HP's Board of Directors Gets Some New Blood

Hewlett-Packard (NYSE: HPQ  ) took one much-needed step in the right direction today. HP's boardroom just gained three new regulars, and it's a high-quality infusion of new blood.

HP's board of directors is often held up as an example of terrible corporate governance. In 2011, ethics and governance expert Nell Minow wondered, "Could there be a worse board?" The company added one director the next month: activist fund manager Ralph Whitworth. Four directors left the board in 2012, including the entire nominating committee that made Leo Apotheker CEO. Otherwise, this group of error-prone directors has remained static since Ms. Minow hung them out to dry.

But today, HP finally added some fresh talent to the boardroom. They're not just some no-name fund-managers and also-rans, either; these are three proven winners who may in fact shake up HP's rudderless operations.

Meet the new faces
These names should be familiar to many investors, but let's do a quick rundown of their qualifications anyhow.

Former Microsoft software architect Ray Ozzie. Image source: Ray Ozzie's official Twitter feed.

Ray Ozzie is a legend of software development. He launched Lotus Notes long before IBM acquired that productivity toolkit and made it central to Big Blue's software strategy. At Microsoft (NASDAQ: MSFT  ) , he championed cloud computing and social media before it was cool. Ozzie took over the role of chief software architect when Bill Gates retired, leaving day-to-day CEO-type operations to Steve Ballmer.

With Ozzie in the boardroom, I wouldn't be surprised to see him nudging the company deeper into software and services, much like Apotheker once did. The big difference this time is that Ozzie comes with much stronger credentials: Apotheker ran a not-particularly-strong operation at SAP; Ozzie, the world's largest software machine. HP CEO Meg Whitman could use someone with a clear vision who isn't afraid to correct the boss when necessary.

Dob Bennett, former CEO of Liberty Interactive. Image source: Liberty spin-off Discovery Communications.

Robert "Dob" Bennett was CEO of Liberty Interactive (NASDAQ: LINTA  ) from 1997 to 2005. He steered the Internet-leaning company through the dot-com bust and came out stronger. Under Bennett's leadership, Liberty Interactive grew annual sales from $1.2 billion to $7.6 billion. He's been known to stand up to Liberty chairman John Malone on occasion, and he still serves as a board member or executive in several of Liberty's offshoots.

So here's another software and services expert with some experience in pushing back against corporate bigwigs. Put this character together with Ray Ozzie, and I smell sparks flying in the boardroom.

Former McDonald's CEO and current Walgreen chairman Jim Skinner. Image source: Marketwire.

Jim Skinner is the least controversial, but perhaps the most impressive, of HP's new board members.

Skinner spent 41 years at McDonald's, including eight years as CEO. Average shareholder returns under his guidance were an eye-popping 21%, thanks to his focus on "being better, not just bigger." HP could sure use a generous dose of that mind-set.

After retiring from Mickey D's, Skinner took the chairman's throne for convenience-store giant Walgreens. Almost exactly one year later, Walgreen shares have soared 60% higher, absolutely crushing the Dow Jones' (DJINDICES: ^DJI  ) historic 20% run. It's hard to pin that rush directly on Skinner's appointment, but his presence clearly doesn't hurt.

The impact on HP
Between these three names, HP gains the following:

  • Two former CEOs of S&P 500 companies, including one Dow leader. Ozzie is the holdout here with "only" a senior leadership role at Dow component Microsoft (but that always seemed like half of Bill Gates' old baton, the other half having been passed to Steve Ballmer).

  • Three proven winners with strong opinions on how to run a large-scale business. None of these three will back down from a challenge if he sees things going wrong at HP.

  • Something like 80 years' worth of top-level management experience.

Is this an instant revolution in the making? Maybe not, but Whitman and interim chairman Ray Lane have taken a big step away from the pushover boardroom politics of years past. They can expect to have their ideas challenged on a regular basis, and that can't be bad for HP -- or its sharehodlers.

HP has become an also-ran in the tech industry without falling out of the Dow. It's incredible how our digital and technological lives are almost entirely shaped by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


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