Migration launching advice grows wiser
Circuit City connects to 3000s to the end

Presidential pay gets HP stimulus

HurdMug Today is Presidents' Day in the US, a holiday celebrated to mark the success of two of America's founders, George Washington and Abraham Lincoln. This year is just another year for HP's board directors to celebrate another mark, president and CEO Mark Hurd, who collected compensation far in excess of $30 million in 2008.

The US economic stimulus package will be signed into law tomorrow, but one of its buried subsections limits pay for top execs like presidents whose companies accept stimulus money. Expect HP to not need such help, since it's got ample cash reserves and healthy profits, even while the firm lays off almost 25,000 people. Hurd has been relentless about cutting back expenses at HP, much to the approval of shareholders and analysts. Even with HP's ax a-swinging, investor analysts still believe HP is vulnerable to declines using its current management strategy.

Although paychecks are frozen at HP, presidential pay cuts are not part of HP's plans. A recent story in the Associated Press about Hurd's $34 million pay package got a slight correction last week. The AP noted that HP mis-reported stock figures in the package, so Hurd only received a 30 percent increase in '08 from his 2007 pay, not 31 percent. Companies who want to lead their markets do need to pay top dollars to keep talent, although how much of the 30 percent boost is essential could be debated. What other company in the computer business — the only business segment Hurd has worked in — might even be able to match the $24 million Hurd was getting in 2007?

That '07 pay is Manny Ramirez kind of money in a sports setting, or 50 percent more than Shaq's annual salary in the NBA. The stimulus program in the US mandates that no more than one-third of any executive's pay can be in the form of stock bonus at a corporation receiving government money. The New York Times reported:

The restriction with the most bite would bar top executives from receiving bonuses exceeding one-third of their annual pay. Any bonus would have to be in the form of long-term incentives, like restricted stock, which could not be cashed out until the [stimulus] money was repaid in full.

Hurd's $34 million in '08 came largely in the form of performance bonuses. He earned a base of $1.45 million, plus $23.9 million in bonuses, and the rest in perks and stock. HP stock dropped 25 percent in value during the year, and he will have presided over 40,000 jobs worth of layoffs when the current 24,600-job firings get wrapped up.

HP has a good president, and his $8 million extra for his 2008 won't be missed much on the HP annual balance sheet. For a 3000 customer sticking with HP because the company is building a No. 1 profile and set of practices, it might be helpful to know HP's president leads the list of IT executive pay. HP's CEO ranked No. 14 among all corporations, while IBM's CEO ranked No. 15.

In contrast, an HP 3000 site moving away from the vendor could point to such large paychecks, along with the massive layoffs, as a reason to stop contributing to the revenue stream of such corporate incentives. The extra money paid to Hurd during '08 alone would have run the 3000 division another five years, staffed with a lab. It's a complicated argument to prove that the $8 million was better spent in Hurd compensation.

About the only IT founders who can count larger paychecks tend to be the founders of firms, not a top executive with a good three years of history at an icon like HP. Hurd was rewarded for a record 2008 financial finish, For the year, HP's profit rose 15 percent to $8.3 billion, while sales climbed 13 percent to $118.4 billion. But those figures included the business from EDS, whose acquisition closed in time to make it into the fourth quarter numbers.

Among the people who won't be voting on the '09 payday for Hurd will be Dick Hackborn, the creator of the reseller-driven, high-volume, consumer heartbeat of today's HP. Hackborn urged HP into the Carly Fiorina CEO era, leaving behind the engineering pedigree that lead the company up to that time.
Hackborn has announced that he won't stand for re-election on March 18, after 17 years of serving on the board. His exit, after a total of 49 years of service to the company, is a step forward for any Hewlett-Packard which wants to steward its custom-invented environments like HP-UX. Hackborn didn't believe in HP distinquishing itself through unique technology. Selling millions upon millions of laser printers, then the inkjet boxes created to sell high-profit ink, was the legacy Hackborn left to HP.