Last week, Hewlett-Packard removed its CEO, ousting Léo Apotheker (who was hired less than a year ago) and replaced him with Meg Whitman (former CEO of eBay). It’s the latest in a string of embarrassments for the HP Board of Directors. [I’m not alone in this assessment; after the announcement CNN asked if HP’s Board was the “worst ever”]
Here’s some background on HP’s CEO travails over the past decade:
- Carly Fiorina was hired as CEO in 1999, with quite a bit of fanfare as the first woman to lead a Fortune 20 company. Fiorina had a tumultuous tenure in this position, with much of the battling focused on her acquisition attempts. She tried to acquire EDS (a computer services company) in 2000, but gave up in the face of resistance from HP shareholders. In 2002, she led the acquisition of Compaq (a leading personal computer maker), prevailing over shareholder objections in yet another difficult battle. Fiorina was finally forced out as CEO in 2005, in a departure that was handled awkwardly by HP’s Board.
- Mark Hurd (from NCR) was brought in as CEO in 2005. He lived up to his reputation as an aggressive (even ruthless) cost-cutter. He laid off 10% of HP’s employees soon after taking over. In the summer of 2010, in another awkwardly handled public dispute, the HP board forced Hurd to resign. This followed an investigation from which HP’s Board concluded that he had acted inappropriately in a situation that resulted in a sexual harassment complaint against him. [I wrote about this in this blog last year.]
- Léo Apotheker was named CEO in September 2010. Apotheker had been forced out as CEO of SAP in February 2010. During his tenure as HP’s CEO, HP stock lost about 40% of its value. Much of that decline came in August, when HP announced that it was dropping its tablet computer business and was looking to sell (or spin-off) its PC division.
So, now it’s Meg Whitman, former CEO of online auction giant eBay. She joined eBay very early in its history and built a strong executive team that helped drive its success. However, the company went public only 6 months after Whitman was hired, so its success was clearly already well underway before she arrived.
Whitman oversaw tremendous growth in her ten years at eBay. The acquisitions of PayPal and the European auction site iBazaar helped fuel that growth. However, Whitman had at least one highly visible strategic misstep at eBay. The 2005 acquisition of Skype (for $4.1 billion) was never successfully integrated and in 2008 Skype was sold for $2.75 billion.
What does Whitman bring to HP? That’s not clear yet (at least to me). Her experience at eBay doesn’t seem directly applicable to addressing HP’s needs. There’s no question that eBay was (and still is) one of the shining successes of the internet age. She presided over a growing, thriving internet company during the internet boom. How much of that was her doing? And, more importantly, which of her skills will matter at HP?
eBay is a consumer-to-consumer business. Whitman has very little enterprise business experience and she has no hardware experience. She also has no experience running a services business.
That doesn’t seem to bode well. However, with HP stock at its lowest point in more than five years, it’s also likely that, no matter what she does, it will look like success.
For now…I’ll leave you with this thought:
Here’s one thing the HP Board is good at – CEO severance packages:
- Fiorina: between $21 million and $42 million [Source: CNNMoney]
- Hurd: $12.2 million in cash (and he forfeited about $14 million in stock, in a settlement that followed his hiring by Oracle after he left HP) [Source: USAToday]
- Apotheker: at least $7.2 million cash + $18 million stock [Source: CNNMoney]