The article linked in from that bit is pretty good too: "IBM redefines failure as 'success,' gives underachieving CEO huge raise" - http://www.latimes.com/business/hiltzik/la-fi-mh-ibm-redefin...

"The company has posted lower revenue for 11 quarters in a row."

She gets a raise for successfully shrinking the company?

Share price is up. Granted, on the back of share buyback plans partially funded by increasing debt, but shareholders are seeing the value of their shares rise.

In an alien world a million billion miles away a general marshalling forces after defeat after defeat offers it's sword (or other death dealing device) to the star marshals and is told, "no, not now" but inconsolable the resignation is re-tendered, so now the star marshals give it a medal, and a pay rise and a nice pat on the heat, and it agrees to remain in charge.

If I could reduce and organisation to zarg-jelly by resigning I would extract similar geld I guess..

Your analogy is hard to follow.

Well, I guess the GP meant that if you could inflict significant harm on the company by resigning, the shareholders won't let you do that, so you can just start extorting them for money.

Jesus... That is pretty awful. I understand cutting down your workforce since your business is struggling like hell but don't give your crappy CEO a massive bonus and pay raise.

Reinstating bonuses for execs after several years of poor performance...

There's a direct correlation between the two events, I'd wager. She's being rewarded for taking decisive action and also being given an incentive to stay and see it through, where "it" is fixing IBM.

EDIT: yes, I used the wrong pronoun originally. The reaction... wow. No disrespect was intended, and I'd think that leeway would be given here on HN. Oh, well.

Concur. Hold onto her while she does the dirty work, but her days are numbered once Chrome is done. She's the hatchet (wo)man - and nobody will want her around post-cull. They'll want fresh untainted vision, buy-in from the survivors. She might as well give herself a post-dated 2016 3-score.

That sounded familiar and a quick search turned up a paper about it:

“The current study relies on a unique dataset of all CEO transitions in Fortune 500 companies over a 15-year period. We find that occupational minorities are more likely than white men to be promoted CEO of weakly performing firms; and when firm performance declines during their tenure, occupational minority CEOs are likely to be replaced by white men, a phenomenon we term the ‘savior effect.’”

http://onlinelibrary.wiley.com/doi/10.1002/smj.2161/abstract

Full copy: http://big.assets.huffingtonpost.com/glassceiling.pdf

Unfortunately the statistical analysis supporting that point sounds incorrect to me.

Their evidence consists of:

1. A claim that the mean return on equity of the previous CEO of -0.68 in the "savior" case (white CEO following a minority CEO) is significantly different from a value of 0.11 in the control case (white CEO following a white CEO). This can't be true because the low number of samples implies standard errors of 0.66 and 0.05 for the means. I'm computing a z-score of 1.18, corresponding to a two-sided p-value of 0.24, far above the claimed p<0.01.

2. A claim that the mean return on equity of the previous CEO is correlated with a binary variable describing whether we are in the savior case. While their measured correlation coefficient of -0.13 would indeed be statistically significant if it were measuring a correlation of normally distributed data, the use of a binary variable describing unbalanced classes means that 95% of the variance is concentrated on just 5% of the data (28 samples). Bootstrapping based on the published mean and deviation of each class shows a 0.11 standard deviation of the correlation coefficient, and more importantly a p-value of 0.12 which is once again non-significant.

An interesting feature is that the standard deviation of the return on equity differs a lot between classes. I assume that this is because the returns on equity are far from being normally distributed, and indeed data from another class with just 4 samples shows an abnormally low standard deviation, letting us reject the normal distribution hypothesis with p<0.001. Most returns are very close to zero, so necessarily some are much greater than the standard deviation. A few or even just one large-magnitude return in the 28 "savior" samples would suffice to create a spurious correlation.

I would contact the authors about it, but I would like someone here to confirm if my analysis makes any sense.

Which is exactly why she got the raise/bonus. It was probably agreed too before she ever took the job.

She'll do the dirty work, get paid VERY WELL for it, so the firm itself can save face. She'll leave next year with a few mill in her pocket. AND IBM will blame their woes on "her" plan.

or $30,000,000 as it's other wise known in CEO world

I think you mean "she".

With respect, the CEO of IBM is a woman.

One reasoning I read was that the board does not want a CEO transition during this time. It would adversely affect the stock price further. And at this point what corporate leader with enough positive recognition to advance the stock price would want the job.

I'm sure that there is a perfectly good explanation for that.

It's easy to forget that IBM still made $5.5B profit in the most recent quarter.

Even easier to misinterpret the $5.5B profit without the context of 6% decline in revenue, and net income decline by 27%.

It's even worse when consider how much their markets have grown in the past year. A 6% decline in revenue is understandable if the target markets go down 6%, but when there's growth it's even worse.

A naive person might then ask, "$5.5 in profit? So why lay off all those people?"

Because if they lay off all those people, they might make even more profit. A public company with outside shareholders can't generally say "oh, we're making enough money, we'll leave it there" - it's got to constantly grow and constantly make more and more profit to please the shareholders which expect it to do so.

If you care about your employees, you don't let random people have a say in how your company is run for their own profit.

Why not? Don't you spend less on things when you want to save more? Do you spend all of your savings?

So you're telling me that when I buy the store brand toilet paper, I'm wreaking sudden havoc with the lives of thousands of families, all for the sake of saving some money?

I guess I better start buying Charmin. The $0.37 of savings totally isn't worth that! I mean, who could possibly have a clear conscience about leaving thousands of people in the lurch over a little bit of money?

I'm no financial analyst but I see a lot of "downs" in the Q4 earnings report: http://www-03.ibm.com/press/us/en/pressrelease/45884.wss

Inertia in it's client base mainly. As drag forces continue to slow it down those profits will disappear.

There always is. It might just not be what we'd want it to be.