HP boots Hurd after compromising plays
August 9, 2010
Hewlett-Packard assembled a hasty investor briefing late Friday to report that its CEO was being dismissed because Mark Hurd's "professional and personal behavior that compromised his ability to lead the company." The behaviour includes $20,000 in fraudulent expense reporting; his personal payout to "cougar" actress Jodie Fisher who has a "close personal relationship" to the married Hurd; and an agreement tied to a $28 million golden parachute for Hurd that he won't sue HP over his immediate resignation order. HP guarantees him $12.2 million, with the rest expected in vested stock sales.
The flash-fire departure eclipses the Carly Fiorina ouster of 2005, and chairman Patricia Dunn's spygate "pretexting" resignation of 2007 over the company's last decade of management behavior. Fisher appeared as shown above in two episodes of the NBC reality series "Age of Love", one of 13 contestants on an 8-episode program that aired the same summer that Hurd hired her. The NBC web site for the show said Fisher was trying to "win the heart" of a 30-year-old tennis player as one of the "Cougars" dating Mark Philippoussis. Internet prowlers over the weekend discovered a demo reel of Fisher's acting produced for her and posted it to YouTube.
But HP assembles its troops today for a private webcast to debut the newest episode for the storied company. The story is that business as usual is the order of this day and each one to follow. Business, said HP's leaders on Friday, couldn't be better.
"Mark's resignation was in no way related to HP's operational or financial performance, both of which remain strong as evidenced in the earnings we pre-announced today," said HP General Counsel Mike Holston. "Rather, it was the result of his professional and personal behavior that compromised his ability to lead the Company."
Over a swift 48-hours after that briefing, details of Hurd's indiscretions surfaced about the 50-year-old Fisher, whose personal relationship to the CEO which began in 2007. Fisher, who's been an actress over the last 20 years as well as a sales executive, said she was hired by Hurd to work "at high-level customer and executive summit events held around the country and abroad. I prepared for those events, worked very hard and enjoyed working for HP." She also added in a statement that she's resolved a sexual harassment charge against Hurd privately.
Hurd's ouster was never her motive, she said. "I was surprised and saddened that Mark Hurd lost his job over this," she said. "That was never my intention."
Today HP intends to find a new CEO and chairman to lead a company that was at the pinnacle of computer industry revenues when the compromising behavior surfaced. Analysts are awash in wonder over how a Hewlett-Packard leader, credited around the industry with the company's turnaround, could be dismissed as just another executive player. HP said the board knew nothing of Hurd's relations with Fisher, and that it "found numerous instances where inaccurate expense reports were submitted by Mark, or on his behalf, that intended to or had the effect of concealing Mark's personal relationship with [Fisher]."
Hurd has been silent in the tale of the affair and wasn't part of the Friday HP briefing. When he joined HP in 2005, however, I reported in a podcast that he came into the job sounding different than the Carly celebrity he was replacing. "I will do everything in my power to live up to the leadership integrity that Bill Hewlett and Dave Packard set up for this company," Hurd said during his hiring press conference.
Hurd set up several private meetings with Fisher upon hiring her three years ago. As an HP contractor for top-level summits, she was on display to hundreds of customers and HP's executives. Hurd personally filed expense reports related to Fisher's work, but only in the amount of $20,000. HP has paid Hurd $42 million in compensation over the past year; those expenses amount to about an hour's pay for the 53-year-old CEO.
"Mark and I never had an affair or intimate sexual relationship," Fisher said in a statement she released through her attorney Gloria Allred. "I wish Mark, his family and HP the best." Allred levied a sexual harassment charge at HP on behalf of Fisher in June. Fisher's probably been seen by the largest audience in her work in the cast (shown above) of Age of Love; her movie credits for titles like Body of Passion and Silk Stalkings 13 years ago are offset by what Allred described as "work for the House Select Committee on Narcotics Abuse and Control."
Allred, a 69-year-old legal legend, was described in the June Harper's Baazar as a lawyer who "has also become the go-to attack attorney for celebrity scandal, a ferocious legal pit bull who defends women against the likes of Charlie Sheen, Eddie Murphy, and Rob Lowe." The magazine said Allred "reportedly helped secure $10 million of hush money from the disgraced golfer Tiger Woods" on behalf of Woods' paramours.
In the initial press release about his resignation, Hurd said "I realized that 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." The company said its board concluded, and Hurd agreed, it would be impossible for him to be an effective leader moving forward, and that he had to step down.
HP said at the analyst briefing that Hurd provided "strong leadership since he joined HP five years ago." But director Marc Andreessen said no single executive is a keystone at the company.
"HP is not about any one person," he said. "Let me tell you what HP is about. This company is more than 300,000 strong. The dynamic of these amazing people around the world working together as a unified team is the driver for the success of our business. We also have a broad and deep executive bench strength that will continue to lead this Company and drive our performance-based culture."
Andreessen is part of a four-member search committee that includes director Larry Babbio, a former Verizon president who settled a lawsuit in January over illegal low-interest loans to the Stevens Institute of Technology; Joel Hyatt, an attorney who founded the Current TV cable network with Al Gore in 2005; and director John Hammergren, CEO of drug wholesaler McKesson Corp. McKesson sits in the 3000's history as the owner, for a time, of Amisys, the healthcare provider software maker. Hammergren said when taking over rival healthcare firm HBO "We poisoned ourselves by acquiring a company that wasn't run on the same ethical platform that we've run our company on for 170 years."
HP's new interim CEO, Cathie Lesjak, has been a fixture on briefings with analysts for the past five years, serving as the company's CFO. A 24-year-veteran of HP, Lesjak has removed herself from consideration at HP's next CEO. At the briefing about Hurd, she said, "In terms of the initiatives that you asked that Mark is championing, Mark was a strong leader, but at the end of the day, he didn't drive the initiatives. It was the organization that supported Mark that drove those initiatives, and there will be no change in those."
Going forward will be feasible without missing a step, she said, because HP has reorganized itself since the Fiorina era. "Clearly, Mark had a level of leadership on the Executive Council. But, there is really no confusion. This is a huge company and people -- the top leaders of our businesses needed to know how to drive their own businesses. And over the last five years, frankly, we've really changed the Company dramatically."
"You think about five years ago, and you think about the diversity today of our profit pool five years ago, [our Imaging and Printing Group] was the vast majority of our profit. Today, the segments have -- we have balanced profitability across all of our segments. We've got market leaders leading segments and we've got very strong management teams that are driving those results. And so, I don't think you're going to see us miss a beat on this." HP's latest reports show far less balance between its enterprise computing segment and most of the rest of the company, but services and printers now contribute equally to HP profits.
Andreessen -- at age 39, the most recent board director named in 2009, and the founder of the Mosaic browser and Netscape Corp. -- said HP can't say much about what it's looking for in its next CEO.
"We are going to move as fast as possible," he said about the search group just formed. "But we are going to make sure that we get the right CEO for the company. We do not have -- not in a position to discuss detailed criteria, but we are certainly looking for somebody with very strong leadership capabilities, with both outstanding strategic and operational skills. We will be considering both internal and external candidates."
"And fundamentally, we are going to make sure that we pair a great CEO with this great company."