Name: HPE Chair Pat Russo on How to Respond to Activists
Uploaded: 2026-01-26T10:00:00Z
Duration: 24 min 55 s
Description: Hewlett Packard Enterprise Chair Pat Russo takes us inside the fight against activist investors that led to a CEO’s ouster and a turning point for a legendary tech company. Russo outlines a roadmap for leaders defending an organization under attack while protecting its standing with investors, employees, and the public. Recorded on November 11, 2025

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Hewlett Packard Enterprise Chair Pat Russo takes us inside the fight against activist investors that led to a CEO’s ouster and a turning point for a legendary tech company. Russo outlines a roadmap for leaders defending an organization under attack while protecting its standing with investors, employees, and the public. Recorded on November 11, 2025 Photo: WSJ Leadership Institute

https://m.wsj.net/video/20260126/eec53fec-5b87-4387-a7af-24ec620d5f08/4/hls/manifest-hd-wifi.m3u8

Hewlett Packard Enterprise Chair Pat Russo takes us inside the fight against activist investors that led to a CEO’s ouster and a turning point for a legendary tech company. Russo outlines a roadmap for leaders defending an organization under attack while protecting its standing with investors, employees, and the public. Recorded on November 11, 2025

HPE Chair Pat Russo on How to Respond to Activists

I've worked with some great CEOs and they all have the same thing in common. They're humble, they're open, they don't think they're the smartest people in the room, and they actually, value the board.

You were chair of the board or the lead director of the board of Hewlett Packard when it was under attack and split into two.

Yeah, and we can talk about that, 'cause that was actually, a very positive experience. And Meg's here and we'll attest to that, so yeah.

You're the lead director at General Motors.

Yes.

Which is also,-

We had two activists, yes.

two different activists. You went through a very painful experience with Alcoa slash Arconic.

Yes, that was very challenging.

CEO pushed out, and then Ralph Whitworth.

At HP, and then now we have a relationship with Elliot at HPE so.

So, does anyone want to challenge and say they've had more experience than Pat Russo has had with this? I think you're safe.

Yeah. Well, you know what's interesting, what's interesting about it is that they were not all the same, right? I mean, activists, first of all, activism, as I'm sure you all know, is on the rise. There are more settlements going on where boards are going on or where new board members are going onto boards. So there's a lot, a lot of activity. And the themes vary, right? The themes vary from strategic disagreements to, you know, we think you should do some M&A, we wanna see you change your capital allocation, we think you need operational improvement. So it really, it really does vary. And in my case, they were different.

Yep. Why is it on the rise?

Look, I think it's on the rise, because there's a lot of money invested. There are many more activists. You know, we are all familiar with some of the larger activists whose names are well known, but there's many, many more new hedge funds who are getting into identifying companies where they think they can make an improvement and make a difference.

I wanted to ask you the best experience and the worst experience you've had. I think you've already kind of nodded to those two experiences. So, can we talk about 'em a little bit?

Pat: Sure.

The HP experience before the breakup.

Yeah.

Tell me about, it turned out to be a good experience. It probably didn't start as a good experience.

No, actually, and it started as a, I wouldn't call it good, bad, I would just call it as a rational experience. Ralph Whitworth, who founded Relational approached HP. Meg was the CEO at the time. And I think I was in the lead director role, maybe not even at that point. And he had taken a large stake in the company and wanted to come on the board, but his approach from the beginning was very constructive. And to Meg's credit, and I think the rest of the board's credit, we were open. Remember, HP when Meg and I went on the HP board, HP had been identified as the worst governed company in corporate America.

That's quite an honor.

Those of you, you may remember, you know, pretexting and there was a huge amount of drama.

I covered that.

And so, there were a number of new board members who had joined and Ralph showed up. He's a good guy, You know, we didn't necessarily agree on everything, but he was constructive. He dealt with facts. We pushed at each other when needed, but I'd say it was a positive experience.

But that's gotta be hard. I mean, the two of you were working on trying to figure out how you're gonna fix this company and somebody comes in from the outside and says, "I have a better idea."

