back to article HP CEO Meg Whitman dons TRIPLE CROWN of POWER

HP CEO and president Meg Whitman has consolidated power at the top of the corporation by taking on the role of chairman as well. The manoeuvring comes days after HP confirmed that Ralph Whitworth is to step down due to health concerns, the exact nature of which were not revealed. Whitman joined HP's board at the start of 2011 …

  1. SW10

    Corporate governance—crowned

    That's corporate governance shot right there.

    The chairman and the board are supposed to represent the investors' interests and make sure the CEO doesn't act in their own selfish interests.

    You know, like Bernie Ebbers or Ken Lay...

    1. Anonymous Coward
      Anonymous Coward

      Re: Corporate governance—crowned

      or Mark Hurd........... How much effort did it take, and how much damage did he do in the meantime, while HP found a means of shaming Hurd into resignation when an independent Chairman could have given him a quiet interview without coffee and shown him the door months previously?

      It appears that lessons learned from that episode went into the same shredder as Geoffrey Dickens's infamous Westminster paedophile dossier.

      1. Levente Szileszky

        Re: Corporate governance—crowned

        Huh, WTF? Normally I ignore stupid AC comments but this is such a nonsense I cannot...

        ...FWIW Mark Hurd was THE LAST BEST CHANCE for HP to stay relevant. The utterly stupid board, mostly lawyers and their ilks (eg Whitman was a rep) put in charge that glorified software sales guy who was fired from SAP and now they blame him...

        ...and pray that Whitman will make HP glorious. Good luck.

        1. Anonymous Coward
          Anonymous Coward

          Re: Corporate governance—crowned

          Hurd was most certainly NOT the BEST LAST CHANCE for HP to stay relevant. Hurd was a numbers guy who only knew how to do one thing and that was to cut costs.

          He literally ripped the heart out of HP R&D because it wasn't producing ROI fast enough.

          Like numerous CEOs before him, Hurd did not realise that you can't cut your way to prosperity.

    2. Anonymous Coward
      Anonymous Coward

      Re: Corporate governance—crowned

      Yep, Meg gets to mark her own homework; let's hope for HP's sake she's not tempted to cheat.

      HP had this arrangement under Hurd and we all know how that turned out...

    3. Don Jefe

      Re: Corporate governance—crowned

      I'm not sure who told you that's what a Board is supposed to do, but don't take investment advice from them.

      Your Board of Directors most important function is to facilitate the high level components of strategies developed by Executive Management. That's why it's so crucial who your Board Members are. Your Board is your very own high power lobbyist conglomerate you send out to enable things and to solve problems. Your Board is also how you squash activist investors like Ralph Nader and ensure Congressmen vote the right way on pending legislation.

      A really good way to assess strategic potential in a company is to look at how many of the Board Members belong to institutional investors and who they replaced. You'll always have a few representatives of your largest institutional investors on your Board (note: those Board Members only represent the interests of the institutions they represent, not other investors) but if you've got an investor heavy Board that's really bad. Additional Investor Board Members are typically put in place because the company didn't have the wherewithal to prevent it. It's a punishment. It also means your Board my be heading towards impotence and you need to replace the weaker Members.

      If you're on top of your game, the Board works for you. If there are big problems in the company and institutional investors are creeping onto the Board it's a very bad sign. Those investor Board Members have only their investors in mind, fuck the other investors and fuck the company.

      I tend to start pulling money out of companies when investors start shaking up their Boards. Those are the Board Members who are always responsible for stopping R&D, advocating for shitty manufacturing and breaking companies into wee bits to be sold off to their buddies. Any Board that isn't the Strategic Special Forces for a company is an impending disaster.

      1. Anonymous Coward
        Anonymous Coward

        Re: Corporate governance—crowned

        That's completely wrong.

        The board represents the shareholders, why do you think shareholders (theoretically) elect them?

        http://www.cfainstitute.org/learning/products/publications/inv/Documents/corporate_finance_chapter1.pptx

        N.B. 'representing investors' DOESN'T mean representing Carl Icahn, you are correct those don't represent anyone's interests other than their own

        1. Mark 85 Silver badge

          Re: Corporate governance—crowned

          Ah..your theory breaks down when you look at who the shareholders (majority) really are. Usually, they're investment firms.

