Palo Alto, CA -- According to CNet.com’s Erica Ogg, HP’s CEO Mark Hurd who was brought in five years ago to right the ship, has now resigned Friday August 6 following an internal investigation of sexual harassment allegations. The resignation was effective immediately and he has been replaced on an interim basis by Cathie Lesjak who is HP’s CFO.
The accusation of Hurd came in June from a former marketing contractor who worked with HP. This may be splitting hairs, but HP’s internal investigation did reveal violations of HP’s “Standards of Business Conduct”, yet did not violate their sexual harassment policy, a unanimous decision from HP’s board of directors revealed.
The General Counsel for HP, Mike Holston, stated on Friday that Mr. Hurd had a “ ‘close, personal relationship’ with a female contractor’” which began during the fall of 2007 and continued on for two years. The relationship was not disclosed by Mr. Hurd to the board and further [Mr. Hurd] made “a systematic attempt” to cover up the relationship by providing compensation to the consultant as well as “incorrect expense reimbursement”. The name of the contractor as well as her company have not been disclosed.
The board first heard of the matter through the receipt of a letter from the contractor’s firm on June 29 of this year. The investigation was handled by investigators outside of HP. The conduct of Mr. Hurd, “‘exhibited a profound lack of judgement’” Holston revealed. CNet also reports that Holston told investors on Friday via a conference call that the expenses incurred by HP did not matter as much as “‘with integrity, with credibility, and honesty’”.
Via a prepared statement, Mr. Hurd said the following: “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.” As compensation for resigning, Hurd will receive $12.2 million in severance in addition to stock benefits provided he pursues no legal action against HP as stated in the separation agreement HP provided to the SEC Friday.
Hurd was originally brought in by HP to correct the mistakes made by former CEO Carly Fiorina who ironically enough now is running for a seat in the U.S. Senate in California. Her tenure as CEO and president was anything but smooth and Hurd was able to provide “stability, growth, and profits,” all of which escaped Fiorina while she was the head.
Ironically, it was his “by-the-book focus” paired with the ability to lower HP’s costs and make solid business decisions in terms of acquisitions that led to his success over the past five years. In fact through his actions, Hurd was able to more than double HP’s market capitalization from $44.6 billion in April 2005 to $108.1 billion as it stands now. He was also able to successfully navigate HP through an investigation of Patricia Dunn who was found to have led an effort to spy on reporters. This effort, Ogg points out, included three from CNet. The results of the investigation led to the resignation of Dunn and allowed for Hurd to assume the position of chairman in 2006.
So where does HP go from here? According to Ogg, the decision on a replacement will not be one that comes very soon. One person it will not be is the interim CEO, Cathie Lesjak who has already removed herself from the running. She has been with HP for 24 years and has been the CFO since 2007. A search committee has been formed which includes Marc Andreessen, Lawrence Babbio Jr., John Hammergren, and Joel Hyatt amongst others.
We will endeavor to keep you updated as things unfold. Check back with us for the latest news regarding this matter. The full statement by HP on the resignation of Mark Hurd can be found here.
