Lou Gerstner wrote, "People truly do what you inspect, not what you expect." … Lest we forget, these "inspection pages" exist because chief executives are "people" too.
Arvind Krishna: 2020-21 Market Value Performance
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Published April 11, 2022
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Arvind Krishna's 2020-21 Market Value Performance
- The Importance of Market Value
- Arvind Krishna's 2020-21 Market Value by the Numbers
Evaluating Arvind Krishna's 2020-21 Market Value Performance
How did Arvind Krishna's leadership affect IBM's 2020-21 market value in his second year as CEO? IBM's market value was essentially flat with an overall .9% increase since the end of 2019. For 2020, IBM's market value was down 5.5% but increased by 6.8% in 2021.
IBM’s market value is calculated by multiplying the corporation’s outstanding shares by those shares’ current market price. Lou Gerstner often used market value as a key business metric to evaluate his business success. He wrote to his shareholders about the significance of market value in IBM’s 1998 and 1999 annual reports. He called it “the most important measure of progress to investors.”
Sam Palmisano, following his predecessor's example, wrote in the IBM 2003 Annual Report:
Sam Palmisano, following his predecessor's example, wrote in the IBM 2003 Annual Report:
The board of directors approved sweeping changes in executive compensation. … IBM’s market value would have to increase by $17 billion [reaching $174 billion] before executives saw any benefit from this year’s option awards.
The following set of charts documents why Sam Palmisano abandoned this market value measurement of success for executive compensation and implemented earnings-per-share roadmaps. Competing with inflation, a market-value measurement would have yielded only pennies, if that, in executive compensation.
In fact, not a single penny for a long, long time.
In fact, not a single penny for a long, long time.
Arvind Krishna's 2020-21 Market Value by the Numbers
- Arvind Krishna 2020-21 Market Value
- IBM Market Value was flat with an overall .9% increase over Arvind Krishna's first two years, falling 5.5% in 2020 but increasing 6.8% in 2021.
- Krishna & Rometty 2011–21 Market Value
- IBM Market Value over the last decade was down 43.9%—losing an overall $93.8 billion, which included several major events like abandoning the 2015 Roadmap, the divestiture of Kyndryl and the x86-Server Division, and acquiring Red Hat.
- Krishna, Rometty, Palmisano & Gerstner 1999–2021 Market Value
- IBM Market Value over the last two decades lost 37.6% of its value—an overall $72.4 billion
- If the $176 billion in share buybacks since 1999 had accomplished one thing—kept market value in line with inflation, IBM’s 2021 share price would have been $349 a share instead of $134.
