HP Spent Over $80M To Get Rid of Its CEOs

hapworth writes "Analysis published today shows that Hewlett-Packard has shelled out over $80 million to get rid of three CEOs since 2005. The first CEO to take her expensive exit, Carly Fiorina, received over $42 million, once stocks, options, and pension are factored in. Mark Hurd, after just four years, received $12.2 million to take his exit; and now, after 11 months, Leo Apotheker will walk out with a reported $25.2 million in severance. With eBay's Meg Whitman in as the new CEO at HP, industry analyst Robert McGarvey writes today that 'the HP gig could help Whitman replenish her personal coffers, depleted by the pumping of $119 million into a futile bid to become California's governor.'"

Comments

I've got a better deal

[GodfatherofSoul]

I'll ruin your company for a measly $5 million; no stock options if you don't mind since I'll probably do a pretty good job of it.

Re:I've got a better deal

[bennomatic]

That's insane! You can't ruin a company for less than $5 million! Everyone knows that you need at least $5 million to ruin a company!

Re:I've got a better deal

[cayenne8]

What does one study to become a CEO??

I'd love to get that job...tons of money when you're there...tons when you leave, and then...it seems, there are job opportunities after you leave, even in disgrace.

I don't see any perceptible skills required to be a CEO...is it all only who you know?

I mean, I'm member and good standing with the "anything for a dollar" club....so, wondering how I could get into the CEO business, and yes...I'm quite willing to sell shares of my soul for this.

:)

Re:I've got a better deal

[Surt]

They did put it on ebay. Somehow Meg came out on top in the auction. Surprising result.

Re:I've got a better deal

[Nethemas the Great]

You need an MBA (Master of Bullsh*t Arts). Essentially it's a degree in social engineering through plausible fabrication of reality while keeping a straight face. This should of course not be confused with the career path for politicians which starts with a law degree wherein you learn social engineering through the plausible misrepresentation of facts while keeping a straight face.

Where are the shareholders?

[bill_mcgonigle]

The Board keeps choosing bad CEO's. Why do the shareholders keep re-electing them? Where are the institutional investors on this? I guess it's their company to destroy, if they really want to.

Re:Where are the shareholders?

[doconnor]

One problem with shareholder democracy is that if a shareholder doesn't like the management of the company it is far easier for them to sell the stock and forget about it then to work to elect better management.

A lot of people have been selling their HP stock recently.

Re:Where are the shareholders?

[Anonymous Coward]

What's odd is when I worked at HP, there was a strong promote-from-within culture. It was relatively rare to bring in outside executives. Carly started her tenure as controversial CEO because she was an outsider, not because she was a rhymes-with-witch in heels.

But one article I read this weekend said the board looked around and none of the current second-level VPs was ready to be CEO. I find that somewhat hard to believe and poor planning on the part of the board. To have a prudent succession plan, they should always have a few potential CEOs being groomed.

I still want to know how Leo swung $2 million a month for his walking papers. I want a piece of that action. If I get fired for cause, I get zip. My few remaining options are worthless, my RSU vesting screeches to a halt, no severance pay, nothing.

Interesting...

[Ecuador]

The one who was considered successful by all (Hurd) was the one with the least compensation (by a huge margin if you consider his years on the job vs Apotheker). It is no joke we say the worse you do as a CEO the more money they pay you!

Why does this happen?

[MrCrassic]

Why is it that even poorly-performing CEO's get incredibly huge severance packages? I can understand CEOs that actually helped raise a company getting nice parting gifts (like Lou Gerstner and Bill Gates), but shouldn't leaders that, effectively, failed to lead? get much, much less?

Re:Why does this happen?

[TheSpoom]

The problem is the CEO is more or less the head of making decisions. So the first CEO ages back made the decision that CEOs should get a ton of money when they leave, regardless of the reason, the only way such a boneheaded policy can be removed is if the next CEO pushes for it. The problem is... where on earth do you find a CEO that will fight against giving himself money.

Replace CEO with politician and the same applies (which is also why you see the two interchange so often).

A slap in the face...

[AliasMarlowe]

I still want to know how Leo swung $2 million a month for his walking papers.

Actually, it took a lot of courage and fortitude on his part. He had to talk the board down from their initial settlement offer, which was vastly greater (it's only shareholders' money, not their own). Apparently, he wanted the monetary compensation to be so small that it counted as an obvious reprimand, almost an insult, and he clearly succeeded. A mere $25million is as hard a slap in his face as this board could be expected to give...

Re:stop hiring out side MBA's and promote people

[dkleinsc]

It may be better in terms of long term performance, but consider this approach to making money if you're on the board of a company:
1. Hire a perceived "rock star" CEO.
2. Stock goes up on the announcement.
3. Sell some of your stock right after the announcement (nothing suspicious about that, just collecting a gain)
4. If "rock star" CEO doesn't work out (as seen in some of the quarterly reports, so you aren't insider trading illegally) buy up some company stock as the price gets lower.
5. Fire bad CEO, stock goes up on the announcement.
6. Form CEO search committee, go to step 1.

This will eventually run the company into the ground, but a director could make a lot of gains on the way down. And they can continue to hold their seat on the board by timing things so that board elections happen between steps 4-6.