Hewlett-Packard

(HP)
Gabriel Devoto, Alicia Navarre, Chris Nguyen
and Jordan Rai

About HP
Established January1, 1939
Revenue in 2014: $111 billion
Industry: Computer hardware/software, IT services &

consulting
Founders: William Hewlett, Dave Packard
Number of employees: 302,000
Current CEO: Meg Whitman
Headquaters: Palo Alto,California
Founded in a one car garage, but now is regarded as the
symbolic figure of Silicon Valley
Products include PCs, Printers, Cameras, Cloud SaaS services

HP Performance
Lost $12.6B in 2012 (over 10% of sales)
10+ years of toxic corporate governance
culture
Changed CEOs four times from 20022012
Multiple scandals during that time
The entire company lost trust in their
leadership
They lacked a clear strategic direction
for many years

Drama and Distrust

CEO, Carly Fiorina- Forced out by 2005
Push for Compaq merger
Split the board
secrets leaked to the press

Chairwoman, Patricia Dunn- Forced out

2006
Hired PIs to root leaks from the board
Investigated by the state of CA and U.S.
Congress

Drama and Distrust

CEO, Mark Hurd- Fired in 2010

Sex scandal
Used HP to fund his affair
CEO, Leo Apotheker- Fired with 11
months
Appointed before back-grounding was
competed

Left with $13.2M severance package

Stock dropped 40% under his oversight

Other Issues at HP
Unclear Strategic path to focus on

Inability to adapt effectively

Stock price drop
Toxic drama trickled down
Employees sharing sensitive info to the press
Very little information sharing within the
company

Constant Investigations by outside Bureaus

Vicious Cycle?

How it Relates
Corporate Governance
Relationship among shareholders, management (CEO)and the
board of directors in determining the direction and performance
of a company.
Lack of leadership was poisonous to HP company

Internal Governance Control:

Board of Directors
too focused on drama to focus on fiduciary duties or strategic
direction

Shareholder Activism
too low to make a difference
Reward and Compensation Agreements
not strong enough to hold CEOs focus

How it Relates
External Governance Control:
Regulatory Bodies
Congressional investigation
Media and Public Activists
Used as a weapon by the board
Market for Corporate control
Shareholders dropping shares when HP
announced PC spin off (acting without planning)

Looking Forward
Drama Settling
CEO, Meg Whitman- Current CEO,
Chairwoman of the Board, and President of
HP
Former CEO of eBay
Split HP into 2 companies
HP Inc.- Business hardware/ software/ SaaS
division

HP Enterprise- PC/ Printer division

Cutting 30k employees to get on track

Questions