It’s been more than a year since HP gave the kiss-off to Carly Fiorina, sending its chief executive packing with door prizes worth an estimated $42 million in cash and benefits.
Now investors are saying that was too much (really?).Â
A pair of large pension funds, the Indiana Electrical Workers Pension Trust Fund and Service Employees International Union, today filed suit, asserting that HP failed to gain shareholder approval of the severance package. The funds seek a class action certification.
By not first obtaining the buy in of its shareholders, the suit alleges, HP violated its own policy not to approve packages that exceeded 2.99 times the sum of an executive’s annual base salary.
HP gave Fiorina $21.4 million in severance pay plus benefits, a sum worth estimated $42 million.
An attorney for the plaintiffs, Jay Eisenhofer, was quoted as saying, “Corporate America must start to realize that institutional activists – like SEIU and the Indiana Electrical Workers – will no longer sit still for these types of egregious compensation practices. Companies must rein in excessive compensation.”
Executive compensation is an age-old issue, of course. The feeling here is that companies are overzealous in granting generous severances, even to execs whom failed miserably. While we understand why firms pay a high price for top leadership, it’s hard to believe that sans such a severance, Fiorina would have resisted the opportunity to run one of the world’s premier companies.
It may have been too much to pay her off. But then, again, anything to cleanse HP upper management may have been a bargain in disguise.
HP has recently been showing a DVD comprised of clips and interviews about the “real” Hewlett and Packard. The early years, before many of the current employees were on board. What a refreshing look at the company and its founders. And how far we went astray within a few years under Ms Fiorina.
Even the stock price reflects a healthy recovery since the queen’s forced abdication. So her severance package has already paid back handsomely.
The real issue is why stockholders continue to pay huge sums of money to recruit so many tweedle-dum and tweedle-dee CEOs and other executives. If these leaders were anything like the giants that Dave and Bill were, it might be worth it. But the recent history of HP shows many of its recent CEOs were more caretakers than role models. Let’s hope that the current head is from a different mold.