Meg Whitman's salary as HP's new CEO: $1.00* 48
Fri, 30 Sep 2011 8:09 pm EDT 
It’s not uncommon for a Silicon Valley executive to receive a token salary of one dollar. Former Apple CEO Steve Jobs did it for fourteen years, as have Google Co-Founders Larry Page and Sergei Brin and Google Chairman Eric Schmidt. Of course, they’re not actually working for $1.00 a year – there’s always a massive package of benefits ranging from stock options to use of the company jet(s) to multi-million guaranteed bonuses.
The idea is to directly tie the executive’s performance to their compensation, thus encouraging them to work harder to make the company more valuable and have more money all so they can take home more cash at the end of the day. New HP CEO Meg Whitman has signed a similar deal, taking home a $1.00 paycheck every year (suitable for framing or wrapping fish) with hefty stock options and bonuses available.
Whitman has the option to purchase up to 1.9 million discounted shares of HP stock over the next eight years, though those shares will only be made available if HP’s stock value stock value increases considerably (see how the whole performance = profit = compensation thing works?).
Additionally, Whitman will get a minimum annual bonus of $2.4 million, with board-approved increases above that depending on HP’s cash flow. And there’s her hypothetical severance package: 1.5 times her base annual pay (so, $1.50) plus her average bonus over the past three years (so, a minimum of $3,600,001.50). Obviously we’re hoping it doesn’t come to that, because we don’t have the time to get to know yet another HP CEO.
Source: AllThingsD
48 Comments
So far she deserves every penny.
So she's demonstrating her salary requirements in this picture?
..and I thought she was just squeezing the life out of webOS.
Nah. She must be referring to Leo's "shortcomings"...
A measure of Leo's man factor.
You guys should really lay off Mr. Apotheker. HP did. :-)
For once, Pre-mature ejection is a good thing, and he did say "coming soon" so this may have been part of his plan.
(I take no credit here, truth is always funnier than fiction). Frankly I think he was way behind on his own schedule. He said this was a marathon, and even slow marathoners are done in six hours or less.
I hope we get to know a new CEO very soon because this isnt looking good.
Hey just **** things up and get fired and receive a golden parachute of 25 million. It worked well for Leo.
Was she like the hatchet lady of Ebay? I mean didn't she lay off thousands to increase profits? I mean nothing really changed about Ebay under her except how much shareholders were pulling in. I might be wrong so someone correct me please. Besides that I have never had much faith in HP. I say sell Webos to Precentral for a buck fire Meg so WE (I mean you great Devs out there) can get to work!
Whitman joined eBay on March 1998, when it had 30 employees and revenues of approximately $4 million. During her time as CEO, the company grew to approximately 15,000 employees and $8 billion in annual revenue by 2008.
http://en.wikipedia.org/wiki/Meg_Whitman
Ironically, Whitman may have been a better CEO for Palm during its early days or even prior to the HP buyout than she will be for HP. (Prove me wrong Meg.)
Then in 2008, Ebay laid off 10% of its workforce. Meg was still receiving millions from Ebay and Ebay approved bonuses for its executives while people were getting the axe. This includes people on the board, which Meg was apart of.
One dollar is plenty of money, just F things up and cut the stock value in half and get fired then pick up your 25 million golden parachute on the way out. Hey, it worked for Leo :)
A dollar would buy her all the Flash based apps released for 1.4.5 with money left over to buy them for all the 1.4.5 owners.
You know why they really do this right? You pay income tax on the 1 dollar and you pay capital gains tax on the stock options. Income tax is WAY higher.
it's not hard for the stock to go up from here. But at todays valut her options are worth over $40 million dollars. But i don't see any thing that says what the price she has to excercise is. It could be lower then today's price right? Thus meaning she'd make money anyway. But regardless it's gonna be a windfall for her i'm sure.
its all about taxes. She has an income tax based off of a dollar then gets better tax rates off of federal gains through stocks ect...
but won't it be taxed as ordinary income on the date she exercises the options? So she exercises them all in a few years for 60 million she'll pay whatever the income tax rate is.
she's filthy rich already so it's hardly a big deal to her i'm sure.