Well, I think of it as constructive augmentation, right? I mean, just think about it. You have people sitting around the table, all smart, capable people. Well, here was someone else who brought a pretty good network of experiences that he's had with other companies, and he was pushing on, I think, pushing on some buttons that probably needed to be pushed on.

If Ralph Whitworth hadn't shown up at the door of the board, would you have split HP into two?

Ralph wasn't the driver behind the split. The thinking behind the split was all about improving capital allocation, right?` Giving each of these, the business, I mean, HP was a huge company. 100 and what? 110 billion, Meg, when?

Yeah, I mean, it was giant. Yeah, and HP was in many different businesses that had different velocities, that had different capital requirements. And what happens when you're managing a portfolio sometimes is you allow for boards do this, you allow for a business to subsidize another business. And if you think about maximizing value, which is what we were focused on. We had a number of new board members here, right? After this, I think we had five or six new board members. Megan and I, being two of them. We concluded that more value could be created, if the two very different businesses, what turned out to be HP and what turned out to be Hewlett Packard Enterprise stood on their own and had to be successful on their own. And so, that was what was behind it. And you know, Ralph had some ideas about that, but he's not the guy who came in and said,-

Wasn't the driver.

"You should split up the company."

It's a hard thing to do when your ego is wrapped up in the size of the company.

Yeah, you know, and again, I'm gonna give Meg credit for this, because CEOs sometimes like the size and the scale, but that was not what Meg or the board were thinking about when we were determining that splitting HP made sense. We felt it made sense for good strategic reasons, good financial reasons, good employee reasons. I mean, there were just a lot of reasons behind it. And nobody got hung up on, gee, you know, I won't be on the board of a $120 billion company.

So, and I actually, remember talking to you about this at the time. You came away from that whole experience with a pretty good feeling about the value of an activist in yourself.

In that case, yes, that was a good experience. We got to know Ralph, and Ralph was a great contributor. In fact, we made him chairman, right? I mean, he was chairman for a while, and then unfortunately, he had a health issue and he had to step off the board. We were sorry to lose him.

Let's go to the other extreme. I'm making assumptions here, but I assume the other extreme, the iconic experience from the outside as an observer was ugly, ugly, ugly proxy battle.

Yes.

CEO gets pushed out, disagreement between the CEO and the board over how you communicate with the activists. What happened there?

That was a very challenging, complicated situation. It was, as was publicly known, it was a very, we ended up in a proxy contest. There are fewer proxy contests these days, by the way. There's many more settlements in terms of directors being placed on boards, but we ended up in a proxy contest. It got very personal. And that's what makes it difficult. And I think, you know, some activists have as part of their tactics,

To make it personal.

that making it personal, threatening to board members with the hope and expectation that board members will fold and not,-

And some do

and some do, of course. Look, it's your reputation. Nobody wants to be talked about negatively in the press. And so, you know, when you go through that kind of situation a board has to be very clear about what its conviction is, about the difference of opinions that are at play. You have an activist who wants certain actions, you have a board who believes it has a strategy and is executing. But in that case, it got very ugly. We ended up settling the day before the shareholders' meeting, and I think three directors were put on the board. I think, the desire was for five, so it was a settlement.

But the CEO.

The CEO resigned. And that was an unfortunate situation where it's publicly known. He sent a letter that was not appropriate and he ended up stepping out. So, we agreed with Elliot that we would have a search committee, we would add three directors to the board. And that all worked out, I think, positively in the end. But it was a very unpleasant experience to get to that point.

Well, and one of the things that has to be tough about this is that, you know, listening to the conversations over the course of this day, it's clear that many of these directors get quite close to their CEOs. You know, you're in the boardroom with them, you go through some tough times with them, you feel a sense of connection with them. And at some point, you must have to ask yourself, "Am I here for the CEO or am I here for a different group of people?"

Yeah, I think, look, we happen to be talking about activism, but there's also been many conversations here about the role of the board, right?

Alan: Yeah.

