HP in an SEC filing late Thursday outlined the payments for incoming CEO Meg Whitman and recently fired CEO Leo Apotheker. Hoping to tie Whitman's pay to performance, the company is emulating former chief Steve Jobs' model and paying her a base $1 per year. While she will get a company-standard $2.4 million bonus every year, her real pay will depend on how much HP's share value has grown over time.
She will have the option of buying as many as 1.9 million stock options, but these will vest over eight years and will only reach their peak value if HP's stock value rises at least 40 percent. At current values, they would be worth $45.2 million. About 100,000 per year for the first three years are guaranteed to vest regardless, but sets of 800,000 shares on Whitman's first- and second-year anniversaries are contingent on her pumping the stock value to respective 120 and 140 percent values for at least 20 days.
Although it was never in question with Jobs, Whitman's severance package is just $1.50 and discourages her from quitting for another firm.
Apotheker, meanwhile, is being paid a large amount to reduce the ill will from his forced departure. He will be paid $7.2 million in core severance over the course of 1.5 years and will also be given a quickly accelerated $3.56 million stock cash-in. Along with the $2.4 million bonus and expenses to move back to Europe, the CEO should be paid about $13.5 million.
The pay is less than half the $28 million Apotheker would normally have been paid with a more graceful exit but is high enough that he might have difficulty suing over an unfair dismissal.
Changes in policy hint at HP wanting more immediate results of any new company leader. Apotheker was brought on hastily as HP just wanted a stable choice in the light of the Mark Hurd scandal. His leadership and a near 50 percent plunge in share prices eventually led to the board of directors mounting a plan to push him out.
While Whitman is being given a Jobs-like responsibility at HP, she has so far hinted there might be no change in strategy from the same CEO that was just fired. Many have questioned its decision to exit mobile hardware and consider scrapping PCs, since they would both cut it out of the mobile computing future and get rid of its core public identity as a PC builder.