Execs Take Heat For Acquisition Missteps

The tech giant last week agreed to acquire Vertica, a Billerica, Massachusetts-based database management and analytics software company in which the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers (KPCB) has a 5 per cent stake. The problem? Ray Lane, HP’s non-executive chairman, is a KPCB partner, a fact that HP reps neglected to mention when they announced the deal.

HP’s oversight is especially surprising in light of the board’s checkered past. It seems like only yesterday that the 2006 scandal CBS News categorized as ‘arguably the most famous leak investigation since Watergate’ dominated business publications’ headlines. The media seemingly couldn’t get enough of the details surrounding then-CEO Patricia Dunn’s efforts to stop HP’s directors from divulging confidential board information to the press. Dunn faced criminal charges, which were ultimately dropped, for authorizing investigators to identify the source of the board leaks by misrepresenting their identities to obtain confidential phone records.

It’s not surprising the 2006 scandal and all the publicity it generated informs HP executives’ attitudes and practices today. Reports surrounding last week’s Vertica acquisition, however, show that the folks at HP seem to have learned the wrong lesson.

When recently pressed for details about the directors’ approval of the acquisition, an HP spokesperson reportedly refused to specify which board committee signed off on the deal, citing the company’s commitment to maintaining board confidentiality. While it’s important for directors to feel free to discuss board matters without being concerned about a spy in their midst, it’s equally important for directors and executives to follow certain protocol when they’re making important company decisions. If there’s anything to be learned from Dunn’s 2006 experience, it’s that accountability and full disclosure are key.

The board at J Crew is having trouble in the disclosure area, too. ISS and hedge fund Mason Capital Management are reportedly against the retailer’s $3 billion sale to private equity firms TPG Capital and Leonard Green. J Crew’s CEO, Mickey Drexler, took seven weeks to inform the board about the takeover overture, and shareholders are crying foul.

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