Top Preforming CEO fired for lying on his Expense Report

When you are in the snake pit you shouldn't find the biggest cobra you can and give it a kick. HP has woken the Oracle cobra up and its unblinking gaze is fastened on HP with fangs flickering at the ready.

HP's apparent ability to shoot itself in the foot over CEO and board matters is becoming legendary. Ex-CEO Carly Fiorina and ex-chairwoman Patricia Dunn, forced out over pre-texting, must be laughing fit to bust. HP's founders would be shuddering in their garage. HP risks becoming notorious and a textbook Harvard Business School case for making an exceptionally silly blunder concerning the employment of its CEO.

The company is in deep, deep doo-do. Anybody who tells it not to panic simply doesn't understand the depth of the hole it is in. It needs a tremendously skilled and well-qualified CEO right now, instantly, who can hit the ground sprinting, not running, to raise its game and the morale of its troops and channel partners. Servers, storage and networking are the battlegrounds. It should give David Donatelli, who looks after this trio of products for HP, the job at once

The Hewlett-Packard board is back to doing what it does best: shooting itself in the foot. By filing an embarrassing lawsuit against the company’s former chief executive, Mark V. Hurd, this week — a suit that unwittingly highlights the mistakes it made in the way it let Mr. Hurd go — the H.P. board can now lay claim, officially, to the title of the Most Inept Board in America. It’s going to take a yeoman effort to dethrone these guys..
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Anyway, when last we left The Most Inept Board in America, it had booted Mr. Hurd for supposedly fudging his expense reports to hide the fact that he was using a former soft-core porn actress turned reality-TV contestant as a greeter at big H.P. customer events. (At least that is what I infer; H.P.’s public statements about the Hurd firing — or was it a forced resignation? — are not exactly models of transparency.)

This happened on Aug. 6. Because the H.P. board didn’t have the nerve to fire Mr. Hurd for cause, it wound up handing him a monster severance package. Much of it came in the form of stock options granted to Mr. Hurd in previous years. But $12.2 million was cash — money clearly meant as a kind of genteel, legal bribe to prevent Mr. Hurd from joining a direct competitor.

Mr. Hurd got his $12.2 million 30 days after leaving H.P. On Sept. 6 — which is to say, the 31st day — Oracle announced that Mr. Hurd was joining Oracle as co-president, reporting to its founder and chief executive, Lawrence J. Ellison, well known in Silicon Valley as a corporate mischief-maker.

However, with Oracle's ambition to become a one-stop shop for enterprise level software and hardware, Hurd's appointment could actually fuel speculation that Oracle CEO Larry Ellison could be eyeing HP itself.

"Larry Ellison is borderline bat-**** crazy on a good day," says veteran Silicon Valley analyst Rob Enderle, a principal analyst at the Enderle Group, in a piece last week by Sam Gustin -- a senior writer at DailyFinance, an AOL Finance & Money site.

He further added that "Ellison believes he can do anything, and he wants to go after IBM, if he can figure a way out to get HP, then I believe he would like to do that. Because he would really like to bring IBM out, and he needs a company of the stature of HP to do it."

Further, Hurd will be granted 10 million stock options which will be priced when granted. It doesn't stop there, either. Hurd will be granted 5 million shares annually for the next five years if he sticks around.

Read more: http://www.businessinsider.com/mark-hurds-oracle-salary-2010-9#ixzz10HtCT9N7

SAN FRANCISCO (AP) -- Hewlett-Packard Co.'s board upset many investors when it forced out Mark Hurd as CEO nearly two months ago. Now, those directors appear to have baffled Wall Street with its selection of HP's new leader -- Leo Apotheker, who lost his job running German business software maker SAP earlier this year after he didn't live up to expectations.

Thursday's announcement caught almost everyone off guard, causing HP's shares to slip back into a funk that began in early August after the board ousted the well-regarded Hurd amid allegations of sexual harassment and deceptive expense reports.

Most analysts had expected HP to hire from within, or tap an outsider with a more impressive resume than Apotheker's.

"I thought it would be difficult for HP to hire an outsider and have its stock to go down, but this board seems to have found a way," Gleacher & Co. analyst Brian Marshall said.

