IBM International Business Machines Corp

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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International Business Machines Corporation

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Armonk, New York
March 10, 2025

Dear Fellow Stockholders:

 

 

Armonk, New York
March 10, 2025

A Message from our Lead Director:

 

 

Table of Contents

​	2025 Notice of Annual Meeting and Proxy Statement	​	​	​	​	2	​	​
​	Proxy Summary	​	​	​	​	3	​	​
​	Ongoing Stockholder Engagement	​	​	​	​	6	​	​
​	IBM Board of Directors	​	​	​	​	8	​	​
​	1. Election of Directors for a Term of One Year	​	​	​	​	11	​	​
​	Governance and the Board	​	​	​	​	18	​	​
​	Committees of the Board	​	​	​	​	18	​	​
​	Certain Transactions and Relationships	​	​	​	​	20	​	​
​	Corporate Governance	​	​	​	​	21	​	​
​	Director Compensation	​	​	​	​	25	​	​
​	Delinquent Section 16(a) Reports	​	​	​	​	26	​	​
​	IBM Impact	​	​	​	​	29	​	​
​	2024 Executive Compensation	​	​	​	​	32	​	​
​	Report of the Executive Compensation and Management Resources Committee of the Board of Directors	​	​	​	​	32	​	​
​	2024 Compensation Discussion and Analysis	​	​	​	​	33	​	​
​	2024 Summary Compensation Table and Related Narrative	​	​	​	​	48	​	​

​	2024 Grants of Plan-Based Awards Table	​	​	​	​	51	​	​
​	2024 Outstanding Equity Awards at Fiscal Year-End Table and Related Narrative	​	​	​	​	52	​	​
​	2024 Retention Plan Narrative	​	​	​	​	55	​	​
​	2024 Pension Benefits Narrative	​	​	​	​	56	​	​
​	2024 Nonqualified Deferred Compensation Narrative	​	​	​	​	59	​	​
​	2024 Potential Payments Upon Termination Narrative	​	​	​	​	62	​	​
​	Pay Versus Performance	​	​	​	​	65	​	​
​	Report of the Audit Committee of the Board of Directors	​	​	​	​	67	​	​
​	Audit and Non-Audit Fees	​	​	​	​	67	​	​
​	2. Ratification of Appointment of Independent Registered Public Accounting Firm	​	​	​	​	68	​	​
​	3. Advisory Vote on Executive Compensation (Say on Pay)	​	​	​	​	69	​	​
​	4. Stockholder Proposal to Support Transparency in Lobbying	​	​	​	​	70	​	​
​	5. Stockholder Proposal Requesting a Report on Hiring/​Recruitment Discrimination	​	​	​	​	72	​	​
​	Frequently Asked Questions	​	​	​	​	74	​	​
​	Appendix A – Non-GAAP Financial Information and Reconciliations	​	​	​	​	77	​	​

 

2025 Notice of Annual Meeting & Proxy Statement 1

 

2025 Notice of Annual Meeting
and Proxy Statement

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

​	​				​
​	Date:	​	​	April 29, 2025	​
​	Time:	​	​	1:00 p.m. Eastern Time	​
​	Virtual Meeting Site:	​	​	www.virtualshareholdermeeting.com/IBM2025	​

The proxy materials, including this Proxy Statement, the IBM 2024 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 10, 2025 to all stockholders entitled to vote.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on April 29, 2025: 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.

 

22025 Notice of Annual Meeting & Proxy Statement

 

Proxy Summary

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

Governance Highlights

 

2025 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary3

 

IBM Board of Directors

Director Nominees

IBM’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders.

 

42025 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

 

Optimal Mix of Skills and Experience of Director Nominees

IBM’s thirteen director nominees are industry leaders with deep executive and oversight experience. Bringing a diversity of backgrounds and experiences, they collaboratively contribute significant competencies, skills, and experience in the areas most relevant to overseeing the Company’s business and strategy.

The top skills and experience of our Board include, but are not limited to:

Independent and Diverse Board

We have a deliberate mix of age, tenure and perspectives on the Board, which reflects our commitment to ongoing and proactive Board refreshment.

 

2025 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary5

 

Ongoing Stockholder Engagement

Stockholder feedback is integral to the Board’s decision-making process and informs the Company’s policies, practices and disclosures. IBM proactively engages with stockholders throughout the year in order to share key updates and solicit perspectives and 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. Engagement participants have included senior members of management, our Investor Relations team, and IBM’s independent Lead Director.

 

62025 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary

 

Business Highlights

In 2024, IBM continued to take meaningful actions to strengthen its position as a leader in hybrid cloud and AI, delivering financial results that fueled business investments and stockholder returns through dividends.

2024 Performance Highlights

Note: See Appendix A for information on Non-GAAP metrics and Gen AI book of business.

