Sucheta Dalal :Fiorina Pursued Leaks at H.P. Too
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Fiorina Pursued Leaks at H.P., Too  

October 5, 2006

The former Hewlett-Packard chief executive Carleton S. Fiorina, once the most prominent female executive in the United States, ordered the first of a series of leak investigations into contacts by board members with journalists in January 2005, she says in a long-anticipated memoir.


Fiorina Pursued Leaks at H.P., Too



Published: October 5, 2006


Ms. Fiorina was hired as chief executive in 1999 and led the company through a merger battle that family members of the company’s founders and some directors bitterly resisted. She was fired in February 2005 when the resulting company failed to meet business goals.


Her book, “Tough Choices” (Portfolio Hardcover), which is embargoed for release on Tuesday and has been made available to reviewers only if they sign a nondisclosure agreement, was purchased at a bookstore yesterday by a reporter for The New York Times.


In it, Ms. Fiorina reveals a good deal of resentment over her firing. She writes that after the board’s final meeting on her fate, all but two members refused to confront her. And she indicates that she had little respect for some Hewlett-Packard directors, whom she described as amateurish and immature.


The timing of the book is coincidental to last month’s disclosures of two leak investigations that took place after Ms. Fiorina’s departure. She has not commented on the boardroom spying scandal that has rocked the company and resulted in felony charges and firings.


It was known that the company was concerned about boardroom leaks even before Ms. Fiorina’s departure, but it was not known that she had authorized the initial investigation.


That investigation, Ms. Fiorina writes, was conducted directly by the company’s outside legal counsel, Larry W. Sonsini, after an article in The Wall Street Journal detailed an impending corporate reorganization.


The book makes no mention of questionable investigative methods like pretexting, which involves pretending to be someone else to obtain information from telephone company employees. Nor does the book say whether Ms. Fiorina directed Mr. Sonsini to spy on any individual reporter or director.


She writes that Mr. Sonsini personally interviewed every board member. He reported back to Ms. Fiorina that Thomas J. Perkins, the prominent Silicon Valley venture capitalist who had previously served on the Hewlett-Packard board and would soon rejoin it, had been a source for the article.


Mr. Sonsini told her that Mr. Perkins had been “honest enough to admit that he’d spoken to the press.”


Ms. Fiorina added, however, that she was deeply suspicious of another board member, George A. Keyworth II, also known as Jay, because of his behavior at a board meeting and during a related board conference call.


More than a year later, Mr. Keyworth acknowledged that he was a source for a reporter’s article. That acknowledgment came after the company conducted two secret investigations into the activities of its board members, using private investigators who in turn made targets of the telephone records of nine reporters, including this reporter.


Mr. Keyworth’s lawyer, Reginald J. Brown, denied last night that Mr. Keyworth was the source of the news article that provoked the first leak investigation.


The former board chairwoman, Patricia C. Dunn, was not involved in the decision to begin the initial investigation, Ms. Fiorina wrote, because she was on vacation in Bali and was not aware of the events that led to the first leak.


The California attorney general brought a felony complaint against Ms. Dunn yesterday for her involvement in the two subsequent leak investigations.


The account of the initial leak investigation, which appears in the final chapter of the book, notes that in late January, Mr. Sonsini reported the results of his inquiry during a board telephone conference call.


“Although I appreciated Tom’s candor,” Ms. Fiorina wrote in referring to Mr. Perkins, “I was deeply disturbed when no one else spoke up. As the call progressed, all but one board member asked questions or made comments.”


That board member was Mr. Keyworth.


Mr. Sonsini’s report also described the board as “dysfunctional.”


“Some board members’ behavior was amateurish and immature,” she wrote. “Some didn’t do their homework. Some had fixed opinions on certain topics and no opinion at all on others. Some members were bored and distracted during important agenda items like leadership development or corporate social responsibility.”


Ms. Fiorina asserts that when the Hewlett-Packard board began to turn against her leadership, she was blindsided.


“I was mystified by the board’s recent behavior,” she wrote. “I was suspicious of Jay’s heated denial when the leak first occurred and then his complete silence on our last call.”


The incident that would help lead to her firing was a visit paid to her by three Hewlett-Packard directors — Richard A. Hackborn, Ms. Dunn and Mr. Keyworth — two days before a board meeting in January 2005.


The three told her that they spoke on behalf of the entire board. They directed her to execute a far-reaching reorganization to convince Wall Street analysts that the company was moving to respond to inadequate financial growth and a lagging stock price.


Ms. Fiorina said that at the meeting she believed that she was having a discussion with the board members and that they could not unilaterally order her to take the actions they were demanding.


She wrote that she resisted their orders and argued that the company should continue with an existing 2005 strategic plan.


She described an especially intense and angry confrontation with Mr. Keyworth, who pressed her on immediately renominating Mr. Perkins to the board.


Earlier in the book, Ms. Fiorina writes about other conflicts with Mr. Keyworth. She describes how he proposed at times that Hewlett-Packard acquire a range of companies including A.M.D., Apple, TiVo and Veritas, and his impatience with her when she disagreed with his logic.


She uses a portion of the book to defend her strategy and management in her five and a half years at Hewlett-Packard, making clear that she felt its subsequent resurgence had stemmed from changes on her watch.


She also notes that in 2005, after her departure, the American economy recovered and the company went on to deliver over 20 percent growth in earnings per share.


She concludes her memoir by writing that 2005 was the payoff year she “had been expecting.”


“H.P. performed magnificently and delivered the plan,” she said, and “the company’s 2005 results finally demonstrated that H.P. had indeed been transformed.”


She added a personal note: “Life isn’t always fair, and I was playing in the big leagues. Yet I realized I had no regrets.”


Ms. Fiorina describes being asked to leave what would be a final February meeting in Chicago while board members discussed her fate. She reveals particular bitterness about her firing.


The book’s opening paragraph states bluntly: “In the end, the board did not have the courage to face me. They did not thank me and they did not say goodbye. They did not explain their decision or their reasoning. They did not seek my opinion or my involvement in any aspect of the transition.”


After being asked to wait for three hours, none of the board members remained in the room when she returned to it, she wrote. She was greeted by Ms. Dunn, the new board chairwoman and the head of the board’s governance committee, who asked her to announce publicly that the decision to step down had been her own. Ms. Fiorina wrote that she refused.


Robert Anderson, a deputy in the California attorney general’s office, would not comment yesterday when asked if Ms. Fiorina was under investigation.



-- Sucheta Dalal