HP's Hurd Pockets $28 Million in Cash and Stock to Depart
SEC filings reveal $12.2 million in severance pay and stock valued at about $16 million, not including an option to buy an additional large block of shares, for widely-respected executive credited with transforming the company.
Hewlett-Packard Co. will pay Mark Hurd, former chairman and chief executive, $12.2 million in cash and $16 million for stock under terms of a separation agreement detailed in an 8-K document the vendor filed with the U.S. Securities and Exchange Commission (SEC) on August 6, 2010.
According to the 8-K filing, Hurd and HP signed a separation agreement that provides him with severance pay of $12.2 million in exchange for a general release of claims in favor of HP.
HP also agreed to pro-rata vesting of 330,117 shares of performance-based stock given to Hurd in January, 2008, calculated on the companys actual three-year performance ending October 31, 2010.
In early December, Hurd will be able to settle 15,853 shares of time-based restricted stock given to him by HP last December for the lesser price of the companys common stock on August 6 or December 11, 2010.
Based on the value of HPs shares at Fridays close, Hurd stands to reap an additional $16 million from the 346,000 shares. HPs shares on the New York Stock Exchange closed Friday at $46.30, falling in after-hours trading by about 10 percent to $41.85.
HP also extended the deadline to September 7, 2010 for Hurd to buy up to 775,000 shares of the companys common stock that vested on August 6, the day he resigned.
In addition, Hurd will receive what HP described as additional benefits customarily provided by HP in connection with the departure of all U.S. employees, including extended health benefits.
Hurd modernized HP with key acquisitions, cost-cutting
HPs board of directors requested and received Hurds resignation after a week-long investigation into claims by a former contractor of sexual harassment against him revealed that he had falsified expense reports and misused company funds, actions that HP characterized as a violation of its code of business conduct.
While the inquiry cleared Hurd of the sexual harassment allegations, HP asserted that the doctored expense reports were meant to conceal what the company called his close, personal relationship with the contractor, actions it considered a conflict of interest.
Hurds tenure as the top executive at HP lasted some five years, beginning in 2005 when he succeeded Carly Fiorina, a current Senate candidate in California, who failed to right the listing company as it struggled following its merger with Compaq Computer Corp. in 2002 and was forced out by HPs board.
By comparison, Fiorinas immediate severance package upon leaving HP in February, 2005 amounted to some $21 million in cash and stock. When Hurd took over HPs top spot, the companys stock price stood at $19.85, suffering from a 45.5 percent drop under Fiorina.
Hurd, who is widely credited for measures that bumped HPs share price more than 135 percent since Fiorinas departure, came to HP after 25 years at NCR Corp. with a reputation for consolidation, cost-cutting and layoffs, all of which he implemented at HP.
He modernized HP to look less like a legacy vendor squeezing profits from sales of PCs, printers and cartridges to emphasize services, software, networking and data center solutions, spending more than $17 billion since mid-2008 on acquisitions to transform the company.
On his watch, HP acquired Electronic Data Systems, a provider of technology services, in May, 2008 for $13.9 billion, effectively doubling the vendors services revenue, and in November, 2009, HP ponied up $2.7 billion for 3Com Corp. to better position itself against rival Cisco Systems Inc. in the networking market. This past April, HP plunked down $1.2 billion for Palm Inc., a maker of smartphones.
Even with Hurds turn at refashioning the company, HP has maintained its top spot among printer vendors and climbed into the market share leaders slot among makers of personal computers.
In public statements, HP has tried to convey the message that in Hurds absence it will proceed as usual.
The board recognizes that this change in leadership is unexpected news for everyone associated with HP, but we have strong leaders driving our businesses, and strong teams of employees driving performance, said Robert Ryan, lead independent director of HPs board.
The scale, global reach, broad portfolio, financial strength and, very importantly, the depth and talent of the HP team are sustainable advantages that uniquely position the company for the future, said Cathie Lesjak, HPs new interim chief executive.
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