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HP’s Golden CEO Quits Amid Sex Scandal
HP CFO Cathie Lesjak, 51, will take over Hurd’s job
By: Maureen O'Gara
Aug. 11, 2010 06:00 AM
HP chairman, president and CEO Mark Hurd, 53, the buttoned-down golden boy the company brought in to clean up the mess left by his ousted predecessor Carly Fiorina, the guy who delivered on that charter beyond the company’s wildest expectations, quit suddenly this evening after a weeks-old company investigation by outside and inside legal counsel of sexual harassment charges.
The probe found that Hurd okayed a string of dodgy payments to the unnamed former marketing consultant who made the complaint. The complaint also named the company.
HP said the investigation of Hurd’s undisclosed “close personal relationship” found no violations of its sexual harassment policy, but it did find violations of its Standards of Business Conduct. It concluded that his “behavior and judgment” were suspect, not to mention his “integrity and honesty”.
Seems there were instances of compensation and reimbursement for jobs that were never performed and “inaccurate expense reports submitted by Mark or on his behalf.” Hurd is not the first HP officer to expense a love affair.
HP CFO Cathie Lesjak, 51, will take over Hurd’s job until the company can find a replacement. HP’s board has already established a search committee consisting of Marc Andreessen, Lawrence Babbio, John Hammergren and Joel Hyatt. They are expected to look both inside and outside the company. Lesjak, who remains CFO, has taken herself out of the running.
Hurd released a statement saying, “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. 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.”
HP’s lead outside director Robert Ryan said the board “deliberated extensively.” Andreessen called the situation “painful.”
Putting distance between Hurd and the HP’s performance, the company released its prospective numbers and raised its outlook at the same time.
It expects revenues this fiscal year of between $125.3 billion and $125.5 billion, better than the $124.5 billion the Street expected. It nudged up its non-GAAP earnings guidance from $4.45 to $4.50 to $4.49-$4.51.
It said it would earn an undiluted $1.08 a share on revenues of approximately $30.7 billion, up 11%, in its fiscal third quarter due out August 19.
HP’s stock still dropped 9% after hours.
The Wall Street Journal said HP stock is up ~134% since Hurd took over. His skill was in firing people.
The paper offered as possible replacements Ann Livermore, who got aced out of the top slot by Fiorina, who is now running for the US Senate; John Joyce, the HP director with private equity capital firm Silver Lake; Todd Bradley, the former Palm CEO who now runs HP’s PC unit; Cisco chief strategy officer and Chamber’s heir apparent Ned Hooper; Microsoft business division chief Steve Elop; former Oracle CEO-turned-VC Ray Lane; Motorola co-CEO Greg Brown; and former Microsoft exec now Juniper CEO Kevin Johnson.
Hurd has been making upwards of $30 million a year and could collect $53 million in severance unless of course the situation devolves into a spicy lawsuit.
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