Ask anyone closely involved with Hewlett-Packard if Meg Whitman is doing a good job, and you’ll get the same answer: Take a look at the stock.Since the former eBay CEO took over in September, it’s crashed by almost 50 per cent, from $23 to $12.
Now ask those same HP observers and insiders if they think that Whitman will be fired. No one close to the company seems to think she’s at risk.
1. A lot of employees like her. Some missteps aside, she’s winning over HP’s workforce. “She connects with employees,” one HPer told us. “She’s personable. She says all the right things, what they want to hear. They have confidence in her even if they don’t have it in the company.”
2. Everyone knows that another fired CEO could cripple the company beyond repair. In the past seven years, HP has forced out three CEOs—Carly Fiorina, Mark Hurd, and Léo Apotheker. HP simply can’t afford to change its leadership now.
3. She’s affordable. Whitman, who made a fortune at eBay, gets an annual salary of $1, plus 100,000 shares of stock. She’s eligible for bonuses of up to $6 million. But most of her compensation comes from stock options that only vest if the stock price hits certain targets for 20 consecutive days. She was eligible for options on 800,000 shares on her first anniversary if the stock closed at or above $28.31 for 20 consecutive trading days. It didn’t. On her second anniversary, she’s eligible for another 800,000 if the stock closes on or above $33.03 for 20 consecutive trading days. We’ll see.
4. She’s like Switzerland. One of HP’s biggest problems is the warring factions within the company: hardware vs. software, PC vs. enterprise, executives brought on via Compaq vs. EDS. As a newcomer and outsider, Whitman is faction-neutral.
5. She’s got another year’s worth of Teflon. Whitman’s first year has been all about doling out the bad news, easily blamed on the mismanagement of her predecessors. Her major failing has been a lack of a clearly articulated strategy for getting HP growing again.
HP has promised that its next CEO will come from within HP. The frontrunner is Bill Veghte, the chief strategy officer. But Whitman needs another year at the helm. If HP is still laden down by debt and internal drama, it will be time for someone else.
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