The Scoop
PayPal said on Tuesday it was booting its CEO and replacing him with its board chair Enrique Lores, sparing no ambiguity as to why: “The pace of change and execution was not in line with the Board’s expectations,” it said in a statement.
One group that was blindsided was HP, where Lores was until Tuesday serving as CEO, according to people familiar with the matter. Lores’ switchup sent them rushing to launch a search process, those people said. HP’s board does have internal candidates which it’s considering for the top job, according to a person familiar with the board’s thinking.
As chair of PayPal’s board, Lores played a role in a process evaluating internal and external candidates. It was unclear when or if he recused himself from the final decision to name him as CEO. But HP’s board was only made aware that Lores was taking the CEO role at PayPal in recent weeks, the people said.
Spokespeople for PayPal and HP declined to provide further comments. Lores was replaced on an interim basis by HP director Bruce Broussard, the former CEO of Humana.
PayPal’s decision to oust CEO Alex Chriss drew a line under a period of extended underperformance. PayPal shares have plunged 80% over the last five years, and fell more than 17% in premarket trading on the news of Lores’ appointment.
Lores has worked for some version of HP since 1989, when he took an engineering internship at an outpost in Spain. He orchestrated the split from HP Enterprise and became CEO in 2019. But after more than three decades with HP, Lores was the consummate insider at a company that hasn’t proven it can move as fast as Silicon Valley’s newer stars, Semafor’s Andrew Edgecliffe-Johnson wrote in a profile late last year.
Board chairs taking over for underperforming CEOs have taken on fresh relevance in recent months: Choosing a board chair often points to the lack of options among top executives, or at least the risk tolerance a company needs to take a chance on a CEO at a time of economic and geopolitical upheaval.
Verizon’s Hans Vestberg was replaced by his chairman, Dan Schulman (who himself was a former PayPal CEO), while UnitedHealthcare swapped Andrew Witty for chairman (and former CEO) Stephen Hemsley. Same goes for Kohl’s, which installed its board chair Michael Bender after its CEO was kicked out due to allegations of an ethics breach.
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Rohan’s view
General Electric famously had an envelope with the names of replacement CEOs should something unexpected happen to either Jack Welch or Jeff Immelt. Whatever the circumstances of Lores’ departure, boards have one job: succession planning.
The fact that HP plucked a board member as interim chief — especially a longtime health executive with limited tech experience — suggests that either the company’s bench is shallow and they don’t have a clear succession plan, or they’re scared to take a chance on someone else.
Room for Disagreement
It’s certainly possible that HP does have a fulsome plan — and that putting someone with little tech experience like Bruce Broussard in charge is just a way to bide some time to run an extensive process and give internal candidates time to prove themselves out in the open.