Fiorina Resignation Brings Board of Directors into Focus

By Kevin Sweeney
February 11, 2005 09:12 AM

The exit of one of America's leading female executives has highlighted the divide that can exist between company leadership and boards.

The announcement of Carly Fiorina stepping down from her post as Hewlett-Packard CEO was met with news that HP's Board of Directors had forced her hand. Disagreement over the direction of the company can lie at the heart of a separation of this stature.

The San Francisco Chronicle reported that Fiorina's decision stemmed from the Board's disappointment with HP's merger prospects.

"Her removal underscored the board's growing dissatisfaction with the company's inability to realize the promise of the $19 billion Compaq deal -- a troubling marriage that may ultimately have cost Fiorina her job," writes Benjamin Pimentel of The Chronicle.

The power of the Board of Directors should not be taken lightly by business reporters. Some other recent corporate complications can be traced to boards:

• Disney's board was recently sued in Delaware for approving a $140M severance package for CEO Michael Eisner.
• Directors for both Enron and WorldCom have paid millions of dollars out of their own pockets as part of shareholder settlements.
• NY Attorney General Eliot Spitzer has initiated a lawsuit against an NYSE director alleging collusion in Dick Grasso's exorbitant pay package.

While executives get the headlines due to their notoriety, the people behind them may provide more intriguing business stories.

With an executive departure, consider the incoming replacement. How that person compares and contrasts with the outgoing exec will likely signal the short-term direction of a company. Whether or not a long-term outlook can be assessed depends on each individual case.

Also take into account how shareholders react to the news. In HP's case, it appeared that the decision was cheered as the stock rose almost two dollars in initial trading following the news.

And in a case with a powerful female involved, explore the landscape of minority leadership across the board. The same day it profiled Fiorina's resignation, The Chronicle's Jason Johnson profiled an increase in the number of African-American CEOs across the country.

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Copyright © 2008 Donald W. Reynolds National Center for Business Journalism