A Breach of Faith

Guest posting by Ralph G. Risley

I was initially going to write a white paper on the HP leaks and the issues that it raises. However, on analysis this event is so core to Board behavior and effectiveness that I have elected to post a series of comments/observations in hopes of getting a dialog going via comment postings which I can incorporate in my future postings on the subject.  My objective is to construct a fair, balanced, impartial display and analysis of he events and their short term consequences and long term collateral damage. This process will be significantly enhanced by future postings from others.

Recent disclosures relating to the activities of certain HP Directors highlight broader and deeper elements of both Board responsibilities and obligations. HP documents their rules of engagement in their own Policies, Procedures and Practices and separately in their position paper on " Standards of Business Conduct". Leaks, whether at the operating management or Board level, compromise both business and investor interests and possibly more significantly those of suppliers, creditors and lenders. Leaks are not the way to force attention to a specific issues or apply pressure to further a specific agenda. The Board process is one of; vetting, consensus, probative dialog and evaluation. This must be accomplished in confidence as a closed group until this process is accomplished. Leaks of any type risk compromising the integrity and long term viability of not only the process but also its participants.  HP provides in its " Corporate Governance Guidelines" a clear statement of intent. Under section 11 there is only a single sentence dealing with " Authority to Retain Advisors " under which guidelines the leak investigators would fit.  Any rules of engagement and oversight criteria not included here or under other sections of the Corporate Governance Guidelines are chronicled under HP's Standards of Business Conduct. Given the sophisticated nature of public company directors there appears to be sufficient policy guidance in place to insure Board behavior to both letter and intent standards.

Comments

[Ralph G. Risley]

Now that the rising tide of the 2006 stock market has eradicated prior losses has the focus on governance, board responsibility and board focus on objective oversight dimmed? I hope not for if it has the earnings driver on equity value will be more than off set by by the lack of confidence resulting from marginal governance.

Any cmmments?

[Andy James]

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