If you thought the days of fat-cat salaries and bonus payouts to executives were a thing of the past, the staggering $48.5m cash payment by Dell to ousted CEO Kevin Rollins might make you think twice.
The computer manufacturer is believed to own Rollins that amount in expired stock options, which it will cough out after it gets its 2007 financial filings in order.
Stock option payouts have been frozen until Dell files its 2007 annual report, which has been delayed because of accounting irregularities. Dell’s board has agreed to make certain allowances and extensions for employees’ options that have expired as a result of the delay.
Rollins’ bank account is expected to benefit on or before 45 days after Dell files its annual report with US securities regulators.
Last month, Dell also agreed to pay Rollins about $7.9m for additional stock options that had expired.
Rollins, 54, was replaced as CEO of the Round Rock, Texas based PC maker in January this year by founder and chairman Michael Dell after 3 years in charge. The switch came after a run of disappointing earnings reports and the discovery of irregularities in the company’s accounting practices.
Rollins later resigned in May. At that time Rollins held 7.37 million unexercised options that were vested at the time of his retirement, and which expired 90 days after his resignation date.
Earlier this month Rollins was hired by TPG Capital as a senior advisor to guide strategic investment in technology and the consumer, commercial and service sectors.
Rollins is the latest high-profile US executive to recently get a bumper check in the mail. Former Home Depot CEO Robert Nardelli’s severance package is believed to be a mind-blowing $210m. Nardelli resigned in January this year.
Many would question whether Rollins earned his payout. During his tenure as CEO, Rollins was personally faulted with Dell’s slumping sales in its core US consumer PC market, in which it lost ground to rival Hewlett-Packard. Before that Dell had set the standard for PC manufacturing with a highly successful build-to-order model where it carried almost no inventory in its warehouses.