Tuesday, October 21st, 2014

Fact-checking Sen. Barbara Boxer's attack ad on Carly Fiorina's record at HP

Sen. Barbara Boxer's "Outsourcing" camapign ad

In a race to represent California in the U.S. Senate, Republican Carly Fiorina has emphasized her "real-world" business experience as chief executive officer of one of the world's largest tech companies. But Fiorina's controversial 6-year tenure as CEO of computer-maker Hewlett Packard has also been used by Democrats to attack her.

The latest attack ad from the Sen. Barbara Boxer campaign picks up on a thread introduced in the primary -- accusing Fiorina of laying off tens of thousands of workers at HP, shipping jobs overseas and all the while padding her own bank account and toy box.

Here's what the announcer in the Democratic incumbent's ad says: "As CEO of HP, Carly Fiorina laid off 30,000 workers. Fiorina shipped jobs to China.

"And while Californians lost their jobs, Fiorina tripled her salary, bought a million-dollar yacht and five corporate jets...Carly Fiorina. Outsourcing jobs. Out for herself."

Fiorina was named CEO of Hewlett-Packard in July 1999, the first woman to lead a Fortune 100 company. She reorganized the company's structure and pushed for a controversial 2002 merger with Compaq Computer Corp., in an attempt to get a greater share of the personal computer market. The merger succeeded, but HP's board fired her anyway in February 2005 (with a $21 million severance package), primarily due to the company's sluggish stock price and missed earnings targets.

Fiorina has numerous detractors, but she also has defenders of her time at HP.

We checked the main claim of the ad, that while at HP Fiorina laid off tens of thousands of workers, and shipped jobs to China. That Fiorina laid off about 30,000 workers is largely undisputed, but the context is. Fiorina, for example, claims that layoffs and the merger with Compaq laid the foundation for HP's future success; and that over the entire course of her 6-year tenure at HP, the company created more jobs than it cut. We weighed the competing claims and rated the Boxer ad's claims Mostly True.

We think it's worth adding some context to some of the other claims in the ad, that "while Californians lost their jobs, Fiorina tripled her salary, bought a million-dollar yacht and five corporate jets."

The first thing to know about the salary claim is that the numbers are cherry-picked from the middle two years of Fiorina's time at HP, 2001 and 2002. The Boxer campaign says they picked those two years because it was 2002 when HP announced 26,000 layoffs. And the line in the ad about Fiorina's salary begins, "While Californians lost their jobs..." According to HP proxy statements, Fiorina's salary was $1.2 million in 2001; and $4.1 million in 2002.

But let's take a wider view of Fiorina's salary during the years she was CEO at HP. According to proxy statements, her salary in 1999 was $4.2 million (and she also got tens of million in preferred stock when she took the job). In 2000, her salary went to $3.7 million. It dropped to its lowest point in 2001, $1.2 million; then went to $4.1 million in 2002; $3.5 million in 2003; and $3.2 million in 2004. In other words, it fluctuated a good bit. While that allows the Fiorina campaign to note that her salary actually dropped 15 percent from her first full year to her last full year, it also allows the Boxer campaign to make the claim it did in its ad. The Fiorina campaign also notes that Fiorina's salary was set by an independent compensation committee, not the board of directors (which Fiorina chaired).

As for the claim about five corporate jets, unlike the yacht, these corporate jets were owned by HP, not Fiorina (though she certainly used them). The Fiorina campaign also notes that the 2003 leasing of two Gulfstream jets was to replace two aging jets in the HP fleet, and the 2001 acquisition of 3 planes was to replace two planes incapable of flying overseas and the leasing of a third. We think it's safe to say the jets were a serious upgrade, but the company essentially acquired five corporate jets and retired four.