Mark Hurd, 53-year-old boss of the world’s largest computer company, is stepping aside due to what appear to be irregularities in his expenses.
Normally you might not expect the chief executive of a $125 billion company to have that sort of problem or, if he did, for it to become widely known. In this case, however, Hurd’s mis-steps were raked over by an outside legal counsel brought in to investigate allegations of sexual harassment made by a former HP contractor.
HP’s press release says: “The investigation determined there was no violation of HP’s sexual harassment policy, but did find violations of HP’s Standards of Business Conduct.”
As a letter to HP’s staff (published by CNet) puts it:
The investigation did reveal, however, that Mark had engaged in other inappropriate conduct. Specifically, based on the facts that were gathered it was found that Mark had failed to disclose a close personal relationship he had with the contractor that constituted a conflict of interest, failed to maintain accurate expense reports, and misused company assets. Each of these constituted a violation of HP's Standards of Business Conduct, and together they demonstrated a profound lack of judgment that significantly undermined Mark's credibility and his ability to effectively lead HP.
This is sad news for Hurd, of course, but it’s hard to have that much sympathy for a CEO earning $17 million a year.
The problem is that it could be even sadder for HP. At the time of writing, HP’s shares are down almost 10% on the news. That’s not good considering HP just increased revenues by 11% to $30.7 billion this quarter.
Hurd has done a good job at HP, which was only an $80 billion company when he arrived, five years ago. In fact, he took annual turnover past the mighty IBM, which has dominated data processing for 50 years.
Perhaps Hurd was lucky, in that he might have seemed a blessed relief compared with his predecessor, Carly Fiorina. As far as I could tell, she didn’t have much of a clue about the IT industry, though her controversial takeover of Compaq turned out better than I’d predicted*.
Hurd also pulled off a few big deals, including the takeovers of EDS ($13 billion), 3Com ($2.7 billion) and Palm ($1.2 billion). Of course, it wasn’t exactly rocket science for someone running a giant PC and printer company to figure out that he needed to bulk up in services and communications, but at least he actually did it.
Now much depends on the quality of whoever replaces Hurd. However, I’ve met the VP’s who run two of HP’s major businesses -- Todd Bradley runs PCs while Vyomesh Joshi runs printers -- and both impressed me a lot. I’ve not met Ann Livermore, who runs the $54 billion enterprise division, but she was a strong internal candidate for chief executive officer and lost out to Fiorina, who was brought in from Lucent. As a one-company woman who knows HP, Livermore might just get it this time.
HP says: “A Search Committee of the Board of Directors has been created, consisting of Marc Andreessen, Lawrence Babbio Jr, John H Hammergren, and Joel Z Hyatt, which will oversee the process for the identification and selection of a new CEO and Board Chair.”
I hope they pick one of the internal candidates. They should at the very least get someone who understands and can work with HP’s strong internal culture, as Hurd appeared to do, rather than someone who thinks it ought to be a copy of Apple.
* Wikipedia says: “Condé Nast Portfolio listed Fiorina as one of The 20 Worst American CEOs of All Time, characterizing the HP-Compaq merger as a widely regarded failure, and citing the halving of HP's stock value under Fiorina's tenure.” It's tough at the top....