There are companies with CEO's, and there are CEO's with companies.
If there was ever an opportunity to ponder the difference, this weekend was the time.
Hewlett-Packard, a company that has prided itself on its own "H-P Way" culture for over fifty years, is not built for the latter phenomenon. But indeed, when the Mark Hurd story hit the wiresshortly after Friday's closing bell, the reality hit home that (HPQ) had become a, "CEO with a company."
My "Call-to-Action" is to protect yourself from scandals and extenuating circumstances like those that ruined every (HPQ) holder's summer weekend. CEO's should never become bigger than the institutions they lead and we are seeing again why.
Those invested in celebrity CEO's Warren Buffett of Berkshire Hathaway and Steve Jobs of Apple have to ponder the respective health of each and consider what succession plans are in place for mortality events. But this Hurd case, this was a blindside to those who capitalized on a CEO that had become bigger than his company.
Carly Fiorina's well-documented departure from (HPQ) created a situation where the company needed a star leader, and Hurd became that individual. But the more momentum the CEO built in terms of accumulating believers just on his name alone, the deeper the hole (HPQ) dug for itself when someone of his stature could, and did, fall.
An (HPQ) stockholder may not be in the mood for riddles but what do Johnson & Johnson, ExxonMobil, and Wal-Mart have in common? None have that cult-of-personality CEO, the type of leader where a power transition would send rumbles throughout the infrastructure. These three titans are examples of "companies with CEO's," an important distinction from what (HPQ) had become.
CEO leadership is pivotal, and in no way am I sacrificing its importance with this defensive call-to-action. For two of the members of The Strategy Session's "One-Decision Club," I sang the praises of the leaders as evidence of their propensity for success—Peter Rose of Expeditors International of Washington and J.Bruce Flatt of Brookfield Asset Management . But it is important to distinguish that it is their approach to business and not any star status that warrants consideration for the investor's dollar.
What has happened at (HPQ) actually makes a great deal of sense. Stock-pickers were buying on the Hurd name. This is not a first-time happenstance. When Larry Ellison, rival or not, writes that Hurd will be, "very hard to replace,” reliance on the individual may be too correlated to performance.
These are the times to either learn from your own mistakes or someone else's. A CEO is merely an individual, a human being who can bring down years and years of progress with a flaw. The Mark Hurd story provides a learning ground.
No individual should be bigger than the institution he or she leads. Should there be another stock choice made for the CEO first and foremost, the K-Call will refer back to a sleepy Friday in August where one scandal quashed this strategy, present and future.
- Ex-CEO Hurd's Stumble May Also Trip Hewlett-Packard
- This Global Asset Company is Potentially Lucrative
Programming note: "
Gary Kaminsky does not hold any equity positions.
The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.
All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.
Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.