongoing basis.
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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 https://www.ibm.com/investor/att/pdf/Independence_Standards.pdf.
Applying those standards to IBM’s non-management director nominees, including those directors not standing for election, as well as a former director who served during 2022, the Committee and the Board have determined that each of the following has met the independence standards: T. Buberl, M.L. Eskew, D.N. Farr, A. Gorsky, M.J. Howard, A.N. Liveris, F.W. McNabb III, M.E. Pollack, J.R. Swedish, P.R. Voser, F.H. Waddell, and A.W. Zollar.
Director Attendance
In 2022, the Board held 9 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 2022:

Overall attendance at Board and committee meetings was over 96%; and

Attendance was at least 75% for each director.
In addition, each director attended IBM’s 2022 Annual Meeting of Stockholders. IBM’s policy with regard to Board members’ attendance at annual meetings of stockholders is available at https://www.ibm.com/investor/governance/director-attendance-at-annual-meeting-of-stockholders.
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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.
Mr. Krishna serves as IBM’s Chairman and CEO and Mr. Gorsky 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. Among other factors, the Board considered and evaluated: the importance of consistent, unified leadership to execute and oversee the Company’s strategy; the strength of Mr. Krishna’s vision for the Company and the quality of his leadership; the strong and highly independent composition of the Board; the views and feedback heard from our investors through our ongoing engagement program throughout the years expressing support for IBM’s leadership structure; and the meaningful and robust responsibilities of the independent Lead Director.
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. Gorsky has significant global business, technology, leadership, and oversight experience as the former chairman and chief executive officer of Johnson & Johnson. Given Mr. Gorsky’s extensive experience leading a global business similar in size and complexity to that of IBM, he plays a pivotal role as independent Lead Director in administering the Board’s risk oversight responsibility.
The Board strongly believes that each company’s circumstances dictate its optimal leadership structure, and the current leadership structure strikes the right balance of allowing our Chairman and CEO to promote a clear, unified vision for the Company’s strategy, providing 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.
Responsibilities and Actions of the Lead Director
As Lead Director, Mr. Gorsky has the following robust set of core responsibilities:
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actively involved in the strategic planning of the Board agendas and meetings, Board design and committee composition;
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approves information sent to the Board;
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reviews and approves meeting schedules to ensure there is sufficient time for discussion of all agenda items;
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presides 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;
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authority to call meetings of the independent directors, at which he presides in lieu of the Chairman;
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serves as liaison between the Chairman and the independent directors; and
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if requested by major stockholders, ensures 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:
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one-on-one debriefs with the Chairman after each meeting;
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analyzes CEO performance in executive session in conjunction with the Executive Compensation and Management Resources Committee Chair;
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leads the Board self-evaluation process, interviewing each director, together with the Chairman, and reviews the feedback received with the full Board;
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spends time with senior management outside of Board meetings to ensure a deep understanding of the business and strategy of, and risks to, the Company;
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regular contact with members of the Board and meeting individually with each independent director; and
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attends meetings held by each of the Board’s committees.
The Board reviews our leadership structure at least annually to ensure the optimal structure for the strategy and oversight of the Company. Regularly scheduled executive sessions, including sessions of independent directors without members of management, chaired by the independent Lead Director, are held at each Board meeting.
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Board Evaluation Process
IBM’s independent Lead Director oversees a comprehensive, multi-part process for the Board’s ongoing self-evaluation to ensure that the Board is operating effectively and that its processes reflect best practices. This process ensures that the full Board and each committee conduct an assessment of their performance and solicit feedback for enhancement and improvement. From time to time, this process includes a third-party review of the Board’s process and evaluation criteria.
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Full Board Self-Evaluation
The Lead Director leads the Board in conducting an annual self-evaluation to review the effectiveness of the Board and its committees. 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 its committees;

The effectiveness of the Board and committee evaluation processes; and

The overall functioning of the Board and its committees.
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Each Individual Committee has Self-Evaluation
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 Chief Auditor and each member of the Committee.
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Individual Interviews with the Chairman of the Board and Lead Director
The Lead Director, together with the Chairman, interviews each IBM director individually to obtain his or her candid assessment of director performance, Board dynamics and the effectiveness of the Board and its committees.
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Presentation of Feedback
The Lead Director shares insights from each of these meetings with the full Board.
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Results Discussion
The Board meets in executive session to discuss the results of the evaluation and any other issues that the directors may want to raise.
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Follow-ups
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, the evaluation process is an ongoing process throughout the year. At each meeting, the Chairman actively solicits feedback from each individual director and directors continuously share their perspectives, feedback, and suggestions throughout the year.
Succession Planning
IBM has long been recognized for its leadership and talent development. 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 regularly to actively review and plan the succession of the CEO and other senior management positions.
In succession planning, 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

