Lou Gerstner wrote, "People truly do what you inspect, not what you expect." … Lest we forget, "inspection pages" such as these exist because chief executives are "people" too.
Arvind Krishna's 2020 to 2025 IBM Market Value Performance
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Date Published: April 11, 2022
Date Modified: April 2, 2026 |
Arvind Krishna: IBM's 2020 through 2025 Market Value Performance
- Overview: The Importance of Market Value
- Krishna: IBM's 2020 through 2025 Market Value
- Krishna and Rometty: IBM's 2011 through 2025 Market Value
- Krishna, Rometty, Palmisano, and Gerstner: IBM's 1999 through 2025 Market Value
Overview: The Importance of Market Value
Why should long-term stakeholders keep IBM's market value "top of mind"
IBM’s market value is calculated by multiplying the corporation’s outstanding shares by those shares’ current market price; therefore, there is a direct correlation between share price and market value. 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 Louis V. Gerstner's example, wrote the following 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.
Sam Palmisano, following Louis V. Gerstner's example, wrote the following 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 last chart in this series of three charts documents why Sam Palmisano abandoned this market-value measurement of success for executive compensation and implemented earnings-per-share roadmaps. A market-value measurement would have yielded only pennies, if that, in executive compensation. In fact, IBM executives' under a market-value compensation system during this timeframe would not have seen "any benefit from their option awards" for seven years: IBM did not surpass $174 billion in market value until 2010!
So, rather than keep the measurement the executive team changed the rules of their compensation game!
So, rather than keep the measurement the executive team changed the rules of their compensation game!
IBM's 2020 through 2025 Market Value
How did Arvind Krishna's leadership affect IBM's 2020 through 2025 market value in his six years as CEO?
- Arvind Krishna: IBM's 2020 through 2025 IBM Market Value Performance
- IBM Market Value was up triple digits with an overall 134% increase over Arvind Krishna's six years.
It is important to note that this five-year uplift in market share was accomplished after ending two and one-half decades of share repurchases (share buybacks) in 2019. The total cost of these share repurchases from 1995 to 2019 was more than $200 billion dollars. Arvind Krishna has left several billion in share buybacks unspent since 2019—but the money is still approved to be spent.
- IBM Market Value was up triple digits with an overall 134% increase over Arvind Krishna's six years.
IBM's 2011 through 2025 Market Value
- Krishna & Rometty: IBM's 2011 through 2025 Market Value Performance
- IBM Market Value over the last decade and a half was up 29.9%. It is critical to note that IBM's 2011 share price of $214 was only surpassed in 2025. The year before, the end-of-year stock price was only $204. So this supposedly decade-and-half gain of 30% has only been achieved in the last year. IBM's market value growth is the result of an upswing in market value that started in 2020 a year after Arvind Krishna took over the corner office at IBM.
It is an interesting note that inflation was up 43.6% over this same fourteen-year period. Even with the gains in the last several years, IBM's 21st Century market value has not kept up with inflation.
- IBM Market Value over the last decade and a half was up 29.9%. It is critical to note that IBM's 2011 share price of $214 was only surpassed in 2025. The year before, the end-of-year stock price was only $204. So this supposedly decade-and-half gain of 30% has only been achieved in the last year. IBM's market value growth is the result of an upswing in market value that started in 2020 a year after Arvind Krishna took over the corner office at IBM.
IBM's 1999 through 2025 Market Value
- Krishna, Rometty, Palmisano, & Gerstner: IBM's 1999 through 2025 Market Value Performance
- After more than two decades, IBM Market Value in just the last two years has finally reached and surpassed its 1999 market value. Although this might be seen as a positive with the growth in market value since 2020, one has to ask if the market value, over the longer haul, has kept up with inflation?
If IBM market value had just kept pace with the rise in inflation, IBM’s share price would have been $372 a share instead of $278 at the end of 2025! Does it truly matter if IBM is considered a Dividend Aristocrat stock for paying dividends reliably if it is continually paying dividends on a stock price that is barely maintaining its value over decades such that market value isn't high enough to ensure its stock price outpaces inflation?
IBM is a case study in the weakness of adhering myopically to a dividend aristocrat investment philosophy.
- After more than two decades, IBM Market Value in just the last two years has finally reached and surpassed its 1999 market value. Although this might be seen as a positive with the growth in market value since 2020, one has to ask if the market value, over the longer haul, has kept up with inflation?
The following chart documents from 1999 through 2025 IBM's stock price at the end of each year as compared with what the stock price would have been if it had just kept pace with inflation. Even with the gains in the last six years, there is a shortfall of almost $100 per share.
