HP, Spies and Leaks

While there are many things not to like about Hewlett Packard’s investigation into leaks by its board of directors, I’m struck, above all, by the likelihood that the entire enterprise was utterly unnecessary. Among other things, it turns out that the so-called leaks that HP devoted time, money and management attention to were barely worth bothering with in the first place.

My belief, as I’ve written, is that the best way to avoid this kind of thing is to permit directors—and encourage lead directors or independent board chairs—to be more open with reporters. If directors are to be held accountable by shareholders, they need to be able to talk publicly about what they do. They shouldn’t talk about proprietary information, but neither do CEOs when they talk in public. Directors should be able to talk, in general terms, about how the company’s doing, how they approach their work, their oversight of the CEO, etc. Otherwise, they are being paid handsomely by owners who have no way to know whether they are doing a good job. Of course, if this were coupled with shareholder access to the proxy ballot, and competitive elections for director (i.e., true shareholder democracy), all the better.

As for HP. The article that apparently got CEO Mark Hurd and his team of snoops all lathered up ran on CNET in January. It’s pretty harmless. Reginald Brown, a lawyer at Wilmer Hale who represents George “Jay” Keyworth, the so-called leaker, sent me a copy of the CNET story along with about 30 pages of background material that demonstrates that just about everything that Keyworth told reporter Dawn Kawamoto was already on the public record. One quick example.

Kawamoto reported:

"Though HP’s direct sales technology is expected to undergo changes, one thing that’s not likely to happen is a merging of the HP and Compaq PC brands, the source said."

Here’s what Todd Bradley, an HP executive said a month earlier on a conference call with analysts, posted at HP’s website:

As far as, Andy, your question about Compaq and HP, we’ve done and are completing a lot of work to understand what those two brands stand for because they do stand for different things. I think, as we go forward.. you’ll see much better delineation between the two.

Then again, CNET’s Kawamoto did reveal the following about HP's January 2006 management retreat:

Those in attendance worked from early morning to late evening, with few breaks given beyond meals, said a source with the company. "By the time the lectures were done at 10 p.m., we were pooped and went to bed," the source said.

For this, HP spied on directors, reporters and its own employees. Makes you wonder not just about CEO Hurd's ethics, but about his judgment.

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It’s pretty harmless. Reginald Brown, a lawyer at Wilmer Hale who represents George “Jay” Keyworth, the so-called leaker, sent me a copy of the CNET story along with about 30 pages of background material that demonstrates that just about everything that Keyworth told reporter Dawn Kawamoto was already on the public record. One quick example.

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Among other things, it turns out that the so-called leaks that HP devoted time, money and management attention to were barely worth bothering with in the first place.

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"Though HP’s direct sales technology is expected to undergo changes, one thing that’s not likely to happen is a merging of the HP and Compaq PC brands, the source said."

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For this, HP spied on directors, reporters and its own employees. Makes you wonder not just about CEO Hurd's ethics, but about his judgment.