F. William McNabb III
INTERNATIONAL BUSINESS MACHINESAbout F. William McNabb III
Independent director of IBM’s Board since 2019, age 67, and former Chairman and CEO of The Vanguard Group. He serves on IBM’s Audit Committee and is designated an Audit Committee Financial Expert, bringing deep financial reporting, risk oversight, and governance experience to IBM’s board . His background includes decades of leadership at Vanguard and current public company board experience, aligning with IBM’s focus on strong independent oversight .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| The Vanguard Group, Inc. | Chairman (2008–2018); CEO (2008–2017); various leadership roles since 1986 | 1986–2018 | Led a top global asset manager; governance and risk expertise |
| Vanguard group of investment companies | Chairman of Board of Directors and Trustees | Began in 2010 | Oversight of fund governance |
| Investment Company Institute | Vice-Chair and Chairman of Board of Governors | Chair 2013–2016 | Industry policy and governance leadership |
| Ernst & Young Independent Audit Quality Committee | Chairman (former) | Not stated | Audit quality oversight and independence focus |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| UnitedHealth Group | Director; Audit Committee Chair | Current | Leads audit oversight at a large, regulated enterprise |
| Axiom | Director | Current | Governance oversight at a technology-enabled services company |
| Wharton Leadership Advisory Board | Advisory Board Member | Current | Leadership development and governance thought leadership |
| Ira M. Millstein Center (Columbia University) | Advisory Board Member | Current | Corporate governance scholarship and policy |
| CECP: The CEO Force for Good | Board Member | Current | Corporate responsibility and stakeholder engagement |
| Zoological Society of Philadelphia | Former Chairman | Former | Non-profit leadership |
| USRowing Foundation | Chairman | Current | Non-profit governance |
Board Governance
- Committee assignments: Audit Committee member; Audit Committee Financial Expert .
- Independence: Board determined McNabb meets IBM/NYSE independence standards .
- Attendance: In 2024, Board held 7 meetings and committees 19; overall attendance >97%, and each director attended ≥75% of meetings .
- Engagement: IBM maintains robust stockholder engagement and independent board leadership structures, including executive sessions and an active Lead Director role; the Board is annually refreshed and evaluated .
Fixed Compensation
| Component | Amount | Notes |
|---|---|---|
| Annual director retainer (cash) | $350,000 | Fees earned or paid in cash in 2024 |
| All other compensation | $84,280 | Primarily dividend equivalents on Promised Fee Shares (PFS) under DCEAP; $84,205 in dividend equivalents and other minor items |
| Total | $434,280 | 2024 total compensation |
| Additional annual retainers (structure) | Audit Chair: $30,000; Lead Director: $50,000; Directors & Corp Gov Chair: $20,000; EC&MR Chair: $20,000 | McNabb is an Audit Committee member (not chair), so these incremental retainers do not apply to him |
- Director compensation program uses DCEAP (Deferred Compensation and Equity Award Plan) permitting deferral into PFS; dividend equivalents are paid on PFS balances .
- Director compensation consultant: Semler Brossy advises; assessed as conflict-free .
Performance Compensation
IBM directors do not receive performance-based equity (e.g., PSUs) or option awards; their equity exposure arises from deferred fee shares (PFS) under DCEAP. Quarterly PFS awards credited to McNabb (illustrative recent history):
| Transaction Date | Filing Date | Type | Shares Credited | Security | Post-Transaction PFS Balance |
|---|---|---|---|---|---|
| 2024-03-28 | 2024-04-01 | Award (A) | 459 | Promised Fee Share | 12,325 |
| 2024-06-28 | 2024-07-02 | Award (A) | 506 | Promised Fee Share | 12,952 |
| 2024-09-30 | 2024-10-01 | Award (A) | 396 | Promised Fee Share | 13,453 |
| 2024-12-31 | 2025-01-02 | Award (A) | 399 | Promised Fee Share | 13,948 |
Note: IBM prohibits hedging/pledging by directors; PFS balances are typically paid on separation per DCEAP rules .
