HP's dangerously dysfunctional board is the real problem

Most directors had not met Leo Apotheker before hiring him and other dumb things

Hewlett-Packard chief executive Leo Apotheker is in danger of losing his job for a number of reasons, including 1) plunging share price, 2) poor quarterly results and diminished financial guidance, and 3) questionable strategic decisions.

But if even half of what the New York Times reports about Hewlett-Packard's directors is true, the company's real problem is rampant dysfunctionality in the board room, and a textbook case of corporate directorial malpractice.

Imagine a director of one of the world's largest and most important technology companies -- a company desperately in need of the right leader after its former chief executive resigned following a tawdry (and arguably overblown) scandal -- choosing not to meet the top candidate selected by the board's CEO search committee. And then voting to put that unmet person in charge of a $90 billion corporation struggling with serious strategic decisions it can't afford to get wrong.

(Also see: HP board shake-up: 4 old members out, 5 new ones in)

A member of Hewlett-Packard's board did that last fall after Leo Apotheker emerged as the front-runner for the CEO job vacated by Mark Hurd last August, according to the Times.

But not just one board member -- eight directors had never met the German native and short-time SAP chief executive before awarding him a three-year, $53 million package to steer HP into the new computing era.

Way to watch out for the interests of shareholders, HP board. An unpaid HP intern would get fired for being that irresponsible.

Just check out some of these quotes about HP's board in the Times article:

"It has got to be the worst board in the history of business."

That's from Tom Perkins, a former HP board member. It's not much different than what Oracle CEO Larry Ellison said last year after the board forced out Hurd. Which is one of reasons Apotheker was "the best of a very unattractive group," as one director told the Times -- because no good candidates wanted the job, not after watching this board operate.

"I admit it was highly unusual" (to name a CEO without having interviewed or even met the candidate), one board member (said). "But we were just too exhausted from all the infighting."

It is exhausting, all that board infighting! Then you go home and the kids start arguing; seriously, there's no escape. If you have to duck a board meeting or two to maintain your sanity, well, that'd be the responsible thing to do, wouldn't it?

All the infighting started, the Times reports, after the whole sexual harassment and expense-account stuff with Hurd blew up. Two directors appointed to investigate the allegations -- Robert Ryan and Lucille Salhany -- were adamant that Hurd should be fired immediately.

But two others -- Joel Hyatt and John Joyce -- were equally adamant that Hurd should stay, or at least stick around until a successor could be identified.

One director told the Times that board relations "became fractious. There were so many hard feelings. It became difficult to conduct business in a civil manner."

Interestingly, all four of the parties reportedly involved in the should-Hurd-stay-or-should-he-go argument are gone from the board, having opted not to seek re-election last March. They were replaced by five other members, including former eBay CEO Meg Whitman, who is being touted in reports this week as a potential replacement for Apotheker.

Whitman is as wrong for the job as Apotheker has proven to be. Her background is running an online auction site, not an enterprise software and services company. She'd be a poor fit and a certain disaster.

Which, of course, makes her irresistible to the tech world's most clueless board of directors.

"The company is coming apart at the seams. ...HP is self-destructing."

Yes, it is. And the shareholder lawsuit filed last week is just the beginning. Investors have a right to be outraged by the HP board's incompetence and flagrant irresponsibility.

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