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Added bonus for Hewlett-Packard, as new chief takes $1 salary

Former eBay boss joins exclusive Silicon Valley club – but is unlikely to go hungry with a possible bonus of m

Hewlett-Packard’s newly installed chief executive, Meg Whitman, has joined the exclusive club of American company bosses on one-dollar salaries.

But the former eBay chief is unlikely to be going hungry. She is one of the world’s five self-made female billionaires, with a personal wealth estimated at £1.3bn by Fortune magazine, and her package at Hewlett-Packard also includes bonus payments that could bring her remuneration for the year to m.

Whitman’s goodwill gesture should help shareholders swallow the news, also announced today, that her ousted predecessor Léo Apotheker is walking away with m after having presided over a near-bn plunge in the IT group’s market value during his 11-month tenure at the company.

Apotheker’s parting package includes .2m in severance payment, a .4m bonus for his performance while chief executive, and .7m of restricted stock. Hewlett-Packard is also covering the German-born Apotheker’s expenses for a move back to Europe.

Silicon Valley’s most famous -a-year boss was Steve Jobs, who chose to take his reward in more than 5.5m Apple shares. Google’s founders, Sergey Brin and Larry Page, and their then chief executive Eric Schmidt took the same token pay cheque in 2005, and have since become fabulously wealthy.

During the 2008 credit crunch, Ford’s chief Alan Mulally vowed to work for a dollar if his company had to take any government bailout money. In the end it did not, as Mulally was able to rescue the venerable US carmaker while the rival companies General Motors and Chrysler went into bankruptcy.

If Whitman fares no better than her predecessor, her departure will cost the company just .50 – her severance terms are 1.5 times annual salary.

Whitman’s target bonus for the coming year is .4m, and could reach m if she hits the highest performance measures. She also has an option to purchase 1.9m shares, which vest fully if she stays at the company for three years, at a price of .59. This means the options will only turn a profit if the share price goes up, and the shares will only vest fully if the price rises by at least 40%.

There is room for improvement. Since Apotheker announced in mid-August that he would spend £7.1bn purchasing the Cambridge software company Autonomy and spin off Hewlett-Packard’s vast personal computer business, the group’s share price has fallen 26%.

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