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New HP CEO Fails to Excite Investors as Shares Drop

Friday, 01 Oct 2010 01:11 PM

Hewlett-Packard Co.'s new chief executive Leo Apotheker suggested software would be a focus under his leadership, but he failed to gain investor confidence in early trading Friday.

HP shares fell 3 percent in early trading, as Wall Street voiced its concerns about the surprise appointment of the software industry veteran.

Apotheker suggested that he will focus on HP's software business, which accounts for only 3 percent of the company's total revenue. He called software the "glue" that connects HP's diverse hardware units.

"Software is how we differentiate on our industry-standard platform," Apotheker said.

Apotheker spent just seven months as CEO of German software giant SAP AG before resigning abruptly, amid customer complaint over maintenance fee increases.

Robert Ryan, HP's lead director, said Apotheker was the only person who was offered the CEO post. Ryan said the board ended up with six candidates that it felt could have done the job.

"We cast the net very far and very wide. We had lots of candidates," Ryan said on a conference call with analysts.

Separately, HP said it will pay Apotheker an annual salary of $1.2 million, plus a signing bonus of $4 million to lead the technology powerhouse after a scandal toppled its last top executive.

Apotheker will also be granted 76,000 shares of restricted stock, according to an HP regulatory filing Friday. Restrictions are due to be released on 50 percent of the shares on October 31, 2011.

Apotheker's annual bonus will be at least 200 percent of his base salary, with a cap at 500 percent.

HP also said in the filing it would pay a $4.6 million relocation allowance to Apotheker. No exact figure was given for Apotheker's severance package, but HP said it would not equal more than 2.99 times Apotheker's base salary.

HP on Thursday named Apotheker to succeed Hurd, who quit amid a scandal involving a female contractor.

Shares of Palo Alto, California-based HP fell 3 percent to $40.81 in morning trading on the New York Stock Exchange.

© 2015 Thomson/Reuters. All rights reserved.

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