BizNomic

Mark Hurd, the CEO of Hewlett-Packard, who transformed the company from a computer and printer manufacturer to an integrated hardware manufacturer and service provider, has decided to move out of the company.

This decision was announced on August 6, 2010, after a month long inquiry into the scandalous sexual harassment charges against him by a female contract worker for Hewlett-Packard.

The charges against Hurd, surfaced towards the end of June, 2010, and the board of Hewlett-Packard ordered an enquiry into the situation immediately. During the investigation, Hurd was not found guilty for the harassment charges. Instead, the investigation revealed that Hurd had fallaciously charged expenses to the company for numerous dinners that he had enjoyed with the same woman.

This news has not been taken very well by the market, as Hewlett-Packard’s share lost almost 10 percent of its value on the stock market. This negative sentiment is a clear indicator of the fact that, investors are unsure about the growth of the company which has spent close to USD 20 billion on acquisitions to establish itself as a globally integrated hardware manufacturer and service provider. A few key acquisitions which Hurd made under his regime include HP’s USD 13.9 billion acquisition of Electronic Data Systems, the USD 2.7 billion purchase of 3Com Corp and the recently concluded USD 1.4 billion acquisition of Palm Inc.

Hurd’s exit has left a question mark on the strategy that he had kicked off through these acquisitions, leaving enough room for uncertainty and dampening investor confidence.

As per reports, Hurd has paid the woman to settle the case and apparently no payment was made by HP for the same. The investigation also revealed that Hurd had falsely expensed dinners with other people when he was out on dinners with the same female contract worker. Another instance revealed that she was paid for an event that was cancelled and Hurd had infact, travelled twice to interview her before she was hired. However, Hurd has constantly defended his stand. His lawyer said that he made no false expense reports and the trips that he had taken were already scheduled for events that he had to attend and, he interviewed her only because she was in the same city at that point in time. As for the cancelled event for which she was paid, it was a last minute cancellation and as per the terms of the contract the payment had to be made unless the event was cancelled 30 days in advance. Finally, Hurd chose to resign because a few board members believed that he had intimate relations with the contractor, inspite of the contractor’s lawyer officially saying that there was no sexual relation between the two.

Recent reports have also revealed that Mark Hurd has been given a whopping USD 40 million for severance pay to move out of HP. Also, the next candidate for the position of the CEO is likely to be an inside candidate. The strong contenders include – Todd Bradley, Head of Personal Computers and Mobile Devices; Vyomesh Joshi, Head of Printer Division; Ann Livermore, Head of Servers, software and storage; and Shane Robinson; Head Corporate Strategy and Marketing.

This is the third such unfortunate incident for HP in the past five years. The first was the resignation of Carly Fiorina in 2005, on account of difference in opinion that she and the board members of HP had for the company’s growth strategy. In 2006, Patricia Dunn was forced to step down as HP’s CEO, after she had approved a private investigation that involved accessing private phone records of company’s board members.

Let’s hope that Hewlett-Packard is able to hop back onto the growth trajectory that Mark Hurd had laid down for the company, and the next leader is well equipped to ward off any sort of scandal that may come his/her way.