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Despite

Hewlett-Packard's

(HPQ) - Get HP Inc. Report

turbulent 2002, CEO Carly Fiorina garnered a $2.9million bonus for the year, on top of her $1 millionsalary.

Meanwhile, President Michael Capellas, whoexited the company last November, walked away with awhopping $26 million payout -- prompting one major H-Pshareholder to draft a reform proposal in protest.

The pay bonanza took place in a year in which H-P plungedinto the red, swinging from a profit in 2001 to a $903million loss. The giant computer outfit also let gosome 9,000 employees from a postmerger staff of about150,000.

Capellas' package reflects thepreviously disclosed severance package of $14.4million, plus an annual incentive payment of $1.8million, a salary of $800,000 and a $9.6 million sweetener to cover taxliabilities.

The hefty payout prompted some grousing from onestockholder, Service Employees International UnionAFL-CIO, which argues the sweet terms gave Capellas anincentive to split after the merger. The SEIU, whichowns 44,000 shares of H-P, has drafted a shareownerproposal aiming to check future severance payouts.

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It will be voted on at H-P's annual meeting onApril 2.

Under the SEIU's proposal, shareholders would haveto approve severance packages with benefits greaterthan 2.99 times the sum of the executive's base salaryplus bonus. Such calls for reform aren't unheard of:One prominent advocate for shareholders, the Councilof Institutional Investors, favors shareholderapproval of severance agreements for payouts greaterthan 200% of an executive's salary.

In response to the proposal, H-P has pointed outthat Capellas originally drew up the agreement withCompaq, saying it had no choice but to follow theterms of the deal after acquiring the company.

But on principle, H-P adds, it opposes shareholderapproval on compensation matters. In its proxy filing,the company says it will recommend a thumbs-down onthe proposal because it is "in the best interests ofH-P and its shareowners to avoid placing arbitraryceilings or restrictions on the kind and amount ofseverance payments H-P may offer."

Fiorina also pocketed a healthy stash of money in'02. Though her base salary stayed flat with the prioryear, in line with a corporate freeze on base pay, shetook home a bonus of almost $3 million. H-P said itsfiling that she earned the payout because the company"achieved net profit and revenue objectives" for thefirst and second half of the year.

Shareholders who watched net income belly flopmight quarrel with those profit objectives.

On the other hand, H-P's revenue grew 25% in 2002,counting Compaq sales after its acquisition of thecompany in May. And shares proved surprisinglyresilient in the period. From the start to the end offiscal year 2002, which closed in October, the stocksaw a relatively minimal loss of 6%, outperforming theS&P by 10%.

Still, Fiorina will have to do better if she wantsto collect on the rest of her pay package. In 2002, shereceived a grant of 850,000 options valued at $6.8million, set to vest over a four-year period. But witha strike price of $21.75, all the options are nowunder water.

In regular trading Friday, H-P closed up 31 cents, or 2%, at $15.85.