HP CEO Hurd cashes in options

Mercury News

Mark Hurd took advantage of his one-year anniversary as chief executive of Hewlett-Packard earlier this month to cash in on the run-up in HP's share price when the first third of a 400,000-share restricted stock grant, given when he was hired, officially became his. The 400,000 shares were worth $8.68 million on the day they were granted at the beginning of April 2005, when HP shares closed at $21.71. A year later their value had grown by more than half to nearly $13.2 million. A third of them became Hurd's on April 1, and he promptly sold 58,081, or nearly 44 percent of the shares back to Hewlett-Packard for $1.9 million to cover taxes. Two days later he sold 25,000, or a third of the remaining shares, on the open market for $33.57 each, or $839,168.Hurd set up an automatic trading plan March 7 under the Securities and Exchange Commission's 10b5-1 rule, which allows executives to sell a set number of shares over a predetermined amount of time. (Executives have increasingly adopted such plans to avoid questions about the timing of their stock trades.)

Hurd, who got a $2 million signing bonus when he was hired and $2.75 million to help him relocate from Ohio, was also granted an option to buy shares at $21.73, including 700,000 shares that vest annually over four years, and 450,000 shares that vest in thirds over three years. (The grant for 450,000 shares was given to make up for compensation he forfeited from his previous employer, NCR.) When the 1.15 million options were granted in 2005, HP estimated their value at $6.2 million. The 28 percent of the options that are now Hurd's to exercise were worth $3.5 million at last week's closing price of $32.62. That's more than half of the estimated value of all the options when they were granted.

Also cashing in recently was HP's chief financial officer, Robert Wayman, who made nearly $2 million the first week of March when he exercised his right to buy 175,000 shares at $21.75 each and then sold them at prices ranging from $32.84 to $33.10.Wayman, who has been the company's chief financial officer since 1984, served as its interim chief executive following Carly Fiorina's firing in February 2005 until Hurd's arrival in April of that year, and received an extra $3 million cash payment for his efforts.