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 user 2011-01-26 at 8:19:52 am Views: 47
  • #23920

    FRANCISCO (AP) — Hewlett-Packard Co. is trying to put a fresh face on
    its scandal-scarred board, swapping out four directors in an extreme
    leadership makeover at the troubled technology icon.The shake-up
    announced Thursday comes as HP’s new leadership tries to dampen
    shareholder anger over the handling of CEO Mark Hurd’s ouster six months

    Hurd’s abrupt exit caused billions of dollars in
    shareholder wealth to evaporate, and his generous severance triggered
    lawsuits accusing HP’s board of squandering the company’s money. Hurd’s
    immediate move to rival Oracle Corp., which earned him a rich new
    employment contract, added to investors’ ire.The decision by four of
    HP’s current board members to not stand for re-election at HP’s annual
    meeting in March represents an unusually large exodus for a company of
    HP’s size.HP would only say that it “continually looks to bring new
    insight and perspective” to the company.”With our new leadership, it’s a
    natural time to assess the composition of the board,” the company said
    in a statement. “We thank our current directors for their outstanding
    service to HP and welcome the opportunity to work with our new
    members.”HP’s revelation came the same day that another technology
    heavyweight, Google Inc., disclosed a surprise reshuffling of its own:
    CEO Eric Schmidt is relinquishing the job to Google co-founder Larry

    HP’s housecleaning comes less than three months after Leo
    Apotheker, a former CEO of German business software maker SAP AG, took
    over as HP’s CEO, and Ray Lane, a former Oracle Corp. executive who
    famously clashed with Oracle CEO Larry Ellison, assumed the chairmanship
    at HP.It also comes as HP is opening a new investigation into the
    circumstances of Hurd’s departure and severance, in response to
    shareholders’ demands.The investigation will be conducted by outside
    lawyers and directors who joined HP’s board after Hurd left. Until
    Thursday’s reshuffling, those new directors would only have consisted of
    Lane and Apotheker. Lane has loudly supported Hurd’s ouster.Hurd was
    forced out last year after a five-year reign in which HP’s market value
    nearly doubled. He was accused of sexual harassment but HP’s board found
    no evidence of that. Instead, he was ousted over inaccurate expense
    reports for his outings with his accuser, a former HP contract worker
    who helped organize networking events for executives, including Hurd.

    got a $12.2 million cash payout and soon after leaving filed papers to
    sell some $30 million worth of stock that he got by exercising options
    that were part of his severance.Spectators howled at the size of the
    severance and the fact Hurd went right to work for Oracle. Hurd and HP
    tangled again, and Hurd agreed to give back $14 million in restricted
    stock to HP to squash a courtroom battle over whether he should be
    allowed to work Oracle. Hurd is now co-president at Oracle.A spokesman
    for Hurd declined to comment on the investigation. Hurd’s resignation is
    also the subject of a Securities and Exchange Commission probe.Some
    industry analysts say the changes to HP’s board are overdue given the
    company’s inability in recent years to escape controversy. Among
    incidents were the firing of Hurd’s predecessor Carly Fiorina in 2005,
    an episode of spying on journalists and board members’ telephone calls
    in 2006, and finally the handling of allegations of sexual harassment
    against Hurd last year.

    Of the board’s 12 current members, 10
    were there when Hurd resigned in August. Four are now leaving: Joel
    Hyatt, John Joyce, Bob Ryan and Lucille Salhany.Salhany and Ryan were on
    the board for all three scandals. Hyatt and Joyce joined in 2007.HP is
    replacing them and adding an extra seat to the board. The new board will
    have 13 members.HP didn’t provide specifics about why each of the four
    directors is being replaced. One person familiar with the matter told
    The Associated Press that at least two of the directors were forced out
    because of their handling of Hurd’s ouster.The person, who spoke on
    condition of anonymity, said that Salhany and Ryan led the efforts to
    have Hurd removed and were key in persuading other board members to go
    along.The person, who requested anonymity because of not being
    authorized to speak publicly about the matter, said that Hyatt and Joyce
    initially supported Hurd but later voted along with the rest of the
    board to have him removed.Messages left by the AP for the departing
    board members were either not immediately returned or the directors
    declined to comment. HP wouldn’t make any of them available.

    The mass exodus raised some eyebrows.
    directors going out at once is unusual,” said Charles Elson, director
    of the Weinberg Center for Corporate Governance at University of
    Delaware. “Boards should not have this much drama.”At 72 years old, HP
    is one of the most storied companies in Silicon Valley, but its rise to
    become the world’s biggest technology company by revenue has been
    interrupted by the explosive management scandals.Gleacher & Co.
    analyst Brian Marshall said the changes HP is making are positive in
    light of the Hurd scandal.”HP got its teeth kicked in last year and
    they’re going through a process of healing,” he said.Stifel Nicolaus
    & Co. analyst Aaron Rakers said the board shuffle is more extensive
    than he expected, but he doesn’t think it will really move the company’s

    “It’s interesting, but is it a big catalyst? Probably
    not,” he said.The new directors are: Shumeet Banerji, chief executive
    officer of the consultancy Booz & Co.; Gary Reiner, former chief
    information officer of General Electric Co.; Patricia Russo, former CEO
    of Alcatel-Lucent; Dominique Senequier, CEO of AXA Private Equity; and
    Meg Whitman, the former CEO of online auctioneer eBay Inc.Marshall with
    Gleacher and Co. said he was most impressed with the addition of
    Whitman, saying her leadership style is something HP needs.

    is a billionaire who spent more than any candidate for a statewide
    office in U.S. history in her Republican campaign for California
    governor last year. She spent at least $174 million, all but $30 million
    of it her own money, but was handily defeated by former two-term
    governor Jerry Brown in the November election.Marshall added that the
    global telecom expertise of Russo will be important for HP as it grows
    its computer networking business.Shares of HP, which is based in Palo
    Alto lost 31 cents to $46.47 after the announcement on the board
    shake-up. In regular trading earlier, it gained 46 cents, or about 1
    percent, to close at $46.78 Thursday.