HP's 2000 Annual Meeting

Dick Hackborn kicks it off... and botches Carly's last name! Ouch. He hasn't had to do this for a while? (or ever?) He runs over the agenda once, then a second time in a bit more detail. My attention wanders to Flint Hall as Dick's mellifluous, soft voice drones on. What would it be like to sing on this stage? The acoustics seem pretty good, a classical tall, narrow opera hall design. I can imagine standing in the center and filling the space to the back wall.

At the very tippy top of the dot-com bubble, I was in the Bay Area on a temporary job assignment and had the opportunity to pop down to Cupertino to attend the annual shareholders meeting of Hewlett-Packard. I published my account of it on my intranet website at the time, and after reading the account of new CEO Meg Whitman's first such meeting, I dug it out of the archives to post here on fortboise. Pretty sure the venue (I called "Flint Hall") was The Flint Center for the Performing Arts, which has a website that will take you right back to the day: copyright 1997, optimized for use with Netscape 2.0.

The business of the meeting is dispensed with in short order. 1,004,949,833 shares as of December 31st, 864,406,821 represented by Carly and ____ (what does that mean?), Dick cuts off the report before it was quite finished, but the fellow reporting just smiles wryly at his formal role being truncated.

Final call for proxies, but no one in the house hollers or waves. (Is this where you could vote your shares at the meeting?) More than 800 million for the slate of 9 board members. 858M ratify Price Waterhouse Coopers, 2M dissent, 4M abstain.

Four hundred eighty-two in favor of the 2000 Stock Plan, 262M against, 7M abstain (and so more than 100M couldn't figure out how to vote?!). This brings a quiet inhalation of surprise from the audience. It wasn't a close vote, but why the dissent?

Given the lengthy discussions in the hp.* newsgroups, I'm anticipating something even closer for No. 4, but it's 702M for, 44M against, 5M abstain (and again, 100M non-votes). The pay for performance plan was apparently understandable, and had less dissent (without the 100M non-votes): 828M for, 29M against, 6M abstain.

Everything passes, game over.

But we're civilized people, let's talk a while.

He introduces Ned Barnholt, half a dozen of his staff, "well on their way to becoming an exciting technology company." For Carly's introduction, he takes the time to get it right, on the third try. She's doing a great job, he tells us.

She graciously glosses over the "difficulty" of her last name, "now you know why everyone just calls me 'Carly'," stands front and center, to "sing." Radio mike, slide projector control (?), no notes. We're headed to become "an E company, with a shining soul." "...we were blessed..." And the rules of the garage.

I'm distracted, wondering what "unlocked tools" mean in the age of the internet. Who leaves tools unlocked in their garage? I've never seen a collective tool box do anything but degrade, but that's focusing on the tools. The important consideration is what gets done with the tools. Maybe that outweighs missing and broken stuff.

The "new landscape" is bundled products—the triangle of network "infrastructure," product "appliances," and "e-services," a 50 to 150 billion dollar opportunity in the next 3 to 5 years by our estimate. We aim to "view the horizon through the eye of the customer." Another puzzling metaphor.

Our strategy has 6 priorities:

  1. Accelerating growth, in a market that is not yet mature. The Ford and (today's) Delta deals, for example. We're on track for 12-15% revenue and profit growth this year.
  2. Streamline our decentralized operating model, the $1B savings we're after.
  3. Focus on the "total customer experience." We're "too difficult" now.
  4. Take advantage of our strong balance sheet.
  5. Leverage our market position to drive adoption of next generation
  6. infrastructure, appliances and e-services.
  7. Create e-services ecosystems, with HP at the center.

She goes through our top level 2x2 organization matrix (presented as just 4 boxes, rather than a matrix, though) and then a slide full of companies with whom we've closed "big deals." Kodak, Ford, Delta, AOL, Yahoo!, FedEx, Oxygen, Ariba, Cisco, BMW, American Airlines, amazon.com. No notes, no teleprompter (I actually looked to the back of the hall to see if there was something back there), no looking behind her at the 12x12' projected slides. She is an amazingly adept speaker, and unlike Comdex, and her visit to Boise last year, there's no distracting, hyperactive pacing today. Just a very smooth delivery, a simple, clear, persuasive message.

Top it off with an update from our Q1 results—right on track—and oh, by the way, our stock closed at $134.50 today. [One 2:1 split and a couple of giant mergers since, so not an easy comparison, but the March/April 2000 highs have never been approached since. It's trading about a third of this value 12 years later.] Just what the crowd wanted to hear. Finally, the slick "garage" video that was "shown to all employees" and a lot of television viewers.

For the last act, "questions and answers," marginally controlled homage to the mythical democracy of the corporation. There are 6 microphones set up around the hall, but the front pair on either side suffice for the crowd at 1/3rd of Flint Hall's capacity. Nevertheless, for a half-hour session, you'd best get right in line; you won't have time if a question occurs to you during the discussion.

There are a few questions with barbs, but mostly they're big, fat softballs. Yes, we're committed to cleaning up the environment. No, I can't guess what those folks voting against the stock plan (a.k.a. the "option plan") were thinking, and I'm gratified by the "overwhelming majority" that supported it. (It was closer than that, actually!)

What about Agilent? They had their shareholder's meeting this morning. (Huh? We didn't get invites to that!)

How are we doing in hiring and retention, especially in the Bay area? In her answer, Carly notes that "almost half our workforce has been with HP less than 5 years." That's not the HP I've worked for, in Boise.

A big ad for jobs at Agilent? Let Ned take that one: Business is booming, we're hiring aggressively. The crowd liked that answer.

We're partnering with Amazon... can we expect a 2, 3, $400 share price soon? Sorry, CEOs can't forecast stock prices.

What about your 8-figure compensation?! Dismissed as HP covering the Lucent options she had to give up. Somehow, that's less than satisfying, but then she shouldn't have to apologize for the deal she got out of the board. She emphasized performance-based pay, but "profit sharing" doesn't seem to fit in that list, the way it's been "fixed."

"Last September, I bought an HP computer..." This could've been an ugly story—God knows there must be some—but it ended up with nothing more than a request for a toll-free number, and "I did get good help, by the way." Carly acknowledges that customer satisfaction is "the heart of the matter."

Geoffrey Moore, speaking at Stanford, said that HP's changing from a collaborative culture to a competitive culture. Comments? Well, we are focusing on being faster, more decisive, and more aggressive, but she didn't have the benefit of hearing Moore, and wasn't ready to just say yes, that's so.

After a warm round of applause following the Q&A, we filed out to pick up our souvenir copy of the "Rules of the Garage" poster, and one man asked, "where are the products?" disappointed that there wasn't anything "HP" to see. I thought to myself "our CEO is our product at this point," but that's cynically overstating the case. We do have one hell of a corporate action figure, though.

Out into the afternoon sunshine, walking to the parking garage next to flowering plum trees, I took a look at the composition of corporate America. Mostly white, retired, very comfortably well-to-do, the model of decorum, especially when things are going well. A pleasant diversion in a relaxed day.

Originally published March 2, 2000