IBM Investor Update Spring 2019 1

2018 Business Highlights IBM returned to growth in 2018, grew earnings per share and stabilized margins Strategy Full-year revenue growth Cloud revenue of $19 billion, with growth led by as-a-Service $79.6B Revenue 46.4% Gross Profit Margin Stabilized margins, with margin expansion in the second half $11.9B Free Cash Flow Enables investment and stockholder returns Returned $10 billion to stockholders in dividends and share repurchases Raised dividend for the 23rd consecutive year $6.28 Annualized Dividend per Share* 17% Return on Invested Capital** Reflects high-value business * Annualized Dividend per Share equals most recent quarterly dividend per share multiplied by four ** Excludes $2 billion in 2018 charges related to the U.S. Tax Cuts and Jobs Act of 2017 2

IBM’s Strong Foundation for the Cognitive and Cloud Era IBM is uniquely positioned to move enterprise clients to the next chapter of digital reinvention Strategy Integrated Model 3 Innovative Technologies Trust and Security Industry Expertise Scaling AI Moving from experimentation to production, scaling and embedding AI across the enterprise Hybrid Cloud Moving mission-critical workloads to the cloud: hybrid, multi-cloud, open, secure, managed

Positioned for the Future IBM has taken actions to lead in the emerging, high-value segments of the IT market, and deliver long-term value to stockholders Strategy Longer-Term Financial Model IBM Today Recent Actions #1 in enterprise IT, and #1 in… Revenue low single-digit growth Maintained high level of investment in R&D, capital, acquisitions to extend lead in areas such as hybrid cloud, AI, security, quantum  AI for business Pre-tax income mid single-digit growth  hybrid cloud Announced acquisition of Red Hat to accelerate adoption of hybrid cloud  enterprise services Earnings per share high single-digit growth  enterprise security  enterprise systems Announced divestiture of select software and services businesses to prioritize investments for IBM’s integrated high-value model Free cash flow realization >90%  blockchain 4

Stockholder Engagement Commitment to Stockholder Engagement and Responsiveness We have a continuous practice of meeting with a significant number of our largest investors throughout the year to solicit and incorporate feedback into our practices and disclosures Engaging with Stockholders Gathering Feedback Continually Enhancing Practices Corporate •Ensured IBM attendees with sustainability expertise Responsibility sustainability topics 5 2018 Proxy Season 100+ # of stockholders we engaged with prior to the 2018 Annual Meeting >70% % of IBM’s institutional ownership we engaged with prior to the 2018 Annual Meeting 250,000 # of registered and beneficial stockholders we reached out to, which represents a majority of our retail stockholder base 2018 Off Season >50% % of the shares voted at the 2018 Annual Meeting that directors and senior management offered to engage with >30% % of the shares voted at the 2018 Annual Meeting that directors and senior management engaged with on corporate governance, business strategy, executive compensation and sustainability Recent Outcomes of Engagement: •Changed Presiding Director title to Lead Director •Continued focus on active Board refreshment •Committee chair and member rotation Governanceand Diversity •Added a relative ROIC modifier to PSUs granted beginning in 2018 •Reduced maximum annual incentive plan opportunity for CEO from 3x to 2x target •For the 2019 annual incentive, total IBM revenue Compensation will replace Strategic Imperatives revenue metric •Enhanced proxy disclosure on corporate responsibility and sustainability Socialwere available for dialogue with investors •Held a webcast devoted exclusively to

Executive Compensation Aligns with High-Value Business Model Compensation Compensation Committee ensures that our pay programs for our senior executives are closely aligned to IBM’s strategy and performance • Market competitive cloud platform company multiple years Relative ROIC Modifier: Measures return on invested capital, demonstrating the company’s differentiated high-value model versus peers • • Typically vest over four years 6 69% At-Risk Long-Term Short-Term The CEO’s total target compensation is unchanged from 2018 to 2019 • Operating Cash Flow (40%): Measures ability to reinvest and return value to stockholders • Operating Net Income (40%): Measures our profit and operational success • Strategic Imperatives Revenue (20%): Promotes shift to a cognitive solutions and 2019 Enhancement Replaced Strategic Imperative revenue with IBM revenue as an annual incentive metric • Three-Year Performance Period • Operating Earnings Per Share (70%): Measures profitability on a per-share basis • Free Cash Flow (30%): Measures ability to reinvest and return value to stockholders over 2018 CEO Pay Mix Base Salary (8%) Annual Incentive (25%) Performance Share Units (44%) Restricted Stock Units (23%)