Choosing Apotheker almost feels like a jilted partner lashing out after a departing ex. If you can't tame Hurd or get him back, why not go after his new employer with all guns blazing? The new CEO comes with a no-nonsense reputation that will keep Hurd's cost-cutting tradition going. But that's hardly the medicine HP needs right now; company coffers are bulging but morale is low. Passing over a plethora of highly qualified insiders and then not landing on a proven winner could be the final insult that drives another rash of top talent out of HP

The response, however, was lukewarm. While some industry experts praised the choice of the former chief of German software firm SAP, HP's stock continued to drop and others questioned the move.

"Leo is somewhat of an unknown entity. Obviously there are a lot of talented people in this valley and he wasn't on anybody's short list," said Gleacher & Co. securities analyst Brian Marshall.

In light of Apotheker's rocky tenure at SAP, Marshall added, "the selection is kind of a head-scratcher. He has a lot to prove."

Oracle CEO Larry Ellison, whose company is increasingly competing with HP, was characteristically blunt. "I'm speechless," Ellison reportedly told the Wall Street Journal. "HP had several good internal candidates, but instead they pick a guy who was recently fired because he did such a bad job of running SAP."

Apotheker resigned abruptly from SAP earlier this year after the company suffered a drop in sales and other problems. SAP, however, is a longtime rival of Oracle, and HP had earlier released a statement from a top SAP executive who praised Apotheker's hiring as a move that "sets the stage for an even deeper relationship between our two companies."

While much of the tech world was scratching its head over Hewlett-Packard's choice for its new chief executive, I was far more gleeful over the company's new chairman: former Oracle executive Ray Lane.

Lane's appointment is sure to rekindle the blood feud that erupted between Oracle and HP following the dumping of Mark Hurd in August. My worries that the two camps had reconciled were for naught. This latest move tells me that the simmering hatred between the former partners turned rivals is alive and well.

(And like manna from heaven, Oracle CEO Larry Ellison delivered late Friday, blasting HP in an e-mail to The Wall Street Journal for its hiring of former SAP executive Léo Apotheker, saying it had several good internal candidates but passed them over for "a guy who was recently fired because he did such a bad job of running SAP." HP: His words don't "deserve the dignity of a response.")

For a columnist, of course, this is great news.

Make no mistake. Lane's hiring is not business. It's personal.
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So, with the Oracle vs. HP blood feud back on, there's only one question: How can it get even better?

HP execs passed over in the CEO race jumping ship to Oracle?

HP hiring Phillips?

Oracle hiring Carly Fiorina, if the current polls are right? Nah, that's too much to hope for, even between these two.

Grab your popcorn, kids. The show is just getting started. And it only promises to get even more entertaining from here

Former General Electric CEO Jack Welch sharply criticized Hewlett-Packard’s board of directors on Tuesday at the World Business Forum in New York.

“The Hewlett-Packard board has committed sins over the last 10 years,” said Mr. Welch. “They have not done one of the primary jobs of a board, which is to prepare the next generation of leadership.”

Leadership development, Mr. Welch contended, “was very low on the priority of leadership at that company.”

The tech giant is on its third CEO in about 11 years. Mark Hurd quit in August over allegations of expense-report improprieties; the board ousted former chief Carly Fiorina in 2005 after a controversial tenure. Mr. Welch blamed the turnover on the board during a conversation with Alan Murray of the Wall Street Journal at the Forum, held at Radio City Music Hall in New York City.

Mr. Welch said a board’s job is to pick CEOs, help them shape strategy, make them feel good about themselves, and, if the CEO isn’t doing a good job, to “get them the hell out of there.”

“This crowd [at H-P] doesn’t seem to do any of that,” said Mr. Welch. “They end up blowing up the CEO’s and don’t have anyone else in mind to come in. Where the hell was the leadership development? Who are these board members?”

Mr. Murray asked if Mr. Welch knows any of the board members.

“I wouldn’t admit it if I did,” said Mr. Welch.

Leo Apotheker apparently isn't the people's choice for CEO at Hewlett-Packard Co.

The former SAP AG chief was backed by only one in five who responded to the most recent Business Pulse survey conducted by the Silicon Valley/San Jose Business Journal between Oct. 5 and Oct. 12.

Apotheker was named on Sept. 30, nearly two months after former CEO Mark Hurd resigned and after weeks of speculation about the possible selection of an insider candidate.

Almost three-quarters who responded to the unscientific online survey said HP hired the wrong person.

Reader Steve T. wrote, "What would prompt them to suddenly develop any wisdom. They've done just fine for years without it."

