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Gateway execs get $13 million parachute

Although Ted Waitt has regained control of the computer seller, his corporate overhaul has come at a high price.

    Although Ted Waitt has regained control of Gateway, his corporate overhaul of the computer seller has come at a high price.

    In all, Gateway paid more than $13 million in severance money to former CEO Jeff Weitzen and four other top executives ousted in January during a shake-up that returned Waitt to the company he founded. Waitt still owns 30 percent of the company, according to Gateway's annual proxy statement filed Wednesday with the Securities and Exchange Commission.

    With the departures, none of the executives listed in the proxy are still with Gateway, a rare occurrence in the financial world.

    Gateway handed Weitzen a $5.6 million lump-sum payment, according to the SEC filing. Weitzen also got an immediate vesting of nearly 2.5 million shares of stock options, although many of those had a strike price, or exercise price, well above where the stock has been trading. Weitzen has up to a year to exercise the options, should Gateway's shares enjoy a dramatic recovery.

    Many of Weitzen's options granted in the last year were priced between $56 and $69 a share. Gateway shares have fallen more than 70 percent since Nov. 1, 2000. They closed regular trading Wednesday at $14.74.

    Weitzen also made more in salary and bonus in 2000 than he did in 1999, a combined $1.9 million, compared with $1.5 million in 1999. But Weitzen was granted fewer stock options in 2000.

    Other former Gateway executives also got substantial severance packages, pursuant to employment contracts they had with the computer maker.

    John Todd, the company's former chief financial officer, received a package equal to two times his salary and bonus, or $1.6 million. Todd also got immediate vesting of 26,250 options.

    David Robino, Gateway's former chief administrative officer, also saw his options vest, and he received $2.9 million, or two times his salary and bonus.

    Likewise, R. Todd Bradley, a former executive vice president and head of Gateway's global operations, received a $1.7 million payment, and Clifford Holtz, former head of Gateway's consumer business, received $1.5 million. They also had their options vested.

    Bradley, Robino, Todd and Holtz all have one year from the date they left Gateway's employment to exercise their options. As part of the severance packages, the executives agreed not to publicly disparage the company, recruit employees from its ranks, or directly compete with Gateway for one year.

    Chief Technology Officer Peter Ashkin and Jack Dollard, senior vice president of operations, left Gateway in January. Any severance agreements with them were not reported in the SEC filing, as they were not among the top five.

    The top five executives also got to keep their Gateway computers, after the company removed all work-related information from the hard drives, according to a March SEC filing.