Hewlett-Packard Boss Resigns Amid Sexual Harassment Claims

Aug. 9, 2010
CEO Mark Hurd's severance package will be about $12.2 million not including stock-related benefits.

Hewlett-Packard chief executive Mark Hurd resigned on August 6 after an accusation of sexual harassment uncovered subterfuge with company expenses, the computer giant announced.

HP had brought in outside counsel to investigate allegations that Hurd had violated HP's sexual harassment policy in his dealings with a former marketing contractor. The probe found that Hurd had not broken harassment rules, but was in breach of "HP's standards of business conduct."

"I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career," Hurd said.

"This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time."

Company officials said Hurd, 53, had made "inaccurate expense reports," designed to hide the relationship.

The original accusation involved Hurd having an affair with a contractor and then putting outings or gifts on the HP tab as business expenses, according to analyst Rob Enderle of Enderle Group in Silicon Valley.

"You don't muck with expenses when you're a CEO," Enderle said. "If he had paid for this with his own money, he'd still be there."

It was evidently after the relationship ended that the woman accused Hurd of sexual harassment.

A Los Angeles law firm claiming to represent the contractor released a brief statement stating "we want to make it clear that there was no affair and no intimate sexual relationship between our client and Mr. Hurd."

Hurd's severance package will tally about $12.2 million not including stock-related benefits, according to a filing with U.S. regulators.

A boardroom spying scandal roiled the company about four years ago and consolidated power in the office of the HP chief executive, setting a stage for missteps to go unchecked, according to the analyst. The controversy about unethical tactics used to expose a board member who had been leaking secrets to news reporters caused a series of resignations and left HP with a "passive" board.

Another factor in the equation was that HP has been performing strongly as a company, with division heads doing well. "HP is in great shape and he didn't need to be there every day," Enderle said of Hurd. "You give someone with a lot of power a lot of time and control over a lot of money, I will usually guarantee you they will do something stupid. This seems to be a case of that."

Hurd's departure is not expected to hurt HP as long as a talented replacement is chosen within a few months.

"Hurd was relatively invisible in terms of a public face, which helps HP now," Enderle said. "A stronger board probably would have replaced him sooner."

Hurd's temporary replacement was named as current chief financial officer Cathy Lesjack.

"As I step into the role of interim CEO, I have never been more confident in the company's future," Lesjack said in a hastily arranged conference call with the press.

HP stock price slumped almost 10% in after-hours trading on the news.

Copyright Agence France-Presse, 2010

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