Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

HP chief resigns over expenses fiddle

by
10th Aug 2010
Save content
Have you found this content useful? Use the button above to save it to your profile.

The chief executive officer of HP, Mark Hurd, resigned on Friday 6 August after a disciplinary board determined that he had violated the company’s standards of business conduct.

Hurd was initially investigated by independent lawyers over allegations of sexual harassment brought by Jodie Fisher, a marketing consultant and actress who appeared in films such as ‘Intimate Obsession’ and ‘Body of Influence 2’.

Fisher was taken on as a "greeter" to work at HP events over a two year period, typically earning $1,000 to $5,000 in expenses for meetings attended by around 60 HP prospects and staff members. 

She commented: “Mark and I never had an affair or intimate sexual relationship. I first met Mark in 2007 when I interviewed for a contractor job at the company.” She added that she had resolved her claim privately.  “I was surprised and saddened that Mark Hurd lost his job over this. That was never my intention.”

In the company’s official statement on his resignation, Hurd said: “As the investigation progressed, I realised 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.

“After a number of discussions with members of the board, I will move aside and the board will search for new leadership. 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. I want to stress that this in no way reflects on the operating performance or financial integrity of HP.”

Chief financial officer Cathie Lesjak, a 24-year HP veteran will take over as interim CEO while the company’s board looks for a successor for Hurd, who held the post of chairman and president as well as CEO.

Hurd was in 2005 after the company dispensed with its previous CEO Carly Fiorina Initially, Hurd was seen more as a cost-cutter and operations specialist. Hurd overturned that impression when he turned HP into the world’s largest technology company by revenue with the acquisition of EDS in 2009 and built up a reputation as one of America’s star CEOs.

In the hours after his resignation last week, HP dropped 8.3% on the NASDAQ exchange.

Once seen as the paragon of propriety within the IT industry, HP has become something of an executive soap opera as it has struggled to find a new role for itself in the 21st century technology industry.

“This was a very sedate, low-key engineering company that has just gone through the strangest period,” commented Jeffrey Sonnenfeld, a management professor at Yale University's School of Management. “It's an incredibly tragic irony.”

Tags:

Replies (3)

Please login or register to join the discussion.

avatar
By Oppco
12th Aug 2010 12:14

Mark Hurd

I'm afraid his brains were in his trousers........

Thanks (0)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
12th Aug 2010 12:59

Interesting comments on HR Zone

This story has attracted a lot of attention across the Web. Our sister site HR Zone picked up the personnel angle and reported that while Hurd was highly respected within the industry, he was viewed somewhat less positively by HP staff (particularly those who were victims of his cost-cutting axe).

According to Glassdoor, a site where employeesanonymously rate their bosses, Hurd had the lowest employee approval rating of any CEO in the IT sector. Only 34% of HP staff signed up to the site approved of his performance; in contrast 98% of Apple Computer employees approve of Steve Jobs. 

Negative comments cropped up on various internet message boards. “We had an office party this Monday at HP HQ,” was one; “God he deserved it. The way we (EDS) employees were treated after the merger, was just terrible,” was another. A third raged: “I love watching all this happen to him, couldn’t have happened to a better guy. Thanks Mark for making me take all that ethics training - looks like YOU were the one who needed it.”

A decisive factor in Hurd's downfall was his failure to live up to 'The HP Way', a core ideology forumlated by founder Bill Hewlett that, he said, "includes a deep respect for the individual, a dedication to affordable quality and reliability, a commitment to community responsibility, and a view that the company exists to make technical contributions for the advancement and welfare of humanity."

Filing dodgy expenses claims doesn't appear in that list.

In the view of Cathie Lesjak, who is moving up from CFO to guide the firm while it finds a new CEO, the resignation was "all about Mark's behaviour and judgment" for failing to disclose the conflict of interest through his relationship with Fisher, failing to maintain accurate expense reports and misusing company assets. "Each of these constituted a violation of HP's Standards of Business Conduct," she said.

Thanks (0)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
13th Aug 2010 11:57

Oracle's Larry Ellison has his say

Oracle CEO Larry Ellison has issued a blistering attack on the HP Board of Directors, accusing them of "cowardly corporate political correctness” in the Hurd affair, reports our sister site, PublicTechnology.net.

Ellison, a personal friend of Hurd's, wrote in an enraged email to the New York Times: "The HP Board just made the worst personnel decision since the idiots on the Apple Board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn't come back and saved them. HP had a long list of failed CEOs until they hired Mark who has spent the last five years doing a brilliant job reviving HP to its former greatness. In losing Mark Hurd, the HP board failed to act in the best interest of HP's employees, shareholders, customers and partners.”
 
Ellison noted that the HP board fully investigated the sexual harassment claims against Hurd and found them to be utterly false. "Nevertheless, the HP board then voted 6 to 4 go public with this sexual harassment claim against Mark because six of the directors believed that 'full disclosure was good corporate governance',” he said. “Publishing known false sexual harassment claims is not good corporate governance; it's cowardly corporate political correctness.”
 
He added that the financial cost of the decision was high and likely to get higher. "Those six directors caused HP to lose a nearly irreplaceable CEO. Those six directors who voted against Mark can try hard to hide behind a claim of 'good corporate governance' but their decision has already cost HP shareholders over $10 billion... and my guess (is) it's going to cost them a lot more.”
 
Ellison poured scorn on the the idea that that Hurd had filled out fraudulent expenses claims, a reason given to the media and investors for his resignation. “This is not credible. Mark Hurd, like most other CEOs, does not fill out his own expense reports, so even if errors were made Mark didn't make them,” argued Ellison. "What the expense fraud claims do reveal is an HP board desperately grasping at straws in trying to publicly explain the unexplainable; how a false sexual harassment claim and some petty expense report errors led to the loss of one of Silicon Valley's best and most respected leaders."
 
Ellison has himself been on the receiving end of false allegations of sexual harassment, even subjecting himself to intimate court room cross examination to clear his name. He won his case by proving that the woman who sued him had forged an incriminating e-mail.

If you want more background on this corporate soap opera, Finance Week has published a profile of CFO and interim CEO Cathie Lesjak.

Thanks (0)