Updated from 12:20 p.m. EDT At its annual stockholders' meeting Tuesday, IBM ( IBM) announced a hike in its quarterly dividend and said its shareholders have voted in favor of a measure to expense options. Big Blue said it will hike its quarterly dividend by 12.5%, or 2 cents, to 18 cents. The dividend is payable on June 10 to shareholders of record as of May 10. The company said it has raised its quarterly dividend nine times since 1996 and that this latest boost marks the largest percentage increase in seven years. Still, IBM's dividend yield will remain a relatively minimal 0.79%, based on Monday's close of $90.43. In calendar-year 2003, the average S&P 500 member company had a dividend yield of 1.56%, according to Standard & Poor's. Also on Tuesday, IBM shareholders approved a proposal requesting that the company expense the cost of options. The company said 53.6% of stockholders supported the measure, with 46.4% voting against it, according to Reuters. In recent months, stockowners of Hewlett-Packard ( HPQ) and Texas Instruments ( TXN) have also voted in favor of measures requiring companies to account for the cost of options. The votes are somewhat symbolic, since an accounting change likely to be enacted in 2005 will require all public companies to prominently reflect the cost of options in their income statements, instead of burying the charge in the footnotes of financial statements. Earlier this year, IBM reacted to the rising tide of shareholder activism over options by announcing a major reform in its
options plan for top-rung executives. Under the new plan, which took effect in February, the top 300 executives at IBM receive options with a strike price 10% above their grant price, meaning the share price has to rise that amount before the options have any value. In recent trading, Big Blue was up $1.35, or 1.5%, to $91.78.