No income tax would be around 35%, but when she sells the stocks any gain in value will be taxed at 15% capital gains tax.
A CEO's salary should be in stock options. Make the company do well and you'll do well, kill the company and you kill yourself.
many would however argue that killing webos was a bottom line issue meant to keep stock holders from getting mad at 300 million dollar losses per quarter. They estimated more then that in the next quarter. I can't imagine how much more the stock would have fallen had they announced a similar quarter next quarter but with a 500 million loss in webos rather then the current 332 million.
point being that if their really only concerned with making the stock move then it may not help the people that wanted webos to keep going with HP.
Be clear the stock didn't plummet because they axed webos. The stock plummeted because they took a huge loss in the quarter and guided lower for the future. Thus i'm not sure a ceo just concerned with the stock is the best thing. I'm not saying it's all bad. But i wouldn't want them making decisions based on short term swings in the market.
I'm sorry, but if you have a "guaranteed minimum annual bonus of $2.4 million" your annual "salary" is not $1. What kind of balderdash is that?
Earned Income Tax Rate: 37% (On the $1)
Capital Gains Tax Rate: 25% (On the rest)
Don't overthink it. One of the reasons Apple is pushing for a capital gains tax holiday is so the can pay out all of those dividends without having to pay ANY tax on it.
well actually no the capital gains tax is 15%, besides I believe the "bonus" will still be taxed at standard income rate, however any gains made on the stock options would be taxed at the capital gains rate.
i think you are the first person i've ever heard (read) use the word balderdash! lol.
HP hires fire sale CEO...how appropriate.
As others already pointed out this is the standard practice for senior executives in every corporation to avoid the top income tax rate bracket. This is also why that media hyped 'Buffet Rule' is a joke since the ultra rich don't have any "earned" taxable income to go after in the first place and there is zero chance the government touches the capital gains rate.
actually that's exactly what buffet is talking about.
on a completely unrelated note.
I got my touchpad back from hp repair service. this was my second attempt at getting it repaired and I must say I am quite impressed.
Not only did it take twice as long as the first attempt but my screen now has two lines of dead pixels instead of just one.
Thank you HP now it's so irritating to use I spend my spare time looking at lolcats on my desktop instead of reading in the park.
Something to consider concerning the "golden parachute" thing:
If someone you invited to your place won't leave and is annoying the **** out of you, what would you do to get them out of there? Call the police? Sure. But then what if that annoying jerk has a legal RIGHT to annoy you AND to not leave your home? ESPECIALLY after you initially invited them saying "here, you can stay here at my place, no problem!" Then what? How about "here's $50, GO AWAY!!"
The difference between your $50 and $50 million given to CEOs is merely scale. Both situations are the same: you invited someone into your home/company and now they won't leave. Paying them to get out of your life seems to be the ONLY option....
Thus: "golden parachutes".
I would take this job for ZERO money, NO stocks, no company cars, no airplanes, no compensation what so ever. Heck I'd even bring my own lunch. I would bet money that after I am done, the damage done will be less than that of Leo APPLEtaker.
Of course I can say this BS, HP isn't going to hire me or anyone NOT from the CEO farm where they grow these greedy company crashing bastages.
Thanks for your support.
Ah yes, executive compensation. As pointed out, she won't pay the marginal 35% income tax nor will she pay any payroll taxes. Just the 15% max capital gains rate for dividends held greater than 12 months.
Yes, she'll pay more in taxes on a direct dollar for dollar comparison than someone earning $40,000. But as a percentage of income she'll pay damn near nothing compared to that $40,000 salaried employee.
I dont care Meg Salary since I cant do anything about it , instead I do thousands things with my pre- and my loved TP, yes I wrote TP.
WebOS.O.S
the **** deserves nothing.
She left eBay in huge controversy, ran the shittiest campaign for governor ever, has no vision or strategy..
