Hurd on the Street: HP CEO Resigns After Sexual Harassment Inquiry
HP CEO Mark Hurd once advised, “Anytime you take a job, think to yourself what it would be like on your last day on the job, and what you’d like to say about your tenure on that day, and work your way backward.”
Bet he didn’t envision his last day quite this way.
Hewlett-Packard announced today that Hurd has resigned following an investigation into allegations of sexual harassment against him by a former company contractor. HP says the investigation found no violation of HP’s sexual harassment policy, though it did determine there were violations of its Standards of Business Conduct.
According to HP General Counsel Michael Holston, some inaccurate expense reports of Hurd’s revealed an undisclosed “close personal relationship” with a marketing contractor and “demonstrated a profound lack of judgment.”
So profound that Hurd couldn’t be allowed to remain in his position.
In a statement, Hurd said, “As the investigation progressed, I realized 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 and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP.”
Hurd’s resignation is effective immediately. He’s to be replaced on an interim basis by CFO and 24-year HP veteran Cathie Lesjak. Board members Marc Andreessen, Lawrence Babbio Jr., John Hammergren and Joel Hyatt are heading up the search for a permanent replacement.
Released in tandem with the announcement of Hurd’s departure, news that HP (HPQ) has raised its full-year outlook for revenue. “We thought it was important for people to appreciate that the announcement today has nothing to do with the operational performance of the company; it is all about Mark’s behavior and judgment,” Lesjak said during a conference call. “Mark…was a strong leader, but at the end of the day, he didn’t drive the initiatives. It was the organization.”
HP CEO Mark Hurd Resigns; CFO Cathie Lesjak Appointed Interim CEO
PALO ALTO, Calif., Aug 06, 2010 — HP (NYSE: HPQ) today announced that Chairman, Chief Executive Officer and President Mark Hurd has decided with the Board of Directors to resign his positions effective immediately.
The Board has appointed CFO Cathie Lesjak, 51, as CEO on an interim basis. Lesjak is a 24-year veteran of the company who has served as HP’s CFO and as a member of the company’s Executive Council since January 2007. She oversees all company financial matters and will retain her CFO responsibilities during the interim period.
Hurd’s decision was made following an investigation by outside legal counsel and the General Counsel’s Office, overseen by the Board, of the facts and circumstances surrounding a claim of sexual harassment against Hurd and HP by a former contractor to HP. The investigation determined there was no violation of HP’s sexual harassment policy, but did find violations of HP’s Standards of Business Conduct.
A Search Committee of the Board of Directors has been created, consisting of Marc L. Andreessen, Lawrence T. 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. HP’s lead independent director, Robert Ryan, will continue in that position.
Hurd said: “As the investigation progressed, I realized 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 and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP.”
“The corporation is exceptionally well positioned strategically,” Hurd continued. “HP has an extremely talented executive team supported by a dedicated and customer focused work force. I expect that the company will continue to be successful in the future.”
Robert Ryan, lead independent director of the Board, said: “The board deliberated extensively on this matter. It recognizes the considerable value that Mark has contributed to HP over the past five years in establishing us as a leader in the industry. He has worked tirelessly to improve the value of HP, and we greatly appreciate his efforts. He is leaving this company in the hands of a very talented team of executives. This departure was not related in any way to the company’s operational performance or financial condition, both of which remain strong. The board recognizes that this change in leadership is unexpected news for everyone associated with HP, but we have strong leaders driving our businesses, and strong teams of employees driving performance.”
“The scale, global reach, broad portfolio, financial strength and, very importantly, the depth and talent of the HP team are sustainable advantages that uniquely position the company for the future,” said Lesjak. “I accept the position of interim CEO with the clear goal to move the company forward in executing HP’s strategy for profitable growth. We have strong market momentum and our ability to execute is irrefutable as demonstrated by our Q3 preliminary results.”
Lesjak has taken herself out of consideration as the permanent CEO but will serve as interim CEO until the selection process is complete. Candidates from both inside and outside the company will be considered. The selection of a new chairman will occur in conjunction with the CEO decision.
The company does not expect to make any additional structural changes or executive leadership changes in the near future.