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EDS chief to retire
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August 7, 1998: 6:50 p.m. ET
Les Alberthal's sudden decision to step down will cost EDS $35 mln
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NEW YORK (CNNfn) - Electronic Data Systems Corp. Friday said the sudden departure of Chairman and Chief Executive, Les Alberthal, will cost the company $35 million.
Alberthal has been with the computer-services company for 30 years and has spent the last 12 as chief executive. He will continue in his positions until the company names a successor. Directors responded by saying they would look to an outsider to lead the company, rather than turning to one of the existing EDS managers.
Albertson's payout package was negotiated with the EDS board ahead of the formal announcement of his retirement, spokeswoman Cecilia Stubbs Norwood said.
Payments of about $35 million will largely go to cover restricted stock options previously granted to the executive, to settle a five-year consulting contract and to provide pension and other related benefits, she said. The expense, amounts to about 10 percent of the profits EDS was expected to report in the current quarter.
Alberthal, only the second chairman in the company's 36-year history, took over in 1986 from EDS founder and former presidential candidate Ross Perot.
EDS (EDS) shares soared 5-1/8 to 41-13/16 Friday on investor belief the company's decision to look for an outsider to replace Alberthal is a positive development.
"The stock is up because investors think it's a good move to get new blood in the company," said Gary Helmig, an analyst who follows the company for brokerage SoundView Financial.
Alberthal's departure puts a new twist on the struggle by EDS to contend with sluggish growth, declining profit margins and fallout from the recent two-month labor strike at General Motors Corp. (GM), its biggest customer.
Helmig said EDS, the world's No. 2 computer integration consultant, has produced inconsistent financial results and has grown in recent years at about half the rate of the No. 1 supplier of such services, IBM Corp. (IBM).
As a result, EDS stock has performed listlessly in the two years since it was spun off from GM. The stock is worth just a little more than half of what it did two years ago.
Helmig said EDS' troubles center on the computer services work its performs on behalf of GM, which still contributes a quarter of the company's total revenues.
GM has cut back its business with EDS and is forcing the company to bid competitively for contracts it once held automatically as the captive unit of GM, he said. 
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