Hewlett-Packard Shuffles Board, Adds Whitman
Departing board members are Robert Ryan, John Joyce, Joel Hyatt and Lucille Salhany, Palo Alto, California-based HP said in a statement today. Directors joining the board are Shumeet Banerji, CEO of Booz & Co.; Patricia Russo, former CEO of Alcatel-Lucent SA; Dominique Senequier, CEO of AXA Private Equity; Meg Whitman, former CEO of EBay Inc.; and Gary Reiner, former chief information officer of General Electric Co.
The board had been faulted over Hurd’s exit, including from shareholders who filed lawsuits. It’s unusual for companies to revamp the board and management as completely as HP has done since naming Leo Apotheker and Ray Lane as CEO and chairman respectively last September, said Dennis Carey, vice chairman at executive recruiter Korn/Ferry International.
“It’s extremely rare for a company to almost simultaneously install both an outside CEO and an outside nonexecutive chairman and also so dramatically overhaul its board, as HP has done,” said Carey.
“This happened at Tyco International, which had to do a complete makeover when it was recovering from the scandals that occurred under former CEO Dennis Kozlowski, but it’s highly unusual,” he said.
Support for Apotheker
The new appointees are more likely to support the agenda of Apotheker and Lane, and help HP put last year’s departure of Hurd behind it, analysts said.
“As an investor, you need to look at HP’s stock with fresh eyes,” said Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco. Investors have seen HP’s board as “immature,” said Noland, who has an “outperform” rating on HP shares.
“This will help put to rest some of the events of 2010,” he said. “Maybe this changes the situation and gets everyone moving in the same direction.”
HP is planning an independent probe into the circumstances of Hurd’s departure, which was announced in August, according to court documents. New appointments may be more inclined to back goals outlined by Apotheker, said Douglas Ireland, an analyst at JMP Securities LLC.
“If there were people on the board who differed with his new strategic outlook, his focus on software, for example, maybe it makes sense to have board members who are more aligned with that vision,” said Ireland, who’s based in San Francisco.
Apotheker and Lane said in an interview that the new board appointments would be accompanied by tighter controls on how directors interact with the press, following months of leaks.
“It was a feeding frenzy,” said Lane. “That is just not the way it is going to work anymore. The board needs to operate in privacy.”
Apotheker said Banerji, for example, who has also worked as an academic at the University of Chicago’s business school, would bring a fresh outlook to the board.
“We felt we needed someone that would bring a longer-term perspective,” said Apotheker. “This is a great opportunity for us to diversify our skills.”
Hurd resigned as chairman and CEO after an internal investigation found he violated business conduct standards in trying to conceal a personal relationship with a contractor. Shareholder lawsuits allege that HP directors wasted company money by awarding Hurd as much as $53 million in severance and other benefits.
HP rose 46 cents to $46.78 at 4 p.m. on the New York Stock Exchange, reversing an earlier decline, amid news of the planned changes.
Directors who joined the board after Hurd became CEO in 2005 include Ryan and Joyce, who became directors in 2007.
The departing directors left of their own volition, said Lane.
“These are the board members that graciously said they would step down make room for new blood,” he said.
HP is the fourth corporate board of which Pat Russo is now a member. She also is a director of Pittsburgh, Pennsylvania- based aluminum maker Alcoa Inc., Whitehouse Station, New Jersey- based pharmaceutical company Merck and Co., and Detroit-based General Motors Co., where she was named lead director in March.
She was one of six new directors named to GM’s board after the company emerged from bankruptcy in 2009. Russo stepped down as CEO of Alcatel-Lucent in 2008 after two years of losses that stemmed from the merger of the two telecom hardware companies.
Whitman and Reiner
Meg Whitman, former CEO of EBay, joins HP’s board following her unsuccessful campaign for California governor last year.
Gary Reiner, another new HP director, is now a special adviser at Greenwich, Connecticut-based investment firm General Atlantic LLC.
Dominique Senequier runs AXA Private Equity, the investment buyout arm of French insurer AXA Group, with close to $30 billion in assets.
HP’s new board of 13 directors will include three women, a higher number than most corporate boardrooms. Less than 20 percent of Fortune 500 companies have three or more women serving together as directors, according to a 2009 survey by Catalyst, the New York-based research organization. Two of the 13 directors at International Business Machines Corp. are female; Oracle Corp. also has two women among its 13 directors.
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