HP has decided to cut back on the multi-million dollar severance packages it had previously dispensed to executives who were fired.
While some cash compensation will likely still be part terminations, and executives will be allowed to retain vested stock they have earned during their tenure with the company, they won’t be able to take deals involving huge amounts of restricted or not-yet-vested stock options.
In days gone by, many an ousted exec was let go with a huge cash-and-stock cushion to fall back on.
For example, when former HP CEO Mark Hurd was fired last year in the wake of a sexual harassment scandal, he walked away with $30 million. His successor, Leo Apotheker, was let go with a $7.2 million cash severance and a $2.4 million bonus, as well as $18 million in company stock. And fired CEO Carly Fiorina was given a $20 million severance package when she and HP parted ways back in 2005.
Altogether, HP paid out more than $80 million between 2005 and September 2011 for fired CEOs alone.
No more, the company now says. Going forward, HP will follow newly amended guidelines for executive severance packages that limit the payments individual former employees can receive in cases where they are fired without a cause.
In its annual financial report, HP stated that the CEO and other executives would be required to return unvested stock options and restricted shares during the termination process. Fired executives will each still have one year after the termination date to exercise any vested stock options they might have.