Frank E. reserved judgment, saying, "We will only know with time."

Sean T. apparently thought the one-sided vote was still too slanted in Apotheker's favor, asking, "How has Leo A. been able to vote 'Yes' so many times?"

SAN FRANCISCO — Hewlett-Packard announced a major boardroom shake-up on Thursday in the aftermath of the forced resignation of Mark V. Hurd as its chief executive

The changes are intended to diversify H.P.’s board and add new experience and perspectives, according to Raymond J. Lane, H.P.’s chairman. It comes just months after the hiring of Léo Apotheker as chief executive.

But the changes seemed only to refocus attention on the drama at H.P. since accusations of sexual harassment by a former contractor led to Mr. Hurd’s departure six months ago. A company investigation found no evidence of harassment, but instead uncovered irregularities in Mr. Hurd’s expense reports. He has denied any wrongdoing.

Boardroom drama at H.P, in Palo Alto, Calif., is nothing new. Five years ago, a spying scandal developed in which fellow board members and journalists were targeted in an effort to uncover who was leaking company information. A few years earlier, the board fought publically over the proposed acquisition of Compaq, the computer maker, which ultimately was approved.

The board has faced withering criticism for its handling of the Hurd matter, along with questions about whether he deserved to be pushed out. A shareholder lawsuit accuses the board of mismanagement for awarding Mr. Hurd a multimillion-dollar severance package. Investigations by the company and the Securities and Exchange Commission are continuing.

H.P., based in Palo Alto, Calif., is trying to get a “fresh start” after months of turbulence, said A. M. Sacconaghi Jr., an analyst with Sanford C. Bernstein & Company. With the new chief executive in place since November, a “changing of the guard” is only natural, he said.

H.P. said four members were leaving the board: Joel Z. Hyatt, John R. Joyce, Robert L. Ryan and Lucille S. Salhany.

The companys aid five new members will start Friday.

Just a year ago, Mark Hurd, H.P.’s chief executive, was forced to resign in the midst of allegations of sexual harassment and expense account irregularities, many details of which remain shrouded in secrecy. (The board concluded the sexual harassment claim was unfounded, but that Mr. Hurd’s lack of candor had cost him its confidence.) The vote to demand his resignation was unanimous, although the board was sharply divided, especially over how to handle his departure and seek a new C.E.O. But H.P. was so big, so dominant in most of its markets, and so profitable that Mr. Hurd was dispensable, according to people familiar with the board’s reasoning. “We don’t need you,” one board member bluntly told Mr. Hurd, or words to that effect.

So how has Hewlett-Packard fared under new leadership?

On Aug. 18, H.P. announced simultaneously that it was exploring “strategic alternatives” and might sell its dominant personal computer business, which accounts for roughly a third of the company’s revenue; that it was scrapping its new, much ballyhooed TouchPad tablet computer; and that it was acquiring a British software concern, Autonomy, for $10.3 billion, a steep 11 times revenue. The stock plunged 20 percent to $23.60 a share. When Mr. Hurd resigned, it was just under $46, so the one-year decline amounted to 49 percent. (The Standard & Poor’s 500-stock index gained about 3 percent over the same period.)

“I didn’t know there was such a thing as corporate suicide, but now we know that there is,” a former H.P. director, the venture capitalist Tom Perkins, told me this week. “It’s just astonishing.”

A year ago, in an e-mail to The Times after Mr. Hurd’s ouster, Oracle’s chief executive, Larry Ellison (and a tennis buddy of Mr. Hurd), wrote, “The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”

Most took this as hyperbole from the famously outspoken Mr. Ellison. Now, many aren’t so sure.

Let's say you were given a year to kill Hewlett-Packard. Here's how you do it:

Fire well-performing CEO Mark Hurd over expense-report irregularities and a juicy sexual-harassment claim that you admit has no merit. Fire four board members, as publicly as possible. Foment a mass exodus of key executives who actually know how to run the giant computer company.

Hire new a CEO from German competitor, SAP, which sells business software, not consumer products. Tell the new CEO, Leo Apotheker, that Mr. Hurd "left H-P in great shape."

Draw public criticism from a major corporate-governance advisory firm, alleging Mr. Apotheker filled board openings with cronies.

Pursue pricey mergers and stock buybacks. Allow expenses to run out of control. Try to blow through billions of dollars in cash reserves before the next global economic slowdown.