Diversity, inclusion, and Company culture
The Executive Compensation and Management Resources Committee also regularly reviews succession planning and the Company’s management resources programs, overseeing a broad range of human capital management topics, including diversity and inclusion.
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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:
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Risk Oversight
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. Our risk professionals rigorously analyze both enterprise and emerging risks, incorporating both internal and external perspectives and data analytics into a comprehensive annual enterprise risk review. This approach is leveraged by management in monthly emerging risk reviews, to proactively identify and respond to changes in the business environment. IBM’s comprehensive annual enterprise risk review is also discussed with both the Audit Committee and full Board.
Risk assessment is integral to the Board’s strategic planning and in the analysis of transactions and other matters presented to the Board, including capital expenditures, acquisitions, divestitures and other portfolio actions, and operational and financial matters. In addition to the annual enterprise risk reviews, IBM’s risk professionals, including the Chief Risk Officer, work closely with senior management to integrate risk assessment into Board and committee briefings on topics of strategic importance. The Board and the Audit Committee also receive reports from IBM’s Chief Trust and Compliance Officer (CTCO) on compliance related matters. The CTCO reports to the Senior Vice President and General Counsel with dotted line reporting to the Audit Committee, and holds a private session with members of the Audit Committee at every meeting.
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. Our risk oversight framework also aligns with our disclosure controls and procedures. For example, IBM’s quarterly and annual financial statements and related disclosures are reviewed by its disclosure committee, comprised of senior management including IBM’s Controller, Chief Auditor, General Counsel, Chief Trust and Compliance Officer, and others, all of whom participate in the risk assessment practices described above. The CEO and CFO then receive a report from the disclosure committee and external auditor before the financial statements are reviewed with the Audit Committee and Board, approved, and then filed.
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Cybersecurity is a critical part of risk management at IBM. To more effectively address cybersecurity threats, IBM leverages a multi-layered approach. IBM has a dedicated Chief Information Security Officer (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 and Technology Security organization, which works across all of the organizations within the Company to protect IBM, its brand, and its clients against cybersecurity risks.
Both the Board and the Audit Committee each receive regular updates from senior management, including the CISO and cybersecurity experts, in areas such as threat intelligence, major cyber risk areas, emerging global policies and regulations, cybersecurity technologies and best practices, and cybersecurity incidents.
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Climate change is a serious concern that warrants meaningful action on a global basis. IBM considers risks as identified by the Financial Stability Board Task Force on Climate-related Financial Disclosures in its risk management process. IBM senior management assesses the significance of environmental and climate-related risks. In addition, they manage these risks and provide regular updates to the Board and Directors and Corporate Governance Committee.
IBM has established objectives and targets for energy conservation, procurement of renewable energy, carbon dioxide (CO2) emissions reduction and other key environmental performance indicators. Performance against these objectives and targets is routinely monitored, and results are reviewed annually by the Board’s Directors and Corporate Governance Committee. Details on IBM’s performance against key environmental performance indicators can be found in our annual ESG Report available at https://www.ibm.com/impact/reports-and-policies.
Director Compensation
Annual Retainer: In 2022, non-management directors received an annual retainer of $325,000. Chairs of each of the Directors and Corporate Governance Committee and the Executive Compensation and Management Resources Committee each received an additional annual retainer of $20,000 and the chair of the Audit Committee received an additional annual retainer of $30,000. The additional retainer for the Lead Director position is $40,000.
Under the IBM Deferred Compensation and Equity Award Plan (DCEAP), 60% of the total annual retainer is required to be deferred and paid in Promised Fee Shares (PFS). Each PFS is equal in value to one share of IBM’s common stock. When a dividend is paid on IBM’s common stock, each director’s PFS account is credited with additional PFS reflecting a dividend equivalent payment. With respect to the payment of the remaining 40% of the annual retainer, directors may elect one or any combination of the following: (a) deferral into PFS, (b) deferral into an interest-bearing cash account, and/or (c) receipt of cash payments on a quarterly basis during service as a Board member. IBM does not pay above-market or preferential earnings on compensation deferred by directors.
Stock Ownership Guidelines: Under the IBM Board Corporate Governance Guidelines, within five years of initial election to the Board, non-management directors are expected to have stock-based holdings in IBM equal in value to eight times the equity portion of the annual retainer initially payable to such director. Stock-based holdings mean (i) IBM shares owned personally or by members of immediate family sharing the same household, and (ii) DCEAP PFS. Stock-based holdings do not include unexercised stock options.
Our stock ownership guidelines remain the strongest in our peer group.
Payout under the DCEAP: Upon a director’s retirement or other completion of service as a director (a) all amounts deferred as PFS are payable, at the director’s choice, in cash and/or shares of IBM’s common stock, and (b) amounts deferred into the interest-bearing cash account are payable in cash. Payouts may be made in any of (a) a lump sum payment as soon as practicable after the date on which the director ceases to be a member of the Board, (b) a lump sum payment paid in February of the calendar year immediately following the calendar year in which the director ceases to be a member of the Board, or (c) between two and ten annual installments, paid beginning in February following the calendar year in which the director ceases to be a member of the Board. If a director elects to receive PFS in cash, the payout of PFS is valued using the closing price of IBM common stock on the NYSE as follows: for payouts made in an immediate lump sum, IBM common stock will be valued on the first day after the date on which the director ceases to be a member of the Board; for lump sum payments made in February of the calendar year immediately following the calendar year of separation or for installment payouts, IBM common stock will be valued on the last business day of the January preceding such February payment.
IBM’s Matching Grants Program: In 2022, non-management directors were eligible to participate in IBM’s Matching Grants Program on the same basis as IBM’s employees based in the U.S. Under this program, IBM matched a director’s eligible contributions in cash on a 1-to-1 basis to approved educational institutions, medical facilities and cultural or environmental institutions. Each director was eligible for a Company match on total gifts up to $10,000 per calendar year. Amounts shown in the Director Compensation Table for matching grants may be in excess of $10,000 because such amounts include Company contributions on gifts that were made by directors in previous years.
Director Compensation Consultant: The Committee retains Semler Brossy Consulting Group, LLC (Semler Brossy) to assess trends and developments in director compensation practices and to compare IBM’s practices against them. The Committee uses the analysis prepared by the consultant as part of its periodic review of IBM’s director compensation practices. Other than services provided to IBM’s Directors and Corporate Governance Committee and IBM’s Executive Compensation and Management Resources Committee, Semler Brossy does not perform any other work for IBM. The Committee determined that Semler Brossy is free of conflicts of interest.
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2022 Director Compensation Table
Name
Fees Earned or
Paid in Cash ($)
All Other
Compensation ($)
Total ($)
(a)
(b)
(c)
(1)
(d)
Thomas Buberl
325,000 36,268 361,268
Michael L. Eskew(2)
92,917 89,171 182,088
David N. Farr
325,000 103,181 428,181
Alex Gorsky
361,667 142,627 504,294
Michelle J. Howard
325,000 52,894 377,894
Andrew N. Liveris
341,667 203,012 544,679
F. William McNabb III
325,000 46,666 371,666
Martha E. Pollack
325,000 60,308 385,309
Joseph R. Swedish
325,000 59,747 384,747
Peter R. Voser
350,000 133,979 483,979
Frederick H. Waddell
345,000 96,712 441,713
Alfred W. Zollar
325,000 9,240 334,241
(1)
Amounts in this column include the following: for Mr. Buberl: $36,193 of dividend equivalent payments on PFS; for Mr. Eskew: $79,146 of dividend equivalent payments on PFS and $10,000 contributed by the Company under the Matching Grants Program; for Mr. Farr: $103,105 of dividend equivalent payments on PFS; for Mr. Gorsky: $142,552 of dividend equivalent payments on PFS; for Admiral Howard: $52,819 of dividend equivalent payments on PFS; for Mr. Liveris: $202,937 of dividend equivalent payments on PFS; for Mr. McNabb: $46,591 of dividend equivalent payments on PFS; for Dr. Pollack: $60,233 of dividend equivalent payments on PFS; for Mr. Swedish: $59,672 of dividend equivalent payments on PFS; for Mr. Voser: $133,903 of dividend equivalent payments on PFS; for Mr. Waddell: $86,637 of dividend equivalent payments on PFS and $10,000 contributed by the Company under Matching Grants Program; and for Mr. Zollar: $9,240 of dividend equivalent payments on PFS.
(2)
Mr. Eskew’s term on the Board ended April 2022.
Fees Earned or Paid in Cash (column (b)): Amounts shown in this column reflect the annual retainer paid to each director as described above. A director receives a prorated amount of the annual retainer for service on the Board and, if applicable, as Lead Director or a committee chair, based on the portion of the year for which the director served.
All Other Compensation (column (c)): Amounts shown in this column represent:

Dividend equivalent payments on PFS accounts under the DCEAP as described above.

