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Emachines pays millions to CEOs

The struggling company is to pay its new CEO nearly $2.9 million in salary and signing bonuses, and give its outgoing CEO a $1.6 million severance package.

Struggling PC manufacturer Emachines will pay its new CEO nearly $2.9 million in salary and signing bonuses this year, and give its outgoing CEO a $1.6 million severance package.

Wayne Inouye, who took over as chief executive of the company in February, will receive $480,000 in salary this year, but will also get a $2.4 million signing bonus, according to new documents the company filed with the Securities and Exchange Commission.

In addition, the company granted Inouye 4 million stock options that will vest over a two-year period. If the options become worthless by the time he can trade them, the company will pay the former Best Buy executive $1 million out of a specially created escrow account.

The compensation package comes as the Irvine, Calif.-based company struggles to right itself. Emachines sold just 311,000 units in the fourth quarter, which is a 49 percent decrease compared with the same period a year earlier.

In the same quarter, the company lost $31.2 million, or 21 cents per share, excluding charges--well below last year's results. In the same period a year earlier, the company had a profit of $2.2 million, or 2 cents per share.

Revenue for the quarter was $134.8 million, less than half that in the same period a year earlier.

In contrast to Inouye's deal, IBM CEO Lou Gerstner received $2 million in salary and $8 million in performance bonuses in 2000--a little more than three times that of Inouye. IBM, however, had revenue of $88 billion.

Inouye, 48, formerly worked as senior vice president of the computer merchandising unit of Best Buy, a position he held since 1995. Before that, Inouye was the vice president of merchandising at Good Guys, where he worked for nine years.

Under his employment contract with Emachines, Inouye will serve as CEO for two years. After that, he will act as a special adviser for another year for $120,000.

Jay Muskovich, Emachines' new CFO, also has a three-year contract. He receives $350,000 in annual compensation and can qualify for performance bonuses and 500,000 in stock options. The company also loaned him $300,000 that will be forgiven if he serves out his term.

Former CEO Steve Dukker, meanwhile, received $1.6 million upon departing from the company, according to SEC documents.