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The New HP Way - Updated
Tuesday, September 12 2006 @ 11:45 AM EDT

HP has decided to keep Patricia Dunn on the board. However, she has resigned as chairwoman, as of January of 2007, to be replaced by the CEO Mark Hurd. That will require a change to the Bylaws [PDF], actually, which currently require the chairman be not an executive (see page 14). The Board of Directors can change bylaws, of course, but some are expressing surprise at not choosing an independent chairman in the current regulatory environment. In January, she steps down as chairwoman, but remains as a director after that, so the bottom line is that HP is keeping her on the board as a director:
In a statement, Hurd said, "I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place in HP."

Uh huh. If they are keeping her on the board, how have they ensured it won't happen again? What is the message they are really sending? A spokesman for HP is quoted in Forbes as saying that she "stepped down voluntarily to minimize the distraction to the company." Um. What? She told us Friday she'd only step down if the board asked her to. Is that voluntarily? Pretexting is a form of lying, remember. Let's not get in that lying habit, shall we? Dunn, for her part, expressed regret that people who are not her used "inappropriate techniques". Personally I'd have used the word illegal:

"Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques," said Dunn in a statement on Tuesday. "These went beyond what we understood them to be, and I apologise that they were employed."

So, now we know the new HP way.

A lot of headlines are playing the story that she got canned. But David Berlind's headline is more accurate: "Dunn is done (as HP's chairwoman) but stays on Board". He is suggesting there needs to be a law protecting folks from corporate pretexting. When corporations display squishy ethics, you probably yearn for stronger laws. But there were laws already on the books, and the pretexting happened anyway. Those laws will continue to play out. But will anyone feel comfortable calling an HP director now? Ever?

So who is really out? George A. (Jay) Keyworth. He resigned today, with Hurd praising him and saying that his discussions with the media were done with HP's interests in mind. His statement:

"I acknowledge that I was a source for a CNET article that appeared in January 2006," Keyworth said. "I was frequently asked by HP corporate communications officials to speak with reporters--both on the record and on background--in an effort to provide the perspective of a longstanding board member with continuity over much of the company's history." Keyworth said that past statements were "praised by senior company officials as helpful to the company." "The comments I made to the CNET reporter were, I believed, in the best interest of the company and also did not involve the disclosure of confidential or damaging information." In his statement, Keyworth also lashed out at the investigation tactics used in the leak probe. "The invasion of my privacy and that of others was ill-conceived and inconsistent with HP's values," he said.

Thomas Perkins made a flowery speech also, and Hurd praised him too. Read it for yourself. It's clear they all think HP will now move ahead. But the bottom line is Perkins and Keyworth are out, and Dunn is still there. That's how it looks to me, anyway. The message I take is that HP cares about leaking more than pretexting. And if all is forgiven, what will happen to the investigations now, I wonder? FT.com got an HP representative to explain keeping Ms. Dunn on the board:

An HP spokesman defended a decision that Ms Dunn would stay on as a director. "She has brought a lot of valuable insights into the company. She is still beneficial to HP," he said.

He added that she was remaining chairman till January "so that she can tie up some loose ends with the investigation", but she had voluntarily decided to step down in order not to be "a distraction". Carly Fiorina had combined the roles of chairman and chief executive. They were split when Mr Hurd took control.

Ah. Those loose ends with the investigation. That may be the explanation right there.

Update: Wait a second. Ina Fried's article says that HP's Hurd praised Keyworth:

In the statement, HP said that Keyworth often had contacts with the press to explain HP's interests at the company's request, but said "The board does not believe that Dr. Keyworth's contact with CNET in January 2006 was vetted through appropriate channels, but also recognizes that his discussion with the CNET reporter was undertaken in an attempt to further HP's interests."

And Keyworth says he never spilled any secrets. And more significantly, he says he was "a source" for the CNET article, not "the" source. Hurd praised his contributions to HP and hopes he'll continue to advise him:

"Jay is an important member of the HP family. He has served admirably for more than two decades and has provided great expertise, especially on matters relating to technology policy. We wish him well. I appreciate his long and distinguished service to HP."

Hurd said he personally valued Keyworth's experienced counsel and hoped Keyworth would continue providing it.

Huh? So, he can be trusted with information to equip him to give meaningful advice now? As Reuters bluntly puts it, "The company's statement on Tuesday suggests it orchestrated at least some leaks." And apparently Keyworth was often their man to do it. Just maybe not that one time. The story keeps changing.

