Why Meg Whitman may not be the right CEO for HP

September 21, 2011, 9:22 PM UTC

By Eleanor Bloxham, CEO, The Value Alliance and Corporate Governance Alliance

Meg Whitman

FORTUNE — HP has endured scandal after scandal. Now, it is being suggested that Leo Apotheker may be out and new board member Meg Whitman may become CEO. Would that be the right move for the tech giant right now?

There are several issues that shareholders need to consider in such a move.

First, Meg Whitman’s nomination to HP’s board was made at the behest of Ray Lane, the chair of HP’s (HPQ) board, circumventing the board’s nominations processes, which raised concerns with ISS, a proxy advisory firm, and others.

Then, less than a week after HP’s 2011 annual meeting, when Whitman was elected to the board, it was announced that Whitman would be joining Kleiner Perkins, Lane’s firm. The fact that this announcement came just a week after Whitman’s election to HP’s board should raise a red flag to shareholders. Certainly, the timing of the announcement raises the possibility that there was a move to postpone information shareholders might have found valuable in weighing Whitman’s independence from other members of the board and, in particular, Ray Lane.

Third, Whitman does not necessarily have the best reputation for respecting the independent role of a board and avoiding conflicts of interest. In 2002, when Whitman was CEO at eBay, she stepped down from the Goldman Sachs board amid allegations that she was allocated pre-IPO shares by Goldman (GS), which netted her $1.8 million in profits, as a result of eBay (EBAY) doing business with the investment bank.

If Whitman’s potential appointment is the result of Ray Lane again acting as puppeteer at HP, the beleaguered tech company has some major issues to address. Is this the right time for HP to play yet again with its governance reputation? These are issues shareholders should start evaluating now.

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm.