Daily Archives: August 7, 2010

Questions Abound in Wake of Hurd’s Ouster

Not much happened this past week. Oh, except for the sudden resignation of Mark Hurd, HP’s now-former chairman and CEO, under mysterious circumstances and an obstinate cloud of suspicion.

I don’t think this story has played itself out. If the business press keeps digging, we’ll probably learn a lot more about the circumstances that precipitated Hurd’s abrupt ouster from the company he led for the last several years. The official story from HP,  as to what transpired and why Hurd had to go, doesn’t feel like the real story.

No Sexual Harassment

What we’ve been told is that an independent marketing contractor made sexual-harassment allegations against Hurd on or about June 29. HP’s board investigated the charges, and it found “numerous instances” in which Hurd submitted inaccurate expense reports intended to conceal Hurd’s “close, personal relationship” with the mystery woman, whom HP and her lawyer, Gloria Allred — yes, that Gloria Allred — refuse to identify.

At this point, I hasten to add that HP says it found no evidence of sexual harassment by the HP chieftain. What’s more, Allred wished “to make clear that there [had been] no affair and no intimate sexual relationship between our client and Mr. Hurd.”

What HP did find, according to the company’s general counsel, Michael Holston, was that Hurd’s behavior reflected a “profound lack of judgment” and violated HP’s standards of business conduct. Perhaps Holston is alluding exclusively to Hurd’s bogus personal expenditures on the company’s dime, which covered receipts for expenses ranging from $1,000 to $20,000 over two years, including meals and travel.

More Questions than Answers

As I mentioned before, though, it sure feels as though there’s a hidden dimension to this scandal. Questions abound.

Considering what HP has chosen to disclose about the matter, why didn’t it fire Hurd for cause instead of giving him a generous severance package? HP’s Omerta apparently is back with a vengeance. What about Allred’s client? Perhaps she’s walking away with a generous parting gift, too. Silence can be bought, though it doesn’t come cheap.

What was the nature of the relationship between Hurd and the mystery woman? It was’t sexual, evidently, but it was a “close, personal relationship.” Did it involve the disclosure of confidential, insider information by Hurd?

SEC Curiosity

This woman worked as a contractor on HP CEO forums that ran through the fall of 2009. If you will recall, the fall of 2009 was when HP acquired 3Com. Just before that acquisition was announced, some rather unusual trading in 3Com shares occurred, triggering the curiosity of the Securities and Exchange Commission (SEC). Did Hurd reveal anything to the mystery contractor that should not have been disclosed?

The SEC might wish to pursue that line of questioning.

There are other aspects to this story that I feel compelled to mention. Mark Hurd was lionized by shareholders and market analysts for increasing the market capitalization of HP during his reign. His actual accomplishments in that regard, however, might have been short-lived and overstated. That’s an argument that has been advanced repeatedly, including today, by Eric Jackson.

No Tears to Cry

While some shareholders might mourn Hurd’s passing, a large number of HP employees, past and present, won’t be shedding any tears for their former strongman. Hurd was reviled by many of them. It was’t for nothing that he had his own high-priced security detail and equipped HP’s executive entrance at its Palo Alto headquarters with the latest in physical-security gadgetry as well as a healthy dollop of old-school barbed wire.

Fear and loathing were palpable at Hurd’s HP. The CEO liked it that way. As recounted by the Los Angeles Times earlier today, Hurd made the following statement to the Wall Street Journal when he came aboard as HP’s CEO:

“As I’ve cut costs, I’ve seen some employees crying [when they've been laid off] and even brought to their knees. It’s painful — but as CEO these days, you face relentless pressure from shareholders.”

Should I say what I think here? In this case, I’ll keep my counsel. It’s better than having to hire one.