HP Proxy Statement: Whitman's Compensation Half That Apotheker's In 2011

Leo Apotheker may have been fired from his post as president and CEO at Hewlett-Packard, but his compensation far exceeded that of his successor, Meg Whitman in 2011.

HP on Friday released its annual proxy statement to investors, which in part details the company's executive compensation, including the fact that Whitman received a $1 salary for the year along with $16.1 million in stock options and $372,598 in "other compensation" for a total of $16.5 million.

In comparison, Apotheker received $30.4 million for 2011, which includes about $1.2 million in salary, a $6.4 million bonus, stock awards totaling $17.7 million, and "other compensation" of $5.2 million.

However, part of Whitman's compensation included payment for her time as a member of HP's Board of Directors before she took over the president and CEO role at HP immediately after Apotheker was fired from that position.

Meanwhile, HP Chairman Ray Lane's compensation far exceeded that of the other members of the company's Board of Directors. While the other directors received between about $291,000 and $356,000 in 2011, Lane received $10.6 million. However, HP said, much of that stems from his position as non-executive chairman, which ended March 23, and his position as chairman, which began on September 22.

HP in its proxy statement also outlined changes in its compensation programs which target 15 percent of the CEO's compensation to come from a target bonus and 85 percent to come from a long-term incentive award.

In the proxy statement, HP also said its annual stockholders meeting is slated to be held on March 21 in Santa Clara, Calif.

At that meeting, HP shareholders will be asked to approve the list of proposed Board of Directors, the choice of auditing firm, and new executive compensation, all of which the company's Board of Directors support.

However, the Board is asking shareholder's to reject a stockholder proposal entitled "Executives to Retain Significant Stock." Under that proposal, senior executives would "retain a significant percentage of stock acquired through equity pay programs until one-year following the termination of their employment and to report to shareholders regarding this policy" before the next annual shareholder meeting."

John Chevedden, the shareholder who proposed the proposal, cited in the proposal third-party evidence tying long-term stock holdings for senior executives to improved corporate governance.

Next: HP's Board Responds To Shareholder Proposal

Chevedden accused HP of being a "stumbling Silicon Valley giant," and quoted a story in The Economist magazine which accused the company's Board "of serial ineptitude spanning the appointment and dismissal of Carly Fiorina, the firing of Mark Hurd, and the selection of Leo Apotheker."

Fiorina and Hurd, like Apotheker after them, were fired from their posts as president and CEO of HP.

Chevedden also downplayed Whitman's ability as head of HP, and wrote in the proposal that Whitman made a fortune when she took her former company, eBay, public, but "flagged badly as eBay grew into a mature business—as it became more like HP. She also failed when she tried to translate her corporate celebrity into a political career. She lost miserably despite spending $100 million of her own money. It is not clear that someone who comes from a consumer-internet background like Whitman is an ideal successor at a company that does a lot of business with other corporations."

HP's Board responded in the proxy statement by saying the company has adopted "stock ownership guidelines and other compensation policies to ensure that our executives are focused on HP's long-term success and that their interests are aligned with those of our stockholders."

HP also said that attracting and retaining qualified senior executives in a competitive marketplace requires a competitive compensation package including equity compensation, and that "imposing post-employment holding requirements could limit our ability to attract and retain executives or require us to compensate executives in other less effective ways to remain competitive."