Hewlett released the figures in a Securities and Exchange Commission filing Tuesday. The pay packages were considered by the companies in the early stages of their merger talks but were never finalized.
However, with the filing, Hewlett hopes to make the compensation packages one of the issues investors consider when they vote on the merger March 19.
"Stockholders have a right to know that the people promoting and recommending the deal have interests in the transaction that are different from those of stockholders generally," a representative for Hewlett said in an interview. "It is even more compelling in this case, because Fiorina and Capellas declined their retention bonuses reportedly to avoid a conflict of interest."
While HP representatives said in a statement that they agree it is important to share compensation information with investors, they added that they cannot disclose the packages until they have been decided.
"It is bizarre," HP said in a statement, "that Walter Hewlett is disseminating misinformation about non-existent employment terms for HP and Compaq senior executives, while at the same time, as a director, he actively supported the board's conclusion that more research and analysis is necessary before HP can even begin to formulate appropriate market-based executive compensation proposals."
In November, both executivesretention-related bonuses--$8 million for Fiorina and $14.4 million for Capellas--tied to a successful merger.
"To explain the executives' decision to decline the retention bonuses, both companies said the CEOs wanted to avoid the appearance of conflicts of interest as they urge on the deal's completion," Hewlett said. "HP, however, has failed to disclose, among other things, that the total value of Ms. Fiorina's contemplated compensation package was far in excess of the value of the retention bonus that she purportedly declined to accept."
Under the previously considered two-year employment agreements, Fiorina would have received a base salary of $1.6 million with a target bonus of $4.8 million each year. In addition, she would have received a one-time bonus of 6 million options with an estimated value of $57 million. That would have brought her total compensation package over the two-year period to $69.8 million.
Capellas, meanwhile, would have received a base salary of $1 million and a target bonus of $3.8 million each year. Options under discussion for the Compaq CEO were numbered at 4 million, with a value of $38 million. His total package for the two years added up to $47.6 million.
The HP compensation committee--including Hewlett himself--approved the proposed employment agreements in September, before the executives had declined the retention-related bonuses. But the group later realized it hadn't reached an agreement on the exercise price for the options, particularly whether they would be set at fair-market value or premium prices. And because the options would affect the package overall, the committee decided to reconsider the entire package at a later meeting.
Hewlett said he was not present at the subsequent meeting where a decision was reached to postpone approval of the agreements. The companies plan to wait until after the merger is approved to resolve the compensation issue. A newly combined board would tackle the issue. But Hewlett said a decision should be made beforehand.
"Mr. Hewlett strongly believes that the details of the compensation packages contemplated for Ms. Fiorina and Mr. Capellas are important to an investor's consideration of the proposed HP-Compaq merger, and that HP's stockholders deserve to know this information," Hewlett's SEC filing says.
One source familiar with the HP board said the company's compensation committee wanted to table the issue until after the merger, given the changing environment for structuring a stock- vs. cash-based compensation and the murky outlook for the technology market.
"Since the environment is changing so rapidly--where executives want more cash and less options--(the HP board) wanted to delay making a decision as long as possible," the source said. "Walter knew this, but I think he felt he could drive the decision to closure."
HP representatives note that Fiorina, under the employment contract being negotiated, would receive sizable option compensation only if she remains at HP for three or more years and delivers a share price increase of two or three times.