HP shareholders vote to limit golden parachutes
Benjamin Pimentel, Chronicle Staff
Writer
Saturday, April 5, 2003
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URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/04/05/BU295439.DTL
Hewlett-Packard shareholders narrowly approved a proposal that would limit the board's ability to grant generous golden parachute packages to top executives, the company said Friday.
The nonbinding recommendation would require the HP board to obtain shareholder approval for any proposed severance package that is more than 2.99 times a departing executive's salary plus bonuses.
The Palo Alto technology company's board "will duly consider the recommendation," HP said in a statement. The company declined to release the breakdown of the vote that had been too close to call Wednesday after HP's annual shareholder meeting in Atlanta.
During that meeting, HP shareholders, again rejecting the board's position, voted for a recommendation that directors seek their approval on any poison- pill policy intended to block hostile takeovers.
The company said the board will also consider that proposal.
The recommendation on executive severance packages had been presented by the Service Employees International Union, which owns about 40,000 HP shares. The union was reacting to the $14.4 million package that former Hewlett- Packard President Michael Capellas received when he left the company.
In its proposal, the SEIU acknowledged that such an agreement "may be appropriate in some circumstances." But citing news reports on the negative reactions of analysts and Wall Street to Capellas' sudden departure, the labor organization argued that "given the magnitude of the benefits payable under such agreements, we believe the company should seek shareholder approval of any future such agreements."
"We feel very good about it," said Steve Abrecht, executive director of the SEIU's pension plan. "We knew this is an area of executive compensation that is getting more and more attention. We hope the board will agree with the shareholders."
In urging shareholders to vote down the proposal, the HP board had argued that such a rule would hinder the board's ability to recruit the best talent for executive positions.
Abrecht said the SEIU had recently proposed a similar measure to Intel's board. Unlike HP, Intel does not have employment agreements, but its board decided to adopt the proposal for future agreements with senior executives, the company said.
E-mail Benjamin Pimentel at bpimentel@sfchronicle.com.
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