After another disastrous quarter and a share sell-off, investors want changes at IBM. The company has attempted a year’s long but unsuccessful turnaround under CEO Virginia Marie “Ginni” Rometty. The most logical place to turn for a decision about her future is Michael Eskew, IBM’s presiding director. His role is to act as head of the board on matters that should not involve the CEO. Among those is whether the CEO should remain at the company.
Eskew has run a huge corporation, having been CEO of United Parcel Service (NYSE: UPS). He has been a director of IBM since 2005, seven years longer than Rometty has been CEO. Several other directors were on the board when Rometty was made CEO. They have a special responsibility to correct a poor decision. These include Kenneth I. Chenault, CEO of troubled American Express (NYSE: AXP). He has been a director since 1998, which makes him the senior member of the board in terms of tenure.
Other members who joined the board before Rometty became CEO are Sidney Taurel of Pearson; James W. Owens, former head of Caterpillar (NYSE: CAT); W. James McNerney, Jr., former head of Boeing (NYSE: BA); Andrew N. Liveris, head of Dow Chemical (NYSE: DOW); and Shirley Ann Jackson, head of Rensselaer Polytechnic Institute. Investors can fairly ask why the board has not ousted Rometty.
Rometty has done a very poor job if by no other measure than IBM’s stock price. IBM shares are at a 52-week low of $147, from a high of $183. They are down 25% in the last five years, against a 78% increase in the S&P 500, while shares of rival Microsoft (NASDAQ: MSFT) are up 147% over the same period.
IBM’s revenue has dropped for 21 consecutive quarters. It is impossible to understand how that could happen. Among large U.S. companies over the last decade the move is almost unprecedented.
In his role as the IBM board’s independent leader, Michael Eskew has to lead the move to get Rometty out.