Fellow Fool and all-around star analyst Morgan Housel took Hewlett-Packard (NYSE: HPQ ) to task yesterday. I urge you to read that story to get a feel for the huge mistakes HP's board of directors have made in the past year. It's a thrilling tale of needlessly golden parachutes, CEO hiring sight-unseen, and general "board stupidity at its finest."
It's well worth a read. I'll wait for you to get back here.
And now back to our scheduled programming
As great as Morgan's rundown of HP's mistakes is, I don't think he went far enough. I'm here to give you a more detailed presentation of the board that's responsible for this mess. In the words of Nell Minow from the Corporate Library, these people might as well carry a banner saying: "We have no idea what we're doing." So without further ado, here's a closer look at the bumbling board's biggest names.
Ray Lane, non-executive chairman
Lane is a partner at high-powered venture capital firm Kleiner, Perkins, Caufield & Byers, tasked with "guiding established businesses to take advantage of new, strategic Internet opportunities," among other things. A former employee of key rivals IBM (NYSE: IBM ) and Oracle (Nasdaq: ORCL ) , Lane joined HP's board in 2010 as part of the botched Leo Apotheker hire, so he's more a byproduct of the Mark Hurd scandal than a participant in it. Never mind that he waxed poetic about Apotheker's being "ideally suited to build on HP's strong foundation" when they both started -- anything less than a glowing recommendation at that point, and Lane simply wouldn't have been doing his job.
That doesn't make him any less responsible for HP's lack of direction in 2011, however, and he'll hold the bag if the Meg Whitman hire fails to cure the company's many ills. Oh, and Lane is actually an executive chairman now with a bigger hand in day-to-day operations. The Wall Street Journal says that Whitman demanded this before she would take the CEO job.
And that brings us to …
Meg Whitman, CEO and director
It's easy to forget that Whitman joined the HP board fairly recently, making her a bit of an insider choice. The former eBay (Nasdaq: EBAY ) CEO and failed gubernatorial candidate grabbed a chair in January 2011, along with four other fresh faces. That was supposedly an effort to refresh a stagnant board with new blood and shake off the stench of the Hurd debacle.
I'm not saying Lane had anything special in mind when he brought Whitman along, but he did bring her into Kleiner, Perkins for a stint that lasted from March to September of this year. Was she an advisor or a student there? Hard to tell, but there's certainly some hand-holding going on here. So yeah, maybe I am saying that Apotheker's days were numbered many months ago.
Some of Whitman's colleagues, including Frontier Communications (NYSE: FTR ) CEO Maggie Wilderotter, who shares board duties with Whitman for consumer-products giant Procter & Gamble (NYSE: PG ) , claim that her eight months of board experience have prepared her to lead the sprawling HP empire.
But if that's the case, why didn't she simply speak up when Apotheker was guiding HP down a road she wouldn't take, like the recent focus on software and services? Job security, perhaps. Not that she needs hobbies to stay busy, what with board duty for Princeton University, P&G, Rosewood Capital, and Zipcar (Nasdaq: ZIP ) all demanding her attention.
What a tangled web you weave, Meg Whitman.
Marc Andreessen, external director
Of all the high-powered names on HP's board, Andreessen is the visionary superstar whom I expected more from.
His investment fund, Andreessen Horowitz, has its funding fingers in white-hot businesses such as Facebook, Foursquare, Groupon, Twitter, and Zynga. Andreessen took less cash and more stock compensation for his services to HP last year than any of the other external directors, which implies that he felt pretty good about where the company was going.
But then again, he seems to have attended fewer meetings as well. As chairman of the Technical Committee and member of the not-so-vital Search and Public Policy committees, perhaps Marc simply doesn't move in the inner circles of power here. Not that it absolves him by any means, especially given his hand in picking both Apotheker and Whitman.
Larry Babbio, external director
On the other hand, former Verizon Vice Chairman Babbio touches all of the important stuff as chairman of the HR & Compensation Committee and member of the Nominating & Governance, Search, and Finance & Investment committees. He's also one longest-tenured HP board member, sitting in since 2002.
Babbio is a former Compaq executive and can't be blamed for that debacle. Anything after 2002 is fair game, though, including the mistakes in 2010 and 2011. A seasoned leader like Babbio should be required to lead a charge against indefensible errors.
But wait -- there's more!
This report could go for miles and miles, but space is limited even in cyberspace. I encourage you to grab a recent proxy statement to read up on HP's board members, how they're compensated, and what their (mishandled) responsibilities are. I wouldn't blame you for stepping away from otherwise respectable -- even admirable -- companies like P&G or Zipcar based on the flawed leadership they share with Hewlett-Packard.
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