By Amy Tsao
It may be weeks before the results are in on whether Hewlett-Packard's (HWP ) shareholders, in a Mar. 19 vote, approved the company's merger with Compaq Computer (CPQ ) after one of the most hotly contested internal battles in recent corporate history. What's already clear, though, is the likely legacy of HP's omnipresent CEO, Carly Fiorina.
Win or lose, many observers believe that Fiorina's relentless stumping on behalf of the deal, her ability to articulate a clear rationale for it, and her calmness under fire did more than any previous event to further the notion in the public psyche that a woman can lead a company as well as a man. Certainly, her strategy -- and the way she executed it -- helped gather enough support to turn a likely defeat into, at worst, a tossup.
Fiorina's performance, however, may benefit the cause of other women more than her own. Should the final tally go against the merger, Fiorina will be out of a job. And even if she wins, she'll face the daunting -- and perhaps ultimately unachievable -- task of managing a successful merger at a company where her tenure is short and her popularity with employees uncertain (see BW Online, 3/21/02, "What Price Victory at Hewlett-Packard?").
It would have been easy for a lesser woman to wilt at the outset. Announced last Sept. 3, the deal was supposed to create a $87 billion supercompany that would be No. 1 in sales of computer servers, PCs, handheld devices, and printers, and hold leading positions in markets such as storage and information technology services. Moreover, proponents claimed, better economies of scale, plus the elimination of overlapping units, would generate operating savings of $2.5 billion a year.
Both boards approved the deal unanimously, and Fiorina seemed poised to win a huge victory in her bid to revitalize a sluggish HP, an effort that had begun with her arrival two years earlier from Lucent Technologies. Then, things began to come undone. Wall Street took an instant dislike to the deal, knocking the stock down 38% in the two weeks after it was announced on fears that the two companies made a bad fit.
Partly in response to the stock slide, on Nov. 6, HP director Walter B. Hewlett, a son of company co-founder Walter R. Hewlett, renounced his support for the deal. He quickly got the Hewlett and Packard families and their foundations to vote their combined 18% of shares against the pact. Facing fierce resistance, Fiorina embarked on a four-month proxy fight to persuade shareholders to see things her way.
Whatever the merits of the merger, Fiorina was a masterful battlefield commander. A proxy fight is just the type of "ultra-male, testosterone-driven combat" that a lot of skeptics would have bet a woman couldn't handle, says Paul Bernard, principal at New York-based executive coaching and career-management outfit Paul Bernard & Associates.
It's a situation that the first-time CEO, who at Lucent had been a top marketing executive, clearly understood. Realizing that every move she made would be scrutinized from every angle, she took great care to present a polished, controlled, emotion-free image. Women in positions of power "are still poster children," says Bernard. "Someone like Fiorina is always concerned about being typecast."
STYLE AND LOGIC.
That isn't to say that Fiorina just fussed over appearances. She and Compaq CEO Michael Capellas deployed hundreds of employees to start the process of integrating the two companies even as she crisscrossed the country numerous times to round up votes. Moreover, she kept her board behind her, scored major points with institutional shareholders, and obviously charmed any number of TV interviewers with her style and the logic of her arguments -- all at a time when any misstep could have meant disaster.
"I think she's judged by a much harsher and colder metric" than a male CEO would be, says Donna Hoffman, a professor of management at Vanderbilt University. Hoffman notes that Fiorina's leadership as a CEO hasn't been above reproach but adds that "she has been [an effective] standard bearer."
Fiorina even traded punches with Hewlett -- without coming off as mean-spirited. A week before the proxy vote, Hewlett referred to her as a CEO who was learning on the job. But she gave as good as she got. In January, HP described Hewlett as a musician and an academic who didn't understand the issues. Fiorina has also referred to Hewlett's argument for keeping HP independent as little more than a "press release." Though both threw insults, many observers saw Hewlett as more to blame.
"TAKE THE HEAT."
No matter who hurled the most mud, these exchanges dispelled another stereotype. "Woman are usually described as more conciliatory [than men]," says Nancy Rothbard, a professor of management at the University of Pennsylvania's Wharton School. "[Fiorina] demonstrates that there are a lot of styles out there. That's great for women. It makes a nice contrast to some of our stereotypical notions of women in leadership roles."
In short, the manner in which Fiorina has handled herself should boost other women who want the top job, says executive recruiter Jeffrey Christian, CEO of Christian & Timbers, who placed her at HP. "She has proven a woman can take the heat, stand up to major conflict, and not give up no matter what the odds." Most important, Fiorina's single-minded determination in the face of sharp criticism has helped dispel any doubts or concerns over how far a woman CEO is willing to go to do her job.
Fiorina kept people focused on her performance and not on her gender, adds Steve Currall, who teaches management and psychology at the Jones Graduate School of Management at Rice University. "Her demeanor has been commensurate with that of a big-time CEO," Currall says. "She placed the bet [on a merger with Compaq], and that's what she has to do to be a CEO. You can criticize the bet, but not her guts." Adds Vanderbilt's Hoffman: "Whatever happens, this is good for women."
HARDER JOB AHEAD.
The saga isn't over for Fiorina, whose own future remains in question. She declared victory once the vote was in, but that's pending a final count in a contest that may be decided by a fraction of a percentage point. Or decided by a court: On Mar. 28, Hewlett filed suit alleging that Fiorina and HP used questionable methods to round up last-minute votes from big shareholders, particularly Deutsche Bank.
Should the deal be approved, she'll still have to prove that she can handle one of the most difficult management tasks in recent years in the technology business. "She'll have to maintain the positive aspects of HP culture while rebranding and revitalizing the company," says Len Rosenthal, a professor of finance at Bentley College. "What's really important is her ability to spur employees to produce innovative products" in at atmosphere where a severely divided electorate will have given her a weak mandate to work from. And Rosenthal adds: "I'm not sure she's the person to do it."
Here's a final irony. Fiorina might be better off if the vote goes against her. At least, that would let her benefit from all the things she has done right, without being exposed to all the things that could go wrong if the merger proceeds. "Because she does have guts, I think she's CEO material," Currall says. "Maybe it's just not at HP."
For now, the deal's fate -- and Fiorina's -- remains in question. Whatever happens, though, she'll likely have a place in corporate history as the person who, to date, has shown most emphatically that women have a claim to the corner office.
is a reporter for BusinessWeek Online