Group life insurance premiums paid by IBM on behalf of the directors.

Value of the contributions made by IBM under IBM’s Matching Grants Program as described above.
Delinquent Section 16(a) Reports: None
IBM believes that all reports for IBM’s executive officers and directors that were required to be filed under Section 16 of the Securities Exchange Act of 1934 in 2022 were timely filed.
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, 2022 through June 30, 2023, at a total cost of approximately $6.7 million. The primary carrier is AXA/XL Specialty Insurance Company.
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Ownership of Securities
Security Ownership of Certain Beneficial Owners
The following sets forth information as to any person known to IBM to be the beneficial owner of more than five percent of IBM’s common stock as of December 31, 2022.
Name and address
Number of Shares
Beneficially Owned
Percent of Class
The Vanguard Group(1)
100 Vanguard Boulevard
Malvern, PA 19355
80,144,196
8.86%
BlackRock Inc.(2)
55 East 52nd Street
New York, NY 10055
72,337,762
8.0%
State Street Corporation(3)
State Street Financial Center
One Lincoln Street
Boston, MA 02111
53,576,165
5.93%
(1)
Based on the Schedule 13G filed with the Securities and Exchange Commission on February 9, 2023 by The Vanguard Group and certain subsidiaries (Vanguard). Vanguard reported that it does not have sole voting power over any shares, has shared voting power over 1,273,052 shares, sole dispositive power over 76,392,974 shares, and shared dispositive power over 3,751,222 shares. The Schedule 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The Schedule 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of IBM.
(2)
Based on the Schedule 13G filed with the Securities and Exchange Commission on February 3, 2023 by BlackRock, Inc. and certain subsidiaries (BlackRock). BlackRock reported that it has sole voting power over 65,351,316 shares, does not have shared voting power over any shares, and sole dispositive power over all shares beneficially owned. The Schedule 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The Schedule 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of IBM.
(3)
Based on the Schedule 13G filed with the Securities and Exchange Commission on February 10, 2023 by State Street Corporation and certain subsidiaries (State Street). State Street reported that it does not have sole voting power over any shares, has shared voting power over 42,508,791 shares, has shared dispositive power over 53,447,207 shares, and does not have sole dispositive power over any shares. The Schedule 13G does not identify any shares with respect to which there is a right to acquire beneficial ownership. The Schedule 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of IBM.
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Common Stock and Stock-based Holdings of Directors and Executive Officers
The following table sets forth the beneficial ownership of shares of IBM’s common stock as of December 31, 2022, by IBM’s current directors and nominees, the executive officers named in the 2022 Summary Compensation Table, and such directors and all of IBM’s executive officers as of December 31, 2022, as a group. Also shown are shares over which the named person could have acquired voting power or investment power within 60 days after December 31, 2022. Voting power includes the power to direct the voting of shares held, and investment power includes the power to direct the disposition of shares held.
IBM’s current non-management directors had beneficial ownership of a total of 196,700 shares of common stock and DCEAP shares as of December 31, 2022. In the aggregate, these shares were valued at more than $27 million as of December 31, 2022, or an average of more than $2.5 million for each of IBM’s non-management directors as of December 31, 2022.
Acquirable within 60 days
Value of
Common Stock
shares at
Fiscal Year End
Common
Stock-based
Stock Options And
Directors’
DCEAP
Name
Stock
(1)
Holdings
(2)
RSUs
(3)
Shares
(4)
($)
(5)
Michelle H. Browdy
103,913 134,142 15,016 N/A 14,640,303
Thomas Buberl
0 0 0 7,198 1,014,126
Gary Cohn
32,552 81,933 26,887 N/A 4,586,251
David N. Farr
8,508 (6) 8,508 0 17,040 3,599,458
Alex Gorsky
4,445 4,445 0 24,005 4,008,321
Michelle J. Howard
144 144 0 9,642 1,378,750
James J. Kavanaugh
112,968(7) 166,783 27,031 N/A 15,916,062
Arvind Krishna
205,578(8) 327,326 41,297 N/A 28,963,884
Andrew N. Liveris
2,655 2,655 0 33,348 5,072,463
F. William McNabb III
9,250 9,250 0 8,823 2,546,305
Martha E. Pollack
0 0 0 10,955 1,543,450
Thomas W. Rosamilia
36,189 96,410 19,522 N/A 5,098,668
Joseph R. Swedish
5,261(9) 5,261 0 10,868 2,272,415
Peter R. Voser
0 0 0 22,602 3,184,396
Frederick H. Waddell
3,763 3,763 0 15,177 2,668,457
Alfred W. Zollar
0 0 0 2,973 418,866
Directors and executive officers as a group
551,424 (10) 917,618 159,744(10) 162,631(10)
(1)
This column is comprised of shares of IBM common stock beneficially owned by the named person. Unless otherwise noted, voting power and investment power in the shares are exercisable solely by the named person, and none of the shares are pledged as security by the named person. Standard brokerage accounts may include nonnegotiable provisions regarding set-offs or similar rights. This column includes 188,389 shares in which voting and investment power are shared. The directors and officers included in the table disclaim beneficial ownership of shares beneficially owned by family members who reside in their households. The shares are reported in such cases on the presumption that the individual may share voting and/or investment power because of the family relationship. The shares reported in this column do not include 6,165 shares held by the IBM Personal Pension Plan Trust Fund, over which the members of the IBM Retirement Plans Committee, a management committee presently consisting of certain executive officers of the Company, have voting power, as well as the right to acquire investment power by withdrawing authority now delegated to various investment managers.
(2)
For executive officers, this column is comprised of the shares shown in the “Common Stock” column and, as applicable, all restricted stock units including retention restricted stock units, officer contributions into the IBM Stock Fund under the IBM Excess 401(k) Plus Plan, and Company contributions into the IBM Stock Fund under the Excess 401(k) Plus Plan. Some of these restricted stock units may have been deferred under the Excess 401(k) Plus Plan in accordance with elections made prior to January 1, 2008, and they will be distributed to the executive officers after termination of employment as described in the 2022 Nonqualified Deferred Compensation Narrative.
(3)
For executive officers, this column is comprised of (i) shares that can be purchased under an IBM stock option plan within 60 days after December 31, 2022, and (ii) RSU awards that vest within 60 days after December 31, 2022. For Ms. Browdy, Mr. Cohn, Mr. Kavanaugh, Mr. Krishna, and Mr. Rosamilia, shares in this column are from IBM restricted stock awards which will vest within 60 days after December 31, 2022.
(4)
Promised Fee Shares earned and accrued under the IBM Deferred Compensation and Equity Award Plan (DCEAP) as of December 31, 2022, including dividend equivalents credited with respect to such shares. Upon a director’s retirement, these shares are payable in cash or stock at the director’s choice (see 2022 Director Compensation Narrative for additional information).
(5)
Values in this column are calculated by multiplying the number of shares shown in the “Common Stock” column plus the “Directors’ DCEAP Shares” column by the closing price of IBM common stock on the New York Stock Exchange on the last business day of the 2022 fiscal year ($140.89).
(6)
Includes 450 shares in which voting and investment power are shared.
(7)
Includes 15,174 shares in which voting and investment power are shared.
(8)
Includes 167,503 shares in which voting and investment power are shared.
(9)
Voting and investment power are shared.
(10)
The total of these three columns represents less than 1% of IBM’s outstanding shares, and no individual’s beneficial holdings totaled more than 1/100 of 1% of IBM’s outstanding shares.
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ESG at IBM
We believe IBM is a catalyst that makes the world work better. As part of that, we are creating impactful solutions to the environmental, social, and governance (ESG) challenges that face companies and society. With a balanced approach, we aspire to make a lasting, positive impact in business ethics, our environment, and the communities in which we work and live. ESG at IBM embodies this philosophy through the three pillars of our IBM Impact framework and is informed through collaboration and engagement with communities, clients, stockholders, and employees. We consider frameworks and initiatives such as the Global Reporting Initiative (GRI) Standards, the Sustainability Accounting Standards Board (SASB) Standards, the Task Force on Climate-Related Financial Disclosures (TCFD), the Stakeholder Capitalism Metrics, and the United Nations Sustainable Development Goals (SDGs). We are also monitoring the developing regulatory landscape as ESG comes into focus for many regulators and standard-setters worldwide. Our latest ESG Report is available at https://www.ibm.com/impact/reports-and-policies.
