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HP’s boardroom changing shape

Amy Scott Sep 12, 2006

KAI RYSSDAL: If we had the sound of the other shoe dropping in the HP boardroom today, we’d play it right about here. The company’s been in the regulatory crosshairs for the past week. Ever since we learned about some questionable tactics the board used to plug leaks to the media. Chairman of the Board Patricia Dunn will step down in January. She’ll be replaced by CEO Mark Hurd. But she gets to keep her board seat. The man identified as the leaker, director George Keyworth, resigned outright. Marketplace’s Amy Scott wraps it all up for us.

AMY SCOTT: By appointing Mark Hurd board chairman, Hewlett-Packard reunites two positions it had deliberately split. A company’s board is supposed to keep management in check. And that’s harder to do when management sits at the head of the table. Technology analyst Mark Lanyan with Morningstar says corporate governance may have taken a step backward.

MARK LANYAN: Mark Hurd has obviously developed a lot of goodwill, and a great reputation for his performance as an executive. So they’re in good hands in this situation. But all else being equal, we’d rather see another high-profile director be put on the board to make sure that all is well in the executive suite.

Lanyan wonders if outgoing Chair Patricia Dunn didn’t get off too easy, since she stays on the board. But Nell Minow with the Corporate Library says the investigation isn’t over.

NELL MINOW: What I’m hoping they’ll do is bring in someone independent, the way that Richard Breeden came into Worldcom to find who knew what when. And I would expect that there will be more developments, including some changes on the board.

Investors seem satisfied, anyway. HP’s stock rose by a percent and a half today. And it’s more than made up for last week’s losses.

In New York, I’m Amy Scott for Marketplace.

RYSSDAL: Investors were pleased, as Amy mentioned. Silence, though, from the Justice Department and California’s attorney general about whether or not they’ll pursue things.

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