HP blows nearly $47 million on its CEO follies

HP blows nearly $47 million on its CEO follies

Summary: HP spent $30.41 million in total compensation for ousted CEO Leo Apotheker. New CEO Meg Whitman landed $16.52 million in total compensation.

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For HP, fiscal 2011 was the year of two CEOs---Leo Apotheker and Meg Whitman---and it cost the company dearly.

In its proxy statement filed Friday, HP outlined the compensation packages for its relatively new CEO and the parting gift for Apotheker.

The damage? Whitman took a salary of $1 for fiscal 2011 and option awards worth $16.15 million. Toss in other competition and the grand total comes to $16.52 million rounded.

And then there's Apotheker, who wrestled with strategy, communications and a decision whether to spin off HP's PC unit. Simply put, the Apotheker reign was a disaster.

However, that disaster was $30.41 million in total compensation. Apotheker landed $1.15 million in salary, $6.4 million in bonus, $17.66 million in stock awards and another $5.2 million in other. Apotheker made a bundle for just a few months work.

Add it up and you're at a $46.9 million tab for two CEOs in a year. And that's simplifying the equation a bit. Interim CEO Cathy Lesjak also made out nicely. She had $11 million in total compensation, but that's worth it given Lesjak held the fort while HP was going through a messy transition.

As for the footnotes in HP's compensation tale, Apotheker's separation agreement deserves a callout. HP said:

On September 22, 2011, Mr. Apotheker terminated as President and Chief Executive Officer of HP, and HP and Mr. Apotheker subsequently entered into a Separation Agreement and Release (the "Separation Agreement"). The Separation Agreement confirms that Mr. Apotheker would receive certain compensation and benefits under the terms of his then-existing employment agreement, including $7.2 million in cash severance payments (subject to his continued compliance with certain non-compete and non-solicitation provisions) and accelerated vesting of 156,000 shares of restricted stock. The Separation Agreement also provides for Mr. Apotheker to receive a fiscal 2011 bonus of $2.4 million, reflecting his nearly 11 months of service with HP, and certain relocation and repatriation benefits to assist him in returning his family to France or Belgium, along with certain financial protections in connection with the sale of his California residence. In addition, Mr. Apotheker retains the right to receive future payouts under two of the three PRU awards granted to him in connection with his commencement of employment, subject to the company's satisfaction of applicable performance conditions. Mr. Apotheker's third PRU award was cancelled.

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Topics: IT Employment, CXO, Hewlett-Packard, Legal

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26 comments
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  • RE: HP blows nearly $47 million on its CEO follies

    No matter which this is spun - the amounts involved are a joke for any Fortune 500 company, period. Then again, a few more years of this sort of expensive musical chairs, and this company will not be in the Fortune 500.
    Matthew A. Sawtell
    • RE: HP blows nearly $47 million on its CEO follies

      @Matthew A. Sawtell
      + 1 that's true
      preferred user
    • RE: HP blows nearly $47 million on its CEO follies

      @Matthew A. Sawtell -

      Agreed.
      HypnoToad72
  • But it was worth it.

    Mr or Ms CEO brings valuable experience in some made up talent , and will allow us to focus on core competencies that are aligned with our core values. This realignment will carry us forward and bring us increased profits.<br><br>And on and on and on...
    otaddy
    • Don't forget da cheddah!

      @otaddy

      Never'ever do dat. ;)
      klumper
    • RE: HP blows nearly $47 million on its CEO follies

      @otaddy -

      These days, most companies fire "talent" if they're employed for too long (higher wages/benefits/demands). The ageism problem doesn't help either.

      Companies think that things written on paper and parrots to squawk them is adequate. Real talent, real labor, and real quality are just too expensive for the quarterly balance sheet... (until people notice and abscond the brand because they're no longer performing...)

      But given the declining quality of products made by these companies, something bigger is going on.

      Economic and societal cannibalism...
      HypnoToad72
      • True.

        @HypnoToad72 And you know, I'm expecting this to happen to me one of these days. Of course, I get no golden parachute.
        otaddy
    • RE: HP blows nearly $47 million on its CEO follies

      @otaddy
      The reason for taking $1 salaries is they know that regular income is taxed at a higher rate, so they prefer to get their money in stock options which are taxed at half that rate.
      The Reagan revolution ushered in the era of indexing capital gains, cutting capital gains taxes and pushing instead consumption taxes in order to push the tax burden down to the middle class and poor.
      johnsmith9875
      • So it's political?

        @johnsmith9875 I'm no Republican, so I don't mind criticisms of Reagan. But I gotta ask: What have the Dems done to fix this? And there sure are a lot of wealthy libs around that seem to be profiting from the current system too!
        otaddy
  • So how do I get a job like that?

    Come in...get paid millions of dollars...screw up the company...then get paid MORE millions of dollars to leave.

    Is this a great country or what?
    IT_Fella
    • great work if you can get it

      @IT_Fella You win either way. Stock goes up you get a bonus, stock goes down, you get your golden parachute.
      otaddy
  • RE: HP blows nearly $47 million on its CEO follies

    Sometimes you have to cut off the pinkie to save the hand. Meg gets it. Salespeople are getting raises, previous defectors are being sought out and enticed back, 80 engineers have been redeployed from HP-UX to storage. In the Enterprise space they have begun to reverse the brain drain of The Hurd Era. The pendulum is swinging back...
    john.defrees@...
    • RE: HP blows nearly $47 million on its CEO follies

      @john.defrees@... pretty much everybody at HP that supported our company well is now gone, including the account rep, project managers, technical architects and network gurus. All gone. Now we are having failures out the wazzoo on servers and laptops and we see why HP is rated at the bottom of the barrel for support. Leo torpedoed the company, and Meg didn't fix anything as far as we can tell.
      terry flores
    • RE: HP blows nearly $47 million on its CEO follies

      @john.defrees@... HP's quality has continued to go downward since 2005 or so.

      With luck Meg's changes will do some good, but we'll see what happens.

      After all, some people try to cure the disease by killing the patient...
      HypnoToad72
  • RE: HP blows nearly $47 million on its CEO follies

    How does a CEO that screws things up qualify for a bonus?
    schultzycom
    • RE: HP blows nearly $47 million on its CEO follies

      @schultzycom - You have no idea how many zillions of stock options they would have got if things had gone right. The money that Leo got was the *minimum*, the maximum could have been $120 million. It's just insane, and complete robbery of the stockholders.
      terry flores
  • Silver severances and golden parachutes *YAWN*

    About the only surefire thing, besides follies of every stripe, that you can ALWAYS count on being delivered from our vainglorious movers and shakers.
    klumper
    • but these people are so awesome

      @klumper They are worth every penny... NOT!
      otaddy
  • RE: HP blows nearly $47 million on its CEO follies

    Why do shareholders go along with this. This is a clear sign that the board needs to go as well. wtf is this cr@p shareholders have to swallow. Might as well give them a pearl necklace as well!
    Tokamak123
    • RE: HP blows nearly $47 million on its CEO follies

      @Tokamak123 -

      Assuming that have a choice.

      Beware of politicians that vote 'no' to letting stockholders having any real say...

      Here's one:

      http://ontheissues.org/OH/John_Boehner.htm#Corporations


      "Voted NO on letting shareholders vote on executive compensation. (Jul 2009) "

      Funny how these same cats talk of "freedom" and "free market" and how everyone is supposedly at the will of the stockholders...
      HypnoToad72