IBM impact
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Ethical Impact
IBM is committed to developing policies and practices that prioritize ethics, trust, transparency, and accountability. For over a century, IBM has earned the trust of our clients by responsibly managing their data. We have worked to earn the trust of our stakeholders by ushering powerful new technologies into the world, responsibly and with purpose. As leaders in the tech sector, we believe it is our responsibility to contribute to diverse, global efforts that shape standards and best practices.
Putting our Principles of Trust and Transparency into Practice
IBM’s Principles for Trust and Transparency are the core principles that guide our handling of client data and insights, and the responsible development and deployment of new technologies. This philosophy applies to our approach to AI: we aim to create and offer trusted technology that can augment, not replace, human decision-making. Properly calibrated, AI can assist humans in making fairer choices, countering human biases, and promoting inclusivity. IBM recognized early on that articulating these principles around the responsible deployment of AI technologies was critical — backed by a strong commitment of putting words into practice. Our practice includes training, education, playbooks, tools and methodologies of AI ethics to be taken into account in the design, development, delivery and operational lifecycle of IBM products and across the IBM enterprise. In 2022 we continued to advocate for technology ethics with the Rome Call for AI Ethics, the Notre Dame-IBM Tech Ethics Lab, and through publication on our points of view on facial recognition and mitigating bias in AI. Additionally, we share technology solutions with the open-source community, including several toolkits, designed to promote trustworthy AI.
Our AI Ethics Board, which is comprised of a cross-disciplinary team of senior IBM leaders, co-chaired by IBM’s Chief Privacy Officer and IBM’s AI Ethics Global Leader, reports to the highest level of the company, and works with experts throughout our business to address our most complicated questions. We regularly share our AI Ethics Board governance process with clients and others outside of IBM so that we can collectively advance the responsible use of technology. Continuous collaboration with governments, companies, and other organizations has helped us as we embed privacy, tech ethics, and security into our operations.
Responsible Computing
Stemming from the belief that technology must be thought of in terms of its impact on people and the planet, in May 2022, IBM co-founded the Responsible Computing consortium to approach trustworthy IT and sustainability. The consortium, comprised of technology innovators from industry and academia, created a framework to address current and future challenges holistically and systemically in computing. The Responsible Computing framework focuses on:
Responsible Data Centers: Designed and operated with an emphasis on sustainability
Responsible Infrastructure: Efficient use of available and future technology
Responsible Code: Conscious code choices that optimize environmental, social and economic impact over time
Responsible Data Usage: Data is securely used in ways that drive transparency, fairness and respect for the users
Responsible Systems: Inclusive systems that address bias and discrimination driving equality for all
Responsible Impact: Technologies and innovations that drive positive impact for society at large
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Equitable Impact
IBM’s purpose is underpinned by our culture, which reflects our ability to continually reinvent ourselves to meet the needs of our clients and to make a positive impact on the world. Our culture promotes diversity, trust and integrity while fostering innovation and encouraging experimentation leveraging the application of science and technology for impact.
Embracing and Enabling a Diverse and Inclusive Workforce
The IBM Board of Directors strongly believes that much of IBM’s future success depends on the caliber of its talent and the full engagement and inclusion of IBMers in the workplace. We foster a culture of conscious inclusion and active allyship where IBMers can make a positive impact on society and bring their authentic selves to work.
Diversity and Inclusion
Our diversity practices have resulted in a year-over-year increase of representation for women globally and Black and Hispanic employees in the U.S.
We currently have eight D&I Communities with over 200 Business Resource Groups spanning 52 countries, with IBMers actively participating in programs, events, and other D&I initiatives globally
Thousands of IBMers have completed training to become certified allies who actively promote and progress equity and inclusion for the advancement and benefit of people different from themselves
IBM has had an equal pay policy since 1935; we have conducted statistical pay equity analysis for decades, and in 2022 this continued to include all countries where we have employees
Supporting our Employees
We believe that our employees perform their best at work, home, and in the communities where we live and work when their well being is supported. IBM offers a competitive benefits program, designed to help employees build a solid financial foundation for meeting a diverse array of needs — health care, income protection, retirement security, and personal interests.
IBM is actively fostering an environment of growth, inclusion, innovation, and feedback. We support our employees’ professional development by investing in a range of advanced tools and resources that empower IBMers to direct their own career paths and build the skills required to pursue their goals.
Talent and Culture
IBM offers a compelling value proposition to employees: IBMers develop innovative technologies including Hybrid Cloud, AI, quantum computing and cybersecurity, for clients whose businesses the world relies on
IBMers worldwide have confidential, 24/7 access to critical mental health support through employee assistance programs, other mental health resources and trainings
Hundreds of thousands of IBMers globally participate in our annual engagement survey, and our industry-leading talent practices enable more than 8 in 10 IBMers to be engaged
IBM managers and leaders have access to their team and organization engagement levels along with actionable data-driven insights
Community Development
At IBM we use our talent and technology to drive positive and measurable social impact in education and sustainability. We are expanding access to digital skills and employment opportunities so that more people — regardless of their background — can participate in the digital economy. Closing the skills gap is the biggest opportunity of the decade. We are taking bold action to achieve this.
Community Development
IBM has pledged to skill 30 million people by 2030, preparing them for in-demand jobs
Learners participating in our skilling programs earn digital badges and certifications widely recognized by the labor market
We are collaborating with over 20 historically black colleges and universities (HBCUs) on IBM Cybersecurity Centers to advance STEM-based opportunities for traditionally underrepresented communities
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Environmental Impact
For more than 50 years, IBM has committed to environmental responsibility — a commitment formalized by our first corporate environmental policy in 1971, which integrated environmental responsibility throughout the fabric of our business. IBM views environmental leadership as a long-term strategic imperative, demonstrated today as we continue to set ambitious goals and apply our technologies to accelerate solutions to global environmental challenges.
Protecting the Environment
Environmental Highlights
Procured 64.2% of electricity consumed across IBM’s operations from renewable sources
Diverted 94.2% (by weight) of IBM’s total nonhazardous waste from landfill and incineration
Reduced operational greenhouse gas emissions 61% since 2010
Held first annual Supplier Sustainability Leadership Forum in 2022 focused on energy efficiency
Enabling Our Clients and Communities
At IBM, we believe that science, technology and innovation are essential to tackling environmental issues and helping clients and communities address environmental challenges. IBM continues to develop solutions that enable clients to assess and minimize their environmental footprint.
   