And, you know, you have to start with, you need a board of independent minded, relevant experiences and skill sets to do their job. And finding the right balance between supporting management, supporting the CEO, and assuring an environment around the table where there is good and strong debate, disagreement where appropriate, challenging where necessary, is just good foundational hygiene for good governance. And frankly, the best CEO, and I've worked with some great CEOs, and they all had the same thing in common. They're humble, they're open, they don't think they're the smartest people in the room, and they actually, value the board. And when you value the board, you really wanna hear what your directors think. And you may not always agree, but the best CEOs really utilize their boards. And the best boards will challenge the CEOs in a constructive and positive way. And if you have that as a foundation, right? Hopefully, you're aligned on your strategy, you're overseeing execution, and operating results, all of the aspects of good stakeholder management, not just shareholder management. And from an activist anticipation standpoint, you know, and we did this at HP and we've done it at other boards, and it was mentioned earlier, we actually, find ways through outside resources to write activist letters to ourselves that says, look, call it like it is, tell us what you would do that we're not doing.

You think that should be a standard board practice?

I think it absolutely should be a standard board practice, because it gives the board the opportunity to take a look at what somebody from the outside would come in and say, "You are not doing well." And that may be how you allocate capital, it may be you're not driving enough profit, it may be, you know, you should split up the company, you should, whatever it is. And it gives the board the opportunity to say, "Have we looked at that? Have we done something with that? Have we, or not looked at that?" So yeah, I think it's a good health.

And how do you tell sitting in the board seat whether the activist is making useful suggestions or destructive suggestions?

Well, the thing to always remember is the activists organizations never really know as much as you do, because they only have access to publicly available information, you know, unless you establish an NDA. So, it's often the case, and I've found this in examples that I've been involved in, where there's a point of view driven by data that doesn't have the nuance of intelligence around what is actually under the data. So, you get these comparisons. I'll give you one example. An activist had a point of view about a particular business performance and was comparing the company to another company, but it was apples and peaches. They weren't exactly the same. And it's not until you engage, right? Engage, have a conversation, be open to the engagement, right? I mean, I've seen different, one is, we don't wanna talk to these guys, and others are no.

You sound like you are generally in favor of engagement.

Absolutely, in favor of engagement. Well, let me put it this way. I'm in favor of engagement with, you know, legitimate, well-regarded, established activists. There are many smaller firms now.

Yeah, yeah.

There are many smaller firms now who seem to have more of an objective of making a name for themselves than actually, the value creation, right? Because they're trying to build up, they build up their reputation. The activists I'm talking about are well established, they're smart, they have smart people. They actually have the same objective as boards. They wanna create value. What I find often is maybe the difference is timing and how you do it.

Yep.

But I've just found in all the cases I've been involved in open engagement, a willingness to listen, take the heat, but then also be in a position to share information turns out to be most constructive.

I want to just take a second and put Ellen Kullman on the spot. I think you're out there some, yes. There's Ellen.

Sorry about this, Ellen, but as I recall, can we get a microphone over to Ellen. As I recall, you, this was a number of years ago, but as CEO of DuPont, you fought the activist hard and you won. So, how do you feel about this question of do you engage or do you fight?

Ellen: So, you have to engage to the point of understanding what their end game is, what their goal is, because they're not all, you know, constructivists. Some of them are doing it for their brand, and they're doing it, because they quote unquote, and I was told directly, "Because I need a win." And I mean, we offered 'em two board seats, just not to him, the principal. And so, you do have to engage to a point.

It was a personal thing.

Ellen: But at some point when they're bullies, you just have to draw a line and deal with it the best way you can.

And what, as I recall, it was a brutal fight.

Ellen: I know, a full page ad Wall Street Journal saying how terrible I was. The kids actually, wanted to let him know that I was much worse on parental issues.

Well, I just wanna say we are in favor of full page ads in the Wall Street Journal, not necessarily endorsing the message, but it was really brutal. Did it take a cost? What was the cost it took on you? What was the cost it took on the company?

Ellen: I mean, so I picked our treasurer, who was a phenomenal project manager. She was our, you know, she was our control tower, and I had her run the lawyers, the bankers, everybody to come in with an integrated view for the board. And if I hadn't have done that, we couldn't have managed the company and managed the fight as we called it at the same time. So you really have to have someone who's in charge of it who really understands where all the bodies are buried in the company and what reality is, because what boards want to hear is reality. They don't want the sugar coating, you know, DuPont's 215 years old, that be great. They want reality. And I think having, putting in that structure helped us.

