HP CEO Hurd resigns over sexual harassment investigation
8/07/2010 11:45:00 AM
kenmouse
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Well, this is unexpected, HP has just announced that CEO Mark Hurd is stepping down. CFO Cathie Lesjak has been appointed as interim CEO.According to a press release, Hurd, 53, is resigning on the heels of sexual harassment charges by a former HP contractor. The company’s investigation concluded that there was no sexual harassment violation, however it did find that Hurd violated HP’s “Standards of Business Conduct.” On a conference call, HP’s General Counsel, Mike Holston elaborated further, explaining that the case centered around expense reports that were used to hide the true nature of Hurd’s close relationship with the contractor.
“Mark demonstrated a profound lack of judgment that seriously undermined his credibility and damaged his effectiveness in leading HP – and Mark agreed,” Holston said in a statement.
According to the details available, it seems like Hurd, who is married (at least for now), was entangled in a personal relationship with a hired contractor— an affair he tried to obfuscate with some fudged expense reports.
In a somewhat dejected tone, Hurd said stepping down was a “painful decision” and vaguely acknowledged that he displayed a lack of character.
“As the investigation progressed, 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. After a number of discussions with members of the board, I will move aside and the board will search for new leadership,” Hurd said in the release. “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.”
In the wake of Hurd’s abrupt departure, HP is on the hunt for a new CEO. The board of directors has already cobbled together a search committee, led by Marc Andreessen, Lawrence Babbio, Jr., John Hammergren and Joel Hyatt, to find a proper replacement.
In a word, HP’s official press release (see below) was awkward. It was a jumble of half-disclosures and odd statements that raised more questions than answers. Meanwhile, intertwined among comments on ethics are adamant assertions of HP’s financial health. Investors can take comfort in the fact that HP is raising its full-year outlook for revenues, but I’m sure the vast majority are appropriately wondering, “What exactly is going on here and what will happen next?” The stock fell several points in after hours trading.
Holston’s comments certainly shed important light on the circumstances, but investors are no doubt feeling a little unsettled with the CEO search still in progress.
Thus, amid controversy and a whirl of questions, Mark Hurd abruptly wraps up his five year tenure at HP, a highly profitable time for the company. Over the last five years, the stock price has more than doubled with Hurd at the helm, aggressively pursuing profits. For his part Hurd has been paid handsomely. Last year, for instance, Hurd pulled in $24.2 million, which was actually a step down from 2008, when he made a whopping $42.5 million.
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