IBM 2003 Annual Report Download - page 11

9
CHAIRMAN’S LETTER
think what resulted—broad, enthusiastic, grass-roots
consensus—could have been obtained in any other way.
In the end, IBMers determined that our actions will
be driven by these values:
•Dedication to every client’s success
•Innovation that matters, for our company and
for the world
•Trust and personal responsibility in all relationships
I must tell you, this process has been very meaningful
to me. We are getting back in touch with what IBM has
always been about—and always will be about—in
a very concrete way. And I feel that I’ve been handed
something every CEO craves: a mandate, for exactly the
right kinds of transformation, from an entire workforce.
Where will this lead? It is a work in progress, and
many of the implications remain to be discovered.
What I can tell you is that we are rolling up our
sleeves to bring IBM’s values to life in our policies,
procedures and daily operations.
I’ve already touched on a number of things relating
to clients and innovation, but our values of trust and
personal responsibility are being managed just as seri-
ously—from changes in how we measure and reward
performance, to how we equip and support IBMers’
community volunteerism.
Our values underpin our relationships with investors,
as well. In late February, the board of directors approved
sweeping changes in executive compensation. They
include innovative programs that ensure investors first
receive meaningful returns—a 10 percent increase in
the stock price—before IBM’s top 300 executives can
realize a penny of profit from their stock option grants.
Putting that into perspective, IBM’s market value
would have to increase by $17 billion before executives
saw any benefit from this year’s option awards. In
addition, these executives will be able to acquire mar-
ket-priced stock options only if they first invest their
own money in IBM stock. We believe these programs
are unprecedented, certainly in our industry and
perhaps in business.
Clearly, leading by values is very different from some
kinds of leadership demonstrated in the past by busi-
ness. It is empowering, and I think that’s much healthier.
Rather than burden our people with excessive controls,
we are trusting them to make decisions and to act
based on values—values they themselves shaped.
To me, it’s also just common sense. In today’s world,
where everyone is so interconnected and interdepend-
ent, it is simply essential that we work for each other’s
success. If we’re going to solve the biggest, thorniest
and most widespread problems in business and society,
we have to innovate in ways that truly matter. And we
have to do all this by taking personal responsibility
for all of our relationships—with clients, colleagues,
partners, investors and the public at large. This is IBM’s
mission as an enterprise, and a goal toward which
we hope to work with many others, in our industry
and beyond.
Playing offense
Put it all together—a more focused business model,
an industry shift that plays to our strengths, bets that
are paying off in the near term, and a workforce that
is united and impatient to become the great company
we all aspire to be—and I feel good about IBM and
our prospects.
Without the prod of fear or of a “burning platform,”
we’ve begun a substantial transformation of our
company. For the first time in a very long time—
probably since my early days with IBM 30 years
ago—I’m seeing a company ready to focus more on
opportunities than on threats, more intent on setting
the agenda than on reacting to the moves of others.
Our deep-seated optimism—a fundamental belief that
IBMers have always possessed in progress, science
and the improvability of the human condition—is
reasserting itself. IBMers are ready to reclaim a
position of leadership—in our industry and in the
larger world of business.
Which is a very exciting place to be. For me
and my colleagues, it’s just terrific to be part of an
energized IBM company that is once again ready
to play some offense.
SAMUEL J. PALMISANO
Chairman, President and
Chief Executive Officer