Frederick H. Waddell
INTERNATIONAL BUSINESS MACHINESAbout Frederick H. Waddell
Frederick H. Waddell (age 71) is an independent director at IBM, serving since 2017. He is the retired Chairman and CEO of Northern Trust Corporation and currently chairs IBM’s Executive Compensation and Management Resources Committee (ECMRC) and serves on the Executive Committee, bringing deep expertise in regulated financial services, operations, and risk management .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Northern Trust Corporation | Chairman of the Board | Nov 2009–Jan 2019 | Led governance and oversight of a regulated financial institution |
| Northern Trust Corporation | Chief Executive Officer | 2008–2017 | Strategy, operations, risk management through the financial crisis and recovery |
| Northern Trust Corporation | President | 2006–2011; Oct–Dec 2016 | Executive leadership and business performance |
| Northern Trust Corporation | Chief Operating Officer | 2006–2008 | Operational execution and controls |
| IBM | ECMRC Chair; Executive Committee Member | 2024 Committee service | Defined compensation philosophy, CEO pay decisions, equity plan approvals; succession planning oversight; Executive Committee member |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| AbbVie Inc. | Director | Current | Regulated industry board experience |
| Art Institute of Chicago | Board of Trustees | Current | Non-profit governance |
| Chicago Symphony Orchestra | Board of Trustees | Current | Non-profit governance |
| Northwestern University | Board of Trustees | Current | Academic institution oversight |
Board Governance
- Independence: The Board determined Waddell and all non-management director nominees meet independence standards under NYSE and IBM criteria .
- Committee assignments and meetings (2024): ECMRC (Chair) – 5 meetings; Executive Committee – 0 meetings; Audit Committee – not a member .
- Board attendance: In 2024 the Board held 7 meetings; overall Board and committee attendance exceeded 97%, with at least 75% attendance for each director. All directors except one attended the 2024 Annual Meeting of Stockholders .
- Lead Independent Director: Alex Gorsky; robust executive sessions at each Board meeting; annual Board self-evaluation led by Lead Director .
Fixed Compensation
| Component (2024) | Amount (USD) | Notes |
|---|---|---|
| Annual Director Retainer (cash) | $350,000 | Standard non-management director retainer |
| ECMRC Chair Retainer | $20,000 | Additional annual retainer for ECMRC chair |
| Fees Earned or Paid in Cash (Total) | $370,000 | Retainer + chair fee |
| All Other Compensation (Total) | $140,516 | Includes dividend equivalents on PFS ($130,441) and Matching Grants Program ($10,000), plus group life premiums |
| Total (Cash + Other) | $510,516 | Sum of components above |
Director compensation structure and guidelines:
- Additional annual retainers: Audit Chair $30,000; Directors & Corporate Governance Chair $20,000; ECMRC Chair $20,000; Lead Director $50,000 .
- Stock ownership guidelines: Within five years, non-management directors must hold stock-based holdings equal to eight times the equity portion of the annual retainer; holdings include IBM shares and DCEAP Promised Fee Shares (PFS); unexercised options excluded .
Performance Compensation
Directors do not receive performance-based executive awards; however as ECMRC Chair, Waddell oversees IBM’s executive pay programs and metrics:
| Program | Metric | Weight | Definition/Notes |
|---|---|---|---|
| Annual Incentive Program (AIP) | Revenue | N/A (AIP pool funding) | Measures total revenue performance; 2024 leveraged score for Revenue was 97% (threshold 80%/50% payout; target 100%/100%; max 110%/200%) |
| Annual Incentive Program (AIP) | Operating Cash Flow (non-GAAP) | N/A (AIP pool funding) | Measures ability to reinvest/return value; 2024 leveraged score was 104% (threshold 70%/70%; target 100%/100%; max 120%/200%) |
| PSU (2022–2024) | Revenue | 40% | Adjusted for currency and Russia exit; threshold 70%/25%, target 100%/100%, max 120%/150% |
| PSU (2022–2024) | Operating EPS (non-GAAP) | 30% | Adjusted for share count and Russia exit; same payout curve as above |
| PSU (2022–2024) | Free Cash Flow (non-GAAP) | 30% | Consolidated FCF; same payout curve; adjusted for Russia exit |
| PSU Modifier | Relative ROIC Modifier | ±20 points | Compares ROIC to S&P 500 medians; 2022–2024 modifier was 0 |
Oversight actions:
- ECMRC responsibilities include CEO goal-setting and evaluation, CEO compensation approval with independent directors, equity plan awards and monitoring stock ownership guidelines, succession planning oversight, and talent/inclusion programs .
- Committee report is signed by Waddell as Chair (2024 CD&A inclusion recommended to Board) .
- Compensation consultant: Semler Brossy retained; Committee determined no conflicts .
Other Directorships & Interlocks
- Compensation Committee interlocks: None in 2024; all ECMRC members (including Waddell) were independent and none were IBM employees or former employees; no reciprocal executive service interlocks disclosed .
Expertise & Qualifications
- Deep executive leadership, operations, and risk management from tenure at Northern Trust; regulated industry expertise; strategic acumen for complex macro/operational issues; director at AbbVie Inc. .
Equity Ownership
| Category (as of Dec 31, 2024) | Shares/Units | Value (USD) |
|---|---|---|
| Common Stock | 3,763 | Included in valuation below |
| Directors’ DCEAP PFS | 21,082 | Included in valuation below |
| Acquirable within 60 days (Options/RSUs) | 0 | N/A |
| Value of Common Stock + DCEAP (at $219.83) | — | $5,461,617 |
Notes:
- No pledging: IBM policy prohibits directors and senior leaders from hedging or pledging IBM securities, including margin accounts or collateralized loans .
- Ownership concentration: The total of directors and executive officers’ beneficial holdings represented less than 1% of shares outstanding; no individual held more than 0.05% .
Governance Assessment
Strengths:
- Independence: Clear independent status under robust Board standards; ECMRC fully independent .
- Active oversight: ECMRC chaired by Waddell with defined responsibilities; strong governance framework (executive sessions, annual evaluations) .
- Alignment policies: Strong director ownership guidelines; prohibition on hedging/pledging; executive clawbacks across incentive programs .
- Investor support: 2024 Say-on-Pay approval at 92.2%, indicating broad investor alignment with compensation practices overseen by ECMRC .
Potential risks/RED FLAGS:
- None disclosed regarding related-party transactions involving Waddell; IBM’s policy requires independent review of any related-person transactions, and no interlocks or relationships requiring disclosure were identified for the Compensation Committee in 2024 .
- Attendance: No concerns—Board/committee attendance >97% overall; at least 75% for each director .
Signals for investors:
- Waddell’s chairmanship of ECMRC places him at the center of executive pay design and succession oversight, with transparent performance metrics (Revenue, Operating Cash Flow, Operating EPS, Free Cash Flow, Relative ROIC) guiding pay-for-performance alignment .
- Strong ownership and anti-hedging policies enhance alignment and reduce conflict risk; director compensation includes equity-linked PFS with dividend equivalents, reinforcing ownership mindset .