Palmisano Gets 30% Raise As IBM Shares SpikePalmisano Gets 30% Raise As IBM Shares Spike

IBM chairman and CEO Sam Palmisano saw his annual compensation increase 30%, to about $31.7 million, in 2010 and he is now leading Big Blue to record-setting share prices in 2011.

Palmisano's $31.7 million compensation package consisted of salary, stock grants, and performance incentives, according to documents IBM filed this week with the Securities and Exchange Commission. While critics of executive compensation may characterize the package as excessive, there's no question that shareholders have benefited from Palmisano's efforts to cut costs while boosting profits.

IBM shares on Wednesday surpassed the $167 mark, a record for the company when stock splits are taken into consideration. The spike was driven by IBM's announcement that it's on pace to post profits of $20 per share by 2015—a goal that Palmisano originally set out last year.

The news led some analysts to increase their price target for IBM shares. RBC Capital Markets' Amit Daryanani is now looking for $176 per share, up from his original target of $165. Bank of America, meanwhile, raised its target to $190, from $180.

"IBM has numerous arrows in its quiver to meet its long-term EPS guidance, with substantial financial flexibility," said Bank of America, in a research note.

Palmisano, 59, is a virtual lifer at IBM who took over the top spot at the company in 2002. He made his mark by selling off commodity business lines such as PCs and printers while moving the company into higher-margin offerings such as consulting, analytics software, and business services.

IBM shares pulled back on Thursday amid a rough trading day across the board. Shares of the company were off 1.97%, to $162.59.