August 11, 2010

HP’s board, CEO Mark Hurd’s resignation, and the morality police circus in Corporate America

Corporate America has done it again. They pulled out their “morality” card and managed to topple one of the most powerful tech executives in the country. If you don’t know about HP CEO Mark Hurd’s resignation by now, I won’t get into details, just google “Mark Hurd resignation” and you’ll get thousands of links to the story. In short, Mark Hurd resigned abruptly late last week after investigations into a sexual harassment suit revealed that he had tweaked his expense accounts to hide the woman’s name.

I’m no big fan of Mark Hurd’s. I’ve been on the record criticizing him when it came to light that he was severely cutting back on HP’s R&D activities, and later again when he mocked cloud computing. But this?!

Granted, whenever you find sex, money, and power mingled together, you’re bound to have a good story. I intentionally waited a few days for more news to come down the pipelines before writing about this, but nothing new is coming out on the story.

From all the articles I’ve read, it’s clear Hurd did nothing illegal. HP is in no way compromised legally or monetarily. Hurd didn’t spend lavishly on this woman (he offered to pay any money owed HP, which was a few thousand dollars). They both deny any physical relationship. And he personally settled the case with the woman in question prior to his forced resignation.

So why was the HP board so adamant to let him go? It’s the case of morality policing that’s all too present within Corporate America. They didn’t like the fact that he hid the name of this woman he hung out with, and possibly had a crush on. Here’s the question: if he tweaked other information that had nothing to do with a male/female relationship, would they have forced him to resign? Highly unlikely, they'd probably give him a wrist slap, rightfully so. But, oh, there was a woman involved and he had to resign.

This is nothing new.

Back in 2005, Boeing forced its new (and very promising) CEO to resign after the board was tipped off about an affair he was having with a company employee who didn’t directly report to him. No joke. They didn’t want the CEO to have a consensual affair.

A few years back I worked with a small public company struggling to increase sales. The company’s top sales executive was costing the company about 2-3 pennies a share every quarter from his total compensation and travel expenses. If you follow stocks and earnings reports, you know that’s huge. They didn’t fire him for his lackluster performance or his ridiculously lavish travel expenses. They fired him because they didn’t like that he was having an affair.

So back to Hurd.

The board didn’t mind that he practically decimated the R&D organization at HP (he was even on record making fun of the R&D folks).

The board didn’t mind that he acquired Palm, the bottom-of-the-totem-pole mobile player on the brink of bancruptcy, for a staggering $1.2 billion in cash.

No that was OK. But they didn’t like that he had a crush on this woman and wanted to hide it.

Here’s what I have to say to these boards. How about you focus on the CEO’s strategies, leadership qualities, and overall performance and let the wives slap them across the face for cheating on them? It’s much more their business than yours.

The first trading day after Hurd's resignation, HP's stock dropped 10% on almost 10 times the average volume. The board is lucky the damages weren't worse.


And now that we’re moving on from Hurd, I think it’s high time HP promotes Anne Livermore to the CEO post. She’s a long time insider who was passed up in favor of Carly Fiorina back when the company was focused on hiring an outsider. She’s responsible for almost half the company’s revenues, and the most strategic businesses within HP (storage, servers, software, and services), and she’s probably the only person who has enough internal insight and operational capability to continue with the integration of the slew of HP’s recent acquisitions. Go Anne!

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