Enabling our Clients
The IBM Sustainability portfolio is differentiated by our ability to handle complex data spanning multiple business systems and embed sustainability decision making in daily business operations. By bridging their high-level sustainability goals and daily operations, IBM is uniquely positioned to unlock a data driven approach enabling clients to identify where to start, where to go and how to achieve their sustainability goals, while also optimizing their core business operations and cost.
In 2023 we are using our sustainability portfolio to assist clients in three key areas:

Data management, analytics, and facilitating the reporting of greenhouse gas emissions;

Identifying opportunities to reduce emissions of owned assets, such as buildings, IT, infrastructure, machines, and processes; and

Managing data and gathering insights to help clients reduce emissions and waste in their supply chain.
Enabling our Communities
In 2022 we announced the IBM Sustainability Accelerator, a pro bono social impact program that applies IBM technologies, such as hybrid cloud and AI, and expertise to enhance and scale nonprofit and government organization interventions helping populations especially vulnerable to environmental threats. IBM plans to select five organizations for this program each year. Our first cohort, which began work in 2021, is focused on sustainable agriculture, while our cohort announced at COP27 in November 2022 focuses on clean energy.
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Responsibly Advocating Public Policy
IBM’s Government and Regulatory Affairs team engages in worldwide policy advocacy to drive growth and innovation in the digital economy. IBM has never had a political action committee (PAC), makes no political donations, and has always been committed to meaningful management, oversight, and accurate reporting of our engagement with government officials. Through deep expertise in specific areas of public policy relevant to its business, clients and communities, IBM works collaboratively with governments worldwide to expand economic prosperity and advance the ability of powerful technologies to have positive impacts on society.
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Political Contributions
IBM engages in policy, not politics. In 1968, former IBM CEO Thomas Watson Jr. said a company “should not try to function as a political organization in any way.” IBM continues to live by this philosophy to this day. We have 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 PACs, campaign funds, or trade or industry associations. This policy applies equally in all countries and across all levels of government. Our approach to advocacy is also grounded in a commitment to preserve and strengthen trust in civic institutions and, to that end, we have partnered with other leading companies and the University of Michigan’s Erb Institute to build and advance a set of principles to promote Corporate Political Responsibility (CPR). By sharing the merit of our non-giving advocacy strategy and deepening business engagement with the CPR principles, we work to increase transparency in the ways that corporations advocate on public policy issues.
IBM does not have a PAC and does not engage in independent expenditures or electioneering communications as defined by law.
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Lobbying
IBM’s Government and Regulatory Affairs team is committed to advancing common sense public policies that benefit our business and communities. We seek to build trust in technology through precision regulation, a modernized digital infrastructure, promoting justice and equality for all citizens, and leveraging science and technology for good. 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 and must comply with applicable law and IBM’s Business Conduct Guidelines.
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.
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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. Although IBM works to make our voice heard, there may be occasions where our views on an issue differ from those of a particular association. We perform comprehensive due diligence on all of our trade associations to confirm they are reputable and have no history of malfeasance. Company policy prohibits them from using any IBM funds to engage in political expenditures, and we implement robust procedures to ensure they comply.
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 IBM Government and Regulatory Affairs, closely monitors and coordinates all public policy advocacy efforts, as well as any lobbying activities.
IBM is proud to report that the Center for Political Accountability’s 2022 Report on Corporate Political Disclosure and Accountability gave IBM a score of 98.6 out of 100, naming IBM as one of only 20 companies that fully prohibit the use of corporate assets to influence elections and as one of only 39 companies that prohibit both trade associations and non-profits from using Company contributions for election-related purposes.
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2022 Executive Compensation
Message to Stockholders
Report of the Executive Compensation and Management Resources Committee of the Board of Directors
Set out below is the Compensation Discussion and Analysis, which is a discussion of IBM’s executive compensation programs and policies written from the perspective of how we and management view and use such programs and policies.
Given the Committee’s role in providing oversight to the design of those programs and policies, and in making specific compensation decisions for senior executives using those programs and policies, the Committee participated in the preparation of the Compensation Discussion and Analysis, reviewing successive drafts of the document and discussing those with management. The Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
We continue to evaluate the effectiveness of our executive compensation programs and practices, and a critical component of that evaluation process is feedback from engaging with our stockholders.
We appreciate all of the feedback and support, and we join with management in welcoming readers to examine our pay practices and in affirming the commitment of these pay practices to the long-term interests of stockholders.
Frederick H. Waddell (chair)
Joseph R. Swedish
Martha E. Pollack
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2022 Compensation Discussion and Analysis
Improved Revenue Growth Profile
Revenue year-to-year growth figures at constant currency.(1)
In 2022, IBM delivered $60.5B in revenue, and generated $10.4B cash from operations
Revenue Acceleration and Cash Generation
Strong revenue growth year-to-year, delivering above IBM’s mid-single digit model. Generated $9.3 billion of consolidated Free Cash Flow(1)
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Optimized Portfolio Positioned to Deliver High Value
Recurring Revenue Acceleration
IBM continues to strengthen and reinforce its position in delivering high-value, differentiated technology to its clients
About 50% of IBM revenue is recurring, with a high-value mix
2022 Revenue Mix
2022 Recurring Revenue Mix
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Increased revenue mix to higher growth Software and Consulting
Software revenue +12% year-to-year
Hybrid Platform & Solutions +9% year-to-year, including Red Hat +17% year-to-year
Consulting revenue +15% year-to-year
Broad-based growth across all business lines and geographies
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65% of recurring revenue now comes from high-growth Software
Hybrid Platform & Solutions exited 2022 with over $13 billion in Annual Recurring Revenue(1)
Strategic Capital Allocation
Completed 8 acquisitions
in 2022 for $2B
Returned $5.9B to stockholders
through dividends in 2022
Ended 2022 with $8.8B in cash
and marketable securities,
up over $1B year-to-year
(1)
Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.
(2)
Year-to-Year revenue growth % includes incremental sales to Kyndryl (post-separation, through October 2022) of ~1 point and ~4 points for 2021 and 2022, respectively.
Note: In an effort to provide additional and useful information regarding IBM’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), this Compensation Discussion and Analysis and Proxy Statement contains certain non-GAAP financial measures, including operating earnings per share, free cash flow, consolidated operating cash flow, and revenue growth rates adjusted for currency. Amounts are presented on a continuing operations basis unless otherwise noted. For reconciliation and rationale for management’s use of this non-GAAP information, refer to Appendix A — “Non-GAAP Financial Information and Reconciliations.”
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Our compensation strategy, with significant pay at risk, supports the drivers of IBM’s high value business model.
For 2022, at target, approximately 77% of Mr. Krishna’s pay remained at risk and subject to attainment of rigorous performance goals.
For 2022 performance, the Board approved an annual incentive payment of $3,480,000 for Mr. Krishna, which was 116% of target. The payout reflects a 100% Individual Contribution Factor (ICF) and the Annual Incentive Program (AIP) pool funding at 116%.
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In making this award in line with the Company’s incentive score, the Committee also considered Mr. Krishna’s overall performance against his objectives, which included strong revenue generation (at constant currency), and the continued optimization of the Company’s portfolio, with an increased mix of higher growth software and consulting revenue. In addition, the Committee considered his personal leadership in AI and quantum computing, improving diversity representation including continued improvement in diverse executive representation, as well as continued best in class employee engagement.
Payouts in both the annual and long-term programs reflect rigorous performance goals.
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Feedback from Our Investors Continues to Inform the Committee

