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IBM: Looking At Who Got A Salary Increase

|Includes: International Business Machines Corporation (IBM)

IBM filed an 8-K with information on the compensation of the 5 highest paid executives. Of course, commentary focused on CEO Ginni Rommetty, and criticized the board for increasing her incentive payout from $3.6 million for 2014 to $4.5 million for 2015.

Both years, she got 90% of the incentive she was eligible for. More relevant, her 2016 salary is $1.6 million, the same as 2015. And her incentive target is $5 million, unchanged from the prior year. She didn't get a raise.

CFO Martin Schroeter received an 8% raise, applicable to both his salary and his incentive target.

John Kelly, Senior Vice President, Cognitive Solutions and Research, received a 15.5% raise, for both salary and incentive target. Mr. Kelly got a very respectable raise.

It should be noted that his responsibilities include the cognitive solutions, which means analytics and Watson. And when IBM acquired the Weather Company's product and technology businesses, the new acquisition reports to Kelly:

David Kenny, who was chairman and CEO of The Weather Company, and previously president of Akamai Technologies, assumes leadership of the IBM Watson platform business. He brings deep expertise in building platforms used by tens of millions of people daily as IBM continues to scale the Watson technology platform. He will oversee the build out of the Watson partner and developer ecosystem, key APIs and emerging solutions powered by Watson. He joins Harriet Green, formerly CEO of Thomas Cook, who leads Watson IoT, Education and Commerce, and Deborah DiSanzo, formerly CEO of Philips Healthcare, who leads Watson Health.

Michael Rhodin, who launched the Watson business and drove the formation of Watson Health and Watson IoT, will now lead Watson Business Development. He will identify and incubate the next major industries and domains for Watson and will oversee related acquisition strategy.

Bloomberg's Emily Chang interviewed David Kenny, and asked him very pointedly about the reporting relationships. Both he and Rhodin report to Kelly.

She also asked him, whether Watson amounted to anything more than a "science project." He replied very politely, to the effect that the company is making money on the project. Ms. Chang then asked how much, which he declined to reveal.

Follow the Money

Sometimes its worthwhile to follow executive compensation, to see who is getting the raises. The inference would be, that the executive getting outsize raises is the one who is making things happen. The point here is, that person would be Kelly. And what is happening would be his area of responsibility, which is cognitive solutions.

Eventually we'll learn what that means in terms of revenue, profits, and share price. But just by looking at the % amount of his raise, it's looking positive, very positive.

Disclosure: I am/we are long IBM.