HP's Compaq Acquisition (D)

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Case Details:

Case Code : BSTA023
Case Length : 11 Pages
Period : 2000 - 2005
Organization : Hewlett Packard, Compaq
Pub Date : 2005
Teaching Note :Not Available
Countries : USA
Industry : Information Technology

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"While I regret the board and I have differences about how to execute H-P's strategy, I respect their decision."

- Carly Fiorina1.


On February 9, 2005, the board of Hewlett-Packard (HP) announced that it had fired CEO Carly Fiorina (Fiorina) after the controversial $19 billion Compaq acquisition had failed to produce the benefits expected.

With her resignation taking immediate effect, Robert Wayman, chief financial officer of HP, was appointed interim CEO and was also nominated to the California based company's board of directors. Patricia Dunn, vice chairman of Barclays Global Investors, was named non-executive chairman of the board. Dunn had been on the board of HP since 1998.

Under a severance plan passed by the committees of HP's board in 2003, Fiorina would receive 2 1/2 times her annual salary and bonus if she was "involuntarily terminated without cause." In 2003, Fiorina's salary and bonus totaled about $8.4 million. So Fiorina received a severance package worth about $21 million.

Continuing Slide

Ever since its founding in a Palo Alto garage 66 years ago, HP had represented a spirit of entrepreneurialism that had to come to represent Silicon Valley. The company's engineering-driven culture valued teamwork and rewarded ideas and inventions. But unlike many other Silicon Valley companies, which had a hire and fire culture, HP was also a people-oriented organization.

Excerpts >>

1] Konrad, Rachel. "Fiorina Forced out as Hewlett-Packard CEO,"www.wsj.com, 9th February 2005.


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