Executive compensation

2016 Outstanding equity awards at fiscal year-end narrative

2016 Outstanding equity awards at fiscal year-end narrative

Option awards (columns (b) - (f))

General terms

Market-priced options:

– From 2005 to 2007, market-priced options were awarded to the named executive officers who participated in the IBM stock investment program (the Buy-First Program) by agreeing to invest 5%, 10% or 15% of their annual incentive program payout in the IBM Stock Fund under the nonqualified deferred compensation plan.

– The exercise price is equal to the average of the high and low prices of IBM common stock on the NYSE on the date of grant.

– These options vested 100% three years after the date of grant.

Premium-priced options:

– Historically, the exercise price has been equal to 110% of the average of the high and low prices of IBM common stock on the NYSE on the date of grant and these options vested in four equal increments on the first four anniversaries of the grant date.

– The one-time premium-priced award granted to Mrs. Rometty on January 26, 2016 is exercisable in four equal tranches at premium prices of 105%, 110%, 115% and 125% of the average of the high and low prices of IBM common stock on the NYSE on the date of grant and will vest three years from the date of grant and expires 10 years from the date of grant.

 

Stock awards (columns (g) - (j))

Number of shares or units of stock that have not vested (column (g))

The amounts in this column are the number of RSUs and RRSUs that were outstanding as of December 31, 2016.

Market value of shares or units of stock that have not vested (column (h))

The amounts in this column are the value of RSU and RRSU awards disclosed in column (g), calculated by multiplying the number of units by the closing price of IBM stock on the last business day of the 2016 fiscal year ($165.99).

Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (column (i))

The amounts in this column are the number of PSUs that were outstanding as of December 31, 2016.

Performance share units

2016 Outstanding PSU award payout levels

 

Name Grant Date Threshold Target Maximum
V.M. Rometty 06/08/2015 21,045 84,178 126,267
  06/08/2016 14,905 59,621 89,432
M.J. Schroeter 06/08/2015 7,121 28,482 42,723
  06/08/2016 5,604 22,414 33,621
M. Jetter 06/08/2015 4,747 18,988 28,482
  06/08/2016 5,043 20,173 30,260
J.E. Kelly III 06/08/2015 7,912 31,646 47,469
  06/08/2016 6,164 24,656 36,984
E. Clementi 06/08/2015 6,329 25,317 37,976
  06/08/2016 6,164 24,656 36,984

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (Column (j))

The amounts in this column are the values of PSU awards disclosed in column (i), calculated by multiplying the number of units by the closing price of IBM stock on the last business day of the 2016 fiscal year ($165.99).

 

2016 Outstanding equity awards at fiscal year-end table

 

  Option Awards Stock Awards

Name
(a)

Grant date

Number of Securities Underlying Unexercised Options
(#)
Exercisable
(b)
Number of Securities Underlying Unexercised
Options
(#)
Unexercisable
(c)
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
(d)
Option Exercise Price(2)
($)
(e)
Option Expiration Date
(f)
Type of Award Grant
Date
Number
of
Shares
or Units
of Stock That
Have Not Vested(3)
(#)
(g)
Market Value of Shares
or Units
of Stock
That Have Not
Vested (4)
($)
(h)
Type of Award Grant
Date
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested(5)
(#)
(i)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4)
($)
(j)
V.M. Rometty                          
01/26/16 0 375,000 N/A $129.08 01/25/26  RSU  06/08/16  32,104  $5,328,943 PSU 06/08/15 84,178 $13,972,706
01/26/16  0 375,000 N/A $141.37 01/25/26         PSU 06/08/16 59,621 9,896,490
01/26/16 0 375,000 N/A $153.66 01/25/26                
01/26/16 0 375,000 N/A $135.22 01/25/26                
Total 0 1,500,000           32,104 $5,328,943     143,799 $23,869,196
M.J. Schroeter                          
 05/08/07 678(1) 0 N/A $102.80 05/07/17 RRSU 12/18/12 4,951 $821,816 PSU 06/08/15 28,482 $4,727,727
            RRSU 02/02/15 50,315 6,924,350 PSU 06/08/16 22,414 3,720,500
            RSU 06/08/16 12,069 2,003,333        
Total 678 0           67,335 $11,176,936     50,896 $8,448,227
M. Jetter                          
            RRSU 04/02/12 5,000 829,950 PSU 06/08/15 18,988 $3,151,818
            RRSU  12/17/13 10,583 1,756,672 PSU 06/08/16 20,173 3,348,516
            RRSU 02/02/15 25,158 4,175,976        
            RSU 06/08/16 10,863 1,803,149        
Total 0 0           51,604 $8,565,747     39,161 $6,500,334
J.E. Kelly III                          
            RRSU 12/30/15 55,922 $9,282,493 PSU 06/08/15 31,646 $5,252,920
            RSU   06/08/16  13,276  2,203,683 PSU 06/08/16 24,656 4,092,649
Total 0 0           69,198 $11,486,176     56,302 $9,345,569
E. Clementi                          
             RRSU 02/02/15  25,158  $4,175,976 PSU 06/08/15 25,317 $4,202,369
             RSU  06/08/16  13,276  2,203,683 PSU 06/08/16 24,656 4,092,649
Total 0 0           38,434 $6,379,659     49,973 $8,295,018

