Carly Fiorina, who was ousted as chairman and chief executive officer by the Hewlett-Packard Co.’s board of directors, stands to walk away with a severance package worth at least $21.1 million, according to press reports.
Since joining HP as its first outside CEO in 1999, Fiorina is credited with consolidating the company’s 83 business units to just a handful, aggressively cutting costs, and pulling off the $19 billion acquisition of Compaq Computer.
On the other hand, there’s her decision to spend $19 billion to acquire Compaq Computer. During Fiorina’s tenure, Hewlett-Packard’s share price fell more than 50 percent. Granted, bursting of the tech bubble is partly to blame, but shares of HP rivals Dell and IBM fell by a much smaller amount.
Yesterday, following the announcement of Fiorina’s departure, HP’s share price climbed $1.39, or 6.9 percent.
Many executives at American International Group, although they still have their jobs, aren’t faring nearly as well as Fiorina when it comes to compensation.
According to The New York Times, a large portion of November’s $126 million settlement between AIG and federal regulators will be drawn from a bonus pool for senior executives at AIG Financial Products, the insurer’s business unit linked to the investigations.
AIG Financial Products agreed to pay $80 million to settle charges by the Department of Justice stemming from structured deals struck with The PNC Financial Services Group and BrightPoint Inc. The insurer also agreed to pay about $46 million in fees it collected on the PNC transactions into an SEC disgorgement fund.
The Times reported that AIG sliced nearly $94 million of annual bonuses for around 50 to 60 executives of the business unit. These bonuses would have ranged from several hundred thousand dollars to more than $10 million, added the paper, citing an interview with AIG chairman and chief executive officer Maurice “Hank” Greenberg. “I felt the overwhelming part of these penalties should be borne by them and not by AIG shareholders,” Greenberg told the paper.
As is common at Wall Street firms, noted the Times, bonuses account for the bulk of the total compensation for top executives of AIG Financial Products. Last year, a number of the affected executives received no bonus at all.
Greenberg told the Times that nearly all of the $80 million was paid from the bonus pool, and about 30 percent of the $46 million, for a total of nearly $94 million. The parent company paid the balance.