HP sauce: was IT firm right to oust CEO over harassment row?

Outgoing HP boss Mark Hurd isn't the first CEO to inflate his expenses. Was it worthy of the sack?

by
Last Updated: 31 Aug 2010

Mark Hurd's departure from HP has attracted a lot of interest - partly because he's one of the highest-rated execs in the US, and partly because of the prurient details of the case, which was linked to his relationship with Jodie Fisher, an HP contractor who might also be familiar to fans of Hollywood classics like Indecent Obsession and Body of Influence 2 (anyone?). But since he was sacked over dodgy expenses, not the harassment Fisher initially alleged, should he be feeling a bit hard done by (his hefty compo notwithstanding)? As the boss of HP, probably not...
 
Hurd's problems began in June, when Fisher (who’d been working for HP arranging/ hosting marketing events and the like) sent management a letter alleging sexual harassment. After an outside investigation, Hurd was cleared of the allegations – but the board apparently found ‘other irregularities’ in his expenses claims (totalling as much as £20,000). There was also some suggestion that he tried to conceal the nature of the relationship - even though both sides insist there was no funny business going on. It's all a bit murky, and you can’t help wondering whether we know the full story.
 
Hurd himself isn't complaining: the outgoing CEO has admitted to '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 Fisher has said she’s ‘saddened’ he lost his job, which we’re sure will be a big comfort to him.
 
Nonetheless, considering how well-regarded Hurd is - he's widely credited with spearheading HP's recovery in recent years - it's a little surprising that the board has taken such severe action (particularly since he'd offered to pay the money back). Stanford University Law School professor Joseph Grundfest told the Wall Street Journal that other companies would probably have considered a public reprimand.
 
However, HP’s board has more reason to be vigilant than most: following a boardroom spying scandal in 2006, the company enforced a tough new code of conduct, which required employees tasked with making a big decision to ‘consider how it would look in a news story’. The company now prides itself as a leader in corporate governance – so it has a reputation to live up to.
 
HP will hope to bounce back quickly; it's installed CFO Cathie Lesjak as interim chief exec, and the hunt is on for its next leader. Faced with increasing competition from all quarters, there have been whispers that its choice could hint at its focus for the next few years: while IBM is currently HP’s biggest competitor, there are rumours it could try to muscle in on Apple or Cisco’s turf. So watch this space.
 
And don't worry too much about Hurd: his exit has been smoothed by a $35m severance package. We could handle a battered reputation for that kind of money. 


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