The full Hewlett-Packard board is scheduled to meet on Thursday, many believe, in order to discuss the ouster of CEO Leo Apotheker, who's only been on the job 11 months. Following a Bloomberg report on Wednesday afternoon that former eBay chief and failed candidate for California governor Meg Whitman is being considered as a replacement, Silicon Valley is up in arms over the idea and spewing vitriol in HP's direction. It's not just the idea of bringing in Whitman, a controversial choice given her lack of experience running a company as big as HP, but also for new revelations about the apparently chaotic process that led to Apotheker's appointment in the first place. Most of the board members didn't even meet Apotheker before they decided to hire him to run the $50 billion company.
With HP having recently canned their mobile division and considering spinning off their PC division, there's a lot of talk about a crisis at the 72-year-old technology company. But there's even more talk about the catastrophe that is the HP board. "It has got to be the worst board in the history of business," former HP director Tom Perkins told The New York Times. He's not the only one that feels this way.
James B. Stewart's story at The Times provides some more details about the disastrous hiring of Apotheker:
Remarkably, when the 12-member board voted to name Mr. Apotheker as the successor to the recently ousted chief executive, Mark Hurd, most board members had never met Mr. Apotheker.
"I admit it was highly unusual," one board member who hadn't met Mr. Apotheker told me. "But we were just too exhausted from all the infighting." During Mr. Apotheker’s brief tenure, once-proud H.P. has become a laughingstock in Silicon Valley. Its results have weakened, its stock has plummeted and his strategy shifts have puzzled people inside and outside the company.
Kara Swisher at AllThingsD insists that HP should act fast lest they damage their image--and their stock--further:
If appointed, even without many critical credentials in the enterprise business, Whitman would be HP’s seventh CEO since 1999. That's more corporate marriages and exec beheadings than England’s Henry VIII!
The possibility of one more, including other internal and external candidates, sent long-suffering HP shares soaring yesterday, and the stock was still up almost seven percent in after-hours trading. That Wall Street glee is surely to come crashing down and very soon today, if the current crisis at the Silicon Valley tech giant--which has stumbled from one to the next over the last few years--is not quickly and definitively resolved by the board.
Nell Minow, a corporate governance expert, doesn't blame Apotheker for HP's woes. Minow told The Wall Street Journal:
It's hard to think of another board that has failed as consistently as this one. The H-P board is a serial offender. If Apotheker's vision and execution failed, it is the fault of the board that selected him.
Shira Ovide at WSJ made a useful timeline of those failures. Highlights include former CEO Carly Fiorina's botched acquisition of Compaq, former CEO Mark Hurd's sexual harassment scandal and more about Apotheker's odd appointment:
When the former SAP executive was hired last summer to run H-P, there was a collective question in techland: Who? He shuffled and then reshuffled parts of senior management. H-P repeatedly lowered its guidance--and still miss those targets. And H-P’s stock price has dropped more than 45% since Apotheker took over in August 2010.
Eleanor Bloxham at Fortune points out that Meg Whitman's appointment to the HP board was also botched:
Meg Whitman's nomination to HP's board was made at the behest of Ray Lane, the chair of HP's (HPQ) board, circumventing the board's nominations processes, which raised concerns with ISS, a proxy advisory firm, and others. … If Whitman's potential appointment is the result of Ray Lane again acting as puppeteer at HP, the beleaguered tech company has some major issues to address. Is this the right time for HP to play yet again with its governance reputation? These are issues shareholders should start evaluating now.