IBM once again offered engagement to over 125 institutions and reached out to hundreds of thousands of individual registered and beneficial owners, representing more than 57% of the shares that voted on Say on Pay in 2022.

Our stockholder discussions and formal 2022 Say on Pay vote reaffirmed investor support of our pay practices.
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Section 1: Executive Compensation Program Design and Results
Trust and personal responsibility in all relationships — relationships with clients, partners, communities, fellow IBMers, and investors — is a core value at IBM. As a part of maintaining this trust, we well understand the need for our investors — not only professional fund managers and institutional investor groups, but also millions of individual investors — to know how and why compensation decisions are made.
To that end, IBM’s executive compensation practices are designed specifically to meet five key objectives:

Align the interests of IBM’s leaders with those of our investors by varying compensation based on both long-term and annual business results and delivering a large portion of the total pay opportunity in IBM stock;

Balance rewards for both short-term results and the long-term strategic decisions needed to ensure sustained business performance over time;

Attract and retain the highly qualified senior leaders needed to drive a global enterprise to succeed in today’s highly competitive marketplace;

Motivate our leaders to deliver a high degree of business performance without encouraging excessive risk taking; and

Differentiate rewards to reflect individual and team performance.
The specific elements of IBM’s U.S. executive compensation programs are:
Type
Component
Key Characteristics
Current Year
Performance
Salary
Salary is a market-competitive, fixed level of compensation.
Annual Incentive Program (AIP)
At target, annual incentive provides a market-competitive total cash opportunity. Actual annual incentive payments are funded by business performance against financial metrics and distributed based on annual performance scores, with top performers typically earning the greatest payouts and the lowest performers earning no incentive payouts.
Long-Term
Incentive
Performance Share Units (PSUs)
Equity awards are typically granted annually and may consist of PSUs, RSUs, and Stock Options. Equity grants are based on competitive positioning and vary based on individual talent factors. Lower performers do not receive equity grants.
For PSUs, the number of units granted can be increased or decreased at the end of the three-year performance period based on IBM’s performance against predetermined targets.
In addition, a relative performance metric applies to all PSU awards. The final number of PSUs earned can be increased or decreased based on IBM’s Return on Invested Capital (ROIC) performance relative to S&P indices.
Restricted Stock Units (RSUs)
RSUs vest over time; typically ratably over four years.
Stock Options (Options)
Stock Options vest over time; typically ratably over four years. The exercise price is at least the value of the IBM stock price on the date of grant, and will be exercisable for up to 10 years from the date of grant.
Retention
Stock-Based Grants & Cash Awards
Periodically, the Compensation Committee and/or the Chairman and CEO reviews outstanding stock-based awards for key executives. Depending on individual performance and the competitive environment for senior executive leadership talent, awards may be made in the form of Retention Restricted Stock Units (RRSUs), retention PSUs (RPSUs), or cash for certain executives. RRSU and RPSU vesting periods typically range from two to five years. In addition to time-based vesting, RPSUs include a relative ROIC performance metric (consistent with standard PSUs). Cash awards have a clawback if an executive leaves IBM before it is earned.
Other Compensation
Perquisites and Other Benefits
Perquisites are intended to ensure safety and productivity of executives. Perquisites include such things as annual executive physicals, transportation, financial planning, and personal security.
Post
Employment
Savings Plan
U.S. employees may participate in the IBM 401(k) Plus Plan by saving a portion of their pay in the plan, and eligible employees may also participate in a non-qualified deferred compensation savings plan, which enables participants to save a portion of their eligible pay in excess of IRS limits for 401(k) plans. The Company provides matching and automatic contributions for both of these plans.
Non-qualified Savings Plan
Pension Plans (closed)
Named Executive Officers (NEOs) may have legacy participation in closed retention and retirement plans, for which future accruals ceased as of December 31, 2007.
Supplemental Executive
Retention Plan (closed)
A full description of the Retention, Pension, and Non-Qualified Deferred Compensation plans is provided in this Proxy Statement, beginning with the 2022 Retention Plan Narrative.
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Our Incentive Compensation Design Supports our Business Strategy
Our senior executive pay is heavily weighted to IBM’s performance through the annual and long-term incentive programs. Each year, the Committee ensures that these programs are closely aligned to the Company’s financial and strategic objectives and are appropriately balanced. Targets are set at challenging levels and are consistent with IBM’s financial model shared with investors for that year. As part of IBM’s ongoing management system, targets are evaluated to ensure they do not encourage an inappropriate amount of risk taking.
2022 Metrics and Weightings
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*
Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.
Note: For PSU performance periods that began prior to 2021, the metrics included Operating EPS at 70%, Free Cash Flow at 30%, and the ROIC Modifier.
IBM shares its financial model each year with investors in the context of its long-term strategy. To provide transparency into the rigor of our goal setting process, IBM discloses the performance attainment against targets for the most recent performance period, for both the Annual Incentive Program and the Performance Share Unit Program.
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2022 Annual Incentive Program
How It Works
IBM sets business objectives at the beginning of each year, which are approved by the Board of Directors. The Compensation Committee and the Board of Directors review IBM’s annual business objectives and set the metrics and weightings for the annual program to reflect current business priorities. These objectives translate to targets for IBM and for each business unit for purposes of determining the target funding of the AIP.
Performance against business objectives determines the actual total funding pool for the year, which can vary from 0% to 200% of total target incentives for all executives. At the end of the year, performance for IBM is assessed against these predetermined financial targets, which are updated to remove any impact of currency movement or the change in tax rates, compared to plan.
The financial targets may be adjusted up or down for extraordinary events if recommended by the Chairman and CEO and approved by the Compensation Committee. For example, adjustments are usually made for large acquisitions and divestitures.
The diversity modifier affirms management’s commitment to improving diverse representation of our workforce that reflects the labor pool demographics of the communities in which we operate. This modifier can result in a 5 point reduction, no impact, or 5 point increase to the AIP scoring. In 2022, the modifier was based on the improvement in representation for executive women globally, and Black and Hispanic executives in the United States.
