HP CEO's Severance Package: Nearly $28 Million in Cash and Stock

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Hewlett-Packard's disgraced CEO Mark Hurd has been ousted from the company with a severance package worth a cool $28 million.Lauded for making Hewlett-Packard (HPQ) the world's biggest technology company, CEO Mark Hurd was in negotiations for a new contract worth about $100 million, according to a person familiar with the negotiations.

Instead, he's getting about a third of that to just go away.

In a stunning announcement Friday, HP said it ousted Hurd after an investigation of a sexual-harassment complaint found that he had falsified expense reports and other documents to conceal a relationship with a contractor. Hurd also allegedly helped the woman get paid for work she didn't do.

In recent weeks, Hurd was in negotiations for a new three-year contract worth about $100 million when a woman who worked for HP as a host at high-profile events accused him of sexual harassment, a person with intimate knowledge of the case told The Associated Press. The person requested anonymity because this person wasn't authorized to speak publicly about the details of the case.

Shares Tumble

News of Hurd's abrupt departure sent HP's stock tumbling nearly 10%. Shares of the world's biggest maker of personal computers and printers have doubled in value during his five-year stewardship, and HP became the world's No. 1 technology company by revenue in that time.

Hurd's "systematic pattern" of submitting falsified financial reports to hide the relationship convinced the board that "it would be impossible for him to be an effective leader moving forward and that he had to step down," HP general counsel Michael Holston said on a conference call Friday with analysts.

"The facts that drove the decision for the company had to with integrity, had to do with credibility, had to do with honesty," Holston said, declining to elaborate.

Holston said the inaccurate financial reports related only to Hurd's personal expenses.

Hurd, 53, acknowledged there were "instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP.

Disputed Charges

High-profile Los Angeles attorney Gloria Allred said she is representing the woman and "there was no affair and no intimate sexual relationship" between her client and Hurd. Allred, reached by The Associated Press late Friday, declined to comment further.

The person close to the case told the AP that the woman worked as a host for more than a dozen events for CEOs that Hurd attended between 2007 and 2009. The person said the disputed expenses range from $1,000 to $20,000 each for travel, lodging and meals.

The person said many of the expenses were for meals after the events and that Hurd insists they were legitimate business expenses. The total amount of the expenses in dispute could not be learned.

Hurd has offered to repay expenses that were incorrectly filed, this person said.

Severance Details

The married father of two will get a $12.2 million severance payment and nearly 350,000 shares of HP stock worth about $16 million at Friday's closing price. The company also extended the deadline for exercising options to buy up to 775,000 HP shares.

The company's chief financial officer, Cathie Lesjak, 51, was named interim CEO. She has been with the company 24 years but has taken herself out of the running to fill the position permanently. HP has set up a search committee to look for a permanent replacement.

HP's shares, which closed Friday on the New York Stock Exchange at $46.30, tumbled 9.7% after hours to $41.85 as investors reacted to the news released after the close of markets.

Rescue Operation

Beloved by investors for his relentless cost-cutting - and scorned by thousands of laid-off employees for the same - Hurd was seen as rescuing the company from the mess left behind by his predecessor, Carly Fiorina.

Hurd has transformed the 71-year-old company from a computer and printer maker hooked on profits from printer cartridges into a company that looks a lot like its archrival IBM (IBM), a major player in technology services and other fast-growing areas.

Though their underlying stories are very different, Hurd's departure is like Fiorina's in one key way: Both were forced out with the company about to reap the benefits of sweeping changes they made at the Silicon Valley institution.

Fiorina left in 2005 in the wake of her decision to acquire Compaq Computer and an ensuing upheaval over her personality and her business strategies, but the divisive deal proved instrumental in HP's ascendance under Hurd.

In-Line Earnings Expected

By comparison, Hurd is departing after cutting tens of thousands of jobs and launching an expensive expansion, including the $13.9 billion acquisition of technology-services provider Electronic Data Systems, the $2.7 billion takeover of computer-networking equipment maker 3Com and the $1.4 billion deal for mobile-phone maker Palm.

To reassure investors, HP, based in Palo Alto, previewed its third-quarter results late Friday in advance of a detailed report Aug. 19.

The company said it expects to report earnings of 75 cents per share, compared with 67 cents a year earlier. Excluding one-time items, the company says results will be $1.08 per share, a penny ahead of analysts' current expectations. Revenue is expected to rise 11 percent from last year to $30.7 billion, slightly higher than analysts' expectations.

The company's forecast for the current quarter, which ends in October, is roughly in line with analysts' expectations.


