Executive compensation

Summary compensation table

Operating Earnings Per Share (Operating EPS) and Free Cash Flow are non-GAAP financial measures. For reconciliation to GAAP and other information regarding these items, see Non-GAAP Supplemental Materials and related information in the Form 10-K submitted to the SEC on February 25, 2014.

Salary (Column (c))

Amounts shown in the salary column reflect the salary amount paid to each named executive officer during 2013.

Bonus (Column (d))

No bonuses were awarded to the named executive officers, other than Mr. Kelly, in the years shown in the 2013 Summary Compensation Table. Mr. Kelly received patent issuance and invention achievement awards in 2013. All employees are eligible for these awards. Payments under the IBM Annual Incentive Program are included under column (g) (Non-Equity Incentive Plan Compensation).


Stock Awards Total (Column (e))

The amounts shown are the aggregate grant date fair values of Performance Share Units (PSUs) and Retention Restricted Stock Units (RRSUs) granted in each fiscal year shown, computed in accordance with accounting guidance (excluding any risk of forfeiture as per SEC regulations). The values shown for the PSU awards are calculated at the Target number, as described below. The values shown for the RRSUs reflect an adjustment for the exclusion of dividend equivalents.

 
Performance Share Units (PSUs)

The following describes the material terms and conditions of PSUs as reported in the column titled Performance Share Units (column (e)) in the 2013 Summary Compensation Table and in the 2013 Grants of Plan-Based Awards Table under the heading Estimated Future Payouts Under Equity Incentive Plan Awards (columns (f), (g) and (h)).


General Terms

Vesting and Payout Calculations

Threshold Number:

Target Number:

Maximum Number:

 
Restricted Stock Units (RSUs)

Restricted Stock Units (RSUs) may include RRSUs. In 2013, RRSUs were granted to Mr. Weber; no other RSUs were granted to the named executive officers. RRSUs granted in previous years to the named executive officers and outstanding at the end of 2013 are included in the 2013 Outstanding Equity Awards at Fiscal Year-End Table. In addition, the column titled Stock Awards in the 2013 Option Exercises and Stock Vested Table include previously-granted RRSUs. Also, Deferred IBM Shares in the 2013 Nonqualified Deferred Compensation Table include certain previously-granted RRSUs.


General Terms

Vesting and Payout

Option Awards (Column (f))

There were no option awards granted to the named executive officers in the years shown in the 2013 Summary Compensation Table. Market-priced and premium-priced options granted in previous years to the named executive officers and outstanding at the end of 2013 are included in the 2013 Outstanding Equity Awards at Fiscal Year-End Table.

 
General Terms

Market-priced options:

Premium-priced options:

Non-Equity Incentive Plan Compensation (Column (g))

Amounts in this column represent payments under IBM's Annual Incentive Program (AIP).

 
General Terms
 
Payout Range
 
Vesting and Payout

Change in Retention Plan Value (Column (h))


Change in Pension Value (Column (h))


Nonqualified Deferred Compensation Earnings (Column (h))


All Other Compensation (Column (i))

Amounts in this column represent the following as applicable:

 
Tax Reimbursements
 
Company Contributions to Defined Contribution Plans
 
Life and Travel Accident Insurance Premiums

Perquisites

The following describes perquisites (and their aggregate incremental cost calculations) provided to the named executive officers in 2013.

 
Personal Financial Planning

In 2013, IBM offered financial planning services with coverage generally up to $15,000 annually for senior U.S. executives, including each named executive officer.

 
Personal Travel on Company Aircraft

General Information

Aggregate Incremental Cost Calculation

 
Personal Use of Company Autos

General Information

Aggregate Incremental Cost Calculation

 
Personal Security

General Information

Aggregate Incremental Cost Calculation

 
Annual Executive Physical
 
Family Travel and Attendance at Company-Related Events
 
Other Personal Expenses

2013 Summary Compensation Table

Name And Principal Position (a) Year
(b)
Salary
($)
(c)
Bonus
($)
(d)
Performance Share Units (1)
($)
(e)
Restricted Stock Units (2)
($)
(e)
Stock Awards
Total (3)
($)
(e)
Option
Awards
Total (4)
($)
(f)
Non-Equity
Incentive Plan
Compensation
($)
(g)
Change In
Retention
Plan
Value (5)
($)
(h)
Change In
Pension
Value (6)
($)
(h)
Nonqualified
Deferred
Compensation
Earnings (7)
($)
(h)
All Other
Compensation (8)(9)
($)
(i)
Total (10)
($)
(j)
V.M. Rometty 2013 $1,500,000 $0 $11,703,869 $0 $11,703,869 $0 $0 $0 $0 $0 $761,808 $13,965,677
Chairman, President and CEO 2012 1,500,000 0 9,259,000 0 9,259,000 0 3,915,000 181,656 641,346 0 687,725 16,184,727
  2011 715,000 0 5,109,845 0 5,109,845 0 1,470,000 180,206 617,157 0 250,062 8,342,270
M. Loughridge (11) 2013 775,000 0 5,360,378 0 5,360,378 0 0 0 2,057,781 0 315,875 8,509,034
Senior VP and CFO, Finance and Enterprise Transformation 2012 775,000 0 4,398,025 0 4,398,025 0 1,202,900 428,278 1,008,806 0 330,046 8,143,055
  2011 747,500 0 4,087,876 0 4,087,876 0 1,359,800 510,704 1,150,367 0 163,143 8,019,390
J.E. Kelly III (12) 2013 625,000 850 4,941,039 0 4,941,039 0 0 0 0 0 128,016 5,694,905
Senior VP and Director, Research  
R.C. Weber (12) 2013 650,000 0 3,262,899 1,463,029 4,725,928 0 0 N/A N/A 0 221,335 5,597,263
Senior VP, Legal and Regulatory  
Affairs and General Counsel  
S.A. Mills 2013 716,000 0 4,661,284 0 4,661,284 0 0 0 0 0 214,146 5,591,430
Senior VP and Group Executive, 2012 716,000 0 4,629,500 4,135,911 8,765,411 0 987,360 136,953 976,530 0 211,912 11,794,166
Software and Systems 2011 705,500 0 3,576,891 0 3,576,891 0 1,258,400 465,124 1,132,095 0 235,028 7,373,038
 

