Dell’s $5M Severance Package for Kevin Rollins

The details of Kevin Rollins exit package are out from Dell (DELL-NASDAQ), and while it is low there is really no reason to say the package was too low.  Rollings will receive a total of $5 million in $1M installments spread out between 3 payments in 2007 and 2 payments in 2008. 

Rollins forfeited his director seat and will remain as an ‘advisor’ to the company until May 4.  He will continue to receive his salary (estimated at $944,000 annualized) until he leaves in May.  Rollins also agreed not to buy or sell any shares or options in DELL stock until its annual report has been filed.  Before thinking he is walking out with only a $5 million exit package, keep in mind that as of the latest filings he held in the money options covering 12 million shares.  These shares were worth more than $90 million at the time.  Rollins also agreed to the traditional non-compete for a year and agreed to cooperate with the company in any current and future lawsuits.

$5 million may be a pennance of an exit package, but some could even argue that this is more than fair.  Since he was on my list of 10 CEO’s that needed to go back in December, $5 million walk-away money for being remembered as "the guy that let things fall apart at Dell after Michael Dell handed over the CEO reigns" is probably more fair considering the billions lost in shareholder value and considering the multi-million dollar value of his stock options.

There will probably be a spot for Rollins back in private equity, but he is probably considered ‘sanctioned’ by other public companies from here on out.  Can people change their image?  Sure, but it will take many years and scrutiny will be more than severe.

Jon C. Ogg
February 21, 2007