Big payoff for HP's new PC guy
At least the new guy at Hewlett-Packard will get a hefty paycheck to offset his gargantuan task of breaking the company out from under Dell's foothold as the No. 1 computer maker.
As part of his compensation package, R. Todd Bradley will get $725,000 per year, a million-dollar signing bonus, the option to purchase 400,000 shares of HP common stock, and 100,000 shares of restricted HP stock, according to paperwork HP filed on Wednesday with the Securities and Exchange Commission.
Bradley, 46, was named to lead HP's PC business after the company decided to separate the division from its printer business this week.
In addition to his large salary, the former CEO at handheld computer maker PalmOne has the incentive to work hard for what HP calls a "targeted short-term bonus opportunity of 125 percent of base salary." The amount is all but guaranteed for the rest of 2005 and 2006, but will hang over Bradley as he learns the ropes and rallies the troops.
You have to give credit to HP CEO Mark Hurd--at least he recognized Bradley's experience with the Palm properties. Bradley was widely credited for turning around the company's supply chain woes and was ever-present as Palm split into hardware maker PalmOne (now back to Palm) and software developer PalmSource.
Because HP and Palm both make PDAs, HP felt it necessary to mention in its 8K SEC filing that it will, "indemnify Mr. Bradley against certain claims by his former employer as a result of his employment by HP, and will also pay Mr. Bradley's reasonable legal fees." This can be interpreted either a red flag for Palm to now keep its eye on any similarities between its Treo family and HP's next batch of iPAQs, or a warning to Palm that HP has no bones about taking its rival out to the garage with a legal stick.
Does Bradley's arrival mean that HP will spin off the PC business, thereby satisfying some Wall Street analysts? Probably not, if HP wants to keep its printer cash cow well fed, like the company told analysts last year.
But it doesn't preclude HP and Bradley from renegotiating the company's partnerships and perhaps take some time to...think different.