Compensation Highlights

Our compensation strategy supports IBM’s high value business model

 

2025 Notice of Annual Meeting & Proxy Statement   |   Proxy Summary7

 

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 2025, the Board will consist of 13 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 backgrounds. The Committee recommends candidates to the full Board for election.

 

82025 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors

 

Building the Right Board for IBM

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 corporate governance expertise, which enables them to guide your Company and achieve its strategic goals.

In addition to the key attributes of our directors, we have identified core director competencies. These core competencies are crucial to the success of the IBM Board of Directors. Our directors have the breadth of experiences, leadership and accountability to oversee the scale and complexity of IBM’s business.

 

2025 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors9

 

IBM Board of Directors – Experience and Skills of Director Nominees

The skills matrix below identifies each director’s top five strategic skills. This matrix is not intended to be an exhaustive list of director skills, and each director possesses additional strategic skills not reflected through the checkmarks, as well as other skills not listed in the matrix. We believe this approach enables you, our stockholders, to better understand the key contributions each director brings as part of the Board’s comprehensive skillset, which supports the strategic oversight of IBM.

 

102025 Notice of Annual Meeting & Proxy Statement   |   IBM Board of Directors

 

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.

​		​	​	Marianne C. Brown	​
			​	Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. Director since: 2023 Age: 66 Committee:	​
			​	Directors and Corporate Governance	​

​		​	​	Thomas Buberl	​
			​	Chief Executive Officer, AXA S.A. Director since: 2020 Age: 51 Committee:	​
			​	Executive Compensation and Management Resources	​

 

​	Top Strategic Skills	​
​		​

​	Top Strategic Skills	​
​		​

 

 

2025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors11

 

​		​	​	David N. Farr	​
			​	Retired Chairman and Chief Executive Officer, Emerson Electric Co. Director since: 2012 Age: 70 Committee:	​
			​	Audit	​

​		​	​	Alex Gorsky	​
			​	Former Chairman and Chief Executive Officer, Johnson & Johnson Director since: 2014 Age: 64 Committee:	​
			​	Executive	​

 

​	Top Strategic Skills	​
​		​

​	Top Strategic Skills	​
​		​

 

122025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors

 

​		​	​	Michelle Howard	​
			​	Retired Admiral, United States Navy Director since: 2019 Age: 64 Committee:	​
			​	Audit	​

​		​	​	Arvind Krishna	​
			​	Chairman, President and Chief Executive Officer, IBM Director since: 2020 Age: 62 Committee:	​
			​	Executive (Chair)	​

 

​	Top Strategic Skills	​
​		​

​	Top Strategic Skills	​
​		​

 

2025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors13

 

​		​	​	Andrew N. Liveris	​
			​	Retired Chairman and Chief Executive Officer, The Dow Chemical Company Director since: 2010 Age: 70 Committees:	​
			​	Directors and Corporate Governance (Chair)	​
			​	Executive	​

​		​	​	Frederick William McNabb III	​
			​	Retired Chairman and Chief Executive Officer, The Vanguard Group, Inc. Director since: 2019 Age: 67 Committee:	​
			​	Audit	​

 

​	Top Strategic Skills	​
​		​

​	Top Strategic Skills	​
​		​

 

142025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors

 

​		​	​	Michael Miebach	​
			​	Chief Executive Officer, Mastercard Incorporated Director since: 2023 Age: 56 Committee:	​
			​	Executive Compensation and Management Resources	​

​		​	​	Martha E. Pollack	​
			​	President Emerita, Cornell University Director since: 2019 Age: 66 Committee:	​
			​	Executive Compensation and Management Resources	​

 

​	Top Strategic Skills	​
​		​

​	Top Strategic Skills	​
​		​

 

2025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors15

 

​		​	​	Peter R. Voser	​
			​	Retired Chief Executive Officer, Royal Dutch Shell plc Director since: 2015 Age: 66 Committees:	​
			​	Audit (Chair)	​
			​	Executive	​

​		​	​	Frederick H. Waddell	​
			​	Retired Chairman and Chief Executive Officer, Northern Trust Corporation Director since: 2017 Age: 71 Committees:	​
			​	Executive Compensation and Management Resources (Chair)	​
			​	Executive	​

 

​	Top Strategic Skills	​
​		​

​	Top Strategic Skills	​
​		​

 

162025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors

 

​		​	​	Alfred W. Zollar	​
			​	Former Executive Advisor, Siris Capital Group LLC Director since: 2021 Age: 70 Committee:	​
			​	Directors and Corporate Governance	​

 

​	Top Strategic Skills	​
​		​

 

2025 Notice of Annual Meeting & Proxy Statement   |   Election of Directors17

 

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).

