IBM boosts dividend, hears complaints

At annual meeting, IBM shareholders protest employment practices weeks before an expected restructuring that could involve layoffs.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
2 min read
IBM announced an increase in its quarterly dividend at its annual meeting, where it also faced complaints about offshoring plans weeks before expected layoffs.

The computing giant said Tuesday that its quarterly dividend will be 20 cents per common share, which is an 11 percent increase from the previous dividend.

The board also approved a plan to set aside $5 billion for its stock repurchasing program.

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Later at Tuesday's meeting, which is being held in Charleston, S.C., Big Blue's board is set to consider shareholder proposals to alter its policies regarding executive compensation, pension plan funding and IBM's hiring practices around the world.

One proxy statement calls for IBM to halt its plans to transfer jobs from the U.S. to overseas locations. It asked for an independent committee to evaluate the "risk of damage to the company's brand name and reputation" from any offshoring initiatives.

In prepared documents, IBM's board said it opposes all of the shareholder proposals.

The calls to change IBM's employment practices come at a time when IBM is expected to lay off workers in Europe--and possibly up to 20,000 worldwide, according to one analyst. After it reported disappointing first-quarter results earlier this month, the company said it would use "sizable restructuring" to address problems.

An IBM insider said earlier this month that the layoffs are likely to occur in IBM's Global Services division, where positions for lower-margin services jobs will be eliminated.

IBM France intends to reduce the number of employees by more than 800, according to press reports in France, which cited a French union. Layoffs in Germany are also anticipated, according to reports.

Prudential analyst Jim Gorman estimated that the number of employees affected worldwide could be between 10,000 and 20,000.

"We believe that IBM management is now under pressure to staunch the bleeding in the stock price, and expect the company to announce head count reductions in the range of 10-20K over the next week or so," Gorman said in a research note Tuesday.

Gorman also speculated that CEO Sam Palmisano could appoint a chief operating officer to help manage IBM.