For the past two weeks, we’ve been asking footnoted readers to vote for the best disclosure of 2011. There were a lot of good ones this year, though of course when we say good, or best, we really mean bad or worst.
This year, footnoted readers awarded the top prize to Hewlett-Packard (HPQ) and its former CEO, LâŸo Apotheker, who managed to get paid very handsomely for failing so spectacularly. Exactly how much Apotheker made for his 11-month stint at HP is subject to a bit of interpretation and involves a very careful parsing of both his employment agreement that was filed Oct. 1, 2010 and the separation agreement that was filed three months ago. Various estimates we’ve seen pin it at somewhere between $25 million and $33 million. But one thing that isn’t open to interpretation: during Apotheker’s 11-month stint, HP stock declined by more than 40%. Perhaps that’s why 1/3 of those who participated in the survey selected this particular disclosure over some of the others on our list.
Since we seriously doubt that HP will provide a full accounting of Apotheker’s payments when it files its proxy next month, we decided to take a whack at it. What we came up with was $36 million, and that’s assuming that the bonus he was promised for fiscal 2011 comes in at the 200% of his base salary of $1.2 million, as opposed to the top range of 500%.
Among the other goodies in there was a $7.2 million severance payment, a $4 million signing bonus that he got when he took the job last year (while the employment agreement spelled out terms for paying it back if Apotheker lasted less than 18 months, the separation agreement says nothing about him owing any money). There was also a $4.6 million relocation bonus that he got last year. If the move back to Belgium or France costs anywhere close to that, HP shareholders could wind up paying Apotheker more than $40 million, since the company agreed to cover the cost of his move back to Europe.
Of course, given HP’s recent track record with it CEOs — you may have heard a bit too much about former HP CEO Mark Hurd in the past 24 hours — Apotheker’s stewardship wasn’t quite that bad. Hurd also walked away with millions in severance, and judging by some of what we’ve read could wind up costing the company a lot more over the sexual harassment issue.
Anyone who’s ever been fired before — and yes, I count myself in that group — could never dream of failing so spectacularly and being rewarded so richly. Then again, most of us will never have the opportunity to run a Dow 30 company. Clearly, when you’re in the big leagues, failure doesn’t sting quite so much.
What kind of trash will companies try to dump later today? Over on footnotedPro, we’re preparing for the end-of-year Friday night dump, when companies haul out their most pungent disclosures just before the holiday weekend. We’re expecting some interesting stuff later today. For more information or to inquire about a trial subscription, please contact us.