Quick now -- name the tech behemoth that in the past half dozen years has shelled out more than $80 million to make three (3) CEOs disappear?
You got that right. It’s Hewlett-Packard Co. (NYSE: HPQ), which has plunged deeper into the sea of expensive stupidity, led by its own board of directors.
Start in 2005 with the ouster of Carly Fiorina, who was forced out because the board was disappointed with the lack of stock market enthusiasm for the Compaq merger. It was reported at the time that Fiorina walked out the door with $21.4 million.
But then there were the deal sweeteners. Factor in options, restricted stock, and her pension, and Fiorina pulled in another $21 million, putting her farewell jackpot at over $42 million.
For six years on the job.
Next out: Mark Hurd, who was fired amid a Silicon Valley soap opera involving allegedly bogus expense report filings and an affair with a consultant. Hurd, of course, landed on his feet at Oracle, and that resulted in a smaller severance. In a deal that let him keep his Oracle job as co-president, Hurd waived rights to roughly 350,000 performance-based stock units. Yet he still sauntered out the HP door with a reported
$12.2 million.
Not bad for four years on the job.
Now it is Leo Apotheker’s turn. With just 11 months in the CEO chair, Apotheker was fired Thursday and will walk away with a reported $25.2 million in severance pay.
Which brings us to eBay’s Meg Whitman. If things keep going this way, the HP gig could help Whitman replenish her personal coffers, depleted by the pumping of $119 million into a futile bid to become California’s governor.
Either way, wouldn’t you love to know what severance deal Whitman’s contract contains? Because, with this board and with a company so mired in misdirection (think of the $1.2 billion acquisition of Palm, followed by the extermination of TouchPad almost as quickly as it was launched in the summer), this clearly is a company heading nowhere.
And the problem is not who is sitting in the CEO chair. It’s who is on the board of directors.
“These guys are a bunch of clowns, surpassed in incompetence only by Yahoo!’s board,” Eric Jackson, managing member of Ironfire Capital, wrote in a blog post a couple of days ago.
This is harsh. It also probably is true. HP seems incapable of deciding what business it is in -- latest reports, for instance, have HP selling its PC business... leaving what?
Probably just more turmoil.
The HP board is filled with rock stars, from Netscape’s Marc Andreessen to Lucent’s Pat Russo. But being smart about tech is not enough to lead HP.
John Alan James, a professor of corporate governance at Pace University in New York, explains:
HP’s basic problem is that since the founders, Hewlett and Packard, departed the scene, the firm… [has] seemed to be confused as to both mission and goals. This is exemplified by the stratification within the Board of Directors. If we go back to the fiascos regarding CEOs and their bad decisions it is possible to assign blame to a board split on the basic corporate mission and particularly on the policies needed to accomplish agreed goals. The acquisition of Compaq was a contentious issue for the Board and the personality conflicts between the CEO [Fiorina] and parts of the Board led to her downfall. Successors selected by a Board with diverse goals and standards resulted in predictable problems and failures. Strategic decision-making has also been hampered by the constrained Board decision-making process… I wish the new CEO greater success than her predecessors, but until the Board finds a consensus and a spirit of teamwork on mission and goals, her path may be similar to those who came before.
That’s an obviously pessimistic outlook. But Meg just might be the next CEO to laugh her way through the HP exit door.
— Robert McGarvey has been online and writing about the Internet for nearly 25 years.
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