Ouster of HP chief Hurd has look of panic
About a year ago, in comparing Hewlett-Packard Chief Executive Mark V. Hurd to his predecessor, the memoir-writing glamorpuss and novice political candidate Carly Fiorina, I wrote the following words:
“My guess is that Hurd won’t be writing a personal memoir any time soon, and if he ever does it will be indescribably boring.â€
At least as to the second half of that statement, I stand corrected. Or do I?
As followers of corporate highlights and lowlights have heard by now, Hurd’s extremely buttoned-down but financially prosperous reign at HP has blown out at the seams. On Friday, the company announced he was stepping down because of allegations of sexual harassment and improper expense reporting. The initial allegations came from Jodie Fisher, a contractor working with the CEO’s office as sort of a VIP host at executive events.
On the face of it, pretty weird and serious.
Over the following 48 hours, here’s what emerged.
An outside law firm investigated the sexual harassment allegations and found them to be groundless. Hurd, the company, Fisher and Fisher’s lawyer, the take-no-prisoners Gloria Allred, all say no sex was involved. Hurd settled Fisher’s complaint on undisclosed terms.
Company sources hinted broadly that Hurd had falsified expense reports to conceal that he had private dinners with the accuser. But Hurd denies that, stating that he didn’t even fill out his own expense reports. The total of questioned charges comes to less than $20,000 over about two years. Hurd evidently offered to repay the challenged sum.
In a conference call, the company claimed that shareholders had been “extremely supportive†of the board. Insofar as HP’s stock price fell more than 7% on Monday, the first day of the post-Hurd era, it doesn’t look as though HP’s new regime is starting off on the right foot, candor-wise.
During the five-year leadership of Hurd, 53, HP’s share price more than doubled, recovering from its crash under Fiorina. He turned HP into the world’s largest technology company, surpassing the mighty IBM in revenue. He’s leaving with severance and stock rights worth $30 million, maybe more.
So it’s proper to ask: What just happened?
To begin with, if one accepts at face value the public statements HP made about Hurd’s behavior — as opposed to the sniggering subtext the company also has provided — it’s hard to justify the thermonuclear step of bouncing him from his job.
If the company says there was no sexual harassment, that seemingly rules out that Hurd offered Fisher expanded or continued employment as a quid pro quo for sex. (Admit it, that’s the image that springs to mind when “sexual harassment†is mentioned.) Maybe flirtatious, salacious e-mails are floating about, even some written record of sexual importuning, but the board seems to be saying that Hurd didn’t cross a certain line.
As for the expense reports, Hurd disputes that he falsified his expense account. A suggestion floated Friday that Fisher got paid for work she didn’t do hasn’t panned out.
Nevertheless, HP says, Hurd demonstrated a “profound lack of judgment†in trying to conceal a “close personal relationship†with Fisher. The company doesn’t say what it means by “close personal relationship,†which only encourages people to imagine something fairly drool-worthy.
This whole affair is beginning to look as if the HP board panicked over appearances, rather than making a mature effort to weigh the facts at hand. I’ve heard that a turning point in the affair was a presentation by a corporate public relations consultant from Washington.
The consultant forecast a good six months of tabloid coverage of its CEO, with regularly scheduled news conferences by Allred and learned analysis by the folks at places like TMZ. That prospect freaked out the directors and helped swing a majority toward Hurd’s ouster.
In following through, the board in effect donned the cloak of zero tolerance: Sure, it’s only $20,000, but even that much, combined with the hint of a “conflict of interest†in Hurd’s relationship with Fisher, is enough to call into question every ounce of his integrity.
Yet zero tolerance is a dodge. It’s a way of shedding the responsibility to weigh all dimensions of a decision in the real world, not according to some rigid rule. This is the dereliction of judgment that leads authorities to expel schoolchildren for having butter knives in their lockers because, you see, no weapons are allowed in school. Or that guided Agriculture Secretary Tom Vilsack to fire Shirley Sherrod faster than he could get his thumb out of his mouth because the agency couldn’t tolerate even the appearance of racism, even after he learned there hadn’t been any racism.
To be fair, the HP board undoubtedly felt itself caught in a squeeze. It was facing the PR issues and legal questions, all while trying to negotiate a new, three-year contract for Hurd (worth a reported $100 million).
Then there was the burden of history. This is the third public boardroom blowup in just over five years at a company that under Messrs. Hewlett and Packard set the standard for judicious management. First came the ugly ouster of Fiorina in 2005, followed shortly by a scandal over board members’ alleged spying on rivals and reporters. Now this.
But it’s the board’s job to not get stampeded — to not let its agenda be found on the tabloid dial. Only four of the 11 current directors have been on hand for all three of the recent debacles, but that only raises the questions of why the board keeps booting the ball.
Is there a virus that the holdovers communicate to the newcomers? Or perhaps there’s a rule that recruits for the board must check their common sense at the door and show the capacity for making a bad situation worse.
It’s conceivable that Hurd’s behavior was worse than the official version being put out; that seems to be the point of the innuendo underlying HP’s official statements. If so, then the responsible course would be to disclose everything. That way, shareholders and customers could assess the events of the last few days without guesswork, and the next potential CEO wouldn’t have to wonder whether the board would fire him in an outburst of flinching.
If not, then maybe it’s the board that should have gone, not Hurd.
Cathie Lesjak, HP’s chief financial officer and interim CEO, has expressed confidence that HP’s business would suffer nary a hiccup from Hurd’s ouster because “disciplined execution has become part of HP’s DNA.†Funny she should say that, because Hurd’s execution was about as undisciplined as you can get.
Michael Hiltzik’s column appears Sundays and Wednesdays. Reach him at [email protected], read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.
