Photo: Bloomberg West
Ray Lane has had a profitable year as HP’s chairman.While total compensation for other board members topped out at about $350,000, Lane was paid $10.6 million, including $8.4 million in stock awards and nearly $2.2 million in options.
His awards weren’t subject to the same restrictions as those granted other directors, either. The proxy statement explains [PDF]:
“Except for certain awards granted to Mr. Lane in fiscal 2011, restricted stock units and stock options generally vest after one year from the date of grant.”
At $10.6 million, Lane was the fourth highest paid person on HP’s payroll. The CEO Lane hired and then fired, Leo Apotheker, was far and away the most expensive. He earned $30.4 million in 2011 and he was let go in September.
New CEO Meg Whitman, landed in second at $16.5 million, all in stock awards. That’s not a bad haul either for a quarter-year’s worth of work.
CFO Catherine Lesjak earned $11 million. Lane and the leader of HP’s PC division, Todd Bradley, tied at $10.6 million apiece.
Lane’s pay is a mighty jump compared to his haul in 2010. As he didn’t join the board until November, HP paid him 45,000 restricted shares and nothing else. (Marc Andreessen was the highest paid board member in 2010 at $434,310, most in stock awards.)
In addition to the pay, Lane elevated his status on the board this year, too. He was elected to the board as chairman as of November 1, 2010. In most companies, chairman is the top spot. But on the same day that Whitman took the job as CEO, Lane got himself a promotion and became “executive chairman.”
Governance experts like Eleanor Bloxham are baffled by that change. She wants HP to explain what the new title means. “How has Ray Lane’s charter changed when moving from chair to executive chair?” Bloxham said to Business Insider.
His role in hiring Whitman raised questions, too, at the time. It apparently circumvented the board’s usual nomination process which raised concerns with proxy advisory firm ISS. ISS had also raised red flags when Apotheker and Lane named five directors in March to replace the four that left.
Currently, six of HP’s 11 directors were put in place by Lane in 2011 (Shumeet Banerji, Ann M. Livermore, Gary M. Reiner, Patricia F. Russo, Meg Whitman, Ralph V. Whitworth).
Plus, in the past few weeks, two long-time HP directors have resigned as of the next annual meeting in March, opening the possibility for more appointments by Lane. No new board members have been added to the annual meeting ballot. So if these appointments come, they will likely happen through the hand of Lane.
It’s true that HP’s board was notoriously dysfunctional in years gone by. But as Whitman tries to rebuild the company, has Lane amassed too much power?