Don’t miss the discussion between the two foremost corporate law experts in the blawgosphere — Professor Bainbridge and Professor Ribstein (with an update here) — over the implications to the corporate model of the Hewlett-Packard Co. Board’s deliberations over limiting HP CEO (and notorious micro-manager) Carly Fiorina‘s managerial role in the company. Here is the Wall Street Journal ($) article and a free CNN Money article on the HP Board’s discussions.
Professor Bainbridge suggests that the HP Board’s actions foreshadow the end of the Imperial CEO era, while Professor Ribstein observes that HP’s troubles indicate a fundamental problem with the way in which control decisions are made within the inflexible corporate structure.
Meanwhile, HP shares are flat at $19.95 in morning trading on the New York Stock Exchange. In comparison, HP’s closing stock price was $18.22 on May 6, 2002, the day on which the company finalized its merger with Compaq Computer Corp that Ms. Fiorina orchestrated over strenuous opposition from several of HP’s longtime directors. Thus, two and a half years after Ms. Fiorina had HP pay $19 billion for Compaq, the market attributes virtually no value to the acquisition.
Given that scoresheet, it appears that HP has succumbed to both an Imperial CEO and a broken business model. In this Wall Street Journal column, Jesse Eisinger essentially says the same thing, and passes along this comment about Ms. Fiorina’s performance:

Ms. Fiorina has had more than 2Ω years since completing the merger in May 2002 to make it work. But H-P is still stuck in between high-end services provider IBM and master of the PC-as-commodity market Dell.
“I’m not sure anyone could have pulled this off,” says Merrill Lynch analyst Steve Milunovich. “I wouldn’t give her a high grade, but I wouldn’t call her a disaster.”
Alas, few CEOs envision epitaphs reading, “Not Disastrous.”

The New York Times sometimes has trouble sorting out business news items because of its bias in favor of greater government regulation over capitalist roaders.
On one hand, this NY Times Sunday article on the struggling airline industry suggests that perhaps the solution to the industry’s problems is to return to the era of regulation in which consumers paid higher prices, but airlines served better food on the flights. The only “experts” in the article quoted in favor of returning to those bygone days of high prices and limited service areas are union representatives, who believe that the higher-paying jobs of the regulation era are the birthright of airline workers. Hardly a mention is made of the fact that such increased regulation would bring increased costs to an industry that certainly doesn’t need more of those.
From a consumer standpoint, airline deregulation has been a remarkable success that has resulted in far cheaper prices and much greater service than ever before. Thus, while the Times’ premise for the article is that increased regulation could help the struggling airlines and their workers, the better premise would have been the following — i.e., despite the great success of deregulation, why are so many airlines continuing to struggle and why is it so difficult to put the chronically unprofitable airlines out of their misery?
On the other hand, this Times article notes that an unintended consequence of the increased regulation of public corporations under the Sarbones-Oxley legislation is that an increasing number of public firms are delisting because of the high cost of compliance with the legislation. Thus, as Professor Ribstein notes in this typically insightful post on the same article, “we can add a decline in disclosure as firms delist and withdraw from mandatory disclosure requirements” as further negative consequences of Sarbox.
For most businesses, the primary benefit of going public is the access to cheaper equity capital. Sarbox’s increased cost of compliance is effectively making that public equity capital more expensive and less attractive. Business owners don’t go public just for the joy of making public disclosures and dealing with class action plaintiffs’ lawyers.

This Dallas Morning News article interviews H. Ross Perot, the founder of Electronic Data Systems, the founder and chairman emeritus of Perot Systems Corp., the two-time U.S. presidential candidate, and — depending on your point of view — either the Texas legend or the lengendary Texas quack.
The best book on Mr. Perot is Gerald Posner‘s Citizen Perot (Random House 1996). Although not as good as Posner’s definitive Case Closed (Random House 1994) on the John F. Kennedy assassination, Citizen Perot nevertheless provides a generally balanced of one of the most complex, colorful, crafty figures on the American political and business landscape over the last 25 years of the 20th century.
Perot is fascinating from a business standpoint not only because of the billions he made as a pioneer in data processing and Texas real estate, but also because of the millions he lost in naive and ill-fated ventures. Although often a savvy and skillful business operator, Posner’s book quotes colleagues who describe Perot as as “squirrelly” and “paranoid.” Nevertheless, Perot is not one to allow his critics to gain an advantage, so he made fun of them by dancing in public to Patsy Cline’s famous rendition of Willie’s Nelson’s classic song, Crazy.
In Citizen Perot, Posner does a fine job of delineating Perot’s contradictions. One one hand, Perot can be incredibly generous to employees needing medical help, but he was also known for berating loyal workers viciously. During the 1992 Presidential campaign, he criticized the influence of Washington lobbyists, but he hired the best in the lobbying business to help EDS and Perot Systems secure business deals in Texas, Washington, and internationally. Perot promoted an outsider political image, but he exerted tremendous influence upon past presidents and presidential campaigns. One of the most memorable descriptions of Perot came from Posner’s interview with Ken Riedlinger, a longtime executive of EDS:

“I like Ross. He saved my life a couple of times. But I also hate Ross. Yet I voted for him. And I would probably go back to work for him tomorrow if he asked.”

Other interesting parts of the Perot legacy are his 1979 rescue mission to Iran, his private battles with business and government leaders he considered corrupt, his animosity toward George H.W. Bush, and his paranoid charges of Republican dirty tricks against his daughter during the 1992 campaign. Indeed, Perot’s performance during the 1992 Presidential debates — along with Bill Clinton’s formidable debating skills — made those debates the most entertaining of any since that format was introduced during the 1960 Presidential campaign.
After his second and less successful presidential race in 1996, Perot has all but disappeared from the public scene. He now concentrates on his family, veterans’ causes, and “big picture” business projects. Nevertheless, he remains a consummate storyteller, which makes the DMN interview a good read. Check it out.