Hewlett-Packard Co. Chairman and CEO Carly Fiorina and other senior executives will be eligible for unspecified pay raises should the company complete its acquisition of Compaq Computer Corp.
The disclosure in a filing with the Securities Exchange Commission Thursday comes two months after dissident board member Walter Hewlett alleged that Fiorina favored the deal in part because she stood to reap financial rewards should it go through.
Currently, Fiorina is paid $1 million a year and is eligible for bonuses based on the companys performance. When she was appointed HPs chief executive in 1999, media reports at the time estimated Fiorina received a compensation package worth as much as $90 million.
But Fiorina has shown restraint in collecting guaranteed bonuses. In 2000, she voluntarily gave up $625,000 of her guaranteed $1.25 million bonus after the companys earnings failed to meet projections. Last year, as the company struggled through an industrywide downturn in computer sales, Fiorina collected no bonuses.
According to the filing with the SEC, Fiorina and other senior executives will be allowed to renegotiate their salaries and compensation contracts should the Palo Alto, Calif., company complete its acquisition of Houston-based Compaq.
"It is currently expected that the employment agreements will include increases to the executives current salaries to reflect their expanded responsibilities within the combined company, as well as the potential for a bonus that may be equal to or greater than the executives base salaries," the document says.
Hewlett, an HP director who has led a proxy fight to derail the merger, alleged that Fiorina and Compaq Chairman and CEO Michael Capellas were lobbying for the deal in part because they stood reap a financial windfall of more than $115 million in compensation, including bonuses and stock options, should the deal go through.
While HPs board acknowledged that it had discussed compensation packages for Fiorina and Capellas, it denied that any deals had been reached.
Fiorina, addressing shareholders at a special meeting March 19 held to secure needed shareholder support for the deal, rejected assertions that she was motivated by financial gain and insisted that her pay would continue to be tied to the companys performance.
Other HP executives who would be eligible to renegotiate their pay include Duane Zitzner, who will oversee HPs computer businesses; Ann Livermore, who will oversee the merged companys services division; Chief Financial Officer Robert Wayman; and Pradeep Jotwani, who currently heads the companys consumer-business organization and is set to assume a leadership role in the printer and imaging unit.
The compensation packages were discussed in a proxy statement outlining company business prior to HPs annual shareholders meeting April 26 in Cupertino, Calif.
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