Performance-Based Executive Compensation Compensation Annual and long-term incentive program target metrics are set at rigorous levels, with pay-at-risk designed to balance short-and long-term business objectives LONG-TERM PERFORMANCE SHARE UNIT PAYOUTS AS % OF TARGET CEO ANNUAL INCENTIVE PROGRAM AS % OF TARGET 2018 Annual Incentive Program score reflects a 15 point downward qualitative adjustment. Even though overall results were strong in 2018, performance was not with the consistency that management set for itself across all markets and units 150 150 arget Target (100%) 100 100 100%) 50 50 0 0 20132014201520162017 2018 2012-2014 2013-2015 2014-2016 2015-2017 2016-2018 CEO TOTAL ACTUAL PAYOUT AS % OF TARGET ANNUAL COMPENSATION Target (100%) 100 Total actual payout ranged from 54% to 89% of target annual compensation over the last five years, reflecting our rigorous performance goals 50 0 2014 2015 2016 2017 2018 7 74% 55% 54% 81% 89% 99% T 82% 52% 32% 67% ( 90% 90% 99% 102% 0% 81%

Thoughtful Approach to Active Board Refreshment Governance Our Director Nominees, all leaders in their respective fields, have a deep understanding of our business and extensive industry expertise to contribute diverse and fresh perspectives As part of our robust and proactive refreshment efforts we added two new directors in 2019: African American and first woman to be named Vice Chair of technology in the digital age will benefit IBM stockholders DowDuPont expertise for IBM technology to improve lives provide value to IBM and its Industry Expertise Key: 8 Healthcare:Financial Services:Transport & Logistics: Energy:Manufacturing:Research & Development: Government:Information Technology:Chemicals: D R . M A R T H A P O L L A C K , P r e s i d e n t , C o r n e l l U n i v e r s i t y  Computer scientist and leader in the field of AI, key skills and  Dr. Pollack’s perspectives on education and the use of stockholders A D M I R A L M I C H E L L E H O W A R D , R e t i r e d A d m i r a l , U S N a v y  The first woman to become a four-star admiral, and the first Naval Operations  Admiral Howard’s experience with cybersecurity and V I R G I N I A R O M E T T Y Chairman, President and CEO, IBM LeadM I C H AE L E S K E W Director Retired Chairman and CEO, UPS D AV I D F AR R Chairman and CEO, Emerson Electric Co. AL E X G O R S K Y Chairman and CEO, Johnson & Johnson S H I R L E Y A N N J A C K S O N President, Rensselaer Polytechnic Institute AN D R E W L I V E R I S Retired Exec. Chairman, Retired Chairman and CEO, Dow Chemical J O S E P H S W E D I S H Sr. Advisor, Retired Chairman, Pres. CEO, Anthem, Inc. S I D N E Y T AU R E L Chairman Emeritus, Eli Lilly and Co. Chairman, Pearson plc P E T E R V O S E R Retired CEO, Royal Dutch Shell plc Chairman, ABB Ltd. F R E D E R I C K W AD D E L L Retired Chairman and CEO, Northern Trust Corporation

