March 15, 2006 5:55 PM PST
HP rejects compensation proposal
HP shareholders rejected two proposals related to executive compensation and voting rights at the company's annual stockholder meeting Wednesday in Los Angeles, which was available via Webcast. The first proposal would have allowed HP's board of directors to recoup bonuses paid to executives in the event of a restatement of earnings or a "significant, extraordinary write-off," citing the performance of deposed HP CEO Carly Fiorina as an example.
Fiorina received a $21 million severance package from HP when she was fired as CEO in early 2005. This package, which has also provoked a lawsuit, was awarded with no allowances for the company's performance over that period, according to the proposal from shareholder Nick Rossi, acting on behalf of Katrina Wubbolding.
HP Chairman Patricia Dunn noted that the company already has a policy that allows it to recover compensation that was awarded before the discovery of fraudulent conduct, and that the proposal would impose restrictions that were too vaguely worded to attract future executives. The proposal was soundly defeated.
Shareholders also rejected a proposal that would have required HP directors to win a majority, not a plurality, of shareholder votes to be re-elected to the board. Some companies have changed their policies after directors were re-elected with a large percentage of voters withholding their votes for certain candidates. Dunn said HP requires directors who receive more "withheld" votes than actual votes in their favor to submit their resignation, and the proposal was defeated.
In other business, HP reapproved its slate of directors, recertified Ernst & Young as its accounting firm, and approved an executive compensation plan that could allow new CEO Mark Hurd to earn as much as $9.2 million in 2006.
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