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Ray and Carmen

I am as capitalist as you will find, but what HP and so many other companies do is the stupidist action they could possibly take. It does nothing but further errode the fragile alliance between the haves and have nots!! It lends power and credibility to the Unions and Socialist movement. The bottom line in my opinion is that as long as you do the job and meet or exceed expectations then you can write your ticket and receive all of the compensation you or the board of trustees think you have earned. That said, the moment you are found to have commited an ofense that would result in the summary termination of anyone else in your company, thats it your fired. Rewarding inappropriate behavior that would not be tolerated if the guy five levels down managemnet did it is just plain wrong.

August 08 2010 at 3:21 PM Report abuse rate up rate down Reply
joe

GOOD RIDDANCE! He rates right up there (down there??) with Fiorona!!! I bought one of their top of the line $2,500.00 HDX9400 latops about 7 months before Windows 7 was released. Thier web site reported that the it would be supported on Windows 7 right up till the day they released it, then the site changed and my 7 month old laptop was not supported. No answers from support untill 2 months later when they END OF LIFED MY NEW LAPTOP!! Now, all it's good for is shoving under old cars, to avoid oil leaks on the driveway. Buh-bye MARK TURD!!! ... You WON'T be missed!!!

August 08 2010 at 2:10 PM Report abuse rate up rate down Reply
joe

GOOD RIDDANCE! He rates right up there (down there??) with Fiorona!!! I bought one of their top of the line $2,500.00 HDX9400 latops about 7 months before Windows 7 was released. Thier web site reported that the it would be supported on Windows 7 right up till the day they released it, then the site changed and my 7 month old laptop was not supported. No answers from support untill 2 months later when they END OF LIFED MY NEW LAPTOP!! Now, all it's good for is shoving under old cars, to avoid oil leaks on the driveway. Buh-bye MARK TURD!!! ... You WON'T be missed!!!

See full article from DailyFinance: http://srph.it/bhlGWb

August 08 2010 at 2:09 PM Report abuse rate up rate down Reply
joe

GOOD RIDDANCE! He rates right up there (down there??) with Fiorona!!! I bought one of their top of the line $2,500.00 HDX9400 latops about 7 months before Windows 7 was released. Thier web site reported that the it would be supported on Windows 7 right up till the day they released it, then the site changed and my 7 month old laptop was not supported. No answers from support untill 2 months later when they END OF LIFED MY NEW LAPTOP!! Now, all it's good for is shoving under old cars, to avoid oil leaks on the driveway. Buh-bye MARK TURD!!! ... You WON'T be missed!!!

August 08 2010 at 2:06 PM Report abuse rate up rate down Reply
joe

GOOD RIDDANCE! He rates right up there (down there??) with Fiorona!!! I bought one of their top of the line $2,500.00 HDX9400 latops about 7 months before Windows 7 was released. Thier web site reported that the it would be supported on Windows 7 right up till the day they released it, then the site changed and my 7 month old laptop was not supported. No answers from support untill 2 months later when they END OF LIFED MY NEW LAPTOP!! Now, all it's good for is shoving under old cars, to avoid oil leaks on the driveway. Buh-bye MARK TURD!!! ... You WON'T be missed!!!

See full article from DailyFinance: http://srph.it/bhlGWb

August 08 2010 at 2:06 PM Report abuse rate up rate down Reply
alchem18

Article on HP CEO referenced Hewlett Packard as HP. That is not the ticker symbol.

August 08 2010 at 10:40 AM Report abuse rate up rate down Reply
JOHN

Another douchebag,corporate hack that couldn't live up to the very standards he set for otheres.

This prick put people out of work and made many of his employees lives a living hell on earth. In the spirit of corporate greed, he's goven 30 mil in go away money instead of being prosecuted to the fullest extent of the law

August 08 2010 at 10:18 AM Report abuse +2 rate up rate down Reply
JOHN

Another douchebag,corporate hack that could live up yo the very standards he set for otheres. This prick put people out of work and made many of his employees lives a living hell on earth.

In the spirit of corporate greed, he's goven 30 mil in go away money instead of being prosecuted to the fullest extent of the law. We can only hope that his wife leaves him and he never gets another job.

August 08 2010 at 10:17 AM Report abuse +2 rate up rate down Reply
GREG

Now if they could just make a printer that lasts for more than one year--that would be news!!!

August 08 2010 at 9:52 AM Report abuse +2 rate up rate down Reply
thom nickels

Gee whiz, he could have just given her pocket money from his HUGE cashed pay checks.

August 08 2010 at 9:27 AM Report abuse rate up rate down Reply