Hewlett-Packard (HPQ) shares dropped more than 3% in premarket trading Friday, a day after the company named Leo Apotheker, former head of German software giant SAP (SAP), to replace Mark Hurd as CEO. Apotheker is set to start on Nov. 1.
According to HP's Securities and Exchange Commission filing, Apotheker will get a base salary of $1.2 million for the next two years, after which the board will review his compensation. In addition, his annual incentive for fiscal 2011 will be at least 200% of that base salary, up to a maximum of 500% of the base salary: In other words, his minimum pay will be $3.6 million.
That will be accompanied by 76,000 shares of common stock and a generous stock plan. But that's not all: Apotheker will get a signing bonus of $4 million and $4.6 million as a relocation allowance.
And just to further demonstrate how executive compensation is so different than the average Joe's, here are some other terms of his employment agreement:
Vacation: While HP doesn't say exactly how much paid vacation Apotheker will get, he will "In no event ... receive less than twenty-five (25) days of paid vacation time per employment year."
Perks: Again, while no specifics are supplied, the mention of the use of the company jet is.
Hurd, who was ousted last month in a sexually tinged expenses scandal, already received a generous severance package that upset many shareholders. It took a while for HP's board to find his replacement, and judging from the company's share price movement Friday morning, investors aren't too happy about Apotheker's appointment, or his compensation package either.