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 2024, Mr. Miebach rotated from the Directors and Corporate Governance Committee to the Executive Compensation and Management Resources Committee.

 

182025 Notice of Annual Meeting & Proxy Statement   |   Governance and the Board

 

 

2025 Notice of Annual Meeting & Proxy Statement   |   Committees of the Board 19

 

Compensation Committee Interlocks and Insider Participation: None

Messrs. Buberl, Miebach, Swedish, and Waddell and Dr. Pollack each served as members of the Executive Compensation and Management Resources Committee in 2024. All members of the Committee were independent directors, and no member was an employee or former employee of IBM. During 2024, 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; 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.

 

202025 Notice of Annual Meeting & Proxy Statement   |   Certain Transactions and Relationships

 

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, including a director overboarding policy. Compliance with this policy is subject to an annual review by the Directors and Corporate Governance Committee and the Board. The IBM Board Corporate Governance Guidelines are available at https://www.ibm.com/investor/att/pdf/IBM-Board-Corporate-Governance-Guidelines.pdf.

IBM is committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations. We have a code of ethics for directors, executive officers, and employees. The Business Conduct Guidelines are available on our website at https://www.ibm.com/businessconductguidelines. 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. IBM also has an insider trading policy that governs transactions in IBM securities by our directors, executive officers and employees that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations and NYSE listing standards. This policy was filed as Exhibit 19 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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

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 and those directors who served in 2024 but not standing for election, the Committee and the Board have determined that each of the following has met the independence standards: M.C. Brown, T. Buberl, D.N. Farr, A. Gorsky, M.J. Howard, A.N. Liveris, M. Miebach, F.W. McNabb III, M.E. Pollack, J.R. Swedish, P.R. Voser, F.H. Waddell, and A.W. Zollar.

Director Attendance

In 2024, the Board held 7 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 2024:

•

Overall attendance at Board and committee meetings was over 97%; and

​

•

Attendance was at least 75% for each director.

​

All directors except one attended IBM’s 2024 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.

 

2025 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance 21

 

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, President 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.

 

222025 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance

 

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.

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:

 

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.

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.

The Lead Director shares insights from each of these meetings with the full Board.

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

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.

 

2025 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance 23

 

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. The Board of Directors and its Committees have responsibility for oversight of IBM’s risk management processes. The Company’s management is responsible for the day-to-day implementation and execution of such processes and controls. IBM has a multi-layered approach to manage and address risks.

A key component of IBM’s risk management strategy is the annual risk review conducted by the IBM Chief Risk Office. Our risk professionals rigorously analyze enterprise risks, incorporating both internal and external perspectives and data analytics into a comprehensive annual enterprise risk review that identifies the most salient risks facing IBM. Those risks include both market risks (such as cybersecurity, geopolitical tensions and trade, external economic and financial conditions) and business risks (such as hybrid cloud adoption, AI differentiation, talent management, and ecosystem adoption of IBM technology). This approach is complemented by management in monthly emerging risk reviews, to proactively identify and respond to changes in the business environment.

The management team or teams responsible for managing and addressing the risks identified through IBM’s comprehensive annual enterprise risk review regularly report to the Board and its Committees that have been delegated oversight responsibility to give visibility to the most salient risks facing the company, the impact they may have, and the company’s strategy to manage them. 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 Committees regularly provide reports to the full Board on the risk areas they are responsible for and other risks that may emerge. For example, the IBM Chief Information Security Officer (CISO), whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture and processes, and other senior leaders regularly report to the Audit Committee and the Board of Directors on threat intelligence, cyber risk areas, cybersecurity incidents, and ongoing cybersecurity initiatives. Similarly, the Chief Human Resources Officer regularly reports to the Executive Compensation and Management Resources Committee and the Board of Directors on the risks relating to compensation, pipeline, and talent management programs.

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. 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 Chief Legal Officer 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, Chief Legal Officer, 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.

 

242025 Notice of Annual Meeting & Proxy Statement   |   Corporate Governance

 

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:

Director Compensation under the IBM Deferred Compensation and Equity Award Plan (DCEAP)

​	Additional Annual Retainers							​
​	Chair of the Directors and Corporate Governance Committee	​	​	​	$	20,000	​	​
​	Chair of the Executive Compensation and Management Resources Committee	​	​	​	$	20,000	​	​
​	Chair of the Audit Committee	​	​	​	$	30,000	​	​
​	Lead Director	​	​	​	$	50,000	​	​

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 2024, 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.

​

 

2025 Notice of Annual Meeting & Proxy Statement   |   Director Compensation 25

 

Director Compensation Consultant: The Committee retains 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.

