Dec. 15 (Bloomberg) -- Hewlett-Packard Co., the world’s largest personal-computer maker, amended a severance plan to limit the payments executives can receive in dismissals without a cause such as negligence of duties.
The chief executive officer and other executives will need to return restricted shares or stock options that aren’t vested at the time of termination, Palo Alto, California-based Hewlett- Packard said in its annual report filed yesterday with the Securities and Exchange Commission.
The change took effect Nov. 1, after shareholder criticism of severance payments to former CEOs Mark Hurd, who was ousted in August 2010, and Leo Apotheker, who was pushed out Sept. 22. Hurd received more than $30 million in severance. Apotheker got $7.2 million in severance, apart from $2.4 million in annual bonus and accelerated vesting of stock options valued at $3.56 million. Apotheker also received 424,000 additional performance- based restricted stock options.
“HP’s compensation committee and subsequently the board of directors has had a reputation for talking the talk for years,” Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, a consulting company in San Francisco, said today in a telephone interview.
Glassner said the new policy on stock compensation, which lets executives have a year after losing their jobs to exercise already-vested options, is “very generous.” Little appears to have changed in the company’s practices, he said.
The Hewlett-Packard policy affects severance benefits paid in cases when officers are dismissed without their having neglected duties or taken actions detrimental to the company.
In March, the company’s shareholders voted against proposed compensation packages for top executives that would have rewarded them even if the company performed poorly.
Current CEO Meg Whitman is taking a $1-a-year salary, along with a target bonus for 2012 of $2.4 million. She also has the option of purchasing as many as 1.9 million shares.
A Hewlett-Packard spokesman, Michael Thacker, said the company had no comment beyond its filing.
Hewlett-Packard fell less than a percent to $26.36 at 2:14 p.m. in New York. The shares had lost 37 percent this year through yesterday.
--Editors: Jeffrey Tannenbaum
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