~OT~ Ian: Is this what Compaq calls 'pay for performance' <G>??.....
<<Ousted Compaq CEO Pfeiffer received nearly $10 million
By Bloomberg News
Special to CNET News.com
August 14, 1999, 11:00 a.m. PT
Compaq Computer's ousted CEO Eckhard Pfeiffer received $9.81 million in severance pay plus options after being forced to resign in April because of poor performance at the personal computer maker.
Pfeiffer was granted the package outlined in his employment agreement, according to a separation accord filed with the U.S. Securities and Exchange Commission. All 13.5 million options he had received while at Houston-based Compaq are fully vested and the exercise period was extended to four years from his termination. The options are valued at about $410 million.
Pfeiffer was ousted by Chairman Ben Rosen because the board was unhappy with his moves to make Compaq more competitive with rivals and problems with the company's $9 billion purchase of Digital Equipment. Compaq since has promoted Michael Capellas to CEO and unveiled plans to restructure, including cutting 12 percent of the workforce, or about 8,000 jobs.
Capellas, who had been acting chief operating officer before being named chief executive last month, will get an annual base salary of $850,000. He also was given a $5 million loan to purchase Compaq shares as well as 200,000 shares of restricted stock. The restricted stock begins vesting when Compaq shares trade above $35. Capellas's employment contract lasts until 2002.
Compaq's stock has lost more than half its value since trading as high as 49.25 in January.
Last month, the company reported its first loss from operations since 1991 as it struggles to cope with plummeting PC prices, bloated costs, and slack growth in several of the businesses it acquired with Digital, including services and high-end computers.
According to the SEC filing, Pfeiffer also was given $5,000 for financial advising fees and was allowed to keep any Compaq computers he has. Pfeiffer received a compensation package valued at $6.1 million in 1998.
To receive the severance package, Pfeiffer had to sign non-compete and non-solicitation agreements. The non-compete agreement says he can't work for a rival firm, and the non-solicitation agreement states he can't woo Compaq employees away from their jobs.
Copyright 1999, Bloomberg L.P. All Rights Reserved.>>
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