2024 Director Compensation Table

​

(1)

Amounts in this column include the following: for Ms. Brown: $5,478 of dividend equivalent payments on PFS and $10,000 contributed by the Company under Matching Grants Program; for Mr. Buberl: $72,696 of dividend equivalent payments on PFS; for Mr. Farr: $134,352 of dividend equivalent payments on PFS; for Mr. Gorsky: $194,815 of dividend equivalent payments on PFS; for Admiral Howard: $87,834 of dividend equivalent payments on PFS; for Mr. Liveris: $259,115 of dividend equivalent payments on PFS; for Mr. McNabb: $84,205 of dividend equivalent payments on PFS; for Mr. Miebach: $7,126 of dividend equivalent payments on PFS; for Dr. Pollack: $97,575 of dividend equivalent payments on PFS; for Mr. Swedish: $23,084 of dividend equivalent payments on PFS; for Mr. Voser: $183,643 of dividend equivalent payments on PFS; for Mr. Waddell: $130,441 of dividend equivalent payments on PFS and $10,000 contributed by the Company under Matching Grants Program; and for Mr. Zollar: $42,782 of dividend equivalent payments on PFS.

​

(2)

Mr. Swedish’s term on the Board ended April 2024.

​

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 2024 were timely filed.

 

262025 Notice of Annual Meeting & Proxy Statement   |   Director Compensation

 

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, 2024, except to the extent indicated otherwise in the footnotes.

​

(1)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 7, 2025 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 1,085,071 shares, sole dispositive power over 88,610,868 shares, and shared dispositive power over 4,211,222 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 January 25, 2024 by BlackRock, Inc. and certain subsidiaries (BlackRock). BlackRock reported that it has sole voting power over 68,491,656 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 January 30, 2024 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 32,946,835 shares, has shared dispositive power over 54,961,927 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.

​

 

2025 Notice of Annual Meeting & Proxy Statement   |   Ownership of Securities 27

 

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, 2024, by IBM’s current directors and nominees, the executive officers named in the 2024 Summary Compensation Table, and such directors and all of IBM’s executive officers as of December 31, 2024, 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, 2024. 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 241,285 shares of common stock and DCEAP shares as of December 31, 2024. In the aggregate, these shares were valued at more than $53 million as of December 31, 2024, or an average of more than $4.4 million for each of IBM’s non-management directors as of December 31, 2024.

​

(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 318,946 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 4,485 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 Savings Plan, and Company contributions into the IBM Stock Fund under the Excess Savings Plan. Some of these restricted stock units may have been deferred under the Excess Savings 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 2024 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, 2024, and (ii) RSU awards that vest within 60 days after December 31, 2024. For Mr. Cohn, Mr. Kavanaugh, Mr. Krishna, and Mr. Thomas, shares in this column are from IBM restricted stock awards which will vest within 60 days after December 31, 2024.

​

(4)

Promised Fee Shares earned and accrued under the IBM Deferred Compensation and Equity Award Plan (DCEAP) as of December 31, 2024, 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 Director Compensation section 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 2024 fiscal year ($219.83).

​

(6)

Voting and investment power are shared.

​

(7)

Includes 450 shares in which voting and investment power are shared.

​

(8)

Includes 11,061 shares in which voting and investment power are shared.

​

(9)

Includes 288,955 shares in which voting and investment power are shared.

​

(10)

Includes 18,040 shares in which voting and investment power are shared.

​

(11)

The total of these three columns represents less than 1% of IBM’s outstanding shares, and no individual’s beneficial holdings totaled more than 1/20 of 1% of IBM’s outstanding shares.

​

 

282025 Notice of Annual Meeting & Proxy Statement   |   Ownership of Securities

 

IBM Impact

We believe IBM is a catalyst that makes the world work better. We aspire to make a lasting, positive impact in business ethics, our environment, and the communities in which we work and live, fostering prosperity and economic development. Our latest Impact Report is available at https://www.ibm.com/impact/reports-and-policies.

IBM Impact Framework​

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 earn the trust of our stakeholders by ushering powerful new technologies into the world, ethically and with purpose. We believe it is our responsibility to continue to contribute to diverse, global efforts that shape standards and best practices for current and emerging technologies, such as AI.

Putting our Principles of Trust and Transparency into Practice

IBM’s Principles for Trust and Transparency are the guiding values that distinguish IBM’s approach to AI ethics. They include:

•

The purpose of AI is to augment human intelligence;

​

•

Data and insights belong to their creator; and

​

•

New technology, including AI systems, must be transparent and explainable.

​

These principles are supported by five pillars of trust that IBM developed to guide the responsible adoption of AI technologies: explainability, fairness, robustness, transparency and privacy. The IBM AI Ethics Board, which infuses IBM’s principles into business and product development strategies, celebrated its five year anniversary last year. The AI Ethics Board is steered by a diverse set of senior leaders from across the company and regularly shares thought leadership around emerging issues. Key best practices that IBM has developed over the past five years include:

•

Embedding AI ethics across the company through business unit AI Ethics Focal Points and a grassroots Tech Ethics Advocacy Network.

