When Mark Hurd was named CEO of Hewlett-Packard in 2005 he came ready-made with a reputation for a zealous commitment to operational efficiency and financial control.   When he was forced to resign five years later due to a sexual harassment charge and mis-reporting his expenses, there was an audible “gasp” from the market that took $10 billion from HP’s market cap.

In the reporting that followed the resignation, it was revealed that HP had reviewed the harassment charges and found they did not violate company policy.  As for expenses, they totaled $20,000 at a time when Hurd was making $66,000 a day.  From a distance of just a few days, the resignation began to look like an over-reaction.  Or worse.  It prompted Oracle CEO Larry Ellison to criticize the HP Board for acting with “cowardly corporate political correctness.”

Worse, for the company, is the revelation that the Board acted on the basis of a public relations counselor’s advice that to delay would expose the company to “months of humiliation if accusations of sexual harassment by a company contractor against Mr. Hurd became public.”   It is likely that the exposure will last longer than months and at least until the company recoups that $10 billion.

This was significant criticism of a man the company’s Board of Directors sought to redress its grievances with the last CEO, Carly Fiorina.

She had taken on the task of remaking HP to be more competitive in a global technology market that was maturing and innovating at the same time.  But, as reported in BusinessWeek, the directors “stewed over their star CEO’s failure to execute her ambitious plan for the company.”  Hurd, who had built a quiet 25-year career at NCR in Dayton, Ohio, seems to have been the right choice.  In his five years at HP, the company’s stock price rose 136 percent.

This makes Hurd’s departure even messier.  It will lead to lingering speculation about the agenda — hidden and otherwise — that drove the decision to strip Hurd of his epaulets in the public square.  It will raise employee and customer eyebrows whenever the company speaks.  And it will continue to roil the Board, still uneasy over its past transgressions that likely made them unable to accept Hurd’s regret and restitution.

This is the under-reported element of this story.  More than the current actions of a suit being filed and expenses fudged is the lingering pain felt by the HP Board for its own crimes.

Remember, shortly after Fiorina was “exited” in a hail of news coverage and Hurd became CEO, it was revealed that HP Chairman of the Board Patricia Dunn had spied on the phone records of other directors in her pursuit of  press leaks.   It was the combination of these two black eyes that probably still smart.

Enough pain, so that even though HP’s lawyers found no merit to the harassment charge and the expense reports could have only been mishandled not malicious, the Board was locked in its response.  It had set the bar for propriety as high at HP as it was for King Arthur in Camelot.  And just as there, where despite the cry for war, Arthur’s idealism allowed Guenevere and Lancelot to safely depart, Hurd was not fired for cause but allowed to resign and depart with a $40 million severance.

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Context reared its potent head in the New York Times on the subject of Google.  Here is the bit:

“Google’s high-profile mistakes hurt because they convey the impression that Google’s behavior is increasingly inconsistent with its ‘Don’t be evil’ mantra.”

And again on the matter of electoral politics.  Here is that bit about the primary defeat of former Republican, now Democrat Arlen Specter:

“’The legacy of political switches is that you can’t do it,’ said Chris Mottola, a Republican consultant who ran Mr. Specter’s media campaign.”

The lesson keeps getting taught, but it too often goes over the heads of those who could most benefit.  “Who” you are is the most important asset a company or a politician has on which to make the public case for a sale or a vote.  Not only does the answer need to resonate (by filling a need or aligning with beliefs), but needs to be consistently portrayed.

Too often a change in course comes across as cynical, as when “I’m shocked, shocked to find gambling going on in here” is uttered by Inspector Renault in Rick’s casino room.

This does not mean no change is possible.  Selling a unit once acquired, authoring a bill that flies in the face of a once sacrosanct policy, a price rise at a time of economic uncertainty, any seeming inconsistency, even “I voted for it before I voted against it” can be seen as principled if it helps extend the story of a strong and valuable “Who.”

Make change a story about growth and the market — whether consumers or voters — will listen.  That is the first step toward leadership.

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Recent news of Steve Jobs’ return to work at Apple has reignited the debate over his company’s secretive nature.  After all, the world was told his leave of absence was time to deal with “hormonal abnormalities,” but then it was revealed that he had a liver transplant.  What are we to think?

A better question  may be, why are we to know?

Some of the answer is to be found, no doubt, in our hyper-interest in celebrities of every stripe.  It was a bonanza for the yap-parazzi when Farah Fawcett and Michael Jackson died on the same day.  He may not like it, but Steve Jobs has been a part of the same celebrity pantheon for a long time.  The only difference is that he is the CEO of a publicly held company.

At a recent Business Wire seminar on investor relations, there was quite a bit of attention paid to what is called, RegFD, the final rule by which the Securities and Exchange Commission monitors selective disclosure and insider trading.  It seems straight-forward enough: “The rules are designed to promote the full and fair disclosure of information by issuers, and to clarify and enhance existing prohibitions against insider trading.”

Who could argue with that?  No one, but, there is a quirky element to it all that could ultimately lead to every public company having to meet standards.  The rule allows that material information — news that can cause a share price to rise or fall — might be revealed unintentionally.  If it is, the company has 24 hours to make it right by broad release.  So far, so good.

Until a company is faced with its stock moving on the basis of non-traditional material information, like the health of an executive.  For Apple, this is now material information in they eye’s of its investors, even Warren Buffet says so.  But not for all investors in all companies.  So, as Don Clark of the Wall Street Journal agreed that day of the investor relations seminar, it may be that ultimately each company will have its own list of material information.

What a difference a day can make.

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