So, riddle me this, Batman. Does this mean he actually was not the primary leaker after all? Who is the bad guy here? Either there never was one (and HP's press release stresses how harmful leaking is, so that isn't the likely explanation), or they didn't catch him or her yet.

There is one other, human side to the story. Ms. Dunn has been battling cancer for some time. It is not beyond the realm of the possible that a human and humane decision was reached that included that consideration. It is never wrong to be kind.

The Inquirer has an article on someone else leaving HP, announced today in a memo from Hurd to the troops. Gilles Bouchard, who led HP's Global Operations for the past two years, has decided to leave as of October 31. He was with HP since 1989. I'm not at all connecting any dots, by the way, I hasten to say. Just making a complete record of an HP at this point in time. They wish him the best in his future endeavors.

And now come the investigations. Nothing that has happened today changes that, according to a Reuters report:

A spokesman for California Attorney General Bill Lockyer said the board changes had no impact on its inquiry. While the issue has not deterred investors from HP, it has raised questions over the board's integrity and unity, analysts said.

"They've taken some important steps today on the road to recovery, but they haven't cured the problem," said James Post, a Boston University management professor who specializes in corporate governance issues. "They have to weather a whole series of investigations. Their credibility is going to be at stake with each and every one of those."

Here's the complete HP press release:

Patricia Dunn to Remain HP Chairman Through January 2007 Board Meeting;
Board Appoints Mark Hurd As Successor

Palo Alto, Calif., Sept 12, 2006

HP today announced that Patricia Dunn will remain as chairman through the company’s Jan. 18, 2007, board meeting. Mark Hurd, the company’s chief executive officer and president, will succeed her and retain his existing positions. Dunn will continue to serve as a director.

Richard Hackborn, who has served on the board since 1992, has been designated lead independent director, effective in January. In addition to having been chairman of the company in 2000, he spent 33 years as an HP employee, concluding his career in 1993 as head of the PC and personal information product business.

Dunn said, “The recent events that have taken place follow an important investigation that was required after the board sought to resolve the persistent disclosure of confidential information from within its ranks. These leaks had the potential to affect not only the stock price of HP but also that of other publicly traded companies. Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques. These went beyond what we understood them to be, and I apologize that they were employed.

“I am very proud of the progress HP has made over the past 18 months. During the remainder of my tenure as chairman, I look forward to completing the transition that is underway, including expanding the board, continuing to improve our corporate governance standards and bringing the current issues to resolution.”

Hurd said, “I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place in HP.

“HP holds itself to the highest standards of business conduct and we are accountable to these standards for everything that we do. The company will work to put these matters behind us so that we fully resume our focus on the business and continue to earn the trust and support of our customers, employees and stockholders.”

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended July 31, 2006, HP revenue totaled $90.0 billion. More information about HP (NYSE, Nasdaq: HPQ) is available at http://www.hp.com.


  


The New HP Way - Updated | 143 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Here
Authored by: feldegast on Tuesday, September 12 2006 @ 12:15 PM EDT
If Needed

---
IANAL
My posts are ©2004-2006 and released under the Creative Commons License
Attribution-Noncommercial 2.0
P.J. has permission for commercial use.

[ Reply to This | # ]

Off topic thread
Authored by: MathFox on Tuesday, September 12 2006 @ 12:22 PM EDT
Other Legal or Open Source issues.
If you have a link, post in HTML mode and follow the receipe.

---
If an axiomatic system can be proven to be consistent and complete from within
itself, then it is inconsistent.

[ Reply to This | # ]

Isn't there a name for this?
Authored by: Anonymous on Tuesday, September 12 2006 @ 12:24 PM EDT
Isn't there a name for issuing press releases that proclain that "Dunn
Stepped Down", implying that the is gone; while buried in the press release
they mention that she will still remain on the board?

[ Reply to This | # ]

  • Pretexting? - Authored by: Anonymous on Tuesday, September 12 2006 @ 02:52 PM EDT
Human nature.
Authored by: Anonymous on Tuesday, September 12 2006 @ 12:25 PM EDT
"Personally I'd have used the word illegal:"

Some people seem incapable of admitting to being in error, even when the facts
of a situation are obvious to all. They seem to think that they can do no wrong.
It happens all the time.

