After a year in which he failed to bring in as many of the so-called megadeals as shareholders might have liked,

EDS's

(EDS)

ousted CEO is leaving with his own big payday.

Richard Brown -- the high-profile executive who reshaped EDS into a megadeal machine -- is walking away from the weakened computer services giant with a severance package valued at $37.4 million. The Texas-based company, founded by onetime presidential candidate H. Ross Perot, has lost roughly $20 billion in market value and shed thousands of high-tech employees under Brown's leadership.

"I definitely think the change in senior management is a positive development," said Adam Frisch, a UBS Warburg analyst who detected challenges at EDS well ahead of the curve. "But I wouldn't say

Brown's severance is typical at all. Based on what happened under his tenure ... I would say it's lucrative and egregious."

EDS stock, which soared 8.4% to $17.08 Friday on news of Brown's departure, still fetches only 27% of the price it commanded a year ago. Still, Frisch is now cautiously optimistic about the company's long-term future.

"EDS is still a viable franchise," said Frisch, who has a hold rating and $15 target price on the stock. "But I still think things will get worse before they get better."

Across the Pond

Under the severance deal, signed in late 1998 when EDS lured Brown away from Britain's

Cable & Wireless

(CWP)

, Brown is entitled to $12.4 million in cash and monthly retirement benefits valued at $19.6 million. He also picks up $5.4 million worth of previously awarded EDS stock.

Adding Value?
Brown and red at EDS

The severance package is expected to cut the company's first-quarter earnings by 19%, to 26 cents a share. A year ago, EDS was reporting first-quarter earnings of 72 cents a share. But the company's strong earnings streak ended just a few months later, blindsiding Wall Street and hammering the stock to multiyear lows. From there, things only got worse. In September, the company revealed that it had made a disastrous bet on its own stock and would record a huge charge as a result.

Of course, big paychecks are nothing new for Brown. According to American media reports published at the time of his hiring, Brown wrangled a hefty pay package from EDS that included a salary of nearly $1.5 million, a guaranteed first-year bonus of the same amount and a $1 million-plus signing bonus. He also got more than 500,000 options and an unknown number of restricted shares.

A contemporaneous report in the British press indicates that in 1997, the year prior to his departure from C&W, Brown pulled in 1.24 million pounds -- equivalent to about $1.9 million -- in salary and bonuses.

Nor is the former EDS chief any stranger to the game of corporate musical chairs. Brown's name was often circulated in recent years as analysts drew up potential CEO candidates to fill jobs at high-profile companies. While at Cable & Wireless in 1997, Brown was interviewed for the top job at

AT&T

(T) - Get Report

, a contest he lost to C. Michael Armstrong.

More recently, Brown's name came up in wake of executive departures at

Qwest

(Q)

and

WorldCom

. Dick Notebaert eventually succeeded Joe Nacchio at Qwest, and Michael Capellas took over for John Sidgmore, who had temporarily filled in after Bernie Ebbers was fired.

The Road Ahead

Brown, who was himself hailed as a company savior five years ago, is being replaced another turnaround CEO. Michael Jordan found success as the top executive at Westinghouse by breaking up the company and selling it in pieces.

Peter Cohan, the author of several popular investment books, wonders whether Jordan will employ a similar turnaround plan at EDS.

"I don't think his track record is all that impressive," said Cohan, who has no position in the stock. "If they want somebody to break up the company and sell it, maybe he's the guy. But if they want somebody who can rev up sales at a standalone company, maybe he's not."

Frisch believes Jordan will probably try to rebuild EDS instead.

"Anything's possible," Frisch said. "But I wouldn't necessarily say

Jordan's past is a probable predictor of the future."

Indeed, EDS has already taken at least one big step toward repairing its tattered relationship with employees. The company is bringing back its popular president and operating chief, Jeffrey Heller, who ended his 34-year EDS career when he retired 13 months ago. In announcing the executive's return, EDS referred to Heller as "the heart, soul and conscience of the company."

But the new management team is inheriting a company with clear challenges. EDS has seen its growth brake with the slowing economy and the ultimate failure of Brown's cash-sapping mega deal strategy.

Still, EDS's incoming CEO is upbeat.

"I am confident we can address the challenges of the marketplace and grow through innovative new services, while continuing to deliver the superior service our clients have come to expect," Jordan said. "I am committed to our people, who are EDS's competitive advantage."

Senior writer

Scott Moritz contributed to this report.