Finally, the Chairman and CEO can recommend an adjustment, up or down, based on factors beyond IBM’s financial performance; for example, client experience, market share growth and diversity and inclusion of IBM’s workforce. For 2022, no qualitative adjustment was made.
The Compensation Committee reviews the financial scoring, diversity modifier, and proposed qualitative adjustments, and approves the final AIP funding level.
Once the total pool funding level has been approved, payouts for each executive are calculated using an Individual Contribution Factor (ICF). The ICF is determined by evaluating individual performance against predetermined business objectives. As a result, a lower-performing executive will receive as little as zero payout and the most exceptional performers (excluding the Chairman and CEO) are capped at three times their individual target incentive. Payouts at this level are rare and only possible when IBM’s performance has also been exceptional. The AIP, which covers approximately 4,000 IBM executives, includes this individual cap at three times the individual target to allow for differentiated pay for performance. For the Chairman and CEO, the cap is two times target. An executive generally must be employed by IBM at the end of the performance period in order to be eligible to receive an AIP payout. At the discretion of appropriate senior management, the Compensation Committee, or the Board, an executive may receive a prorated payout of AIP upon retirement. AIP payouts earned during the performance period are generally paid on or before March 15 of the year following the end of such period.
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This incentive design ensures payouts are aligned to IBM’s overall business performance and diversity goals while also ensuring individual executive accountability for specific business objectives.
2022 AIP Payout Results
Based on full year financial performance against IBM revenue and operating cash flow, the weighted incentive score was 116. For 2022, there was no additional adjustment based on the diversity modifier. While executive representation of women globally, as well as Black and Hispanic executives in the United States, improved by 0.3 points, 0.7 points and 0.3 points, respectively in 2022, this improvement did not result in an increase to the incentive score.
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(1)
Based on AIP payout table; results that exceeded 100% of target for each metric yield a higher Incentive Score.
(2)
Operating Cash Flow is a non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric.
362023 Notice of Annual Meeting & Proxy Statement   |   2022 Compensation Discussion and Analysis
 

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Performance Share Unit Program
The Performance Share Unit (PSU) metrics for the 2020-2022 performance period were Operating EPS and Free Cash Flow.
Targets are established at the beginning of each three-year performance period. These targets are based on IBM’s financial model, as shared with investors, and the Board-approved annual budget. The Committee’s longstanding practice is that the Company’s share repurchase activities have no effect on executive compensation. Actual operating EPS results are adjusted to remove the impact of any difference between the actual share count and the budgeted share count, while simultaneously ensuring that executive compensation targets are normalized for any planned buybacks that are incorporated into the Operating EPS target. Additionally, the scoring for the PSU Program may also take into account extraordinary events. For the 2020-2022 performance period, results were adjusted to exclude the impact of exiting our business in Russia in 2022.
At the end of each three-year performance period, the Compensation Committee approves the determination of actual performance relative to pre-established targets, and the number of PSUs are adjusted up or down from 0% to 150% of targets, based on the approved actual performance.
In addition, the PSU Program has a Relative Return on Invested Capital (ROIC) modifier. The modifier is based on IBM’s ROIC performance over the three-year performance period, relative to the S&P 500 Index (excluding financial services companies due to lack of comparability) and the S&P Information Technology Index. This modifier reduces the score up to 20 points when performance falls below the S&P 500 Index median, and increases the score up to 20 points when IBM exceeds the median performance of both the S&P 500 Index and the S&P Information Technology Index. The modifier has no impact when IBM’s ROIC performance falls between the S&P 500 Index median and the S&P Information Technology Index median. There is no qualitative adjustment to the PSU program score.
Relative ROIC Modifier
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The PSU score is calculated as a weighted average of results against targets for Operating EPS (70%) and Free Cash Flow (30%). The calculation for the 2020-2022 performance period is shown in the table below. For the 2020-2022 performance period, the ROIC modifier was 0%. While IBM ROIC exceeded the median of the S&P 500 Index (excluding financial services), it did not exceed the median of the S&P Information Technology Index.
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(1)
Based on PSU payout table.
(2)
Non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric.
(3)
Non-GAAP financial metrics. Operating EPS 3-year cumulative performance is calculated based on 2020 and 2021 historical as reported amounts adjusted to include discontinued operations. Operating EPS excludes certain separation related charges in 2021 and includes immaterial share adjustments in 2021 and 2022. For 2022, both Operating EPS and Free Cash Flow were adjusted to exclude the impact of separating business in Russia. Free Cash Flow amounts are on a consolidated basis, which includes activity from discontinued operations. See Appendix A for GAAP to Non-GAAP reconciliation.
Impact of Significant One-Time Events on the Open PSU Performance Periods
As discussed in prior years, in connection with the separation of Kyndryl in 2021, the Committee determined that the targets for the 2020-2022 and 2021-2023 PSU programs were no longer reflective of the Company’s strategic direction and growth objectives as communicated to stockholders prior to the announced plan to separate Kyndryl. In February 2021, the Committee approved an adjustment to the 2020-2022 PSU program targets to incorporate the planned impact of the 2021 separation of Kyndryl, including one-time transaction-related cash charges associated with the separation, and actions taken to enable the separation of Kyndryl and IBM’s growth. Following the separation of Kyndryl on November 3, 2021 into its own publicly traded company with approximately $19 billion in revenue prior to separating from IBM, a final target adjustment was made for the 2020-2022 and 2021-2023 PSU programs. The final adjustment was made to incorporate the impact of separating Kyndryl, including the early separation of Kyndryl two months ahead of schedule. As a result of the adjustments made for the Kyndryl separation and actions taken to enable IBM’s growth strategy, Operating EPS and Free Cash Flow targets for the 2020-2022 PSU program are lower than those for the 2019-2021 PSU program. Consistent with the Company’s long-standing practice of setting rigorous performance plans, cumulative targets for both plans remain higher than comparable metrics shared with investors on October 4, 2021.
2023 Notice of Annual Meeting & Proxy Statement   |   2022 Compensation Discussion and Analysis 37
 

