Playing Now in Theaters Everywhere: The H-P Saga

The H-P board/CEO saga is turning into pure theater. Analysts are actively encouraging shareholder revolt, H-P has hire Goldman Sachs as a “defensive move” against their wrath, the CEOs of Oracle and unpopular H-P acquisition Autonomy bandy words in a very public and contentious way (see article and graphic below).

The CEO succession backdrop is particularly fascinating. On August 6^th, 2010 Netscape founder, H-P Board member and celebrity technologist Marc Andreessen was interviewed by Maria Bartiromo in a CNBC Special Report:

“We will run a search as fast as we can, but insuring we get the best possible candidate. We will look at both internal and external candidates in that process.

We have just formed a committee, so work will begin on this immediately. But we’re going to dive right into it.

And fundamentally, you know, we’re looking for someone who is outstanding, who we can pair up with a truly great company. The company is in great shape, it’s extremely well positioned for the future.

We’re executing on the strategy. The performance is strong, so we’re look at someone who can both maintain that level of performance and then build on it.”

In other words, “we are totally unprepared, but trust us, we’re on it!”

H-P eventually settled on Leo Apotheker, who had recently been ousted as head of European technology giant SAP (after seven months on the job).

Now more details are being revealed about that appointment process. James Stewart in The New York Times describes how botched the process of hiring Apotheker was:

[W]hen the search committee of four directors narrowed the candidates to three finalists, no one else on the board was willing to interview them. And when the committee finally chose Mr. Apotheker and again suggested that other directors meet him, no one did. Remarkably, when the 12-member board voted to name Mr. Apotheker as the successor ... most board members had never met Mr. Apotheker.

One of the board members who had never met Apotheker tried to explain: "I admit it was highly unusual. But we were just too exhausted from all the infighting." As Morgan Housel writes in The Motley Fool, “Try using that line on your boss sometime.”

Stewart describes the board in this way: “while composed of many accomplished individuals, as a group (it) was rife with animosities, suspicion, distrust, personal ambitions and jockeying for power that rendered it nearly dysfunctional.” His article makes interesting reading.

Only 3 of the 13 current directors - Andreessen, Lawrence T. Babbio, and John H. Hammergren were on the search committee that ultimately replaced Hurd with Apotheker. In the Board shuffle that followed  2 of the  directors who were replaced (Joel Z. Hyatt and John Joyce ) were in favor of keeping Hurd, while a third, Lucille S. Salhany, (according to Stewart) wanted to slow down the process, worrying aloud that “no one has ever met him…”