1. What kind of information can a Board Member disclose outside the company? (George Keyworth, a veteran of Washington DC politics, disclosed information about events at Board meetings and retreats to reporters.)

While George Keyworth announced his resignation today, perspectives on the legitimacy of his actions differ. Some pundits have opined that this is natural behavior for a director who feels disenfranchised. Keyworth himself defended his actions saying that he was trying to provide a favorable impression of H-P, and that H-P's Public Affairs people often asked him to speak to the press, on the record and on deep background. I wonder whether Keyworth’s perspective is shaped by his experience in Washington, where the practices around discussions with the media are much different (see, e.g., the lengthy investigation by Special Prosecutor Patrick Fitzgerald).

It is obvious that Board Members and employees alike need to be held to the same standards regarding disclosure of confidential information. Policies and Codes of Conduct differ slightly in the specifics here, but most forbid discussing information regarding company strategy, personnel, litigation, acquisitions, etc. Some even go further and require that, except for a few designated officials, nobody may speak to the media about company business without approval of Public Affairs.

In the H-P case, the media were reporting internal deliberations about people and strategy. It seems clear that this is information that any company would want to keep confidential, and would expect its employees and board members to keep confidential, unless explicitly authorized otherwise. Therefore H-P was well advised to try to stop these disclosures. Which leads to the next issue . . . .

2. What steps should a Board Chair take when unethical conduct by a Board Member is suspected? (Patricia Dunn, Chairwoman of H-P, first had outside counsel interview board members. When a leak recurred, the firm’s General Counsel retained an outside consulting firm to do an investigation.)

According to what has been publicly reported, Ms. Dunn discussed the disclosures with the full Board, and later had outside counsel interview Board Members to remind them of the company’s expectations of confidentiality and to ask whether they were the source of the news stories. All directors purportedly denied being the source. When news stories continued, it appears that Ms. Dunn commissioned investigations, once through Corporate Security and once through the Law Department, although the stories I have read were not altogether clear on this point.

As a starting point, Ms. Dunn’s actions here seem appropriate and defensible. The company had a legitimate concern about breaches of confidential information. Airing the concern and then conducting interviews did not appear to work. Launching an investigation appears to be an appropriate next step.

Unfortunately, as we all now know, these investigations were flawed. We’ll turn to them in another blog entry.

In the meantime, if you agree or disagree with my analysis thus far, please let me know.