      2. SW10

        Re: Corporate governance—crowned

        I'm not sure who told you that's what a Board is supposed to do, but don't take investment advice from them.

        You'd be surprised how much I know about this stuff - and why.

        The Board is elected by the shareholders to represent their interests in the company they own.

        Over 50% of board members in the US and UK should be independent, or 'non-execs' - which is to say they are outsiders not directly employed by the company. The roles of chairman and chief executive in the UK should not be exercised by the same individual, though this requirement does not (yet) exist in the US.

        If investors choose to elect people from Banks to be on the Board, they are perfectly entitled to do so. If you, as an investor, read something negative into that, that's fine. It doesn't change the fundamentals of Anglo-Saxon corporate governance model.

        1. Don Jefe

          Re: Corporate governance—crowned

          @SW10

          Unless you are Winston Churchill, I doubt you're going to surprise me. Especially if we're going to discuss corporate governance.

          Board Members aren't elected by shareholders. Board Members have their seats confirmed by voting shareholders after the company has nominated someone for a seat using whatever mechanisms are in the company by-laws. That voting shareholders bit is crucial, not all shareholders can vote, you do know that, right? Not all shareholders own any portion of the company. You know that too, yeah?

          Apparently not. I'll explain to you how companies work. While the following is most prevalent in tech, the defense and energy industries do it a lot as well. Class B Common Shares generally do not entitle shareholders to a vote in any aspect of a company. In the rare cases where Class B shareholders get a vote it is not a vote-per-share arrangement. The company will have a share conversion ratio where for every (x) number of Class B shares converts, for the purposes of voting, to one (1) Class A share. That ratio varies from company to company (at the last publicly traded company I worked at the ratio was 23.5:1) but it's almost always a number beyond the means of non-institutional investors to purchase enough shares to influence the company. Class A shares aren't generally available to non-institutional investors. An individual can buy them, but there's usually a minimum purchase requirement that only crazy people would dabble in. Exposure is simply too great for people who don't hate their families.

          Carrying on, Class B shareholders do not own any part of the company. They are effectively making a small loan to the company and if share price has increased since the origination of the loan then they that increase as well. They don't own any part of the company, therefore are not given the same voting rights as Class A shareholders. Kind of neat how the world works, huh?

          If you actually understand where shareholders actually fit into reality everything is different that what you thought you knew. The Board is there for the Company. Like I said, you'll get a few institutional investors on the Board simply because of the volume of voting shares they own, but you want them kept to a minimum. If too many of those sorts you get into situations like HP is in. Like some rube up there commented, Boards that participate in planning are always fucked. Each Board member is only looking out for their own interests and it'll never succeed. The Board at HP has been 100% worthless since the Compaq acquisition. Which is why I took my money out of there.

          You've got the entire situation turned around. A Board that's not there to enable the CEO is a worthless Board. If you don't like the way a company is governed you can decline to invest, or you can try to buy enough voting shares to matter. Beyond that shareholders have no rights and it's not up to you, or anyone else, how the company is governed if you don't have the power to change it to your liking. There's nothing wrong with one person being Chairman, CEO and the largest shareholder. If you don't like it don't put your money in there, but if you are going to invest money in publicly traded companies it's best if you have an idea of how companies actually work. Otherwise you'll just end up looking foolish.

      3. TheOtherHobbes

        Re: Corporate governance—crowned

        >Your Board of Directors most important function is to facilitate the high level components of strategies developed by Executive Management.

        LOLWUT?

        If you mean 'They do the planning' - that pretty much never happens in the US either.

        Look at M$. They swapped out a clown and installed the corporate blatherbot equivalent of ELIZA.

        Look at HP. Strategy? Meg Hitman wouldn't know a strategy if it jumped out of a printer and yelled "Jobs!"

