Many observers place the blame for HP's loss in competitive advantage and stellar reputation squarely on its board of directors because of major strategic errors committed over the last decade Consider the turbulence in HP's CEO office Carly Fiorina was fired due to loss of confidence after poor competitive performance post Compaq merger Mark Hurd improved the firm's performance, but then engaged in unethical behavior and was replaced by Leo Apotheker Apotheker led the company poorly and was replaced after only 11 months, following a huge decline in shareholder value (show a 10 year chart of HP's stock price relative to the S P 500) Meg Whitman has had trouble getting the firm to perform competitively and has flip flopped on the strategic issue of whether to separate the consumer based PC and printer businesses from the enterprise parts of the business HP's recent history demonstrates the difficult decisions that a board of directors must make when governing a public company How should a company deal with a situation in which internal stakeholders leak sensitive information to outsiders Should the board force a highly successful CEO to resign when ethical shortcomings are discovered but before an investigation proves or disproves illegal behavior Would the company, and the stockholders, have been better served by just reprimanding the CEO On the other hand, would a mere reprimand communicate to the employees and other stakeholders that performance trumps ethics What due diligence should a board of directors apply when approving a multibillion dollar acquisition or appointing a new CEO Having so much action in one boardroom makes it an interesting discussion topic for this chapter Who has been to blame for HP 's shareholder value destructionthe CEO, the board of directors , or both What recourse, if any, do shareholders have Assume that you were brought in as (a) a corporate governance consultant or (b) a business ethics consultant by HP's CEO at the time that Meg Whitman took over What recommendations would you have given her How would you go about implementing them Be specific Why is a company leader's private life relevant to the company The CEO of HP, Mark Hurd, resigned due to his involvement in a sex scandal with an adult movie actress, which severely damaged the company's image The market value dropped roughly $10 billion, largely due to Mr Hurd's forced resignation The primary issue here is that Mr Hurd used HP's resources to pay his mistress, and this is unethical, even though Hurd is a strong leader and turned HP's performance around Given the firm's strong performance under Hurd's leadership, was the decision by the board of directors to force Mr Hurd to resign right or wrong

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Many observers place the blame for HP's loss in competitive advantage and stellar reputation squarely on its board of directors because of major strategic errors

Many observers place the blame for HP's loss in competitive advantage and stellar reputation squarely on its board of directors because of major strategic errors committed over the last decade. Consider the turbulence in HP's CEO office. Carly Fiorina was fired due to loss of confidence after poor competitive performance post-Compaq merger. Mark Hurd improved the firm's performance, but then engaged in unethical behavior and was replaced by Leo Apotheker. Apotheker led the company poorly and was replaced after only 11 months, following a huge decline in shareholder value (show a 10-year chart of HP's stock price relative to the S&P 500). Meg Whitman has had trouble getting the firm to perform competitively and has flip-flopped on the strategic issue of whether to separate the consumer-based PC and printer businesses from the enterprise parts of the business.

HP's recent history demonstrates the difficult decisions that a board of directors must make when governing a public company:

How should a company deal with a situation in which internal stakeholders leak sensitive information to outsiders?
Should the board force a highly successful CEO to resign when ethical shortcomings are discovered but before an investigation proves or disproves illegal behavior?
Would the company, and the stockholders, have been better served by just reprimanding the CEO?
On the other hand, would a mere reprimand communicate to the employees and other stakeholders that performance trumps ethics?
What due diligence should a board of directors apply when approving a multibillion-dollar acquisition or appointing a new CEO?
Having so much action in one boardroom makes it an interesting discussion topic for this chapter.
Who has been to blame forHP's shareholder value destructionthe CEO, theboard of directors,or both?
What recourse, if any, do shareholders have?
Assume that you were brought in as (a) a corporate governance consultant or (b) a business ethics consultant by HP's CEO at the time that Meg Whitman took over.
1. What recommendations would you have given her?
2. How would you go about implementing them? Be specific.Why is a company leader's private life relevant to the company?The CEO of HP, Mark Hurd, resigned due to his involvement in a sex scandal with an adult movie actress, which severely damaged the company's image. The market value dropped roughly $10 billion, largely due to Mr. Hurd's forced resignation. The primary issue here is that Mr. Hurd used HP's resources to pay his mistress, and this is unethical, even though Hurd is a strong leader and turned HP's performance around. Given the firm's strong performance under Hurd's leadership, was the decision by the board of directors to force Mr. Hurd to resign right or wrong?