[ Reply to This | # ]

Meet the New HP Way, Same as the Old HP Way
Authored by: kurtwall on Tuesday, September 12 2006 @ 12:29 PM EDT

Nothing has changed except the arrangement of the chairs in the boardroom. The board has closed ranks around Dunn and done the absolute minimum they think they had to do to meet the letter of investors' demands: Dunn is no longer Chairman of the Board. Evidently, in the rarified atmosphere of the HP boardroom, there is insufficient oxygen for the remaining directors to appreciate that the rest of us aren't fooled. Cleaning house doesn't mean rearranging piles of clutter, it means getting rid of the clutter altogether.

[ Reply to This | # ]

grey lady down but not out
Authored by: tz on Tuesday, September 12 2006 @ 12:50 PM EDT
HP may make color printers, but seems to have trouble with things that are black
and white.

The instigator and recipient of the fruit of the poison tree (I think that is
the term for the exclusionary rule) gets to play musical chairs, but the target
is out.

The target didn't do anything illegal, but perhaps unethical.

The investigator has caused a lot of legal attention and perhaps lawsuits and
other things which will damage the stock value and will still be there.

One of the requirements of justice (the virtue) is that punishment be carried
out and be proportionate to the offense. Even if people want to show mercy, out
of respect of the harm that is done by the offense, punishment must occur.

At least if you are in an organization that takes ethics seriously. HP's board
apparently doesn't.

[ Reply to This | # ]

The New HP way - "Giles Bouchard to leave HP"
Authored by: Brian S. on Tuesday, September 12 2006 @ 12:57 PM EDT

To: All HP Employees
From: Mark Hurd
Re: Gilles Bouchard

I would like to announce that Gilles Bouchard has decided to leave Hewlett-Packard, effective October 31........ The Inquirer


Brian S.

[ Reply to This | # ]

The New HP Way
Authored by: Yossarian on Tuesday, September 12 2006 @ 01:00 PM EDT
The "new HP Way" started long ago when HP demanded "pee in a
bottle" as a condition for employment. HP did not trust its
employees and it could not measure performance by what
employees did. So checking what the employees smoked
became "the HP Way".

Now this mistrust attitude was expanded to directors.
What a surprise...

[ Reply to This | # ]

Shell Games
Authored by: Jeff on Tuesday, September 12 2006 @ 01:00 PM EDT
This whole announcement is one big shell game, intended to give the appearance
of action and consequence.

It means as much to me as Microsoft's talk of "innovation".

[ Reply to This | # ]

Gotta love that HP Integrity
Authored by: Carla Schroder on Tuesday, September 12 2006 @ 01:01 PM EDT
"Oops, we got busted, so we promise to not do it again."
Yep, that's integrity. Oh wait, it's a line of computers
named Integrity- not the people. Never mind.

[ Reply to This | # ]

Oh, the irony...
Authored by: blang on Tuesday, September 12 2006 @ 01:06 PM EDT
From Patricia Dunn's profile in Forbes

... Dunn has returned to Barclays in a nonexecutive role and is now focused on corporate governance issues and client relations.

[ Reply to This | # ]

The ends do not justify the means
Authored by: Anonymous on Tuesday, September 12 2006 @ 01:08 PM EDT
It's sad that the executives of Corporate America don't understand this simple
fact.

[ Reply to This | # ]

Dropping Investigations
Authored by: Anonymous on Tuesday, September 12 2006 @ 01:11 PM EDT

"And if all is forgiven, what will happen to the investigations now, I wonder?"

HP will drop all internal investigations but they have no control over whether the California and Federal investigations continue.

----------------

[ Reply to This | # ]

The New HP Way
Authored by: Anonymous on Tuesday, September 12 2006 @ 02:44 PM EDT
They're still not getting any of my business, be it personally or when I spec
out new servers for work. Don't have a login, otherwise I'd be posting logged
in.

[ Reply to This | # ]

This is a molehill, not a mountain
Authored by: hopethishelps on Tuesday, September 12 2006 @ 02:45 PM EDT

I think way too much is being made of this whole affair.

Keyworth violated his obligation to keep confidential information confidential. Because of his behavior, there was an investigation. Dunn asked HP's lawyer to run the investigation. Natch, when you ask a lawyer to do something, you expect it will be done in accordance with applicable laws.

The lawyer brought in an investigation company. Then things get a bit murky. The investigation company, or maybe some other outfit they subcontracted to, did things that some people think are unethical, and some people think are illegal. Or ought to be illegal. Anyway, the privacy of the members of the Board of Directors was violated.

