HP CEO Mark Hurd resigns over sexual harassment investigation (updated with liveblog!)
By Nilay Patel 
posted August 6th 2010 5:51PM
posted August 6th 2010 5:51PM
Wild news out of HP just now -- CEO Mark Hurd has just resigned over a sexual harassment investigation. Hurd and HP's board of directors decided that he should resign following a sexual harassment claim against Hurd and HP by a former marketing contractor -- HP claims that although there was no violation of its sexual harassment policy, Hurd violated the company's standards of business conduct by submitting inaccurate expense reports that covered his relationship with the contractor. CFO Cathie Lesjak is taking over on an interim basis, and she's actually upping the company's forecasts for next quarter, saying Mark's resignation has nothing to do with HP's performance and everything to do with his behavior. A committee led by former Netscape CEO Marc Andreessen has been formed to find a new CEO; Lesjak has asked to be excluded, and HP declined to answer if Jon Rubinstein was being considered when we asked.Update: We liveblogged the media call -- check it after the break!
Update 2: A quick note from the investor call, which mostly repeated the same info -- interim CEO Cathie Lesjak said that although Mark Hurd was a "strong leader, at the end of the day, he didn't drive our initiatives -- it was the organization that supported Mark in driving those initiatives." Ouch -- given Mark's recent history of saying things like "we didn't buy Palm to get into the smartphone business," it certainly seems like he might have been a little distracted.
Update 3: We've just received the full text of the letter interim HP CFO Cathie Lesjak sent to all employees -- check it after the break.
This is to advise you that Mark Hurd, Chairman and CEO of HP, has resigned from the company effective immediately. Mark's resignation was submitted at the request of the company's Board of Directors as a result of inappropriate behavior in which he engaged that violated HP's Standards of Business Conduct and undermined his ability to continue to lead the company.
At the request of the Board I have agreed to serve as interim CEO until a new, permanent CEO is hired. During this time I also will continue to perform my duties as CFO. The Board has formed a committee to undertake a search for a new CEO, and candidates from inside the company as well as outside the company will be considered. I have informed the Board, however, that I do not wish to be considered for the role of permanent CEO, and I have removed myself from being a candidate for that position.
While this news is unexpected, HP remains in an exceptionally strong position both financially and in the marketplace. It is essential, however, that we remain focused and continue to achieve – if not exceed – our operational and financial objectives.
Because there is likely to be considerable media coverage of this announcement during the next few days, I wanted to be the first to share the facts with you.
Mark's resignation followed an internal investigation into a claim of sexual harassment asserted against Mark and HP by a woman who is former contractor to HP. The investigation was conducted by outside counsel in conjunction with HP's General Counsel's office and was overseen by the Board. Based on the investigation it was determined that the former contractor's claim of sexual harassment was not supported by the facts.
The investigation did reveal, however, that Mark had engaged in other inappropriate conduct. Specifically, based on the facts that were gathered it was found that Mark had failed to disclose a close personal relationship he had with the contractor that constituted a conflict of interest, failed to maintain accurate expense reports, and misused company assets. Each of these constituted a violation of HP's Standards of Business Conduct, and together they demonstrated a profound lack of judgment that significantly undermined Mark's credibility and his ability to effectively lead HP.
As we regularly remind all employees, each of us is expected to adhere strictly to the Standards of Business Conduct in all of our business dealings and relationships. This expectation applies with even greater force to HP's CEO and other senior executives who, given their positions, must set the highest standard for professional and personal conduct. The investigation that was conducted revealed that Mark had failed to meet this standard.
We recognize that this change in leadership is unexpected news. We also know that HP's success in recent years is due to the collective efforts and hard work of more than 300,000 talented employees who have formulated far-reaching strategies and achieved our objectives better than anyone else in the industry.
On Monday morning we will conduct an all-employee webcast to discuss this matter further and answer your questions. To join the webcast please click on this link.
In closing, I would like to thank each of you for your contributions to HP, and to ask that in the weeks and months to come we do everything to ensure that HP's future, like its past, is one of innovation, operational excellence, and the delivery of world-class products and services.
All the best.
Cathie
Liveblog of HP's Media Call:
3:22PM We're on the call now -- HP is saying that Mark Hurd had a close personal relationship with a contractor who was hired by the office of the CEO, and there were numerous instances of reimbursement where there was not a legitimate business interest for HP. Mark also submitted inaccurate expense reports to conceal his relationship with the contractor, and that violated HP's standards of business conduct.
