The news that California is investigating questionable tactics by Hewlett-Packard's board of directors has already hurt the company's shareholders.
In Wall Street trading, shares in the 11th-largest company in the Fortune 500 took a dip last week following months of political infighting among the board's members. The stock slip and subsequent inquiry by the U.S. Attorney's office raises the question of whether the HP brain trust has sacrificed shareholder interest in favor of personal grudges.
California Attorney General Bill Lockyear issued subpoenas in a bid to determine whether the computer maker may have used illegal means to investigate leaks to the media believed to have come from an HP board member in 2005.
Lockyear said the investigation was still "in the early fact-finding stage" but did not rule out criminal charges.
In a filing with the Securities and Exchange Commission, Hewlett-Packard disclosed it had sought the private telephone numbers and telephone billing accounts of board members in its leak investigation.
Private investigators are accused of using the possibly illegal procedure of "pretexting" -- an investigative technique in which someone poses as another person to gain private information.
An attorney involved in the case told The Associated Press that outside investigators hired by Hewlett-Packard had used the final four digits of board members' Social Security numbers to set up accounts with telephone companies and then gained access to individual board members' bills.
Pretexting, consumer groups say, is the same tactic used by identity thieves.
At issue was whether one or more board members had leaked to the news media some details of the board's action in ousting CEO Carly Fiorina in 2005.
The then-new board chairwoman, Patricia Dunn, was dissatisfied -- as were shareholders -- with HP's stock performance during Fiorina's time at the company.
Dunn was heading the board when HP hired a private investigation company to discover the source of the leak.
That investigation led to the pretexting controversy, which angered other board members and incited one, Thomas Perkins, to quit the board.
"If this chairman [Patricia Dunn] thinks this is the way business ought to be done, maybe it's time for her to take a sabbatical," Peter Morici, a professor of business at the University of Maryland, said to the Associated Press. "It's arrogant and inappropriate."
While corporate boards are usually clubby and collegial, they are also supposed to safeguard the interests of shareholders.
Dunn was among those on the HP board who hired Fiorina in 1999, but later became disillusioned after years of lackluster stock performance.
Still, as Peter Hodgson pointed out in a study for The Corporate Library, Fiorina's compensation, set by the board -- and that of her successor Mark Hurd -- didn't suffer.
"Over the last five years of her leadership," Hodgson said, "stockholder returns fell by 10 percent."
Yet Fiorina's compensation totaled $21.6 million. When Hurd's compensation is added to Fiorina's, the total is $36 million, according to The Corporate Library.
Hodgson says part of the compensation was not only a golden handshake goodbye to Fiorina, but, he said, "A golden hello -- a hiring bonus" for Hurd.
"Stockholders were losing money," Hodgson said, "but that wasn't the case for either of the CEOs."
And what about the investigation and its relationship to stockholders?
"The main problem for shareholders is that a board of directors fighting over these leaks, a board charged with looking out for their interests, is not operating at maximum efficiency," Hodgson said. "The board may be acting out of their interests alone."
So far, one board member accused of leaking information has been forced to resign and another has quit apparently over the board turmoil.
The outcome of the attorney general's investigation will be in doubt for months, as may be the price of Hewlett-Packard's stock.
The Associated Press contributed to this report.