PALO ALTO, Calif. (CNN/Money) -
There's duck-hunting season, football season and the holiday season. All reasons to rejoice -- at least for somebody.
Me? I celebrate proxy season, the blessed time of year when corporate boards and the management teams that work for them must bare their souls to the shareholders of their companies.
Why's that so great?
Well, despite all the many facts and figures companies disclose on a regular basis to the Securities and Exchange Commission, the things they say in their annual proxy statements are some of the juiciest. It's the one time of year the board 'fesses up as to why they're paying the CEO what they are, how the company has done relative to its peers, and whatever other perks its lawyers think ought to be disclosed.
As far as documents go, proxies are drab. But they're more important than the glossy annual reports.
First up, HP
One of the early contestants out of the gate is Hewlett-Packard. It filed its proxy statement Thursday because its fiscal year ended last October. (Expect companies on calendar years to file their proxies over the next couple of months.)
Perusing HP's proxy will tell you that Carly Fiorina, HP noted CEO, gets a base salary of $1 million. Look closer and you'll see that if she hits all performance objectives she can earn a bonus of as much as $12 million.
Yowza. About 125 senior HP executives participate in a bonus pool that could earn them up to $87 million. Taking Carly out of the equation, that's an average potential bonus of about $600,000 for each honcho at HP.
Life in the Valley could be good, huh?
There's also some interesting posturing that goes on in a proxy statement, like the explanations management gives in disagreeing with shareholder proposals.
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In HP's case, for example, a shareholder has suggested that any severance agreement awarded to an executive that exceeds 2.99 times his or her annual salary needs to be approved by shareholders.
That's a swipe at the $14.4-million severance granted to former HP President Michael Capellas. HP, which opposes the proposal, says that the Capellas severance agreement was negotiated and approved by Compaq's board, before HP bought Compaq. "HP acquired Compaq effective May 3, 2002 and assumed Capellas' employment agreement by operation of law," the company says.
Dig a little deeper, however, and you'll see that Capellas amended his deal with Compaq in December, 2001, well after the HP deal was announced and while the merger partners were discussing who would do what in the combined company. If a suitor doesn't like what's going on at a target company, they don't buy it. Period.
Will these tidbits give you great insight into whether or not a stock is a buy or a sell? Probably not. But they will help you decide if a company is the type you'd like to own. And hey, it beats reading about the war.
Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.
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