This week, another HP exec bit the dust - this time, it's the CEO. HP CEO Mark Hurd (forcefully) resigned from the company following a sexual harassment investigation. Hurd had been questioned about specific interactions with a female contractor that could have been in violation of the company's business standards. Basically, he filed inaccurate expense reports that covered his personal relationship with a contractor who may or may not have actually performed the services she was hired for. Oh yeah, and HP paid for all of it!
The CFO, Cathie Lesjak, is taking over during the CEO search (which is never a good sign), but she did say that Mark's resignation has nothing to do with HP's performance and everything to do with his behavior. She even went on to say that Mark Hurd was a "strong leader, at the end of the day, he didn't drive our initiatives -- it was the organization that supported Mark in driving those initiatives."
More about this Eliot Spitzer-esque scandal after the break.
We do have the full text of the letter that Lesjak sent to all the employees. Here's some of the important parts.
Mark's resignation followed an internal investigation into a claim of sexual harassment asserted against Mark and HP by a woman who is former contractor to HP. The investigation was conducted by outside counsel in conjunction with HP's General Counsel's office and was overseen by the Board. Based on the investigation it was determined that the former contractor's claim of sexual harassment was not supported by the facts.
The investigation did reveal, however, that Mark had engaged in other inappropriate conduct. Specifically, based on the facts that were gathered it was found that Mark had failed to disclose a close personal relationship he had with the contractor that constituted a conflict of interest, failed to maintain accurate expense reports, and misused company assets. Each of these constituted a violation of HP's Standards of Business Conduct, and together they demonstrated a profound lack of judgment that significantly undermined Mark's credibility and his ability to effectively lead HP.
So, there's the executive board's version of the facts. Now let's take a look into HP's media call they had on the matter. HP opened by saying that Mark Hurd had a close personal relationship with a contractor who was hired by the office of the CEO, and there were numerous instances of reimbursement where there was not a legitimate business interest for HP. To make matters worse, the whole ordeal lasted for two years - from fall 2007 to fall 2009!
An important question was asked as well: Will Jon Rubinstein be considered for the CEO position? HP responded by saying that they are not naming candidates at this time. Hmm. So saying yes by not saying no? I think so. HP also pointed out that no litigation has been filed, and we've found out why. As it turns out, Mark Hurd has received an insane severance package for all of his awful actions. He's going to get $12,224,693 in payment in exchange for not suing HP for making him go away. Add that to his stock options and he's closing in on $50 million in total value of his departure. Awesome job, White Collar Crime Man!