​

•

Instilling a culture of ethics through role-based education programs for different audiences with varying levels of familiarity with AI, both internally and externally.

​

•

Strengthening alignment with AI ethics principles and AI governance processes by providing assessments of the risks of AI solutions, as well as mitigation strategies and tools.

​

•

Integrating governance methodologies and tools, and using our own technology to automate the implementation and monitoring of AI governance throughout the development, deployment, and use of trustworthy AI.

​

•

Leveraging and adapting existing governance mechanisms (like privacy safeguards) to help address AI regulatory requirements and enable continuous compliance.

​

IBM launched the AI Alliance in 2023, and scaled it in 2024 to include more than 100 leading organizations from around the globe across industry, startup, academia, research, civil society and government coming together to support open innovation and open science in AI. The AI Alliance is focused on fostering an open community and enabling developers and researchers to accelerate responsible innovation in AI while ensuring scientific rigor, trust, safety, security, diversity and economic competitiveness. In addition, IBM’s leadership in AI ethics is reflected in many external collaborations, including the Notre Dame — IBM Technology Ethics Lab, which in 2024 focused on the challenges of designing effective solutions for safe and ethical human-AI collaboration and held a “Responsible AI in Finance” event.

 

2025 Notice of Annual Meeting & Proxy Statement   |   IBM Impact 29

 

By providing an inclusive environment that encourages learning and exploration of new ideas and innovative approaches, we can make the greatest impact with our clients, partners, colleagues, and the world. Fostering a culture underpinned by our purpose, values, and growth behaviors is what drives us. It’s what motivates employees to do their best work. Together, we think big, set the pace for our industry, forge partnerships, and make the world work better.

Supporting our Employees

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 of all IBMers in the workplace. We foster a culture of conscious inclusion where IBMers can bring their authentic selves to work.

IBM has had an equal pay policy since 1935. We have conducted statistical pay equity analyses for decades, and in 2024 we continued this practice for all countries where we have employees.

IBM offers a competitive benefits program, designed to help employees build a solid foundation for meeting a diverse array of needs — health care, income protection, retirement security, and personal interests. IBMers worldwide have confidential, 24/7 access to critical mental health support through employee assistance programs and supplemental resources. Other programs include training for employees on resilience, ergonomics, and financial well-being. 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 and prepare them for the AI era.

IBM is actively fostering an environment of growth, inclusion, innovation and feedback. IBMers globally participate in our annual engagement survey, providing actionable, data-driven insights on workplace experience, inclusion, pride and propensity to recommend IBM as an employer. In 2024, more than 8 of 10 IBMers who participated in the survey responded that they felt engaged at work — a testament to our industry-leading talent practices.

Community Development and AI Skilling

At IBM, we believe we have a shared commitment to create opportunities across our global community. We are expanding access to digital skills and employment pathways so that more people can cultivate their talents and participate in the digital economy. In 2021, IBM committed to train thirty million learners by the end of 2030. To achieve this goal at a global scale, we have been expanding our collaborations with universities and non-profit partners to deliver AI training to student and adult learners and have launched new generative AI coursework through IBM SkillsBuild. Closing the skills gap is one of IBM’s top priorities in this space. We are taking bold action to achieve this and have already trained more than 16 million people globally in disruptive technologies, including AI, across free IBM programs.

For more than 50 years, IBM has been 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 apply our technologies to mitigate risk and build a sustainable foundation for growth.

Improving the Sustainability of AI

IBM is active across the full stack of AI. We train, tune, and deploy models, but we also design and operate hardware. With that holistic experience, IBM defines enhancing the sustainability of AI as finding opportunities for efficiencies across the full stack of integrated technologies, resulting in reduced energy consumption and lower operational costs.

IBM’s Granite family of models has benefited from innovative techniques that increase speed and efficiency, and the models are available in various sizes, pre-trained with specific, relevant data, so organizations can use the smallest, most energy-efficient option that fits their needs.

IBM Turbonomic can help reduce excess resource allocation for AI workloads, potentially lowering energy usage and freeing up capacity without reducing performance.

IBM has also announced a number of commercial and prototype innovations in AI infrastructure. These include the IBM Telum II microprocessor and the IBM Spyre Accelerator to deliver high-performance, secured, and more power efficient enterprise and AI computing solutions. IBM has also announced a novel co-packaged optics technology that brings high density bundles of optical fibers onto the edge of silicon chips, thereby increasing bandwidth density and offering significant improvements in AI speed and energy efficiency.

