Hurd's double faults leave him out at HP

Mark Hurd's abrupt departure from HP over fake expense reports and a relationship with an employee is the second major scandal on his watch in his five-year tenure at HP.

HP CEO Mark Hurd liked to explain conceptual matters on large sheets of paper. There isn't one big enough to explain his actions over the past two years, which led to his abrupt departure Friday.
HP CEO Mark Hurd liked to explain conceptual matters on large sheets of paper. There isn't one big enough to explain his actions over the past two years, which led to his abrupt departure Friday. Stephen Shankland/CNET

Mark Hurd shone at Hewlett-Packard because of his reputation as a detail-oriented executive who shunned the spotlight and got results. On Friday, the tech industry learned about a different side of Mark Hurd.

HP's announcement that Hurd had been dismissed following an investigation into allegations of sexual harassment that turned up improper relationships and falsified expense reports stunned Silicon Valley, where Hurd was brought from the hinterlands of Ohio in 2005 to restore luster to one of America's most storied technology companies. The former Baylor University tennis star is widely credited with turning around HP's fortunes, bringing discipline, order, and a low-key work ethic to HP following several painful years and turning it into a business-school case study as well as the largest technology company measured by revenue.

Hurd career highlights

1979
Earns bachelor's degree in business administration from Baylor University.

Around 1980
Hired at NCR Corp., holds a variety of management, operations, and sales and marketing roles.

2002
Named COO of NCR.

2003
Named CEO of NCR.

Early 2005
Named CEO and president of HP to provide stability after the turbulent tenure of his predecessor, Carly Fiorina.

September 2006
Named chairman of the board of directors to replace Patricia Dunn, following embarrassing revelations that Dunn headed an effort to spy on reporters, including three from CNET.

Fall 2007
Starts "close, personal relationship" with female contractor that lasts two years.

May 2008
HP announces plan to acquire computer services firm EDS for $13.9 billion.

September 2008
HP announces plan to lay off about 25,000 people as it digests its EDS purchase.

February 2009
To avoid further layoffs amid recessionary times, Hurd announces across-the-board employees pay cuts , including a 20 percent cut to his own salary.

April 2010
HP announces it will buy Palm for $1.2 billion .

But while Hurd survived his first scandal at HP's helm--the 2006 pretexting affair that took down then-chairman Patricia Dunn and elevated him to the chairman's position--there was apparently no way out of this one. HP General Counsel Mike Holston said Hurd displayed a "systematic pattern" of inaccurate expense reports during a conference call with reporters, and an internal e-mail to HP employees said Hurd had "misused company assets" while involved in a two-year "close, personal relationship" with a female marketing consultant working on his behalf.

Gloria Allred, the famous Los Angeles lawyer known for high-profile cases and who is representing the woman involved with Hurd, declined to identify her but said in a statement "we want to make clear there was no affair and no intimate sexual relationship between our client and Mr. Hurd." Allred declined to comment further or hint at whether she was planning any litigation on behalf of her client against Hurd or HP, throwing the nature of Hurd's "close, personal relationship" with the woman into question.

An informal survey of business executives would likely turn up a pretty large number who have padded their expense reports from time to time, and the amounts involved were not material to the company, HP said, although it refused to disclose the dollar figures. However, Hurd never disclosed the relationship to HP's board, which it called a "conflict of interest," and may have provided the contractor with payment for services that were never provided.

It's a shocking end to a career at HP that most tech industry watchers would have put in the top 5 or 10 CEO performances over the last several years. Acting CEO Cathie Lesjak bent over backwards Friday to assure reporters and financial analysts that Hurd's departure is in no way related to the company's performance: HP actually raised guidance for the quarter while making the announcement of Hurd's departure.

Hurd spent 25 years at NCR, a historic if dowdy point-of-sale and ATM company previously based in Ohio, but now located in Georgia. He rose through the ranks there to become CEO in 2003, but was lured west by the search for a replacement for Carly Fiorina, who also left HP under less-than-pleasant circumstances.

Hurd was the top choice of a committee led by Dunn and board member Tom Perkins, wooed by his ability to understand HP's strengths and weaknesses like an insider and his ability to outline "a plan to fix things quickly and efficiently," according to Anthony Bianco's recent book on the HP pretexting scandal, The Big Lie.

However, while few would have envisioned back in 2005 that any CEO could have left HP more unceremoniously than Fiorina, Hurd has certainly set a new bar. Nonetheless, he'll receive a severance package valued at $12.2 million and will be able to exercise his vested stock options and restricted stock units under an agreement with HP signed and dated Friday.

It's hard to understate the reverence that was attached to Hurd's tenure as CEO within the financial and technology circles, although he kept a relatively low profile. Hurd was willing to bet big on HP, acquiring large companies such as EDS and 3Com as well as smaller ones like Palm to build HP into a technology giant almost without equal. No company has the same amount of breadth and depth across enterprise hardware, software, and services matched with the world's largest PC company and a legendary research arm.

Until it was yanked Friday afternoon, Hurd's biography on HP's Web site (courtesy of Google's cache) pointed to a 2009 Fortune article called "Mark Hurd's Moment," which described the CEO thusly:

It's simplistic to think of Hurd as a cost-cutter, but he's an unrepentant left-brainer. He personally manages a spreadsheet that tracks and analyzes his daily tasks. That kind of obsessiveness makes him an ideal CEO for these tough times. His ability to draw out and encourage his company's right-brain tendencies, though, will determine if Hurd is a CEO for the ages.

However, employees were reportedly less enthused. A recent Forbes article noted that HP's employees ranked lower than their tech industry counterparts on job-satisfaction rankings maintained by Glassdoor.com.

"Common complaints concern overwork, favoritism, and managers looking over their shoulders in fear of not meeting Hurd's inexorable goals," the article stated. "'A sweatshop,' says one low-level manager who recently departed. 'No one wants to quit now, but watch them go when the economy recovers.'"

"Although he's something of an operational nerd, he's political," said Bianco, who argued in his book that Hurd deserved more blame for the 2006 HP scandal and essentially threw Dunn under the bus to save his own career and reputation. "He plays people and he's good at it."

Although Americans do like their second acts, it's hard to imagine Hurd's career recovering from such a scandal. HP, which appeared to have finally shed the aftereffects of a decade characterized by the painful Compaq merger fight, board dysfunction over Fiorina, and an uncomfortable month in the spotlight during September 2006, is now in for another protacted year of uncertainty and doubt as it searches for a new CEO.

And HP employees of a certain age--assuming there are any left following several rounds of Hurd-ordered layoffs--are likely shaking their heads Friday evening at the fine mess that Bill Hewlett and Dave Packard's beloved company finds itself in once again.

Related stories:

HP CEO Hurd resigns over sexual harassment investigation
Analysis: What's next for HP after Hurd
HP statement on Hurd resignation
HP's letter to employees on Hurd resignation

About the author

    Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.

     

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