By Samuel Weigley: Subscribe to Samuel's RSS feed
October 6, 2011 12:56 PM EDT
Like most employees, when CEOs of large companies don't meet the expectations of their employers, they can be fired. Yet unlike the average worker, the high-profile CEO often leaves the company with a hefty severance package, sometimes worth tens and even hundreds of millions of dollars.
One example is recently ousted Hewlett-Packard CEO Leo Apotheker, who served less than a year in his role. Despite his short stint with HP, he was entitled to nearly $14 million in severance pay.
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Apotheker was entitled to a cash payment of $7.2 million, which he will receive over 18 months. In addition, the former CEO will receive a bonus of $2.4 million under the "Pay-for-Results Plan" that the company enacted in 2005. During the chief's tenure, the stock price tumbled more than 40 percent -- so it is unclear on what results, if any, Apotheker needed to hit in order to receive the bonus.
Furthermore, Apotheker will receive about $3.6 million in accelerated stock vesting, along with several hundred thousand dollars in relocation costs and other miscellaneous expenses. HP has declined to comment on the payout.
Most heads of large corporations would receive large payouts if they are fired. According to data compiled by corporate governance firm research firm GovernmentMetrics International (GMI), 470 CEOs of S&P 500 companies are able to receive a severance package in the case of termination. If termination is due to a change of control in the company, the median pay exit package would equal about $33 million, while the median would be nearly $21 million if the termination was a firing without cause.
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