San Francisco Hewlett-Packard Co. ousted its CEO on Friday for allegedly falsifying documents to conceal a relationship with a former contractor and help her get paid for work she didn’t do.
News of Mark Hurd’s abrupt departure sent HP’s stock tumbling. Shares of the world’s biggest maker of personal computers and printers have doubled in value during his five-year stewardship, and HP became the world’s No. 1 technology company by revenue in that time.
The company said it learned about the relationship several weeks ago, when the woman, who who did marketing work for HP, sent a letter accusing Hurd, 53, and the company of sexual harassment. An investigation found that Hurd falsified expense reports and other financial documents to conceal the relationship. The company said it found that its sexual harassment policy wasn’t violated but that its standards of business conduct were.
Hurd’s “systematic pattern” of submitting falsified financial reports to hide the relationship convinced the board that “it would be impossible for him to be an effective leader moving forward and that he had to step down,” HP general counsel Michael Holston said on a conference call Friday with analysts.
“The facts that drove the decision for the company had to with integrity, had to do with credibility, had to do with honesty,” Holston said, declining to elaborate.
Holston said the inaccurate financial reports related only to Hurd’s personal expenses.
Hurd acknowledged 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.” Hurd, who is married with two children, will get a $12.2 million severance payment, and nearly 350,000 shares of HP stock worth about $16 million at Friday’s closing price, plus an extension of options to buy up to 775,000 HP shares.
High-profile Los Angeles attorney Gloria Allred said she is representing the woman and “there was no affair and no intimate sexual relationship” between her client and Hurd. Allred, reached by The Associated Press late Friday, declined to comment further.
The company’s chief financial officer, Cathie Lesjak, 51, was named interim CEO. She has been with the company 24 years but has taken herself out of the running to fill the position permanently. HP has set up a search committee to look for a permanent replacement.
Other notable business news:
• Consumers cut back on credit cards again in June. Consumer borrowing fell in June for a fifth straight month as households keep cutting back on credit card use. Borrowing dropped at an annual rate of $1.3 billion in June, the Federal Reserve reported Friday. That marked the 16th drop in overall credit in the past 17 months.
• With ban looming, some Saudis sell off BlackBerrys. Some Saudis were trying to sell their BlackBerrys ahead of a ban on the smart phone’s messenger service in the kingdom — but with few willing to buy, they’re having to slash prices. The Saudi telecoms regulatory agency announced earlier this week the service would be halted Friday. By mid-afternoon, it was still operating. One Saudi newspaper, Okaz, said the halt would begin at the end of the day, at midnight.