Provoke partners Microsoft and Oracle by threatening to put H-P's own operating software on PCs. Then decide not to. Remember that promising webOS software H-P bought in a $1.2 billion acquisition of Palm last year? Sideline it.

Bristle when Oracle's Larry Ellison tells the New York Times: "The H-P board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs." And file lawsuits when Mr. Ellison hires Mr. Hurd.

Boast that you're going to attack Apple's iPad with your $499 TouchPad. Then dump your TouchPad in a $99 fire sale and announce you're just not going to offer it anymore.

Telegraph to the world that you are just too dumb to make smartphones.

Raise your financial estimates, twice. Then miss them, twice.

Make sure Mr. Apotheker's memo gets leaked to the media -- the one that says "watch every penny and minimize all hiring."

Announce plans to buy British business software company Autonomy for $10 billion, because it makes enterprise software just like SAP, which is what Mr. Apotheker knows best.

Announce plans to maybe sell the PC business. Or maybe spin off PCs as a stand-alone company. Uncertainty will damage the price.

Never mind the years of effort H-P spent -- including a controversial merger with Compaq -- becoming the world's largest PC maker. Never mind that the PC business feeds H-P's more profitable businesses. Dumping it is a beautiful absurdity that one analyst, Jayson Noland of Robert W. Baird & Co., described as "like McDonald's getting out of the hamburger business."

Watch Moody's threaten to downgrade H-P's credit.

Act surprised as H-P's stock plunges more than 40%.

Go to Wall Street and tell long, confusing stories about how you are transforming H-P from a low-margin to a high-margin business.

From former CEO Carly Fiorina's spectacular flame-out, and former chairwoman Patricia Dunn's illegal spying scandal, to Mr. Hurd's alleged sex scandal that apparently didn't involve any sex at all, this sort of dysfunction has become "the H-P Way."

It has been a year since H-P fired Mr. Hurd. Jack Kevorkian couldn't have devised a better plan for euthanizing a company. But like the good doctor used to say: "Dying is not a crime

Some companies become so badly damaged because of changes in the competitive markets or due to poor management decisions that their employees lose hope. This may be due to the fact that they believe the corporations that they work for have little future, or that they will be laid off as their employers try to save these corporations.

This loss of hope is exacerbated by the state of the economy. A person who is fired now likely will find it extremely hard to find new work. Nearly 6 million Americans have been out of a job for more than half a year, which means that work is scarce either because companies have never recovered from the recession or because firms are concerned that a new recession has started to choke the economy.

It is impossible to know whether the employees at a very badly run company have completely lost hope in their situations. However, this is highly likely in certain corporations. Layoffs have already started at many of these companies, sales have fallen, or Wall St. has passed a verdict they have faltered badly or failed.

24/7 Wall St. has compiled a list of companies that are in deep trouble. This is based on share prices, layoffs, analysts' reports about their futures of these firms and the extent to which they have missed Wall St. predictions about earnings-per-share or are likely to in future.

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4) Hewlett-Packard (NASDAQ: HPQ - News) announced earnings on August 18, and its shares promptly dropped to a 5-year low. HP also revised earnings forecasts down. Management said it may spin off the firm's PC division, the largest in the world. So far, there are no takers. HP also discontinued its Palm operating system, which it bought only a year ago, and its tablet PC product. Investors believe, almost universally, that CEO Léo Apotheker does not have the strengths of his predecessor Mark V. Hurd, who was pushed out for ethical lapses. Wall St. seems certain that HP will lay off more people in addition to the sharp cuts it made in 2009 and 2010. It is generally accepted by analysts who cover the company that it has begun to lose the battles against Dell
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Hewlett-Packard Co's board convened on Wednesday to consider ousting Chief Executive Officer Leo Apotheker after less than a year on the job and replacing him temporarily with former eBay CEO Meg Whitman, a source familiar with the matter said.

The board of directors -- facing shareholder lawsuits and intensifying criticism from investors -- is thrashing out a host of issues, including whether to name Whitman as the interim CEO, the source told Reuters,

HP is trying to contain a crisis of credibility on multiple fronts, starting with its leadership. No decisions have yet been made on the leadership issue, the source said on condition of anonymity because of the sensitivity of the issue.

If Apotheker is let go, he would be the third CEO in a row to be ousted by the board.