CEO Mark Hurd’s Resignation: was HP Wrong?

Ready for some business talk, “TMZ-style?” Because the more we read about Mark Hurd’s abrupt departure as HP’s CEO, the more we scratch our heads. In case you aren’t aware of the details, here’s how things reportedly went down…

Mr. Hurd met a woman named Jodie Fisher in 2007 while she was contracting for HP.  Ms. Fisher was a former R-rated movie actress (see her promo video here) who was recently on an NBC reality show called “Age of Love” (cougars compete with 20-somethings for the affection of an Australian tennis star… Fisher was eliminated by the 2nd episode). The details are unclear but somewhere down the line, something went wrong and Ms. Fisher accused Mr. Hurd of sexual harassment. (Her attorney, Gloria Allred, had already made a name for herself representing several of Tiger Woods’ mistresses.) That’s when things began to unravel…

According to quoted inside sources, Mr. Hurd settled the claim out of court with Ms. Fisher for an undisclosed sum.

Jodie Fisher

(Obviously this was a cheaper and less public option).  During HP’s investigation of this  claim, they uncovered some irregularities in Hurd’s expense accounts. It seems that anywhere from $1,000 – $20,000 were unaccounted for. (Update: some accounts say this was per transaction, and that the total was in the hundreds of thousands!) This money had allegedly been used to fund non-business related meals and trips on Ms. Fisher’s behalf. Although HP’s investigation later deemed Ms. Fisher’s harassment claims as unfounded, it was because of the incidental finding of fiscal foul play that Mr. Hurd was forced to resign.  The argument was that his behavior was unbecoming of a CEO of a large corporation such as HP.

While HP’s board voted unanimously to oust Mr. Hurd based on recommendations by analysts that the scandal could hurt the company, there have been dissenters. Jodie Fisher herself said in a statement that she was “surprised and saddened” that he was fired, in fact denying that she and Hurd ever had “an affair or intimate sexual relationship,” and that his ouster was never her intention.

Perhaps loudest of all critics has been Larry Ellison, Oracle CEO and close friend of Mr. Hurd. In an email to the NY Times, he had this to say:

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. The HP board admits that it fully investigated the sexual harassment claims against Mark 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”. Publishing known false sexual harassment claims is not good corporate governance; it’s cowardly corporate political correctness. 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 it’s going to cost them a lot more.

The final insult was when the HP board going to the press and suggested that Mark Hurd engaged in expense fraud over a few thousand dollars. 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. 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.

Since full disclosure seems to be the order of the day, I should disclose that Mark Hurd a close friend and I am deeply offended by what just happened to him. If the HP board is offended by my comments … so be it.

On one hand, we can understand why HP did what they did. Mr. Hurd did indeed betray HP’s shareholders (albeit for a pittance)… that sort of corporate malfeasance should never be tolerated – especially at his level.

On the other hand, this man is credited for turning around HP’s fortunes. Their stock went way up during his tenure, costs were cut, and key acquisitions (like Palm) were made to create a sustainable ecosystem for the company’s long-term future. And now he’s getting fired over a few thousand dollars with which he may or may not have been directly involved? Plus, if the allegations of sexual harassment were indeed false, why did HP have to bring those details to light?

We’re just gadget geeks, not corporate gurus… and we certainly don’t have all the details. What we do know is that this fiasco has already cost HP stock billions in the short-term, and that has competitors licking their chops. If something as silly as this affects our beloved webOS from succeeding the way we hope it will, then it will be a real tragedy. In this writer’s opinion, things don’t look so dour; as brilliant a CEO as he was said to be, Mark Hurd was only one person and obviously surrounded by a bunch of good talent. We’re not exactly saying HP was mistaken in their ruling… but to us, something about this whole ordeal really stinks.

What say you, dear reader? Should Mark Hurd have been forced to resign? What impact do you think this will have on webOS, if any?

– Sources: MercuryNews, TradingMarkets, DailyFinance