Other Directorships & Interlocks
- Current public company boards: UnitedHealth Group (Audit Chair); IBM (Audit Committee) .
- Compensation committee interlocks: IBM discloses none for its Executive Compensation and Management Resources Committee in 2024 .
- Largest beneficial owners include The Vanguard Group (10.03%); McNabb is retired from Vanguard and deemed independent under IBM’s standards .
Expertise & Qualifications
- Financial and governance expertise: Audit Committee Financial Expert; significant knowledge of financial reporting and accounting principles .
- Risk oversight and strategic leadership: Former Chairman/CEO at Vanguard; governance roles across public and non-profit boards .
- Board-relevant skills: Corporate governance, risk management, financial acumen aligned with IBM’s audit oversight needs .
Equity Ownership
| Holding Type | Shares | Value at FY-end (12/31/2024) |
|---|---|---|
| Common Stock | 9,250 | Included in total value below |
| Directors’ DCEAP (PFS) | 13,947 | Included in total value below |
| Acquirable within 60 days | 0 | None reported |
| Value of Common + DCEAP | $5,099,472 | Valued at IBM $219.83 YE price |
- Stock ownership guidelines: Non-management directors must hold stock-based holdings equal to 8x the equity portion of the annual retainer within five years; IBM states its guidelines are the strongest in its peer set .
- Hedging/pledging: Prohibited for directors and leadership teams under IBM’s insider trading policy .
Insider Trades (Alignment Signals)
| Date | Type | Shares | Price | Ownership After | Source |
|---|---|---|---|---|---|
| 2020-10-28 | Open Market Purchase (P) | 9,250 | $108.0135 | 9,250 common | |
| 2025-09-30 | DCEAP PFS Award (A) | 324 | $0 | 15,223 PFS | |
| 2025-06-30 | DCEAP PFS Award (A) | 310 | $0 | 14,803 PFS |
Pattern: Consistent quarterly accruals of PFS via deferred fees and a notable open-market buy in 2020 indicating long-term alignment .
Governance Assessment
- Strengths:
- Independent, financially sophisticated director on Audit Committee; designated Audit Committee Financial Expert .
- Strong attendance culture (>97% overall) and formal independence determination; executive sessions and rigorous board evaluation process enhance oversight quality .
- Director equity alignment through DCEAP with substantial holdings; hedging/pledging prohibited .
- No disclosed compensation committee interlocks at IBM; robust related-party transaction policy .
- Broad investor support for pay practices (Say-on-Pay 92.2% approval in 2024), indicating governance credibility with shareholders .
- Watch items:
- Vanguard’s significant ownership (10.03%) juxtaposed with McNabb’s prior role at Vanguard may warrant ongoing monitoring for perceived conflicts, though IBM affirms independence after annual review .
- Director compensation relies on PFS and dividend equivalents, not performance metrics; while typical for directors, investors should continue to evaluate equity alignment versus pure cash retainer .
Appendix: Committee Context (for Board Effectiveness)
| Committee | Members | 2024 Meetings | Key Responsibilities |
|---|---|---|---|
| Audit | Voser (Chair), Farr, Howard, McNabb | 10 | Financial results, audits, internal controls, cybersecurity, ESG data; pre-approve auditor services; private sessions with compliance leaders |
| Directors & Corporate Governance | Liveris (Chair), Brown, Zollar | 4 | Board composition, refreshment, director compensation recommendations, ESG oversight, stockholder proposals |
| Executive Compensation & Management Resources | Waddell (Chair), Buberl, Miebach, Pollack | 5 | Executive pay philosophy and decisions, succession planning, equity awards, stock ownership compliance |
| Executive | Krishna (Chair), Gorsky, Liveris, Voser, Waddell | 0 | Acts for Board between meetings (no meetings in 2024) |
IBM Board independence, leadership structure, and Lead Director responsibilities underscore robust governance processes supporting investor confidence .