        Last time I looked her 'high level components of strategies' meant a mix of enterprise, cloud, and tablets no one wants - just like everyone else.

        Oh, and printers have been 'refocused around customer needs.' Which is nice. (What were they before? Focused on the needs of the trees in the parking lot?)

        1. Anonymous Coward
          Anonymous Coward

          Re: Corporate governance—crowned - printers

          Before, HP printers were focussed around the need to sell ink at 2000% markup, to cover the loss from selling printers at below cost.

          1. Don Jefe

            Re: Corporate governance—crowned - printers

            Using printers as loss leaders to drive the sale of high margin consumables was, when the practice became a standard tactic, a new thing. Prior to that printers cost obscene amounts of money and also had service and maintenance contracts attached to them that could only have been developed by deceased MBA's who were contracted out by Satan to increase incidents of workplace violence and suicides.

            Generally, consumables were included in the price of the service contract, but the contracts were structured so that making the contracts worthwhile was just unbelievably expensive. Ink/toner were quite nearly afterthoughts. What the printer manufacturers wanted was that $300 monthly fee they charged you every month to send a tech out to calibrate the color profile on the unit.

            Lots of commercial printers are still sold that way, but the contracts aren't nearly as insane as they used to be, but the costs are still quite high. As far as I know, 100% of the costs of consumer printers are covered by commercial printer sales. It's kind of like they get an extra business for free.

            1. Anonymous Coward
              Anonymous Coward

              Re: Corporate governance—crowned - printers

              It wasn't quite like that. Printing and copying were two different businesses, and HP wasn't in copying. What they did was to commercialise the office laser printer using Canon engines, and they did this very successfully. The early HP lasers were built very solidly, and the 3s and the proper 4s just kept on going till their cases turned brown from heat and sunlight. They were expensive to make but built to last.

              If I remember rightly it was Canon that brought out the first popular inkjets, and who charged a fortune for ink. However, bubblejets could be refilled effectively with a syringe and Parker Quink. In the early days everybody charged a fortune for ink because they could, but then started giving away printers to obtain vendor lock-in.

              Meanwhile printers were getting cheaper and nastier to get those all important sales, and more and more of the eventual profit was loaded onto ink prices. Hence the attempts to lock out third party ink vendors. What you had was a distorted market in which technology suffered because of bad commercial decisions. The few manufacturers who tried selling solid inkjet printers at a profit and then selling ink at reasonable prices, found they didn't sell.

              Technical progress means that the cheap and nasty throwaway printers are still more reliable than the old ones made on steel chassis held together with lots of screws, but then when you replace toner you throw away 80% of the printer.

              Resellers have been going through a process of trying to flog big multifunction machines to businesses because there is a profit margin on them, but this is the least satisfactory solution for real office workers who would rather have simple and reliable machines close by. Rather than commercial sales covering consumer printer costs, the different divisions are likely to be in intense competition.

  2. M7S
    Coat

    still, with all that power she'll have a certain amount of....

    .....Autonomy

    1. Anonymous Coward
      Anonymous Coward

      It is to be rebranded as.....

      .....Autocracy

  3. Canecutter

    Aah! What memories this brings back!

    This brings back memories of a young man who became President of a now-defunct technology company. Later he created the position of CEO, to which he appointed himself (not quite the same as the present situation, admittedly). Later still he became the Chairman of the board.

    In the months prior to having sold that company to its competitor, this young man had held the three positions concurrently, President, CEO and Chairman of the Board.

    Wonder whatever became of him? All I can remember is seeing his face in a GQ Magazine interview back in the day.

  4. Gordon 10 Silver badge
    FAIL

    Wtf

    Well that will solve the multitude of corporate governance problems HP has been exhibiting in the last 5 years.

    More evidence that the board are asleep at the wheel.

    1. Don Jefe

      Re: Wtf

      The Board at HP isn't asleep at the wheel, they're engaged in full on war with each other, and have been since the run up to the Compaq buy. Granted, it's understandable the Board hasn't been protecting the company, that's thinking intensive work, but guarding from assassins is more thinking intensive. Doubly so when you've escalated acceptable tactics to include covert surveillance, interpretive accounting, situational ethics and outright threat.