But, seriously, how big a deal is that? These are directors of a public company. The expectation of privacy of such a person cannot be the same as the expectation of peons like us. They are in the public eye - and they are richly compensated for it - they are in the fortunate position of being able to set their own salaries. Personally, I find it difficult to feel any sympathy for anyone as rich as a member of the HP BoD. Or of the Board of Directors of any big, public company.

Depending whose account you read, the privacy of some journalists was violated too. Well, cry me a river. Journalists make a living by exposing people's private lives. If anybody does it to them, I'm cheering them on.

The only really bad guy in all this (despite all the spin to the contrary) is Keyworth. And he's gone. Good riddance. The corporate counsel probably didn't do a good job. We'll see what happens there. Dunn has had a lot of mud thrown at her (some of it, I would guess, by her enemies, and some of it by people who ought to know better), but it's still unclear whether she did anything unethical, let alone illegal. The most one can say is that she might have.

[ Reply to This | # ]

The New HP Way
Authored by: Anonymous on Tuesday, September 12 2006 @ 02:47 PM EDT
--"Carly Fiorina had combined the roles of chairman and chief
executive."

Because clearly, especially as an HP CEO, Carly Fiorina is the person you want
to emulate...

Yeesh. I've still got a couple of their old RPN calculators (from before they
starting putting metal plates in them just to make them feel heftier) and their
printers used to be good, but any chance there was of my picking up a newer
product, like a palmtop or something, is gone now.

Ah, well. Guess this new direction will help my Dell stocks.

[ Reply to This | # ]

The New HP Way
Authored by: philc on Tuesday, September 12 2006 @ 02:57 PM EDT
There seems to be some confusion over how the board works.

The board of directors is elected by the owners of the corporation (the
shareholders) to represent their interests in the operation of the company. The
owners are the only people that can remove a director. Directors are elected at
the annual shareholders meeting (or a special shareholder meeting). A director
may decide to resign but they can't be removed.

The board of directors elects one of its members to be the chairman. The board
is the group that can change the chairman.

The primary job of the directors is to hire the president. The president serves
at the pleasure of the board and may be fired by the board. Beyond that they
oversee the company to the benefit of the people that elected them, the owners.

In the matter at HP, the owners representitives, the directors, are acting
badly. The continued service of the directors is a matter for the shareholders
to address at the next shareholders meeting.

The president and employees of HP are not caught up in this. It is completely
beyond their control and does not reflect on them at all.

[ Reply to This | # ]

Elections
Authored by: MplsBrian on Tuesday, September 12 2006 @ 03:01 PM EDT
When do HP shareholders next get to vote for the Directors? It remains to be
seen whether the owners of the company agree with this kind of sanction.

[ Reply to This | # ]

  • Elections - Authored by: Anonymous on Tuesday, September 12 2006 @ 03:16 PM EDT
Lying is lying
Authored by: jbb on Tuesday, September 12 2006 @ 03:15 PM EDT
PJ said:
The message I take is that HP cares about leaking more than pretexting.
I think comparing leaking to pretexting is slightly unfair. I thought the original problem wasn't the leak per se but (like so many other things in life and soap operas) the lying about the leak.

I don't want to defend an illegal investigation of the board members. It is now perfectly clear that these actions were inappropriate and hurt H-P. But I do think that Dunn was faced with an untenable situation of knowing that at least one board member was out and out lying about persistently leaking information obtained at multiple board meetings.

IMO, it is the lying leaker who is the true villain here. Perhaps even an Iago to Dunn's Othello.

I think that a board member leaking information like this and lying about it is entirely different from a whistle blower. If the leaker disagreed with the direction things were going or wanted more personal power there were much more honorable ways of working towards those ends. I think people need to have a certain level of trust in order to work together. The lying leaker was directly attacking Dunn's power and authority.

It is clear that the illegal investigation was wrong, but I can't think of a response that would have been "right". Maybe someone else can. Even though it totally backfired, I do give Dunn some credit for trying to solve the problem without making it public.

---
Anyone who has the power to make you believe absurdities has the power to make you commit injustices.

[ Reply to This | # ]

Who pretexted?
Authored by: Anonymous on Tuesday, September 12 2006 @ 03:30 PM EDT
All the news articles name HP personnel, but not a single one has named any
person alleged to have done pretexting. The closest I've seen is an article that
says "a House committee said it is seeking information from H-P about the
matter, including the identity of private investigators that H-P has said it
used in the investigation." Don't we want to know at least what
instructions were given to, or what HP requested of, those who did the
pretexting? Did Patricia Dunn say "Get me those names and I don't care how
you do it"? If not, whose idea was it to break the law?

