It’s been more than a year since HP gave the kiss-off to Carly Fiorina, sending its chief executive packing with door prizes worth an estimated $42 million in cash and benefits.
Now investors are saying that was too much (really?).Â
A pair of large pension funds, the Indiana Electrical Workers Pension Trust Fund and Service Employees International Union, today filed suit, asserting that HP failed to gain shareholder approval of the severance package. The funds seek a class action certification.
By not first obtaining the buy in of its shareholders, the suit alleges, HP violated its own policy not to approve packages that exceeded 2.99 times the sum of an executive’s annual base salary.
HP gave Fiorina $21.4 million in severance pay plus benefits, a sum worth estimated $42 million.
An attorney for the plaintiffs, Jay Eisenhofer, was quoted as saying, “Corporate America must start to realize that institutional activists – like SEIU and the Indiana Electrical Workers – will no longer sit still for these types of egregious compensation practices.Â Companies must rein in excessive compensation.”
Executive compensation is an age-old issue, of course. The feeling here is that companies are overzealous in granting generous severances, even to execs whom failed miserably. While we understand why firms pay a high price for top leadership, it’s hard to believe that sans such a severance, Fiorina would have resisted the opportunity to run one of the world’s premier companies.