HP chief Hurd got pay valued at $34 million in '08

[January 21, 2009]  SAN FRANCISCO (AP) -- Under three years of Mark Hurd's leadership, Hewlett-Packard Co. has added more than $30 billion in sales, seen its profit more than triple, and for that "exceptional and sustained" performance Hurd was rewarded with a $34 million pay package in the latest fiscal year.

Hurd, 52, saw the value of his compensation in fiscal 2008 jump 31 percent over the previous year, according to AP calculations. The increase reflects the prosperous period HP enjoyed before the economic meltdown hammered the stock and cut into HP's profit.

Hurd also exercised $10 million worth of stock options and had $15.7 million worth of HP stock vest during the period, according to a regulatory filing Tuesday by the Palo Alto, Calif.-based technology company.

The biggest chunk of Hurd's raise came from cash incentives based on HP's performance during the 2008 fiscal year, which ended Oct. 31 and was a banner year for the company.

For the year, HP's profit rose 15 percent to $8.3 billion, while sales climbed 13 percent to $118.4 billion. Those were big gains for a company the size of HP, which has faced questions from Wall Street about its ability to continue improving sales and profit margins at a steady clip.

Hurd, who joined HP in 2005 to engineer a major turnaround after the rocky reign of former CEO Carly Fiorina, has answered by aggressively cutting costs and positioning the company as a bigger challenger to IBM Corp. through the $13.9 billion acquisition of technology services provider Electronic Data Systems.

At the end of 2005, HP had sales of $86.7 billion and profit of $2.4 billion.

When the company's current round of job cuts is complete -- HP is slashing 24,600 positions, nearly 8 percent of its 320,000 workers -- Hurd will have cut nearly 40,000 jobs in two big rounds of layoffs since he took the job. Under Hurd's watch, HP has also regained its title of world's biggest personal computer manufacturer from Dell Inc., though Dell has been stealing some of that ground back with a new retail strategy.

Hurd's changes have helped HP's bottom line but they did little to soothe investors' nerves in 2008, when HP's stock price bounced around before falling off sharply in September and October as the financial crisis worsened. The stock lost more than 25 percent of its value during the fiscal year.

Many analysts say HP is vulnerable to the slowdown because of its exposure to the ailing consumer market through its personal computers and lucrative printer ink, and because it relies heavily on hardware sales, which have suffered as companies freeze information-technology spending.

Still, Hurd was rewarded in 2008 for steering the company to "exceptional and sustained" financial performance in his first three full years on the job.

Hurd pulled down $23.9 million in performance-based cash bonuses in 2008, according to the filing, which was almost twice as much as the $13.3 million in cash bonuses he snagged in 2007.

Hurd, 52, was also rewarded with $7.9 million worth of stock-based compensation during the period, nearly $3 million less than in 2007.

Hurd's compensation package also included more than $738,000 worth of additional compensation for things like: home security ($256,000), personal use of HP's corporate jet ($135,734) and a $71,000 mortgage subsidy Hurd is guaranteed for relocation expenses under his employment agreement.

Hurd's salary of $1.45 million increased only slightly over 2007.

HP also revealed in its proxy filing with the Securities and Exchange Commission that Richard Hackborn, an instrumental figure in building HP's printer division who served 33 years with HP before retiring in 1993, has decided not to stand for re-election to the board of directors at HP's annual shareholder meeting set for March 18.

Hackborn has been an HP director since 1992.

The Associated Press' calculations of total pay includes salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations exclude changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.

[Associated Press; By JORDAN ROBERTSON]

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