HP Inc to Xerox: If you complete a hostile takeover, and try firing our chief exec, you will pay...
... a bigger severance package to Lores, that is
HP Inc's chief exec will be paid 50 per cent more if he is fired in a hostile takeover, according to the company's SEC filings last week.
Under the new formula, newly appointed chief exec Enrique Lores stands to make roughly $7.2m in severance pay if he is fired as the result of a change of control, according to Bloomberg calculations.
Under the previous severance arrangement, Lores would receive his salary and the average of his bonus over the past three years, including his less well paid role as president of the company's imaging and printing solutions unit. But the new arrangement offers him double his salary and his projected bonus for the year.
Xerox woos HP stock owners with talk of layoffs, selloffs and cash payouts post mergerREAD MORE
Lores, who only took the top job at HP in November, is trying to steer the jurrassic company towards growth again after flat sales in fiscal '19. He has put in place a restructure that reduces costs and pushed a new print strategy to overcome challenges in the print supplies sector.
Talks between the two companies began in 2018 after John Visentin took the reins of Xerox after its agreement with Fujifilm fell through, according to a recent HP SEC filing (PDF). Xerox initially bid $33.5bn for HP, equating to $22 per share. However, it revised this offer upwards last month to $24 per share, taking the offer to $36.5bn.
HP has repeatedly rejected Xerox's advances, arguing that the money on offer undervalues its business, and raising questions about how Xerox would fund and manage the debt repayments.
The talks turned nasty last month when Xerox bypassed HP's board to directly communicate with shareholders to convince them to sell their stock. In return for each piece of HP stock, those investors can expect $18.40 in cash and 0.149 Xerox shares, based on the recently upped offer.
HP responded by adopting a poison-pill tactic that if Xerox – or someone else – acquires more than 20 per cent of HP's stock, HP will issue discounted shares to its other shareholders, diluting Xerox's, or whoever it might be, stake.
The two sides are expected to meet this week to discuss those issues, and potentially determine whether a business combination would be possible.
HP and Xerox did not respond to The Reg's requests for comment. ®