Type of Award:
PSU = Performance Share Unit
RSU = Restricted Stock Unit
RRSU = Retention Restricted Stock Unit

 

(1) These options were granted under the Buy-First Program. These options vested 100% on the third anniversary of the respective grant dates. See the 2016 Summary Compensation Table Narrative for additional information about this program.

(2) The exercise prices for Mrs. Rometty’s premium-priced options are equal to 105%, 110%, 115% and 125% of the average high and low prices of IBM common stock on the NYSE on the date of grant. The exercise price of Mr. Schroeter’s options is equal to the average of the high and low prices of IBM common stock on the NYSE on the date of grant.

(3) The amounts shown in column (g) of the 2016 Outstanding Equity Awards at Fiscal Year-End Table are RSU and RRSU awards that have not yet vested. See the 2016 Summary Compensation Table Narrative for additional information on these types of awards. The Vesting Schedule for Unvested RSUs and RRSUs table below shows the vesting schedules for these outstanding awards. Mr. Schroeter’s 2012 RRSU award fully vests on December 18, 2017, provided that he is an employee of IBM as of that date; and his 2015 RRSU award vested 50% on February 2, 2017 and 50% will vest on February 2, 2019, provided that in each case, he is an employee of IBM as of those dates. Mr. Jetter’s and Mr. Clementi’s 2015 RRSU awards vested 50% on February 2, 2017 and 50% will vest on February 2, 2019, provided that in each case, they are an employee of IBM as of those dates. Dr. Kelly’s 2015 RRSU award vests 50% on December 30, 2017, 25% on December 30, 2018 and 25% on December 30, 2019, provided that in each case, he is an employee of IBM as of those dates. In 2016, each named executive officer received RSU awards that vest 25% per year on the first through the fourth anniversaries of the grant date.

(4) Values in these columns are calculated by multiplying the number of units by the closing price of IBM stock on the last business day of the 2016 fiscal year ($165.99).

(5) The amounts shown in column (i) of the 2016 Outstanding Equity Awards at Fiscal Year-End Table are PSU awards that have not yet vested. See the 2016 Summary Compensation Table Narrative for additional information on PSU awards. The Vesting Schedule for Unvested PSUs table below shows the vesting schedules for these outstanding PSU awards (reflecting Target payout), all of which are paid out in February following the end of the performance period.

 

Vesting schedule for unvested RSUs and RRSUs

 

  Vesting Schedule  
Name Type of Award Grant Date 2017 2018 2019 2020
V.M. Rometty RSU 06/08/2016 8,026  8,026  8,026  8,026
M.J. Schroeter RRSU 12/18/2012 4,951      
RRSU 02/02/2015 25,157   25,158  
RSU 06/08/2016 3,017 3,017 3,017 3,018
M. Jetter RRSU 04/02/2012 5,000       
  RRSU 12/17/2013   10,583    
  RRSU 02/02/2015 12,579   12,579  
  RSU 06/08/2016 2,715 2,715  2,715 2,718
J.E. Kelly III RRSU 12/30/2015 27,961 13,980 13,981  
  RSU 06/08/2016 3,319 3,319 3,319 3,319
E. Clementi RRSU 02/02/2015 12,579   12,579  
  RSU 06/08/2016 3,319 3,319 3,319 3,319

 

Vesting schedule for unvested PSUs

 

  Vesting Schedule
Name Grant Date Dec-2017 Dec-2018
V.M. Rometty 06/08/2015 84,178  
  06/08/2016   59,621
M.J. Schroeter 06/08/2015 28,482  
  06/08/2016   22,414
M. Jetter 06/08/2015 18,988  
  06/08/2016   20,173
J.E. Kelly III 06/08/2015 31,646  
  06/08/2016   24,656
E. Clementi 06/08/2015 25,317  
  06/08/2016   24,656