 

302025 Notice of Annual Meeting & Proxy Statement   |   IBM Impact

 

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 donations to political parties, campaigns, or candidates, 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.

 

2025 Notice of Annual Meeting & Proxy Statement   |   IBM Impact 31

 

2024 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)
Martha E. Pollack
Michael Miebach
Thomas Buberl

 

322025 Notice of Annual Meeting & Proxy Statement   |   2024 Executive Compensation

 

2024 Compensation Discussion and Analysis

​

(1)

GAAP 3-Year revenue growth (CAGR): 3% IBM, 7% Software, 3% Consulting, 0% Infrastructure

​

(2)

Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.

​

(3)

Historical period of 2021 utilized in the calculation has been recast to reflect 2024 segment structure.

​

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, operating PTI margin, ROIC, 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.

 

2025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis 33

 

Our compensation strategy, with significant pay at risk, supports the drivers of IBM’s high value business model.

For 2024, at target, approximately 78% of Mr. Krishna’s pay remained at risk and subject to attainment of rigorous performance goals.

In making this award in line with the Company’s pool funding score, the Committee considered Mr. Krishna’s overall performance against his objectives, which included strong free cash flow generation, sustainable constant currency revenue generation, 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 Mr. Krishna’s personal leadership in AI and quantum computing, driving IBM’s high performance culture, as well as continued best in class employee engagement.

Payouts in both the annual and long-term programs reflect rigorous performance goals

 

342025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis

 

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.

The specific elements of IBM’s current U.S. executive compensation programs are:

Other compensation elements include perquisites, which are used on a limited basis to ensure safety and productivity of executives, and retirement benefits.

Full Career Performance: Retention, Pension, and Savings

Periodically, awards may be made in the form of Retention Restricted Stock Units (RRSUs) or cash awards to help retain certain executives. Vesting of RRSUs typically range from two to five years and cash awards have a clawback if an executive leaves IBM before it is earned.

Eligible U.S. employees may participate in post-employment savings plans such as the IBM 401(k) Plan, and a non-qualified deferred compensation plan. Employer contributions in the non-qualified deferred compensation plan provides a 5% matching contribution for all eligible employees. The Company also provides a cash balance retirement benefit in the IBM Personal Pension Plan to all eligible employees equal to 5% of eligible pay.

 

2025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis 35

 

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.

2024 Metrics and Weightings

​

  *

Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.

​

IBM shares its financial model each year with investors in the context of its long-term strategy. To provide further transparency, IBM discloses the performance attainment against financial targets for the most recent performance period, for both the Annual Incentive Program and the Performance Share Unit Program.

2024 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 then set the metrics and weightings for the AIP. These translate to financial targets for IBM and for each business unit for purposes of determining the target funding of the AIP.

In January, following the completion of the performance year, the Compensation Committee reviews the financial scoring, the modifier, any proposed qualitative adjustments, and approves the final AIP funding level.

Performance against the targets determines the actual total funding pool for the year, which can vary from 0% to 200% of the 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.

The financial targets may be adjusted up or down for extraordinary events if recommended by the Chairman, President and CEO and approved by the Compensation Committee; for example, adjustments are usually made for large acquisitions and divestitures.

The AIP modifier in 2024 serves as a mechanism to help attract and retain the best qualified talent available in the market, representing the industries, communities and clients we serve. In 2024, this modifier measured both: (1) global representation of women executives and representation of Black and Hispanic executives in the United States and (2) the inclusion score from IBM’s annual engagement survey, which is measured by the question “I feel comfortable being myself at work”. The modifier can result in a 5 point reduction, no impact, or a 5 point increase to overall AIP scoring which determines the total funding pool (but not individual amounts). The modifier results for 2024 had no impact on the overall AIP score. In 2025, the AIP modifier will include goals approved by the Compensation Committee in two categories, Talent and Innovation, which are key to IBM’s growth strategy.

The Chairman, President and CEO can recommend an adjustment, up or down, based on factors beyond IBM’s financial performance, which the Compensation Committee considers each year as part of an evaluation of qualitative business goals that are not included in the financial objectives. For 2024, the qualitative business goals can be grouped into four categories: client experience, market share, research and innovation and skill retention.

 

362025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis

 

In 2024, IBM demonstrated significant advancements in its hybrid cloud and AI strategy, leading to a total shareholder return of approximately 40%, outperforming the market by a substantial margin (S&P +25%). The company’s new product and emerging technology innovations, like the open-sourcing of IBM’s Granite family of models, have been pivotal in this success. Red Hat was named a Leader for the second consecutive year in the 2024 Gartner® Magic Quadrant™ for Container Management1. Red Hat and IBM launched InstructLab to evolve and improve AI models. IBM’s commitment to emerging innovation is also evident with over 75 quantum systems deployed worldwide and the expansion of Qiskit, IBM’s quantum computing software, into a comprehensive stack, which aims to enhance the stability, efficiency, and usability of Qiskit, supporting advanced quantum algorithm development and fostering broader adoption. High performing talent is critical to accelerating innovation; in 2024, our top performer attrition was approximately 25% less than overall voluntary attrition, demonstrating our ability to retain high performers for future growth.

