Ex-HP CEO Fiorina used job-creating tax breaks to buy back stock — then fired thousands of workers
Prior to being fired herself, former Hewlett-Packard CEO Carly Fiorina used tax incentives from the federal government, intended to increase research and development and employee hiring, to buy back stock before firing thousands of HP workers.
According to The Daily Beast, Fiorina — whose troubled tenure at HP has come under more scrutiny as she moves up in the polls for the GOP presidential nomination — was not the only high-ranking executive to take advantage of a corporate “tax holiday” and work it to her own advantage.
In 2004 Congress passed the American Jobs Creation Act of 2004 — after high pressure lobbying from Hewlett-Packard among others — that included an incentive for companies to repatriate profits stashed overseas with the understanding the money would be invested in job-creating research and development.
Instead, under Fiorina’s stewardship, HP took $4 billion of the $4.3 billion in tax breaks and funneled the money into a stock buyback program that enriched shareholders including herself. The move was done despite the fact that the act specifically prohibited the stock manipulation.
Instead of hiring more workers, HP laid off 14,500 workers due to plummeting share prices following Fiorina’s disastrous decision to purchase Compaq that caused profits to plummet.
The following year, Fiorina was fired by the HP after an acrimonious fight, but still managed to depart with a $21 million severance package.
This is not the only time Fiorina has been accused of skirting the law.
During her tenure, HP was accused of selling products into Iran despite an embargo. HP explained that the sales were made by a foreign subsidiary which was not bound by the U.S. government sanctions. Fiorina claimed no knowledge of the $120 million sale.