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As El Reg reported two weeks ago, Ray Lane, the non-executive chairman of IT giant HP, has shaken up the board of directors ahead of the company's annual shareholder meeting on March 23. And as part of the proxy filing with the US Securities and Exchange Commission ahead of that meeting, HP has detailed how much it's paying Leo Apotheker to take the helm at HP in the wake of Mark Hurd's departure. Odds are it's more than you and me put together.

For starters, HP is paying Apotheker a base salary of $1.2m. This amount is fixed for two years, but depending on how well or how poorly HP does under his stewardship, that base salary could be cut in the following two years. Apotheker is also getting a $4m signing bonus for stepping up to the plate - even though he wasn't really doing anything after being shown the door at German software giant SAP, where he was co-president.

None of that even approaches the real money that Apotheker would get his hands on if HP does well in the next couple of years. Apotheker is also getting 80,000 HP shares as a signing bonus and an additional 120,000 performance-based restricted units (PRUs). These PRUs can convert to anywhere from a fraction of an actual share to two shares, depending on HP's performance in terms of cash flow, profits, revenue growth, and other metrics that are part of an HP exec's contract. Apotheker also got another 76,000 shares of restricted stock as a long-term incentive (vesting over two years), plus 304,000 additional PRUs that vest two years from now.

It is difficult to predict what this stock and PRU quasi-stock will be worth, but let's take a best-case scenario and assume that HP's shares rise 50 per cent in two years, and that the PRUs convert to two shares of stock. We don't know what it will take to meet that best-case scenario, however – only HP's human-resources people and Apotheker know this. This is but a thought experiment.

On September 29, 2010 – the day the deal with Apotheker was inked – the company's shares closed at $42.53. So those 80,000 shares were worth $3.4m; the 76,000 in long-term stock had a value of $3.2m. Now, let's assume HP's stock goes to $63.80, a 50 per cent bump and not unreasonable at all considering that the stock was trading at just $54.75 in April 2010, its 52-week high.

That works out to potentially over 1 million HP shares, or $64m, over a four-year term for the stock. Plus another $4.8m for salary, and possibly another $9.6m in additional performance bonuses, and the $4.6m for relocation. That's looking like $83m under this scenario. Apotheker could do better or worse than this, of course, depending on what HP's stock does.

Ex-CEO Hurd did a lot better than that. He had a base salary of $1.45m in 2008 and a $5.34m bonus, plus stock awards worth $16.5m and other compensation worth another $18.6m, for a total of $42.5m. In 2009, Hurd's salary dropped to $1.27m and his bonus dropped to $1.18m, with his total compensation falling to $29.5m. And in 2010, when he had to leave the job early because of an alleged sex scandal and some doctoring of his expense accounts, he had $1.12m in salary and no bonus, but $9.9m in stock awards and $12.9m in stock options that he sold, for $23.9m in total compensation.

Add it all up, and Hurd raked in $95.85m over three years.

HP's top three executives by pay - Todd Bradley, who runs its PC biz; Ann Livermore, who runs its enterprise behemoth; and Vyomesh Joshi, who runs its printing biz - all have made about half of what Hurd did over the past three years. Cathie Lesjak, the company's chief financial officer was paid even less, but got a $2.58m cash bonus for taking the reins between the time Hurd was fired and Apotheker was hired last fall. ®

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