Considering the significant shareholder value unlocked this year and the acceleration of our hybrid cloud and AI strategy execution, along with considerable advancements in innovation, the Compensation Committee approved a qualitative adjustment of +10 points to the AIP score.

The Compensation Committee reviews the financial scoring, modifier, and proposed qualitative adjustments, and approves the final AIP pool 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, an executive who does not meet their objectives will receive as little as zero payout and the most exceptional performers (excluding the Chairman, President 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 3,600 IBM executives, includes this individual cap at three times the individual target to allow for differentiated pay for performance. For the Chairman, President 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 in the year of their retirement. AIP payouts for the performance period are generally paid in April of the year following the end of such period.

This incentive design ensures payouts are aligned to IBM’s overall business performance while also ensuring individual executive accountability for specific business objectives.

2024 AIP Payout Results

Based on full year performance of revenue and operating cash flow, the IBM pool funding score was 110.

(1)

Based on AIP payout table; the 2024 leveraged score resulted in 97% for Revenue and 104% for Operating Cash Flow; for Revenue, threshold attainment is 80% with a 50% payout, target attainment and payout is 100%, maximum attainment is 110% with a 200% payout; for Operating Cash Flow, threshold attainment is 70% with a 70% payout, target attainment and payout is 100%, maximum attainment is 120% with 200% payout.

​

(2)

Revenue financial target is adjusted to remove the effects of currency changes.

​

(3)

Operating Cash Flow is a non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric.

​

Performance Share Unit Program

The Performance Share Unit (PSU) financial metrics for the 2022-2024 program were Revenue, Operating EPS, and Free Cash Flow. Financial targets are established at the beginning of the three-year performance period. These targets are based on IBM’s financial model as shared with investors and the Board-approved business objectives.

The PSU score is calculated as a weighted average of the results against the targets of Revenue (40%), Operating EPS (30%) and Free Cash Flow (30%). The results adjust Revenue for fluctuations in currency rates and Operating EPS for any difference between actual and targeted share count. Additionally, the scoring for the PSU Program may consider extraordinary events. For the 2022-2024 program, the results were adjusted for the impact of exiting our business in Russia in 2022.

1

Gartner, Magic Quadrant for Container Management, 9 September 2024. Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and is not a representation of fact. Gartner Content speaks as of its original publication date (and not as of the date of this exhibit), and the opinions expressed in the Gartner Content are subject to change without notice.

​

 

2025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis 37

 

At the end of the three-year performance period, the Compensation Committee approves the results relative to the targets, which is leveraged up or down from 0% to 150%. The PSU Program also includes a Relative Return on Invested Capital (ROIC) modifier, which compares IBM’s performance to the median performance of the S&P 500 (excluding Financial Services) and S&P 500 Information Technology indices over the three-year program period. The modifier increases the score linearly by 20 points when IBM’s performance exceeds the median of the S&P 500 Information Technology index. The modifier reduces the score linearly by 20 points when IBM’s performance falls below the median of the S&P 500 Index. If Revenue, Operating EPS, and Free Cash Flow result in a 0% leveraged payout, the modifier does not apply. For the 2022-2024 program, the ROIC modifier was 0.

The calculation for the 2022-2024 program is shown in the table below. Based on the leveraged performance and the ROIC modifier result, the final score is 93.

(1)

Based on PSU payout levels displayed below.

​

(2)

Non-GAAP financial metric. See Appendix A for information on how we calculate this performance metric.

​

(3)

2022-2024 revenue as reported, adjusted for fluctuations in foreign currency and impacts of separating business in Russia.

​

(4)

Non-GAAP financial metrics. Operating EPS includes immaterial share adjustments in all three years. For 2022-2024, 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, and include immaterial activity from discontinued operations in 2022. See Appendix A for information on how we calculate these performance metrics.

​

2022-2024 PSUs: Threshold, Target, and Max Attainment % and Payout %:

​

(1)

Non-GAAP financial metrics. See Appendix A for information on how we calculate these performance metrics.

​

 

382025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis

 

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.

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.

 

2025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis 39

 

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, President 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

Mr. Krishna owns common stock and stock-based holdings above his ownership requirement (over 42 times his base salary) as of December 31, 2024. 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, President and CEO, Vice Chairman and SVPs, inclusive of the NEOs, owned shares or equivalents valued at over $187 million as of December 31, 2024; as of that date, this group held, on average, over 11 times their base salary, and are all on track to meet or exceed their ownership goal within 5 years of hire or promotion.

