HP CEO Mark Hurd may have been forced to resign for conduct deemed inappropriate by his board, but he won't be leaving empty-handed.
According to the terms of his resignation filed with the Securities and Exchange Commission, Hurd will earn a severance payment of $12.2 million. He will also be able to cash in on various large stock opportunities, including 330,177 performance-based restricted stock units that were granted to him in 2008. He was also given an extension until September 7 of the expiration date of outstanding options to purchase up to 775,000 shares of HP stock that were vested as of Friday.
In exchange, Hurd signed "a general release of claims in favour of HP", according to the filing.
On Friday, HP announced that Hurd agreed to resign after a former marketing consultant alleged that he sexually harassed her. An investigation found that Hurd had a personal relationship with the consultant that he hid from the board and covered up using inaccurate expense reports.
HP CFO Cathie Lesjak will serve as interim CEO while the board hunts for a permanent replacement for Hurd.
His payout appears to be close to the terms set out in the company's severance plan for a CEO who is involuntarily dismissed, not for cause. An HP CEO who is involuntarily dismissed, not for cause, is eligible for two times their base pay plus the average annualised bonus paid during the preceding three years, according to company proxy materials. Hurd's base pay in 2009 was $1.2 million and total bonuses from 2007 to 2009 amounts to $7.9 million.
Hurd's total compensation from HP in 2009 was over $30 million.
HP's general counsel, speaking during a conference call to discuss Hurd's resignation, seemed to leave the door open to potential lawsuits regarding Hurd's activities. In response to a question about whether any lawsuits had been filed, Mike Holston, HP's general counsel said none had been filed "at this point."