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(More customer reviews)During the 1960s-1980s period, public firms rarely fired a big-firm CEO. Then, in the 1990s, there was IBM and G.M. In 2004, leaders of 600 companies were asked to leave, and by 2006 this had risen to 1,400. "Revolt in the Boardroom" focuses on the H-P, Boeing and AIG board revolts, and the firing of their celebrated CEOs.
Scandals at Enron (board members forced to pay $13 million out of their own pockets for poor oversight), WorldCom (another $18 million assessed from board members), Adelphia, Tyco, and the collapse of the stock market bubble ended the long-running cozy relationship between boards and their CEOs. Independent members began meeting regularly in executive session, without management present. Increasingly the audit and compensation consultants reported to the board, not the CEO (this and other changes later became required by the NYSE and/or Sarbanes-Oxley), and big public-employee pension funds becamse more feisty and started banding together to force concessions on eg. executive options and pay. (Drucker noted as early as 1991 in a Harvard Business Review article that the 20 largest pension funds held about 10% of the equity in all publicly owned companies.)
In Greenberg's case (AIG), despite a Rolladex full of high-level contacts, well-paid board members, and the ego-boosting practice of large donations to board-members' charities, Greenberg was forced out. The reasoning is not hard to discern - AIG had to pay $126 million in penalties and restitution in response to allegations of price-fixing, etc., and accept the ongoing presence of an outside monitor.
In Boeing's case, the company had recently undergone major scandals involving bid-rigging vs. the Air Force (replaced CEO, CFO, and others), brought in a new CEO (Stoncipher), and was then stunned to learn of an affair involving its new CEO and an underling - supposedly also including favorable career treatment for the underling. Exposure of steamy e-mails from the CEO brought his tenure quickly to an end.
Murray's weakest "case" involves Carly Fiorna at H-P. Here he contends that the board's initial concern involved Carly's complex matrix structure, and being out more than she was in (130 speeches in her last year). Then here overreaction to their concerns and desire for an operations leader led to her firing. Ignored were some of the serious costs of her matrix structure. The new CEO substantially improved H-P through laying off another 15,300 without any loss of revenues - mostly from the centralized personnel, finance, and in-house technical staffs she created. Hurd also split PCs back off from printers, phased out centralized selling (CSC) unit, raising product-manager accountable costs from 30% to 80%. A third major step was to centralize IT - databases went from 85 with 7,000 applications to 6 with 1,500 - cutting IT costs from 4% to 2%, using all H-P equipment and then using the experience and expertise to help sell services and equipment elsewhere. Thus, poor performance was also a major issue, as well as Carly's seemingly annual round of layoffs. (Most CEOs try to get this over all at once.) Regardless, Carly's leaving during the turmoil with her board to attend an economic conference in Switzerland was probably the last straw.
Bottom Line: Somewhat interesting, though incomplete.
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