IBM Paying $1.2 Billion in Cash Bonuses

International Business Machines Corp. is paying out $1.2 billion in cash bonuses, its largest amount ever, to 241,000 employees worldwide based on improved financial performance, a spokesman said Sunday.

“The whole idea is to recognize employees for their hard work,” a spokesman for the world’s largest computer maker said. “It’s linked to how they do, how the business unit does and how the overall corporation does.”

Customer satisfaction also is considered.

Last year, IBM had record revenue of $75.9 billion and earned $5.9 billion, or $11.06 a share, excluding one-time charges.

The bonus equaled about 20% of IBM’s 1996 earnings and was about 10% of an average worker’s pay in the United States, up from 8% of base salary a year ago, the spokesman said.

The bonus averaged $4,979 for all employees worldwide. No breakdown on the size of bonuses in the United States and abroad was available.

IBM has been paying annual bonuses since 1992.

Since Chairman Louis Gerstner took over in April 1993, a larger part of employee compensation has come from bonuses as the company has sought to motivate employees.

Gerstner and four other top executives are not included in the bonus plan.

Their separate bonuses will be disclosed Tuesday when IBM files its proxy statement for its annual meeting.

IBM’s bonus comes a month after another technology stalwart, Intel Corp., rewarded employees with $820 million in cash bonuses, profit sharing and retirement pay.

Intel’s average employee received at least 33% of their base salary under the plan, because of the Santa Clara, Calif.-based semiconductor giant’s record year in 1996.

Armonk, N.Y.-based IBM paid its domestic employee bonuses on Friday. Canadian staffers were paid last month. Timing in other countries varies.