The Journal (Jan. 26, Schubarth) cites the concerns of several corporate governance experts that Hewlett-Packard Co. recently recruited executives to its board of directors who all have business ties to CEO Leo Apotheker. Consequently, they will need to prove they can act independently.
Dominique Senequier, for instance, manages an investment buyout arm of French insurer AXA SA, where Apotheker is on an advisory board. Three other new directors -- former General Electric Co. Chief Information Officer Gary Reiner, former Alcatel-Lucent CEO Patricia Russo, and ex-eBay Inc. CEO Meg Whitman -- all did business with SAP AG while Apotheker was on staff.
Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, comments, "If directors have significant relationships with the CEO or other directors of a company on whose board they sit, it's harder for them to be objective. Directors are supposed to be representing shareholders, not the CEO or one another, and that's why companies typically try to recruit directors who are independent of one another and management."
It is an interesting problem, and one that will confront any CEO who's business (or prior business) has a large global footprint. After all, it could be argued that anyone coming from a firm that did not work with, or use, SAP products is coming from a business still operating in the dark ages. And that appears to be the reaction of the majority of stakeholders, as reflected in the Steel City Re Corporate Reputation Index metrics. In a word, no impact. No change in the relative ranking among 18 peers in the Computer Processing Hardware sector, no change in reputation volatility, and no change in reputation vector or velocity.
Yet given the governance challenges HP has faced over the past few years, the concerns in this instance merit deeper consideration.
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