Yeah. Pat, what's the biggest mistake you made in dealing with an activist?

I would say, probably in my less experienced days, not being as open initially to hearing.

You just thought this is bad. We have an activist,-

What was being said,

it's bad.

Yeah, I think, what I learned, what I learned is, boards can sometimes not see opportunities, if they're not being brought forward. And you have to be open, not necessarily accepting, but you have to be open to hear and believe that the people who are offering the ideas aren't necessarily as emotionally attached to some of the things that maybe a board can become over time. That's why the independence dimension is so important. And so, I just think being open to listen. And you know, and I agree with Ellen's point. You have to be able to decipher whether there's constructive intent or there's some other agenda, right? But if there is constructive intent, then take advantage of it, right? What I said in my latest interaction with an activist at Hewlett Packard Enterprise is, "Look, you guys are smart people. I know you've got a lot of people who do a lot of hard work and you've got a lot of information. If you have ideas that are good for creating value in a reasonable timeframe, we are absolutely open to hearing them."

Alan: Yeah.

"And if you wanna put somebody on the board who's gonna be constructive and make a difference, we're open to that." Now, I don't know, some people may think we're crazy, but it just strikes me that, if you start out that way, again, you have to make a judgment that this is a legitimate investor, right? They are an investor, they have a big position in the company, they are interested in value creation, which is part of our job. You just have to make sure that the rest of the pieces can all work. It can't just be, for example, we are very committed in all the companies I'm associated with not just to, you know, you have to take care of employees, you have to take care of customers, you have to be good community citizens, because you're not gonna create maximum shareholder value, if you are not.

Are you woke?

Pardon?

Are you woke?

No, it's just, you know, the best CEOs I've worked with have always gotten before wokeism. If you don't have people who come wanna come to work every day, and you don't have customers who think you're doing a good job, you don't have a good business. I mean, that's just sort of common sense. And so, the boards have to protect that. And it can't just be about every dollar to the bottom line. That's, you know, that's going to create longer term challenges. So, that's the balance you have to find.

So, you, of course, were a CEO, before you became a director.

Yes, twice.

Listening to you talk,

Twice.

Twice, yes.

Yeah.

So, you have that experience. Listening to you talk it's clear that a lot of this depends on the relationship between the board and the CEO. Obviously, you had a very good relationship with Meg at HP, but define what makes a great CEO from the board's perspective and what makes a great board from the CEO's perspective.

So for me, right, I think, the best CEO's I've seen are, first of all, table stakes, smart, capable, have demonstrated they can produce results, they understand business, all that stuff. I'm not gonna talk about that, but I'm gonna talk about the who they are. They're authentic, they're empathetic, they're inspiring, and they know how to hold people accountable and get the best out of people, right? They really understand the importance of talent in an organization. And they're not just talent magnets, but talent developers, right? And that's on top of being good executors and all that other stuff. That's more the human leadership. They set a vision, they hold people accountable, they celebrate success, you know, they inspire. Those are great CEOs who I have seen can produce the best results. I think, good boards are boards that know that their job is to both be supportive, but to also challenge and ask the right questions. And to, you know, the best experience.

A little contradictory.

Yeah, but yeah, but I mean, I can remember whether it was Meg or Mary Barra, you know, they use a board and say, "Look, I'm thinking this through and I really need your perspective," right? And that relationship where a CEO doesn't feel like they have to have everything wrapped up in a bow and packaged perfectly, but rather use the people sitting around the table to help inform their thinking and help them come out in a better place, is where I have found that dynamic works the best.

Pat, fascinating. Thank you for sharing your experience with us. I think it very preferable that everybody know that. Thank you for making the time.

Yeah.

Thanks.

Yeah.

The WSJ Leadership Institute Presents: Leaders. A new podcast series bringing you revealing conversations with top executives shaping business today. Hosted by Alan Murray, president of the WSJ Leadership Institute, the series goes beyond headlines to explore how leadership really works in times of upheaval, transformation, and uncertainty. Our first episode was released Monday, Sept. 22, at 5:00 a.m. ET, with new episodes every other Monday.