Blog Post

HP’s Chairman Ray Lane to step down; HP loses two other board members

HP Chairman Ray Lane will step down from his spot heading the computer maker’s board of directors, the company said Thursday. Director Ralph Whitworth will take his spot on an interim basis, while Lane remains on the board. The loss of its chairman is just part of what appears to be an overall cleanup of the troubled company’s board of directors, possibly in response to shareholder activists. Just a few weeks ago, the board fended off shareholder attempts to restructure it, but barely.

Some HP board members stuck to their guns in the face of shareholder discontent. Three weeks ago, Rajiv Gupta told Reuters: “Losing some of our directors in an abrupt and disorderly manner could undermine our efforts to stabilize the company … What the company needs now is stability and consistency of leadership so that the Board and the management team can devote all of their focus and energy towards executing on our strategic plan.”

HP logo So much for that. By now, it’s apparent that  some of those challenges resonated. Directors John H. Hammergren and G. Kennedy Thompson have decided to leave the board, leaving two slots open for HP to fill. Both directors will continue to serve until the May board meeting, according to the release. Many have blamed HP’s myriad troubles on its inept board, including the CtW Investment Group, an arm of labor federation Change to Win that filed a letter in February asking for Lane to be removed as chairman. The group blamed the retiring directors and Lane for the debacle that is the Autonomy purchase.

Cleaning house might be the first step to getting the company back on track after what has been a tumultuous couple of years since the company deposed Mark Hurd as CEO and Chairman in 2010 after a sexual harassment scandal. Lane’s tenure has been rocky to say the least. He came on as chairman at the same time as former SAP CEO Leo Apotheker was named CEO and presided over the company’s problematic — and extremely expensive — acquisition of Autonomy for more than $13 billion.

That acquisition — which was Apotheker’s baby but got board approval —  raised eyebrows even at the time it was announced with many observers calling Autonomy wildly over priced. That assessment turns out to have been true. HP subsequently wrote off  more than $8 billion of that purchase and pushed U.S. and U.K authorities to investigate alleged fraud on the part of former Autonomy management. The fact that the purchase passed muster in the first place though focused more eyes on HP’s board.

In a release announcing his move on Thursday Lane said:

“After reflecting on the stockholder vote last month, I’ve decided to step down as executive chairman to reduce any distraction from HP’s ongoing turnaround,” said Lane. “Since I joined HP’s board a little over two years ago, I’ve been committed to board evolution to ensure our turnaround and future success. I’m proud of the board we’ve built and the progress we’ve made to date in restoring the company. I will continue to serve HP as a director and help finish the job.”

The one question some shareholders may have is why Lane, who is a partner emeritus at VC firm Kleiner Perkins Caufield & Buyers,  remains involved at HP at all.

HPQ Chart

HPQ data by YCharts


This post was updated at 11:15 a.m. PST with director comment.

3 Responses to “HP’s Chairman Ray Lane to step down; HP loses two other board members”

  1. I am a shareholder of HP and wish that these board changes did not happen. I voted for the reinstatement of all of the board members, as did the majority of shareholders. However a few pension funds made a big stink about wanting change. They needed some scapegoats and now they have them.

    The mainstream media and most analysts are extremely uninformed about what HP does. Even though it would be mildly detrimental to shareholders I really wish they would just shut down the PC division, as it draws so much attention with the “death of the PC” zeitgeist. So that the press would stop writing about the company.

  2. Mcbeese

    The only Board I know of that previously demonstrated more incompetence than HP’s was Nortel’s. The Nortel Board turned one of the top telecom vendors into ashes, and it turns out that they did it for no reason. No WMDs were found in Iraq or in Nortel’s accounting.

    HP has survived because it takes a multi-service giant longer to fall, but the performance of the Board has been pretty glaringly bad for at least a half dozen years. I hope this is the beginning of big change because HP needs to reinvent itself. HP can’t afford to not be strong in mobile and mobile ecosystems because these are going to be the drivers for the next decade of computing evolution.

    • Mcbeese,

      HP only derives 10% of their profits from the entire PC division. HP is not a PC company and mobile devices have only a minimal impact on HP’s bottom line.