I Hurd the new today, oh boy
August 10th, 2010 / Author: John BerardWhen 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.