Well, Mark Hurd and the Hewlett-Packard braintrust finally demanded and received Patricia Dunn’s outright resignation from HP’s board of directors. She’s not just stepping down as chairman, she’s gone.
That’s as it should have been as soon as the dimensions of this risible corporate-espionage scandal first became known to Hurd and the other board members. It took them long enough to reach a conclusion that should have been obvious and irrefutable.
Instead, the HP board, led by Dunn but apparently supported by Hurd, stonewalled and resisted doing what it should have done, which was coming clean and admitting ultimate responsibility for the entire mess. For some bizarre and utterly inexplicable reason — but one that suggests an ethical turpitude that should appall HP’s employees and customers — they thought they could ride out the storm, pretend that nothing happened, and comport themselves as though they were responsible for none of what eventually came to light.
Well, guess what? Dunn and Hurd were wrong.
They’re not escaping from this debacle unscathed. Oh, they will try to plead ignorance, as Hurd did yesterday, saying he briefly attended a meeting at which discussion ensued regarding the first phase of HP’s misguided and wholly inappropriate investigation into board leaks of confidential information, but that he did not stay to hear anything about the conduct of the probe that was ethically or legally objectionable.
Similarly, he claimed that he was sent, but did not read, an email message — he cannot deny that the message was sent to him, because, one presumes, it has been unearthed in one of many criminal investigations by government agencies into the legality (or lack thereof) of HP’s probe of its leaky board — regarding the ethically dubious tactics and allegedly illegal conduct of the second stage of HP’s board investigation earlier this year. It’s convenient that he didn’t read it; if he did, and he failed to do anything to quash the probe or notify the proper authorities of potential violations of the law, then his job as CEO would be hanging from the most tenuous of threads at this moment.
When claiming ignorance doesn’t work, though, HP senior officers have demonstrated that they’re extremely adept at throwing subordinates under the bus. Apparently, in a leak that presumably was approved by Hurd and Dunn, it was let slip yesterday that two senior HP employees, both of whom were involved in the investigation into board leaks, are in the process of leaving the company, and apparently not of their own volition.
For her part, Dunn explicitly blamed her minions for her downfall, saying that they conducted the investigation in a manner that she did not approve or know anything about. Some of the evidence, though, seems to suggest otherwise.
This entire board deserves to go — and not to anywhere salubrious. It has failed HP shareholders, employees, and customers. It was and is a disgrace to corporate governance.
This board now has made Mark Hurd its chairman, assuming that an autocratic carpet sweep can allow the company to put this unfortunate episode behind it and permit the focus to return to operations, products, revenue, and profits. Governance experts, however, take issue with that decision, saying the timing is poor (everybody on the board and at the most senior executive positions at HP is under a cloud of suspicion, if not under criminal investigation), and that it suggests HP has learned nothing from the ordeal.
Moreover, what can be said of the formerly irreproachable Mark Hurd? If we believe his statements yesterday about his own negligent oversight of the investigation and its aftermath, he is at best inept.
If he was sent an email regarding something as important as an investigation that he encouraged and demanded regarding board leaks to the media, then it stands to reason that he should have read it, doesn’t it? If he didn’t read it, what does that say about his attention to detail and his work ethic? If he did read it — and if evidence comes forward proving that he did so — then he’s a goner, just like Dunn.
The goal of yesterday’s press conference, it seems, was for HP to belatedly become proactive in addressing the scandal. The company wanted to offer a few sacrifices to appease its critics and burnish its tarnished brand. It also wanted to preclude further embarrassments.
I think it failed. Mark Hurd’s apology seemed forced, insincere, and entirely scripted, and his claims that he didn’t know what was happening and failed to read critical correspondence do not reflect well on him, irrespective of whether you believe him. In fact, HP’s apology, as Charles Cooper of CNET’s News.com wrote, was lame, raising more questions than answers and causing many of us to further lower our estimation of HP’s board and its C-level executives.
Yesterday, California attorney general Bill Lockyer stated that his investigation so far had not produced evidence that Mark Hurd had committed a criminal offense. Still, a spokesman for Lockyer asserted that the investigation wasn’t complete and that nobody was out of the woods yet.
But, make no mistake, the woods are burning. Getting out won’t be as easy as was assumed.