(1) The amounts in this column reflect the aggregate grant date fair values of Performance Share Unit (PSU) awards at the Target number (described in the 2013 Summary Compensation Table Narrative), calculated in accordance with accounting guidance. At the Maximum number, these values for Mrs. Rometty would be: 2013: $17,555,803; 2012: $13,888,500; 2011: $7,664,767; for Mr. Loughridge: 2013: $8,040,665; 2012: $6,597,038; 2011: $6,131,814; for Mr. Kelly: 2013: $7,411,656; for Mr. Weber: 2013: $4,894,446; and for Mr. Mills: 2013: $6,991,926; 2012: $6,944,250; 2011: $5,365,337.

(2) The amounts in these columns reflect the aggregate grant date fair values of Retention Restricted Stock Units (RRSUs), calculated in accordance with accounting guidance; these amounts reflect an adjustment for the exclusion of dividend equivalents.

(3) The amounts in this column reflect the total of the previous two columns (Performance Share Units and Restricted Stock Units). For assumptions used in determining the fair value of stock awards, see Note R (Stock-Based Compensation) to the Company's 2013 Consolidated Financial Statements.

(4) There were no option awards granted to the named executive officers in the years shown in the 2013 Summary Compensation Table.

(5) Assumptions used to calculate these amounts can be found immediately after the 2013 Retention Plan Table. For 2013, the change in Retention Plan Value for eligible named executive officers resulted in the following negative amounts: for Mrs. Rometty: $(130,705); for Mr. Loughridge: $(213,254); for Mr. Kelly: $(602,593); and for Mr. Mills: $(513,849). This negative change is primarily due to increases in the discount rate and the interest crediting rate.

(6) Assumptions used to calculate these amounts can be found immediately after the 2013 Pension Benefits Table. For 2013, the change in Pension Value for eligible named executive officers, except Mr. Loughridge, resulted in the following negative amounts: for Mrs. Rometty: $(499,471); for Mr. Kelly: $(17,511); and for Mr. Mills: $(509,879). This negative change is due to increases in the discount rate and the interest crediting rate.

(7) IBM does not provide above-market or preferential earnings on deferred compensation. See the 2013 Nonqualified Deferred Compensation Narrative for information about deferred compensation.

(8) Amounts in this column include the following for 2013: for Mrs. Rometty: tax reimbursements of $18,878 and Company contributions to defined contribution plans of $541,500; for Mr. Loughridge: Company contributions to defined contribution plans of $197,790; for Mr. Kelly: Company contributions to defined contribution plans of $120,896; for Mr. Weber: Company contributions to defined contribution plans of $92,734; and for Mr. Mills: Company contributions to defined contribution plans of $170,336. In accordance with SEC rules, dividend equivalents paid in each of the years shown above on RSUs and RRSUs granted prior to January 1, 2008 are not included in "All Other Compensation" because those amounts were factored into the grant date fair values. RSUs and RRSUs granted on or after January 1, 2008 do not receive dividend equivalents.

(9) Amounts in this column also include the following perquisites for 2013: for Mrs. Rometty: personal financial planning, personal travel on Company aircraft of $151,933, personal use of Company autos, personal security, annual executive physical, family attendance at Company-related events, and other personal expenses; for Mr. Loughridge: personal financial planning, personal travel on Company aircraft of $77,489, personal use of Company autos, annual executive physical, family attendance at Company-related events, and other personal expenses; for Mr. Weber: personal financial planning, personal travel on Company aircraft of $91,180, annual executive physical, family attendance at Company-related events, and other personal expenses; and for Mr. Mills: personal financial planning, personal travel on Company aircraft, annual executive physical, family attendance at Company-related events, and other personal expenses. See the 2013 Summary Compensation Table Narrative for a description and information about the aggregate incremental cost calculations for perquisites.

(10) The amounts in this column reflect the total of the following columns: Salary, Bonus, Stock Awards Total, Option Awards Total, Non-Equity Incentive Plan Compensation, Change in Retention Plan Value, Change in Pension Value, Nonqualified Deferred Compensation Earnings and All Other Compensation.

(11) Mr. Loughridge retired on December 31, 2013.

(12) Mr. Kelly and Mr. Weber were not named executive officers in the Company's 2012 and 2013 Proxy Statements. Therefore, this table does not provide 2011 and 2012 data for them.