3:22PM Interim CEO Cathie Lesjak on the line -- she's told the board that she doesn't want to be considered in the CEO search, but she says she's "never been more confident" in HP's future.
3:23PM "My principal priority as interim CEO is to continue our path that is giving us market momentum as we conduct the search for a new CEO."
3:24PM It's Q/A time -- this should be interesting.
3:25PM First question, from ABC News: "Can you tell us the amount of money involved in these inaccurate expense reports?" HP: We're not going to get into details, but there were numerous instances, and the issue was integrity at the highest levels. The amount is not the issue from the board's perspective.
3:26PM Next question, from NYT: "Can you explain the nature of the contractor and the circumstances of what happened here?" HP: This was a marketing contractor who worked from fall of 2007 through the fall of 2009 -- she was never an HP employee. Not getting into her age or description -- she's chosen not to come forward.
3:27PM Bloomberg: How did this come to the board's attention, and how was it dealt with? HP: The contractor's attorney sent us a letter, and the investigation began the next day.
3:28PM Dow Jones: Did Mr. Hurd provide payments to the contractor, or was this a matter of dinners and hotels? HP: We're not going to talk about Mr. Hurd, but HP paid the contractor's fees for services and her expenses -- there was a question about whether her services were actually provided.
3:29PM Financial Times: What were the services? HP: Marketing services.
3:29PM Investors Business Daily: How is the CEO search process going to play out, and what's the timeline? HP: The search committee is moving as quickly as they can.
3:30PM Reuters: You raised your guidance for the year -- what gives you that confidence? HP: We raised our guidance because of strong business performance.
3:31PM HP: Mark Hurd resigning has nothing to do with the operational performance of HP -- it has everything to do with his actions and integrity.
3:32PM Next question (from us!): Will Jon Rubinstein be considered for the CEO position? HP: We're not identifying any candidates at this time.
3:32PM PC Mag: Any litigation here? HP: Nothing has been filed, we have an agreement with Mark in place.
3:32PM And that's it! There's an investor call coming up, we'll let you know if we hear anything there.
very good news for palm fans!
It really sickens me that hes going to get a 12m severance package and can cash in ALL of his stocks plus his restricted stock. He's basically walking away with 30m+ for stealing from the company while he was making at least a million a year. So corrupt, just like giving away bonuses at bailed out companies!
BARBARA BOXER '10!
Whose slogan should be:
"I'm not endorsed by Sarah Palin".
Seriously, the board heard of the Zeen naming fiasco yesterday, and today he's toast...
EngadgeTMZ!
too bad for investors their money was getting spent on some booty call
C.E.-OH NO HE DI INT!!
Oh nooooooes, what becomes of the Slate and Web OS now?
Wow! Epic event! Hope this doesn't get in the way of us seeing the glory of WebOS on future devices.
My hat's off to you, Engadget - you covered the hell outta this. Well done.
He was paying a contractor money for non-business related work and the contractor just happened to be someone he is having relations with?
That is stealing from the company. Why isn't this guy in PRISON?
THIS is why we have shitty CEOs and corporations. They rob companies, shareholders and consumers, and instead of sending them to prison we give them huge severance packages!
@bernardino
It's a case of one hand helping the other. If the same thing happened to you, you'd want the same treatment. You are on the board of directors, aren't you?
I really hope they give Jon Rubinstein a decent chance at the CEO position. He has the charisma and likability needed in a CEO. Also he will hopefully put WebOS in the forefront and get that new WebOS phone going.
what an opportunity .. i think Jon Rubinstein just jizzed in his pants
is this going to delay my HP web o/s printer?
I think now that Mark Hurd is available, Nokia should try to get him as CEO. Nokia really needs some new management, and Olli-Pekka is not really getting the company anywhere.
Sexual harassment pan-da!
WTF?! Engadget isn't supposed to report REAL news.
Just another pig with his snout in the trough. He'll move onto the next trough with his mates and continue.
Apologies to all the loyal employees who have left or required to leave because of this pig and all the other pigs eating it large across the world
This article is a stretch for TC, and even more so for CG. It does bring to light the absurdity of this situation. Maybe her confidential settlement required her to put out this release, but honestly, if the release reflects her true sentiments than she is a horrible person for thrusting this matter into the public. http://procleansegoldwarning.com