HP: Fiorina and Capellas Due For Raises

Hewlett-Packard Compaq Computer

However, how big those raises will be, and what bonuses will be added, remains to be seen. HP said that executive compensation packages won't be determined until a new board of directors, which will be made up of Compaq and HP leaders, reviews the market and decides what executives--including HP Chairman and CEO Carly Fiorina and Compaq Chairman and CEO Michael Capellas--are worth.

"HP agreed that this process would involve obtaining market information and other input from outside compensation experts and HP has determined that the employment terms previously discussed would not serve as a benchmark for any future terms," HP said in its proxy statement.

"Accordingly, HP plans to negotiate promptly following the completion of the merger new employment agreements with Ms. Fiorina and certain executive officers of HP," including Ann Livermore, who heads HP's services business, and Duane Zitzner, head of HP's computer operations.

HP also said it would negotiate quickly with Capellas and other unnamed executives from Compaq.

Salary and compensation became a thorny issue during the fight between HP and dissident director Walter Hewlett, who has opposed the $21 billion merger. Hewlett said HP directors had discussed lavish compensation packages for Fiorina and Capellas in a merged company, but HP said it scrapped those discussions before any offers were formally made or accepted.

In 2001, Fiorina was paid $1 million in salary but received no bonus, according to the proxy.