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How Much Did International Business Machines Corporation’s (NYSE:IBM) CEO Pocket Last Year?

Ginni Rometty has been the CEO of International Business Machines Corporation (NYSE:IBM) since 2012. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for International Business Machines

How Does Ginni Rometty’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that International Business Machines Corporation has a market cap of US$104.9b, and is paying total annual CEO compensation of US$19m. That’s actually a decrease on the year before. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO compensation was US$11m.

It would therefore appear that International Business Machines Corporation pays Ginni Rometty more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at International Business Machines, below.

NYSE:IBM CEO Compensation November 1st 18
NYSE:IBM CEO Compensation November 1st 18

Is International Business Machines Corporation Growing?

Over the last three years International Business Machines Corporation has shrunk its earnings per share by an average of 28% per year. Its revenue is up 2.6% over last year.

Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

You might want to check this free visual report on analyst forecasts for future earnings.

Has International Business Machines Corporation Been A Good Investment?

Since shareholders would have lost about 7.5% over three years, some International Business Machines Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount International Business Machines Corporation pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling International Business Machines Corporation (free visualization of insider trades).

Or you might prefer examine intently this intuitive graph showing past earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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