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Mark Hurd, the former chief executive of Hewlett-Packard (HPQ), could receive as much as $40 million in severance benefits.
A loophole in Hurd's contract could bring him this big payout. It seems that his contract did not include specific language that would permit the company to fire him "for cause." Most contracts for chief executive contain specific language that detail the conditions under which he could be fired, including breaches of the company's ethical code.
Hurd resigned a week ago admitting that he did not "live up to the standards and principles of trust, respect an integrity that I have espoused at HP." The company said that he left by agreement with charges of expense account violations and a "close personal relationship" with an external contractor that contravened its code of conduct.
The board decided not to fire Hurd. It would have been difficult to fire him over the ethical lapses he admitted. In addition, a lawsuit by Hurd would be difficult to defend against.
Hurd's severance includes $12 million in cash plus stock benefits. His stock benefits are anybody's guess, but it is believed that the entire package is close to $40 million.
Shareholders are displeased with these arrangements and filed a lawsuit against HP over his departure.
These cases tend to be complex as is this one. Apparently the board decided to end this quietly instead of having a long, drawn out legal battle.
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Reader Comments (Page 1 of 1)
8-15-2010 @ 12:38PM
Kathy said...
And any one of us who filed a false expense report or dallied around and had a charge of sexual harassment made against us would be given a golden parachute instead of a kick out the door? Executives should be held to a high standard, not rewarded for messing up. Hewlett & Packard would not be happy with how he ran their company or treated their employees. They had such a good thing going, but these modern executives (Carly included) do not understand it. What they're being taught in business management schools today is to be hard a__ thieves.
8-15-2010 @ 9:34PM
william lindblad said...
This is just another case of ho-hum. For all of the various reasons that CEO's are replaced, the one thing in common is the severance package. They are all enormous. When this is considered, what is the point in doing the job at all? If you fail, you are rewarded in a rather handsome manner and have the opportunity to go to another company and repeat the cycle. If one does the job and stays until a normal retirement - you would probably make less.
Corporate U.S. has a real problem!