Optimal Mix of Skills and Experience for Director Nominees Governance The Board is committed to ongoing, proactive refreshment and maintaining a diversity of backgrounds, talents and perspectives Industry leaders with deep executive and oversight experience Less Than 5 Years 5-10 Years Global experience necessary to oversee a business of IBM’s scale, scope and complexity Critical skill given industry trends and transformation Key insight into IBM’s regulatory environment More Than 10 Years Average tenure is 6.7 years Transformation Experience led complex organizations company’s innovation and 9 Emphasis on Diversity Building the Right Board for IBM: Key Director Attributes 33% 50% Diverse Diverse Directors Chairs Business Operation, Innovation, and • 100% of IBM Directors have • Key to Board’s oversight of transformation issues Industry Experience • IBM’s Directors have experience leading organizations in a variety of industries, enhancing the Board’s knowledge and perspectives on contemporary business Global Perspective • Every IBM Director has international experience • Board’s diverse and international experience is crucial for IBM, which operates in more than 175 countries worldwide Public Company Board 10 6 Directors Organizational Leadership and Management 12 3 Directors Global Business Operations 9 3 Directors Finance/Public Company CFO 7 Tech, Cybersecurity, or Digital 12 Government / Public Policy 12 Balanced Mix of Tenures Highly Qualified Director Nominees with Diverse Experiences

Commitment to Governance Best Practices The table below highlights practices that IBM embraces in support of strong governance Governance below market value 10 Compensation Governance Best Practices  Tie a significant portion of pay to Company performance  Maintain robust clawback provisions  Stock ownership guidelines for Chairman, CEO and SVPs  Utilize noncompetition and non-solicitation agreements  Remove impact of share repurchase on executive incentives × No individual severance or change-in-control agreements for NEOs × No excise tax gross-ups × No dividend equivalents on unearned RSUs/PSUs × No hedging or pledging of IBM stock × No stock option repricing, exchanges or options granted × No guaranteed incentive payouts × No accelerated vesting of equity awards for NEOs Stockholder Rights and Governance Best Practices  Annual election of directors  Robust independent lead director role  Stockholder special meeting right  Proxy access  Majority voting for directors  Annual Board self-evaluation  11 of 12 director nominees are independent  Signatory of Commonsense Principles 2.0 NEW  Endorser of Investor Stewardship Group Principles NEW × No supermajority voting provisions × No stockholder rights plan or poison pill

Corporate Responsibility is Smart Business Under the Board’s guidance and supervision, IBM’s longstanding commitment to the highest standards of corporate responsibility is an integral part of our long-term performance strategy Sustainability • We apply our technology and talent to create solutions for education, environmental sustainability, healthcare and more Programs like Pathways in Technology Early College High Schools (P-TECH) are leading the way in public education reform to address the global skills gap by integrating high school and college coursework with workplace opportunities • • • Responsibly sourced packaging materials Conduct environmental supplier audits Foster supplier diversity globally U.N. Sustainable Development Goals (SDGs) 17 interconnected initiatives aimed at building an inclusive and sustainable world • • Apply the Responsible Business Alliance (RBA) Supplier Code of Conduct Our products, services, and solutions enable clients to drive improved sustainability  IBM’s contributions toward the achievement of certain SDGs can be found at www.ibm.com/ibm/ environment/news/ibm_unsdgs _2018.pdf • Recognized global leader in workplace diversity, inclusion and equality. Only tech company to win the 2018 Catalyst Award for the advancement of women, and IBM is the only company to be recognized for a fourth time Programs such as Tech Re-Entry and Business Resource Groups create an equal opportunity workforce • Use innovative technology and deep expertise to minimize our environmental impact and develop smarter solutions for a more sustainable world In 2017, we reduced CO2 emissions at our managed locations by 42.9% versus our 2005 baseline, exceeding our goal to reduce emissions by 35% by 2020 • • • Visit www.ibm.com/ibm/responsibility/ to learn more about these initiatives and to read our latest Corporate Responsibility Report 11 DIVERSITY & INCLUSION ENVIRONMENT CORPORATE CITIZENSHIP SUPPLY CHAIN

