The Board of Directors of Hewlett-Packard is criminally stupid

(written by Lawrence Krubner, however indented passages are often quotes)

Also incredible:

Turning to HP, this week was their Board’s opportunity to solidify its reputation for incompetence and bad manners. They rose to the occasion. As recounted last year in August (Curious Summer), September (Redemption of More Insanity Ahead), and October (HP’s Board Gets No Respect) Monday Notes, this group of supposedly wise and experienced individuals managed to accumulate a sorry track record of boneheaded decisions. Admittedly, there’s a revolving boardroom door, directors have come and gone, but something in the coffee keeps addling their brains. To wit:

In 1999, HP hires Carly Fiorina as CEO. She’s a Lucent Sales exec, with no qualification whatsoever to run a tech giant. Was there no one else to be found in the entire industry? Behind that bad decision, there is the Board’d failure in one of its most important missions: Succession Planning, grooming one or more standby CEO candidates.

In 2002, after much internal strife, the Board proceeds with the hugely expensive Compaq acquisition: $25B, 36% of the combined entity to Compaq shareholders and an ugly proxy fight with Hewlett heirs.

A rare moment of Board lucidity, or is it the relentless pounding of facts? In 2005, Carly gets the boot and is replaced by an experienced industry exec, Mark Hurd, who came with a record for turning NCR around.

Members of the Board and execs get caught in unsavory pretexting shenanigans, spying on directors and employees. The Board Chair and the company’s General Counsel leave.

Hurd delivers, some say by cutting too much: HP becomes the #1 tech company ahead of IBM. Shareholders love their new CEO.

Five years later, in August 2010, after alleged but unproven allegations of misconduct of a sexual nature, and unclear but minor expense reporting problems, Hurd is shown the door. The decision is debatable, but what follows isn’t: At the Board’s behest, the company issues public statements disparaging Hurd, accusing him of ethics violations and lapses of judgement. And then, after pillorying him, the company inexplicably paid off the “disgraced” Hurd to the tune of $30M to $40M. HP shareholders sued the directors and the media roasted them.

Hurd is promptly hired by Oracle’s Larry Ellison, who doesn’t miss the opportunity to mock HP’s Board. So does Joe Nocera in his NYT column: “The Hewlett-Packard board is back to doing what it does best: shooting itself in the foot.”

Claiming he’ll “inevitably” misuse confidential HP information in his new Oracle job, the Board authorizes a suit against Hurd. Two weeks later, under the combined weight of ridicule and of the invalidity of non-compete clauses, HP settles.

Having failed once again in its mission to develop CEO successors internally, HP’s Board hastily hires Léo Apotheker, an enterprise software industry veteran, ex-CEO of the industry giant SAP. Hastily? Yes: As the NYT tells in this “Voting to Hire a Chief Without Meeting Him” column, when the Board decided to hire Apotheker, “most board members had never met Mr. Apotheker”. How can these directors not fire themselves for such an egregious lapse of judgment, especially after their vicious verbal attacks against Hurd for his purported bad hidgment? What more important director duty than hiring and firing the CEO? Their excuse? “ But we were just too exhausted from all the infighting.” Firing Hurd was really hard on these fragile creatures.

In September 2010, Léo Apotheker takes the helm and, understandably, remakes the Board, bringing 7 new directors, most notably Ray Lane, once President and COO of Oracle and Kleiner Perkins Managing Partner, and Meg Whitman, ex-CEO of eBay and expensively defeated candidate for the California Governor job.

Last week, less than a year into the job, it’s Léo’s turn to be fired. He made controversial decisions: Getting out of the PC business and halting HP’s investment in WebOS devices after the TouchPad’s poor initial showing. Shareholders didn’t like the substance or form of these decisions and dumped the stock. And the Board dumped Léo. Nothing patently unfair, this is a normal CEO occupational hazard.

But, within hours of Léo’s departure, sticking to its sick code of conduct, HP’s Board proceeds to malign their ex-CEO. After grabbing the Executive Chairman title, Ray Lane gives a long series of reasons why HP had to let Apotheker go. What Lane avoids to discuss is why the Board approved Léo’s decisions, and their public positioning.

Léo, wisely, issues a sober farewell memo to HP employees.