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HP's New CEO Pay Package Fatter Than Previous Job
03/30/05
By: Wei Gu, Reuters
NEW YORK - Hewlett-Packard Co.'s new president and chief executive, Mark Hurd, will get a compensation package far more generous than he earned at his previous employer NCR Corp. and that is in some ways more generous than that of HP's ousted CEO Carly Fiorina, according to regulatory filings Wednesday.
Hurd's base salary jumped to $1.4 million at HP from $900,000 as chief executive of NCR, the maker of supermarket checkout and bank teller machines. The jump brought his base salary to parity with Fiorina's in her last year at HP.
Under a four-year agreement with HP, Hurd, who starts the new job on Friday, stands to receive an annual bonus of at least $2.8 million, no matter how he performs, and which could reach $8.4 million.
Hurd received a bonus of $1.1 million at NCR. Fiorina's bonus was $1.6 million in fiscal 2004, lower than in previous years, because the company missed internal operating targets, according to a copy of his employment agreement filed with U.S. securities regulators.
"Hurd's package is quite rich because of all the guarantees," said Paul Dorf, Compensation Resources Inc.'s managing director. "They are giving him a lot no matter whether he succeeds or not."
HP, the No. 2 computer maker and the No. 1 computer printer maker, also gave Hurd 700,000 stock options which HP valued at $4.2 million. Fiorina also received 700,000 stock options in HP's last fiscal year.
Hurd will receive 400,000 shares of restricted stock that HP estimated are worth $8 million, dwarfing Fiorina's restricted stock grant of $660,000 last year.
However, when Fiorina came to HP in 1999, she received restricted stock worth valued at about $65.5 million in inflated tech-boom stock prices but which are now valued at about $18 million.
If Hurd himself is forced out, he will receive a one-time cash payment equal to 2.5 times of his base salary and his target bonus amount. His stock options will vest fully and can be exercised immediately, a practice which experts say is usual.
Fiorina received more than $21 million in severance pay when the board ousted her last month for not producing the consistent, profitable growth she had promised in arguing for HP's purchase of Compaq Computer Corp. She and the board also disagreed on how to structure the company.
Hurd is also slated to receive include relocation fees of $2.75 million for moving to California from Ohio.
"Under Sarbanes Oxley directors cannot give him a loan for relocation, so they decided to give him money. That's pretty nice," Dorf said, adding that relocation allowances rarely exceed $1 million.
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