IBM taps Palmisano to take over as CEO

IBM's board of directors Tuesday officially tapped Chief Executive Officer (CEO) Louis Gerstner's longtime heir apparent, Samuel Palmisano, as the company's next CEO. Effective March 1, Palmisano will succeed Gerstner, who will remain chairman of IBM through the end of 2002, the company announced Tuesday. Palmisano, currently IBM's president and chief operating officer (COO), will remain president.

IBM also said its vice chairman, John Thompson, will retire from the company and the board on Sept. 1.

Palmisano, 50, joined IBM in 1973 as a sales representative and has climbed steadily within the company during the past three decades. He gained the inside track as Gerstner's replacement when IBM named him its president and COO in September 2000. "Sam bleeds Blue," Gerstner wrote Tuesday, in a letter e-mailed to IBM employees and released to the media. "He's an exceptional leader, passionate about our business, committed to our principles and values, and steeped in the disciplines that are critical to our successes."

Gerstner, 59, was widely expected to retire when his contract expires in March. He joined IBM in 1993, and is credited with leading a turnaround that repositioned the lumbering Big Blue at the pinnacle of the IT industry. Its lucrative professional services business and cutting-edge research and development are admired throughout the industry. Hewlett-Packard Co. and Compaq Computer Corp. executives have cited the ability to compete with IBM as a goal of their planned merger.

An IBM spokeswoman declined to comment on whether the company will fill the now-vacant COO position. IBM did not have a COO when Palmisano assumed the position.

IBM CEOs rarely retain their position past their 60th birthday. Gerstner addressed that trend in his e-mail to the staff.

"Some people believe IBM CEOs are required to step aside at age 60. That's not so. There is no rule or age limit that requires me to do this now. I am doing it because I am convinced that the time is right. The company is ready, and so is our new leader," he wrote.

He also noted that when he joined the company in 1993, the board "asked me to focus on one short-term objective: save the company. Given my limited knowledge of IBM at the time, I quite honestly did not know if that could be done."

Outgoing IBM Vice-Chairman Thompson took on that title concurrently with Palmisano's September 2000 ascension to his new roles as president and COO. Thompson currently oversees IBM's worldwide business and technology strategy. He joined IBM in 1966 in Canada, and rose to become CEO and president of IBM Canada Ltd. in 1986. He subsequently moved to the U.S. and held various top positions within IBM, culminating in his tenure as vice president and group executive of IBM's Software Group. Thompson vacated that position in August 2000.

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