Thanks to the tax loopholes this will work out much better for her.
Not sure what to make of it, honestly, but, if it was all about money, there's no way she'd be agreeing to this.
She's already quite wealthy from her eBay years, remember?
I think its very possible the MW wants to prove that she is worthy of this position. The political fiasco she just made probably was more of a personal insult to her, and this might be her way of restating her leadership capabilities.
The key to her success in this position will be to make HP a great company again. How she does that, well, who knows?
She obviously has to reassess the whole company before making any decisions that would deviate from the plan already in place and endorsed by Lane, but, if I had only 1% thought that she might change her mind about WebOS before, now I have a 5% thought on that possibility = it aint the money, its getting HP to the promised land, and if she doesnt think WebOS is worth it, then its gone.
And, finally, do I think she can succeed? Well, perhaps. I dont think its difficult to run a huge company, but, I do think its difficult to get all of those EVP's and thier cohorts to jump when you say "jump". She's the new kidon the block, doesnt know the workings of HP (as soomeone like Todd Bradley would), and has to take everything told her at face value.. that's not a good position to be in.
I laughed when Lane said that "no one inside the company was quite ready yet for the CEO position". That told me, with no doubt, that this man has his own aggenda, and didnt want anyone with the know-how and power in a position to stop him from achieving that, so, Bradly was overlooked.
Lets see how this plays out - again, she certainly made it clear that this is NOT about money, in any regard.
Does It Pay to Be HP's CEO? Read the following!
http://www.fool.com/investing/general/2011/09/30/does-it-pay-to-be-hps-c...
Bonus is taxed as regular income. I get a few thousand dollars in bonuses each year. Whatever taxable income figure is in my W2, it is a total wage + bonus. The W2 doesn't know or care what is wage vs bonus. So for example, suppose the W2 taxable income is listed as $60K. That total could be $60K base + $0K bonus or $1K base + $59K bonus. The W2 still lists it as $60K and it is all taxed as ordinary income. I make less than $10K in bonus. Believe me when I says CEO's million dollar bonuses are getting taxed as ordinary income. I think the $1K salary vs million dollar bonus thing is a symbolic ego driven thing made popular by Steve Jobs. :)
What's the difference between salary and "a minimum annual bonus"? Sounds like PR spin to me. Any part of a performance-based bonus is a different matter, but the part that is guaranteed is salary for all purposes except PR and, perhaps, taxes.
I'd do it for a penny and her benny's. And would make darn sure the hardware was reinstated, fire the board and change the name of HP to Palm. But nobody asked me... Hahaha!
I'm sure she will have enough money trying to buy a governorship somewhere in 4 years.
after squandering 300million+ money, she sounds ridiculous to me.
She was never in charge of a company making consumer electronic products, what makes her so attractive is mysterious to me.
HP board has been shown to be composed of a hoard of brain dead fat millionaires, I have zero confidence in future HP's hardware products.
Lets hope Amazon buys webOS, after that dont really care what the **** happens to HP.
I agree with the others - a minimum bonus of $2.4 million is a salary.
It's a shame to all of us who live in this country that her "bonus" is taxed at a lower rate than her salary would be taxed.
Meg starts off her tenure at HP **** the public. And we need to fix the tax code so that people making millions per year pay a fair tax rate.
Even if it were true that her bonus were taxed at a lower rate than her salary (cite facts please), what difference would it make? It's not unreasonable to assume what she does pay amounts to a good deal more than I'll be paying in the next 10 years, and more than most will be paying over the course of their lifetime.
You're right... we do need to fix the tax code so that everyone pays a fair tax rate, and more importantly, can't be tampered with by further attempts to make things "fair" (read: play one group against another, or otherwise pander to one group at the expense of another).
I already explained CEO bonus is NOT taxed at lower rate. Bonus = Ordinary Income. I EXPLAINED IT JUST FIVE OR SO POSTS ABOVE!!
If HP was a human male, then it's weener would be almost half this big!
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