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Section 2: Compensation Program Governance
Stockholder Engagement Provided Important Feedback for the Committee
IBM continually reviews and enhances its corporate governance and executive compensation programs. As part of this review, it is IBM’s longstanding practice to meet with a significant number of our largest investors during both the proxy season and the off-season, to solicit their feedback on a variety of topics.
In 2022, IBM once again offered engagement to over 125 institutional investors. Further, our process includes outreach to hundreds of thousands of individual registered and beneficial owners, who represent a majority of our retail base. The Company continued its enhanced engagement practices in 2022. IBM’s Chairman and CEO, Lead Director, and members of IBM’s senior management participated in this engagement program. Overall, the Company offered to engage with investors representing more than 57% of the shares that voted on Say on Pay at the 2022 Annual Meeting.
This in-depth engagement process provides valuable feedback to the Compensation Committee on an ongoing basis. Overall, our stockholders continue to support the Company’s compensation programs and practices. We heard from stockholders that they are strongly supportive of the overall design of the program, which focuses on long-term financial performance that drives stockholder value. Still, the Committee and the Board review and consider all of the investor feedback in making decisions relating to the design of our executive compensation programs. For example, the following changes occurred in 2022:

The Company’s Peer Group was updated to increase the weighting of peers in the technology industry, reflect IBM’s increased orientation as a hybrid cloud and AI company, and align the Peer Group with the size and scope of IBM following the separation of Kyndryl.

Stock Options were introduced as part of the overall equity pay mix for executives, to ensure a portion of equity does not generate value unless IBM’s stock price increases over the price when granted.

The diversity modifier continued as part of IBM’s Annual Incentive Program in 2022, with disclosure of the underlying results for both 2021 and 2022 included in the Annual Incentive Program section of each year’s respective Proxy as well as IBM’s annual ESG report.
Compensation Practices
Overall, IBM’s compensation policies and decisions, explained in detail in this Compensation Discussion and Analysis, continue to be focused on long-term financial performance to drive stockholder value.
The table below highlights practices that IBM embraces in support of strong governance practices.
What We Do
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Tie a significant portion of pay to Company performance
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Mitigate risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining robust clawback provisions
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Require significant share ownership by the Chairman and CEO, Vice Chairman and Senior Vice Presidents
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Utilize noncompetition and nonsolicitation agreements for senior executives
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Remove impact of share repurchase on executive incentives
What We Don’t Do
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No individual severance or change-in-control agreements for executive officers
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No excise tax gross-ups for executive officers
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No dividend equivalents on unearned RSUs/PSUs
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No hedging/pledging of IBM stock
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No stock option repricing, exchanges or stock options granted below market value
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No guaranteed incentive payouts for executive officers
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No accelerated vesting of equity awards for executive officers
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No above-market returns on deferred compensation plans
382023 Notice of Annual Meeting & Proxy Statement   |   2022 Compensation Discussion and Analysis
 

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Personal Stake in IBM’s Future through Stock Ownership Requirements
Investors want the leaders of their companies to act like owners. That alignment, we believe, works best when senior leaders have meaningful portions of their personal holdings invested in the stock of their company. This is why IBM sets significant stock ownership requirements for IBM’s Chairman and CEO, Vice Chairman, and Senior Vice Presidents (SVPs). Within 5 years of hire or promotion, each is required to own a minimum number of IBM shares or equivalents that is equal to a multiple of salary at the time of hire, promotion, or election as an Executive Officer. The minimum multiple of salary required is in excess of standard market practice.
Stock Ownership Requirements
Ownership Requirements as a Multiple of Salary
NEO Name
IBM Minimum Requirement
Median Peer Group Minimum Requirement
A. Krishna
10
7
J.J. Kavanaugh
7
4
G. Cohn
7
4
T. Rosamilia
7
4
M.H. Browdy
7
4
Mr. Krishna owns common stock and stock-based holdings above his ownership requirement (over 20 times his base salary) as of December 31, 2022. More information on Mr. Krishna’s holdings can be found in the Common Stock and Stock-Based Holdings of Directors and Executive Officers Table. As a group, the Chairman and CEO, Vice Chairman and SVPs, inclusive of the NEOs, owned shares or equivalents valued at over $110 million as of December 31, 2022; as of that date, this group held, on average, over 7 times their base salary, and are all on track to reach their ownership goal within 5 years of hire or promotion.
The following table illustrates which equity holdings count towards stock ownership requirements:
What Counts
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IBM shares owned personally or by members of the
officer’s immediate family sharing the same household
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Holdings in the IBM Stock Fund of the 401(k) Plus Plan
and the Excess 401(k) Plus Plan
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Shares of IBM stock deferred under the Excess 401(k) Plus Plan
What Does Not Count
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Unvested equity awards
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Unexercised stock options
Stock Ownership Continues Beyond Retirement
Finally, our programs are designed to ensure alignment with IBM’s long-term interests past the retirement date for our Chairman and CEO, Vice Chairman and SVPs. Share price performance and long-term goal achievement continue to impact the Long-Term Incentive Plan for these retired executives for at least two and a half years post retirement. For example, shares for Mr. Krishna that remained restricted and subject to performance of IBM represent more than 100% of his share ownership requirement as of December 31, 2022; assuming future performance at target.
2023 Notice of Annual Meeting & Proxy Statement   |