Nearly three years after IBM-Red Hat deal, IBM president Jim Whitehurst is stepping down

Nearly three years after agreeing to sell Red Hat to IBM for $34 billion, former Red Hat CEO Jim Whitehurst is stepping down from his role as president of IBM, the company said Friday.

Whitehurst, 54, was named president of IBM in January 2020, after longtime CEO Ginni Rometty retired and named Arvind Krishna as her replacement.

Naming Whitehurst president of IBM was unusual for the company. IBM hadn’t previously had a split leadership structure, with a separate CEO and president, for more than 100 years.

But Whitehurst had been considered a likely candidate to replace Krishna as CEO in the future.

In a blog post accompanying the announcement, Krishna said Whitehurst will continue to work as a senior adviser for IBM.

“In the almost three years since the acquisition was announced, Jim has been instrumental in articulating IBM’s strategy, but also in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients,” Krishna wrote.

IBM declined to comment or make an executive available to speak about Whitehurst’s departure. The company did not name a replacement for Whitehurst.

Efforts to reach Whitehurst by phone on Friday were not immediately successful.

Krishna was one of the primary influences in IBM’s pursuit of Red Hat back in 2018.

The company viewed Red Hat’s technology as critical to it becoming more competitive in cloud software, where it competes with tech giants like Amazon and Microsoft.

Red Hat has continued to grow since the merger closed in 2019, hiring more than 1,000 new employees and recently opening up 500 more.

However, while Red Hat continued to grow, Krishna has been reorganizing IBM as he tries to place a larger emphasis on cloud computing and return the tech giant to revenue growth. Last year, the company announced lay offs as well as plans to spin off its Global Technology Services division into a new, publicly traded company called Kyndryl.

Shares of IBM stock fell Friday after Whitehurst’s departure was announced — declining 4.5% to $140.32 per share as of 2 p.m. The company’s stock, however, is up 17.2% over the past year.

As the second-highest employee at IBM, Whitehurst had a large compensation package that he will be stepping away from. Whitehurst’s salary at IBM was $1.2 million, according to filings with the U.S. Securities and Exchange Commission. In addition, he had been awarded IBM stock worth more than $18 million.

IBM was also giving Whitehurst retention payments worth up to $6 million to stay at the company, conditioned on his achieving certain goals. The payments were to be paid out over three years on the anniversary of the Red Hat deal with IBM officially closing. That anniversary is in July, and Whitehurst was given a $2 million retention payment last year.

It is unclear if Whitehurst will receive this year’s retention payment or whether his role as a senior adviser will count toward his retention. The N&O has asked IBM for clarity.

Before becoming president of IBM, Whitehurst had been with Red Hat since late 2007, when he replaced Matthew Szulik as the tech company’s CEO. Prior to joining Red Hat, he worked at Delta Air Lines in Atlanta as the airline’s chief operating officer and guided the company through a Chapter 11 reorganization.

While at Red Hat, he grew the open-source software company into an enterprise with more than $1 billion in revenue and more than 12,000 employees around the world, including more than 2,000 in the company’s downtown Raleigh tower.

Whitehurst wasn’t the only IBM executive departing on Friday. The company also said Bridget van Kralingen, who oversaw sales operations, was retiring. She is being replaced by Rob Thomas.

Tom Rosmilia was named the new head of IBM’s cloud and cognitive software division, a position that should have a lot of overlap with Red Hat.

In addition to leaving IBM, public records show that Whitehurst and his wife sold their Durham home last month for more than $2.1 million.

This is a developing story and will be updated.

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate

This story was originally published July 2, 2021 at 1:32 PM with the headline "Nearly three years after IBM-Red Hat deal, IBM president Jim Whitehurst is stepping down."