Voting Item 5: Stockholder Proposal on Written Consent The Board recommends a vote AGAINST this proposal and believes that action by written consent without prior notice to all stockholders is not in the best interest of stockholders Proposals  Majority written consent would allow a bare majority of stockholders to act without a meeting, let alone notice to the other IBM stockholders  By contrast, IBM’s current practices, including a special meeting right, guarantee that notice and an opportunity to be heard is given to all stockholders prior to a stockholder vote  This allows for meaningful discourse and deliberation to occur before important decisions are made affecting IBM  This transparency and fairness for all stockholders would be negated with a majority written consent provision 12 The Board does not believe that majority written consent is an appropriate corporate governance model for a widely-held public company like IBM

Voting Item 6: Stockholder Proposal on Independent Chairman Proposals The Board recommends a vote AGAINST this proposal because the Board’s flexibility to determine the appropriate leadership structure is essential and IBM has a robust Lead Director role ensuring effective independent oversight The Board believes the Company’s current leadership structure is in the best interests of IBM stockholders: IBM’s Lead Director role is robust and ensures effective independent oversight at all times: Lead Director Michael L. Eskew • Retired Chairman & CEO, UPS • Global business, technology, leadership and oversight experience  The full Board reviews our leadership structure annually to ensure the allocation of responsibilities remains appropriate  The Board’s flexibility to determine the appropriate Board leadership structure is essential  IBM’s current leadership structure is optimal for the Company at this time  There is no conclusive evidence to support that a separate, independent Chairman leads to enhanced oversight or increased value for IBM stockholders  IBM stockholders have continuously supported the current leadership structure with the majority of stockholders voting against this proposal multiple times 13 As Lead Director, Mr. Eskew has the following core responsibilities:  Presides at all Board meetings at which the Chairman is not present and leads a session of non-management directors at each meeting  Serves as liaison between the Chairman and the independent directors  Approves information sent to the Board  Approves meeting agendas and meeting schedules  Has the authority to call meetings of the independent directors  Available for consultation and direct communication In addition to core responsibilities, Mr. Eskew also:  Conducts one-on-one debriefs with the Chairman after each meeting  Analyzes CEO performance in executive sessions in conjunction with the Executive Compensation & Management Resources Committee chair  Reviews feedback from the Board and Committee evaluation process  Engages with senior management outside of Board meetings to ensure a deep understanding of business and strategy  Attends other committee meetings

We Request Your Support at the 2019 Annual Meeting of Stockholders Proposals Public Accounting Firm 14 To express our appreciation for your participation in our annual meeting, IBM will make a $1 charitable donation to AnitaB.org on behalf of every stockholder account that votes this year. AnitaB.org is a global nonprofit organization that connects, inspires, and guides women in technology. The Board asks that you vote: For all management proposals Against both stockholder proposals FOR Election of all Twelve Director Nominees FOR Ratification of PricewaterhouseCoopers LLP as IBM’s Independent Registered  FOR Advisory Vote on Executive Compensation FOR Approval of Long-term Incentive Performance Terms for Certain Executives for Awards Eligible for Transitional Relief Pursuant to Section 162(m) of the Internal Revenue Code AGAINST Stockholder Proposal on the Right to Act by Written Consent AGAINST Stockholder Proposal to Have an Independent Board Chairman  

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Appendix A 16

Forward-Looking Statements and Non-GAAP Information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. Those statements by their nature address matters that are uncertain to different degrees. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the Company’s filings with the SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor Relations. Any forward-looking statement made during this presentation speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements. These charts and the associated remarks and comments are integrally related, and are intended to be presented and understood together. In an effort to provide additional and useful information regarding the company’s financial results and other financial information, as determined by generally accepted accounting principles (GAAP), these materials contain certain non-GAAP financial measures on a continuing operations basis, specifically free cash flow. The rationale for management’s use of this non-GAAP information and its reconciliation are included on page 61 of the Company’s Annual Report, which is Exhibit 13 to the Form 10-K submitted to the SEC on February 26, 2019. Note: ROIC is based on GAAP from continuing operations and equals Net Operating Profits after Tax (adjusted for one-time tax reform charge) divided by the average sum of total debt and total stockholders' equity. 17