The following table illustrates which equity holdings count towards stock ownership requirements:

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, President 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, 2024, assuming future performance at target.

Compensation Committee Consultant

The Committee enters into a consulting agreement with its outside compensation consultant on an annual basis. In 2024, the Committee retained Semler Brossy as its compensation consultant to advise the Committee on market practices and specific IBM policies and programs. Semler Brossy reports directly to the Compensation Committee Chair and takes direction from the Committee. The consultant’s work for the Committee includes data analyses, market assessments and preparation of related reports. From time to time, the Committee seeks the views of the consultant on items such as incentive program design and market practices. The work done by Semler Brossy for the Committee is documented in a formal agreement which is executed by the consultant and the Committee. Semler Brossy does not perform any other work for IBM, other than services provided to IBM’s Directors and Corporate Governance Committee. The Committee determined that there is no conflict of interest with regard to Semler Brossy.

 

402025 Notice of Annual Meeting & Proxy Statement   |   2024 Compensation Discussion and Analysis

 

How Compensation Decisions are Made

At any level, compensation reflects an employee’s value to the business — market value of skills, individual contribution and business results. To be sure we appropriately assess the value of senior executives, IBM follows an evaluation process, described here in some detail:

1. Making Annual Performance Commitments

All IBM employees, including the Chairman and CEO, Vice Chairman and SVPs, develop goals, both qualitative and quantitative, that they seek to achieve in a particular year in support of the business. The Board of Directors reviews and approves the Chairman and CEO’s performance goals and formally reviews progress and outcomes. As part of this process, many factors are considered, including an understanding of the business risks associated with the performance goals.

2. Determining Annual Incentive Payouts

Evaluation of Chairman, President and CEO Results by the Compensation Committee

The Chair of the Compensation Committee works directly with the Committee’s compensation consultant to provide a decision-making framework for use by the Committee in determining annual incentive payouts for the Chairman and CEO. This framework considers the Chairman and CEO’s self-assessment of performance against commitments in the year, both qualitative and quantitative, and also considers progress against strategic objectives, an analysis of IBM’s total performance over the year and the overall Company incentive score. The Committee considers all of this information in developing its recommendations, which are then presented to the independent members of the IBM Board of Directors for further review, discussion, and final approval.

Evaluation of Vice Chairman and SVP Results by the Chairman, President and CEO and the Compensation Committee

Executives work with their managers throughout the year to update their own results against their stated goals. The self-assessments of the Vice Chairman and SVPs are reviewed by the Senior Vice President of Human Resources and the Chairman and CEO, who evaluate the information.

Following this in-depth review and taking into account the Company incentive score, the Chairman, President and CEO makes compensation recommendations to the Compensation Committee based on an evaluation of the Vice Chairman and each SVP’s performance for the year, and the Committee decides whether to approve or adjust the Chairman and CEO’s recommendations for the Vice Chairman and SVPs. The Committee then presents the compensation decisions for the Chief Financial Officer to the independent members of the IBM Board of Directors for ratification.

3. Setting Competitive Target Pay

Approach to Benchmarking

IBM participates in several executive compensation surveys that provide general trend information and details on levels of salary, target annual incentives and long-term incentives, the relative mix of short- and long-term incentives, and mix of cash and stock-based pay. Given the battle for talent that exists in our industry, the benchmark companies that are used by the Compensation Committee to guide its decision making have included a broad range of key information technology companies, to help us identify trends in the industry. We also include companies outside our industry, with stature, size, and complexity that approximate our own, in recognition of the flow of executive talent in and out of IBM from other industries. The surveys and benchmark data are supplemented by input from the Compensation Committee’s outside consultant on factors such as recent market trends. The Committee reviews and approves this list annually.

For 2024 and 2025 compensation decisions, the Committee utilized the following benchmark group criteria:

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Companies in the technology industry with revenue that exceeds $10 billion, plus

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Additional companies in other industries, with revenue that exceeds $30 billion, and that have a global complexity similar to IBM, and whose business strategy results in substantial competition for senior leadership talent.

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For 2024 and 2025 compensation decisions, the Committee approved the following benchmark group for each year using the criteria above, which achieves a balance between prominent technology competitors and large-scale companies of similar size of IBM, and accurately represents IBM’s competition for senior leadership talent. In consideration of size and complexity, IBM’s philosophy is to generally target the 50th percentile of the market for cash and total compensation. New in role executives are typically positioned below and brought up to median with sustained performance; while high performing executives may have above median target total pay opportunity driven by long-term incentives to retain executive skills for strong succession plans. To be consistent with our benchmark group criteria, for 2025 we removed VMware and General Electric, and added Broadcom and Elevance Health.

Benchmark Group