Gerstner Initiates Major Shake-Up in IBM Senior Management

Joanna Doyle

Citing his company’s need to move in a new direction, IBM CEO Lou Gerstner announced a major high-level executive reshuffling, which will include the appointment of Samuel Palmisano, current senior vice president of IBM’s server division, to the position of president and chief operating officer. The 48-year-old Palmisano will be the first president IBM has had under Gerstner’s seven-year tenure.

In addition to Palmisano’s promotion, the company announced that software group senior vice president and group executive John Thompson, 57, has been named vice chairman. The new positions take effect Sept. 1.

“The chairman wanted to focus on issues in the company while moving the company forward, and that is what he thought would be the best way to do it,” says IBM spokesman Edward Barbini, explaining what spurred this major executive reorganization, the first of its kind since Gerstner came on board.

Barbini says there has been no official indication that the moves represent the early stages of preparation for naming a successor to Gerstner, whose contract will expire in March 2002, although many analysts say it looks likely Palmisano is being groomed as his replacement.

According to IBM, Palmisano will primarily be responsible for daily operations, overseeing eight divisions of the company. Thompson’s role will be to explore future directions for the company’s products and services, concentrating on such areas as the Internet and wireless technology. However, while Palmisano’s focus will be in day-to-day operations, Barbini says one of the reasons he was selected for the position of president is that he is knowm to be “a strong supporter of innovation in the IBM labs.”

In the wake of Monday’s announcement, 28-year-IBM veteran Dave Thomas stepped down as head of IBM’s beleaguered PC division. Industry experts anticipate Thomas’ resignation will be one of a number of changes to result from the reorganization.

Bill Zeitler, the 63-year-old head of the IBM S390 division and former head of the AS/400 division, has been selected to succeed Palmisano as vice president in the server division. Barbini would not speculate on whether or not other IBM divisions will be affected by the staff changes as positions are filled down the line.