Sunday, 12 February 2012

Mike Lawrie’s compensation package as CEO of CSC

CSC filed its employment agreement with Mike Lawrie as President and CEO with the SEC on 8 February. Here are the headlines of his compensation package:

·         His employment contract is for 5 years.

·         His base salary is US$1,250,000 pa, to be reviewed annually

·         His on-target annual bonus is 150% of his base salary ($1,875,000) with a maximum of 300% of base salary ($3,750,000). 

·         Grant of Long Term Stock Options for shares with a value equivalent to 280% of his base salary. This means that for the year beginning 1 April 2012 (CSC’s FY2013) the value of the shares covered by the option agreement will be $3,500,000.   

·         Grant of Performance Share Units with a value equivalent to 420% of his base salary. Thus for FY2013 the value of the shares covered by the Performance Share Units agreement will be $5,250,000. 

·         Grant of Time Vesting Inducement Restricted Stock Options (ie “Golden Hello part 1 ”)  of 200,000 shares vesting evenly over 4 years. At a current price of $30 per share the value of the shares covered by this agreement would be $6,000,000.   

·         Grant of Performance Vesting Inducement Restricted Stock Options (ie “Golden Hello part 2 “) of up to 200,000 shares. These options will vest based upon the increase in CSC’s share price over the coming 5 years. The maximum award would vest in the event of a share price increase of 80% over its current price. With a current price of $30 per share the value of the shares covered by this agreement would be up to $6,000,000.  

·         An annual grant of an unspecified number of Career Shares,

·         Benefit Programs such as pension and other perks.

·         Various provisions regarding termination of employment, change of control of CSC , confidentiality agreements, indemnification in case of litigation or claims against him in his role as CEO of CSC etc.



It is a rich package. However, Mike Lawrie is taking on the challenge of turning round CSC from the road to oblivion that Mike Laphen has driven it down.  If Lawrie succeeds, his compensation and rewards will be good value for both shareholders and employees.   

The Board of Directors who have selected Mike Lawrie as CEO and approved this compensation package also selected Mike Laphen as CEO and then designed his compensation package.  Laphen’s failure as CEO was foreseeable in view of his management style. His compensation package was flawed in that he earned significant “performance awards” in bonus and stock options despite major shortfalls against targets. This led to his earning $15.5million in FY2010 and $12.5million in FY2011 while investors lost money and employees lost their jobs. More details are in our blog posting of 30 June 2011 “CSC’s idea of pay for performance“.  

We trust the CSC Board of Directors has learned the lessons of their errors regarding Mike Laphen. We hope they will ensure Mike Lawrie is well compensated for success, but there will no longer be massive rewards for CEO failure.

For full details of Mike Lawrie’s employment agreement, see


 posted by Little John




12 comments:

Anonymous said...

Can't say I'm a big fan of ML. I am one of many (hundreds?) of employees who worked for Misys. For almost two decades I enjoyed a successful career until Lawrie came in and off-shored and laid off countless high-paid dedicated employees like myself. He replaced us with less skilled cheap workers from India, and even though both lower mgt and customers alike complained, the stock price rose and Lawrie managed to fulfill his ridiculously inflated bonus requirements and then jumped ship as soon as he collected. So he makes many millions while hundreds of loyal workers are left unemployed, and Misys is the worse off for it.

So good luck to the employees of CSC. And watch your back - you might want to get those resumes polished.

ksontini nabil said...

the same is gonna happen here, working since a few years in a great compagny but now we're replaced by cheap unskilled indians , every one complains but well, the earth still turns...

Anonymous said...

Employees are now expected to participate in High Deductible health plans in the new year and pay more out of pocket for benefits. This can amount to a 5-10 percent reduction in annual compensation/benefits. This is part of an auterity measure to stengthen the company. Why don't we see similar reductions in executive compensation.

Anonymous said...

CSC was in ruins before ML came in and shook things up. Management was stagnated, and had no committment to anything but their paychecks. Change is good for a company, gets rid downward progress that was happening with Laphen and all the management he put in place. Also, I don't know why people think Indians are unskilled? Several successful companies have offices in India, Microsoft being one of them.

Anonymous said...

>>
Several successful companies have offices in India
>>
CSC ...is one of those companies...
[anonymous-1]

Anonymous said...

Lay offs to the point of crippling work...not a good plan for the long haul.

Anonymous said...

Not to mention annual raises that are far less than the average rate of inflation....

Anonymous said...

This CEO is a moron. He is killing CSC by taking away every things from employees so that he can keep collecting bonus. Last year when he himself collected millions, he gave no increment to CSC employees. This year he is giving fake designations to CSC employees so that he can cut their salary next year and push bottom line up so that he can collect his bonus. He has put the CSC on self destructive path. If you own CSC's stock then sell it because most of the good employees are leaving CSC because of this greedy moron.

Currently employees are leaving and very soon, in next 2 or 3 years clients will also leave CSC. We, employees are praying that we get a new CEO before it is too late.

Anonymous said...

Former employee of 12 years and my sentiment will be shared by the thousands of once loyal employees let go. To all those Directors protecting your own income and not fighting for mine as the cost of living increased exponentially. All while I made unrealistic expectations a reality with minimal capacity. Missing family events, not taking care of the home base while I remained committed and continued to blindly support you operationally, blood, sweat, and tears as the house crumbled around. Bouncing from one RIF list to another b/c my enterprise role although vital from a project management prospective was considered SG&A. The sweetest revenge is taking that knowledge and my contributions to building up your competitors. Good luck winning future new business.

Anonymous said...

Over 75% of our staff is looking for new jobs. Kiss this multi million contract goodbye.

Anonymous said...

The Capability and Talent reductions are continuing. The investment community is driving price of CSC stock up based on non transparent bottom line. Bottom line is not from growth, it's from cost cutting. Mike Lawrie's strategy sounds like a good plan but his non visible actions are destroying CSC while making Executive inner circle wealthy. Company American resources will be reduced to minimum levels, operations management will become HP alumni and Indian Expats. What remains of value will be segmented and sold. The investment community should be short selling CSC. CSC scaled from 93k employees in '11 to ~63k employees in '15. More layoffs to come. Stop rewarding Mike Lowrie and his Board of Directors.

Anonymous said...

Hmmm...Apple CEO makes $4 mil in 2013 and Lawrie makes over $21 mil @ CSC......Apple CEO makes $9 mil in 2013 and Lawrie???? Doesn't seem equitable, does it?