Fiorina Scarce as McCain Adviser After Gaffe, CEO-Pay Spotlight

By Indira A.R. Lakshmanan

Sept. 25 (Bloomberg) -- When Republican presidential hopeful John McCain convened a high-profile roundtable to discuss the financial crisis with 12 economic advisers in New York yesterday, one absence was notable: Carly Fiorina.

For months, the former Hewlett-Packard Co. chief executive officer was the face of the McCain campaign in scores of televised interviews. She was mentioned as a possible vice president, a Washington outsider who could bolster the Arizona senator's economic credentials and draw women voters.

Now, she is on the sidelines: After at least six national TV appearances last week, Fiorina, 54, has stopped granting interviews and has spoken at just one campaign event since her Sept. 16 comment that none of the presidential or vice presidential candidates -- including the ones she is advising -- was qualified to run a major corporation.

Meanwhile, the emergence of CEO severance packages as a major issue in the banking-bailout debate has stirred memories of her own eight-figure payout when she was ousted from Hewlett- Packard in 2005.

``Her comments were inappropriate and certainly diminished her credibility,'' said Ed Rollins, former White House political director under President Ronald Reagan. ``That, combined with her history of being asked to leave with a large parachute, and I don't think that's a story you want repeated.''

Status `Unchanged'

McCain campaign spokesman Tucker Bounds said Fiorina hasn't been marginalized. ``Her status with the campaign remains unchanged,'' he said, though he wouldn't comment on her absence from interviews or campaign events.

The sudden, unflattering spotlight trained on her underscores the unforgiving terrain of the campaign season, said Republican strategist Vin Weber.

``If someone makes a gaffe, the first reaction is, `How do we keep this from being repeated again and again?''' said Weber, a former U.S. representative from Minnesota. ``And the easiest way to do this is to take the person off the road till it settles down.''

McCain, 72, has seized on a proposal for a massive government bailout as the financial markets undergo the worst crisis since the Great Depression to rail against payouts for dismissed or discredited CEOs. His campaign is running ads linking Jim Johnson and Franklin Raines, the former CEOs of failed mortgage giant Fannie Mae, to Democratic candidate Barack Obama and is demanding they return their shareholder-funded payouts.

Johnson acted as an adviser to Illinois Senator Obama, 47, before quitting in June when questions were raised about his tenure at Fannie Mae, which was taken over by federal regulators this month. Raines never advised Obama.

`Proud of Her Record'

Asked on Sept. 23 if Fiorina should surrender her golden parachute, too, McCain dismissed the comparison. ``I'm proud of her record,'' he said. ``I want everyone to know Carly Fiorina is a person that I admire and respect.''

Fiorina's backers said there is an important difference between her payout and that awarded to Johnson and Raines. While Johnson and Raines weren't charged with wrongdoing, federal regulators said Fannie's books had been manipulated to maximize executive bonuses.

Fiorina, who was forced out in a management dispute with Hewlett-Packard's board, was never accused of wrongdoing.

Stock Options

Her payout was valued at $21.4 million in cash in 2005; a New York Times report at the time estimated the value of her package was $42 million, including stocks, options and pension. A shareholder lawsuit filed in 2006 asserted that her cash payment exceeded a limit set by shareholders, and demanded she refund $7.4 million that the plaintiffs claimed her board overpaid her. The suit was dismissed this year and is on appeal.

In an interview with NBC's Today Show on Sept. 22, McCain was challenged about Fiorina's payout from a company that laid off 20,000 employees. ``She is an example of exactly the kind of person you say is at the root of the problem,'' said anchor Meredith Vieira.

``I don't think so,'' McCain said. ``I think she did a good job as CEO in many respects. I don't know the details of her compensation package, but she's one of many advisers that I have.''

Republican strategist Whit Ayres said the campaign is keeping Fiorina out of view until the controversy blows over.

``If someone says something that has been misinterpreted or used by the opposition, it only makes sense to have the surrogate or adviser lay low till the media beast is on to something else,'' Ayres said. It's not ``a good time for a former CEO to be in the news, period.''

To contact the reporter on this story: Indira Lakshmanan in Washington at ilakshmanan@bloomberg.net .

Last Updated: September 25, 2008 00:01 EDT

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