Another costly blunder from corporate America’s most dysfunctional, discredited and disdained board
HP’s board took another gigantic jump backward today. It’s not so much that it fired one CEO and hired another. People have come to expect that on a regular basis from what has become corporate America’s most dysfunctional, discredited and disdained board.
It is the shell game involving HP’s chairman that should prompt eyebrows to be raised even higher. Ray Lane was the board’s non-executive chairman and played the largest role in the appointment of Meg Whitman as new CEO. Now, he’s jumped inside, this time to become executive chairman of the board, with a much bigger payday as part of the deal. We are unaware of any comparable situation where two outside directors suddenly have become insiders, one as CEO and one as head of the board she reports to. Is this marriage of convenience the main reason why there was no full search for a new CEO? Is it just one more sign of a cozy club mentality at work in a boardroom where accountability has been the missing voice? We think so.
We also believe it is a further step in the wrong direction for the board to think that a lead director, yet to be appointed, will be able to provide the necessary focus for checks and balances that is so important to its fiduciary responsibility. No lead director has ever prevented disaster from occurring in any major company. It is bad corporate governance, pure and simple. For a company whose most costly product has been disaster, with billions in shareholder value wiped out over the past year alone, HP’s board obviously still does not get the fundamentals of how to execute on its significant responsibilities.
HP’s formula for a turnaround must include the highest standards of corporate governance, not the lowest. The rather large shell game it engaged in by turning a so-called non-executive chairman into an insider as part of the package that brought its newest CEO into the room shows that it does not even know where the switch is to turn that process on.