[ Reply to This | # ]

  • Who pretexted? - Authored by: Anonymous on Tuesday, September 12 2006 @ 04:33 PM EDT
    • Why was Nixon Impeached? - Authored by: Anonymous on Tuesday, September 12 2006 @ 10:35 PM EDT
      • Wrong - Authored by: Anonymous on Wednesday, September 13 2006 @ 03:51 PM EDT
The New HP Way
Authored by: Anonymous on Tuesday, September 12 2006 @ 03:39 PM EDT
Now if they could just get some of their "high quality of standards"
ethics into their ink department... Half full ink carts that expire quickly so
that their customers have to purchase more and more of their over-priced ink is
no more ethical than their investigative techniques.

My old HP printer got around 500 prints out of a #26 cart. Today, I'm lucky if
I can get 100. The carts used to cost $15 but are $36 now. So I pay twice as
much for 1/5th the ink and that is somehow ethical and meets their high
standards? I don't think so.

[ Reply to This | # ]

  • The New HP Way - Authored by: Anonymous on Wednesday, September 13 2006 @ 12:50 AM EDT
HP's Values
Authored by: overshoot on Tuesday, September 12 2006 @ 03:53 PM EDT
"The invasion of my privacy and that of others was ill-conceived and inconsistent with HP's values," he said.

Or at least with the values that HP once had. Perhaps Mr. Keyworth is simply out of step with the new realities.

I know a fair number of HP employees, many of whom remember working with Hewlett and Packard (to give an idea of how far back they go.) I've worked with them, socialized with them, and have a pretty good idea what they think. One gauge of HP's values is the number of them who've taken early retirement from jobs they used to love.

[ Reply to This | # ]

How I would have done the investigation
Authored by: Anonymous on Tuesday, September 12 2006 @ 04:03 PM EDT
It's really simple. Just give all the directors some piece of information. Like
Gross sales or some other information that you suspect might be leaked, and have
a couple of numbers transposed for each one.

Then watch CNET and presto. Pretty soon you will find out who is leaking.

You're welcome.

Skinrash

[ Reply to This | # ]

The New HP Way
Authored by: Anonymous on Tuesday, September 12 2006 @ 04:32 PM EDT
Actually, the real reason Dunn resigned is because she found out from the
private investigators that she was the leaker.

Dunn said in an interview that after takes up her new post she is going to sue
herself.

[ Reply to This | # ]

We don't really know what happened - Yet
Authored by: rsteinmetz70112 on Tuesday, September 12 2006 @ 04:50 PM EDT
Likely Perkins and Keyworth have agreed not to sue. That would have been the
best way to find out what happened.

However the governmental and journalistic investigations will continue and may
yet shed light on this whole thing. It is however possible that given the truce
between the parties those investigations will quietly fade away. The best
possibility is, I think, for journalists to keep digging. That will be fueled by
the investigation of one of their own.

I don't think the full story is out yet. I hope it does come out.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

The New HP Way - If you don't like it, get out.
Authored by: justjeff on Tuesday, September 12 2006 @ 07:54 PM EDT
This seems to be all too common these days. Somebody (or somebody in his
corporate camouflage) goes over the line... gets caught... pleads ignorance...
apologizes profusely... promise never to do it again... and carries on as
though nothing happened. Meanwhile, "the good guys" resign in
protest. Like that matters. I realize why they do it - they just don't want to
play anymore. I've felt that way more than a few times. But they are replaced
by a new kid on the block who will play along.

Meanwhile, "the line" has been moved. Every time this happens, it
is more and more outrageous behavior. Every time, the line moves another inch.
Every time, more outrageous behavior becomes commonplace.

I used to have a job where I saw a little bit of this every once in a while. I
tried to make a stink about it, but rarely had any success. Eventually the
various bosses decided that they'd had enough of me. Perhaps I should have left
in protest long ago and retained a slightly lower blood pressure...

[ Reply to This | # ]

Taking Appropriate Action
Authored by: DannyB on Wednesday, September 13 2006 @ 09:30 AM EDT
In a statement, Hurd said, "I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place in HP."
By "taking action", he means that he issued a statement.

This is how corporate America works. If something is broken, you need to issue a statement, or start a marketing campaign to correct it.

---
The price of freedom is eternal litigation.

[ Reply to This | # ]

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