EDS Ousts CEO
Departing CEO defends severance package
reprinted by permission of Ralph Grabowski, editor
March 24, 2003
The EDS share price rose 10% on the news it replaced CEO Richard Brown with new CEO Michael Jordan, and Jeffrey Heller as president and chief operating officer, effective immediately. The replacements were announced two days after EDS revealed it was losing US$430 million on a contract.
Mr Brown receives a US$35 million severance package, which includes a $12.4 million cash payment, $19.6 million for monthly retirement payments, and stock valued at $5.4 million. The 'Financial Times' reports that "in a shareholders meeting, Mr Brown defended his high salary and stock grants by saying: 'I have an expensive wife.'"
Replacing Mr Brown is Mr Jordan, a former former chairman and CEO of CBS Corporation. And Mr Heller returns to EDS after retiring in 2002 after 34 years with the company. A board member said the board believes the new management team has the opportunity to move EDS forward unencumbered by past events.
The 'Financial Times' also reports that technology companies, such as Microsoft and HP, are considering acquiring part of EDS.
Why should this matter to readers of this e-newsletter? Changes in management and changes in ownership could put in doubt the future of the company's PLM Division (as it calls its CAD software), should the question be asked, "How does CAD software fit into EDS' recovery?" It was under Mr Brown that EDS purchased Unigraphics Solutions in the summer of 2001; the new CEO may not see the point to having CAD in the EDS portfolio of services.