      HP cannot survive with the Board not only trying to destroy its own members, but when the Board is getting involved in company operations. The HP Board is actually embarrassing. Bunch of idiots.

  5. Anonymous Coward
    Anonymous Coward

    Cadburys (now under new management)

    I don't know where the US gets its corporate governance rules from but in recent decades the UK has been guided by the output of the Cadbury Commission whose report was issued back in 1992, the Commission having been put together as a result of a number of scandals (e.g. Polly Peck, BCCI, Maxwell) where poor corporate governance appeared to have been a major contributing factor.

    " the final report covered financial, auditing and corporate governance matters, and made the following three basic recommendations:

    * the CEO and Chairman of companies should be separated

    * boards should have at least three non-executive directors, two of whom should have no financial or personal ties to executives

    * each board should have an audit committee composed of non-executive directors

    These recommendations were initially highly controversial, although they did no more than reflect the contemporary "best practice", and urged that these practices be spread across listed companies. At the same time it was emphasised by Cadbury that there was no such thing as "one size fits all".[3] In 1994, the principles were appended to the Listing Rules of the London Stock Exchange, and it was stipulated that companies need not comply with the principles, but had to explain to the stock market why not if they did not."

    (Wikipedia:UK Corporate Governance Code - worth a look).

    Since then there have been other commissions which, on the whole, have attempted to reinforce the Cadbury Commission aims, with varying degrees of success (e.g. the Greenbury committee on executive "compensation" appears to have had very little effect).

  6. OzBob

    Game of Thrones - Palo Alto

    And will the ghost of Carly please stop rattling her chains and saying "I told you so".

    1. Mpeler
      Mushroom

      Re: Game of Thrones - Palo Alto

      I think the ones who are rattling are Bill and Dave, in their graves (maybe spinning off-balace a bit because they're so irritated).

      Hewlett-Packaging...white box PCs, printers, and impossibly-expensive ink.

      But, as someone noted above, with the evisceration of the labs, no wonder what nit-Whitman does, no labs = no future.

      On another note/rant, no point in having a services-based economy if there is nothing to justify the services and no one who can afford to pay for them....in the end, folks have to work, and, in general, manufacturing and manual labor jobs are needed for the folks that, for one reason or another, aren't suited or able to do the "soft skills" types of jobs....</rant>....

    2. Anonymous Coward
      Anonymous Coward

      Re: Game of Thrones - Palo Alto

      Would you be referring to Carly "I need three corporate jets because I'm worth it" Fiorina?

      1. Mpeler
        Unhappy

        Re: Game of Thrones - Palo Alto

        I thought she had seven - one for each day of the week...purchased during the annual fourth-quarter purges (er, budget clampdowns)....

        To the tune of Barry Manilow's Copacabana - Her Name Was Carly

        http://blog.jgc.org/2008/03/bouts-complete-song-parodies.html (it's a few tunes down)

        Expositor of "perception is reality" and fastener of "Invent" on all HP trademarks, as well as removing Hewlett and Packard and leaving just HP (though we all know who H and P were....) (and who CF isn't)...

        I don't believe Bill and Dave ever combined CEO, President, and Chairman in one person....I don't think the President spot even existed back then..... (boy, do I feel old....)...

        BTW, Bill and Dave both had business and engineering skills...back in the day one needed both to survive as a company....sad that the locusts and the IP whores of today don't have a clue about engineering (though they might be worse if they did....sigh)...

        1. Mpeler
          Pint

          Re: Game of Thrones - Palo Alto

          Not forgetting of course Scott McNealy's legendary comment about the HP-Compaq merger - hearing the sound of two garbage trucks colliding...

          Good ol' Scott - always had a noteworthy comment, usually aimed at HP...hmmm...what happened to Sun...(of course, after Scott had left)...Ellison's also outspoken, but Scott was also funny..

          Stanford University Networks...sad to see you go...

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