October 6, 2006 1:49 PM PDT

Fiorina book: HP board was 'dysfunctional'

In her much-anticipated new book, ousted Hewlett-Packard chief Carly Fiorina details the inner workings of what she saw as an often-divided board of directors, offering particulars on a rift between former Chairman Patricia Dunn and former director George Keyworth.

"He had been derisive of Pattie Dunn's capabilities ever since I had known him," Fiorina writes of Keyworth in her new book, "Tough Choices." "He routinely complained that she didn't understand the company and relied on process as a crutch."

Fiorina's book is hitting the shelves as her former company has reassumed the national spotlight amid a scandal over its probe into leaks from its board. The company has admitted its investigators gained access to the personal phone records of more than a dozen people using false pretenses, a process known as pretexting.

In the wake of the scandal, Dunn has resigned from HP's board and faces felony charges, as do two former HP workers and two outside investigators. Keyworth has also resigned from the board, acknowledging that he was a source for a January CNET News.com article.

"Some board members' behavior was amateurish and immature. Some didn't do their homework. Some had fixed opinions on certain topics and no opinion at all on others."
--Carly Fiorina in "Tough Choices"

"The board was an interesting collection of individuals," Fiorina writes of her initial experiences with the board, prior to HP's acquisition of Compaq. In the end, she agrees with the assessment of outside counsel Larry Sonsini, who concluded the personality conflicts ultimately rendered the board "dysfunctional."

"Some board members' behavior was amateurish and immature," she writes. "Some didn't do their homework. Some had fixed opinions on certain topics and no opinion at all on others."

The book is slated to go on sale next week, though The New York Times reported on it this week and a copy was purchased on Friday by News.com. An interview with Fiorina is also expected to appear on the CBS news show "60 Minutes" Sunday evening.

While Fiorina does offer plenty of thoughts on the board, as well as on many of HP's top current and former executives, she spends much of the book detailing her own journey through the ranks of AT&T and Lucent before ultimately assuming the top spot at HP. There is also a fair bit of detail on the company's months-long proxy fight with Walter Hewlett over the Compaq merger.

The book also paints an unflattering picture of Fiorina's merger partner--Compaq CEO Michael Capellas. Fiorina tells of an incident where Capellas called her after midnight and screamed at Fiorina for giving up her merger-related retention bonus. Fiorina writes that Capellas was concerned that "I would make him look bad."

"Michael was abusive and incoherent," Fiorina writes. Ultimately, Capellas, too, agreed to forgo his retention bonus. But, Fiorina said she was "shaken" by the conversation. "Over time, it became clear that this was a pattern, not an aberration."

Capellas did not disagree with the idea of giving up his retention bonus, a Capallas representative said. Indeed, the representative said, the two had discussed the idea of both foregoing the bonus. However, Capellas was upset upon learning that HP had unilaterally leaked to a reporter that Fiorina was foregoing her bonus, the representative added.

In the book, Fiorina also speaks out about the damage done by press leaks, in particular a January 2005 report in The Wall Street Journal that divulged board deliberations.

"It is hard to convey how violated I felt," Fiorina writes, near the end of the book. "Until a board makes a decision, its deliberations are confidential. Whoever had done this has broken a bond of trust with me and every other board member."

With the board's knowledge, Fiorina says she asked outside counsel Larry Sonsini to investigate the leaks by speaking to each director.

She writes, though, that she was not seeking anyone's resignation. "I thought this could be a useful wakeup call to several board members who were not as smart as they thought they were."

In the end, however, it was Fiorina who found herself out of a job. "It turns out I wasn't as smart as I needed to be."

In outlining the steps that led to her ouster, Fiorina notes that it was Keyworth and Dunn together, along with board member and former HP executive Dick Hackborn, who first approached Fiorina in January 2005 with their concerns, two days ahead of a board retreat. "The group was odd and so was their timing," Fiorina reflected.

Although she lashes out at the leaks, Fiorina writes elsewhere of the importance of ethics in everything that a company does. She shares an anecdote from her AT&T days where the company fired a worker and risked losing business in Brazil, rather than resort to the kinds of bribes needed to secure the deals, according to the book.

"Not all means are justified by the ends," she writes.

See more CNET content tagged:
Carly Fiorina, Michael Capellas, merger, Patricia Dunn, representative

5 comments

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Strange timing
Boy, I must say that the timing of this book release sure is "strange". And I like how the article says the book "will be released next week, but we 'bought' a copy this week". LOL.. I wonder how much they had to "pay"??

Come to think of it, this whole HP "scandal" smells awfully funny.

HP has from what I can tell a much better than average record when it comes to corporate ethical violations than most large US corporations, yet here they have become the "evil poster-child". My feeling is that this affair doesn't hold a candle to the kind of "real" corporate espionage that goes on all the time, and which never sees the light of day.

Dunn's lawyer's assertion that there is an "orchestrated disinformation campaign" going on might have some truth to it after all.

Combined with the Chicken-Little attitude adopted by Cnet and other media organizations (for once - since their reporters were targeted. If only they could muster this kind of righteous indignation for the other, more abundant forms of corporate and political sleaze these days)

Phil
Posted by pjk0 (1198 comments )
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Coincidence
"Boy, I must say that the timing of this book release sure is "strange"."

We knew over a year ago that the book would be released around this time. See, e.g., <a class="jive-link-external" href="http://www.infoworld.com/article/05/08/24/HNfiorinabook_1.html" target="_newWindow">http://www.infoworld.com/article/05/08/24/HNfiorinabook_1.html</a>

Jim
Posted by poster48150 (167 comments )
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But then again
But then again, the "Peter Principle" as outlined by Dr Laurence J Peter, perhaps says it all!
Posted by heystoopid (691 comments )
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This woman is even more stupid than I thought
Hmm.... The board sucked? Hey wasn't she the damn chairman of
the board?! She had the power to change it, yet didn't, just like
everything else at the company. It took another CEO to actually
instill change, all she managed to do was destroy one of the best
company cultures in the world and replaced with her stupid view of
the world. Great!
Posted by ivanbou (14 comments )
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Fiorina is a Ferrari
When it comes to focus, Fiorina had it. As a side note, I remember her visiting a company I worked for...a big one...and she was put off by any behavior that smelled of arrogance or unethical dealings. I would not consider her in any way part of this scandle, but I would consider her a catalyst for the success HP now enjoys. She seemed decent and acted in many ways like a functional human being. When she was booted, I knew something was amiss at HP.
Posted by BoxlessThinker (6 comments )
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