Best of the Week
Most Popular
1.Canada Real Estate Bubble - Harry_Dent
2.UK House Prices ‘On Brink’ Of Massive 40% Collapse - GoldCore
3.Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - Nadeem_Walayat
4.Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - Marc_Horn
5.5 Maps That Explain The Modern Middle East - GEORGE FRIEDMAN
6.Gold Back With A Vengeance As Bitcoin Bubble Bursts - OilPrice_Com
7.Gold Summer Doldrums - Zeal_LLC
8.Crude Oil Trade & Nasdaq QQQ Update - Plunger
9.Gold And Silver – Why No Rally? Lies, Lies, And More Lies - Michael_Noonan
10.UK Election 2017 Disaster, Fake BrExit Chaos, Forecasting Lessons for Next Time - Nadeem_Walayat
Last 7 days
Students, It’s Time to Prepare Your Finances for the Years Ahead - 25th Jul 17
Stock Market and Gold Stocks Trend Forecast Update - 25th Jul 17
Saving Illinois: Getting More Bang for Its Bucks - 24th Jul 17
3 Stocks Sectors That Will Win in The Fed’s Great Balance-Sheet Unwind - 24th Jul 17
Activist Investors Are Taking Over Wall Street, Procter and Gamble Might Never Remain the Same - 24th Jul 17
Stock Market Still on Track - 24th Jul 17
Last Chance For US Dollar To Rally - 24th Jul 17
UK House Prices Momentum Crash Warns of 2017 Bear Market - Video - 22nd Jul 17
Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts - 22nd Jul 17
Warning: The Fed Is Preparing to Crash the Financial System Again - 21st Jul 17
Gold / Silver Shorts Extreme - 21st Jul 17
GBP/USD Bearish Factors - 21st Jul 17
Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing - 21st Jul 17
Is It Worth Investing in Palladium? - 21st Jul 17
UK House Prices Momentum Crash Threatens Mini Bear Market 2017 - 21st Jul 17
The Fed May Show Trump No Love - 20th Jul 17
The 3 Best Asset Classes To Brace Your Portfolio For The Next Financial Crisis - 20th Jul 17
Gold Stocks and Bonds - Preparing for THE Bottom - 20th Jul 17
Millennials Can Punt On Bitcoin, Own Safe Haven Gold For Long Term - 20th Jul 17
Trump Has Found A Loophole To Rewrite Trade Agreements Without Anyone’s Permission - 20th Jul 17
Basic Materials and Commodities Analysis and Trend Forecasts - 20th Jul 17
Bitcoin PullBack Is Over (For Now): Cryptocurrencies Gain Nearly A 50% In Last 48 Hours - 19th Jul 17
AAPL's 6% June slide - When Prices Are Falling, TWO Numbers Matter Most - 19th Jul 17
Discover Why A Major American Revolution Is Brewing - 19th Jul 17
iGaming – Stock Prices - 19th Jul 17
The Socionomic Theory of Finance By Robert Prechter - Book Review - 18th Jul 17
Ethereum Versus Bitcoin – Which Cryptocurrency Will Win The War? - 18th Jul 17
Accepting a Society of Government Tyranny - 18th Jul 17
Gold Cheaper Than Buying Greek Villas in 2012 - 18th Jul 17
Why & How to Hedge the Growing Risks of Holding Stocks - 18th Jul 17
Relocation: Everything You Need to do for a Smooth Transition Abroad - 17th Jul 17
A Former Lehman Brothers Trader: It’s Time To Buy Brick And Mortar Retailers - 17th Jul 17
Bank Of England Warns “Bigger Systemic Risk” Now Than 2008 - 17th Jul 17
Bitcoin Price “Deja Vu” Corrective Sequence - 17th Jul 17
Charting New Low in Speculation in Gold and Silver Markets - 17th Jul 17
Bitcoin Crash - Is This The End of Cryptocurrencies? - 17th Jul 17
The Fed's Inflation Nightmare Scenario - 17th Jul 17
Billionaire Investors Backing A Marijuana Boom In 2017 - 17th Jul 17
Perfect Storm - This Fourth Turning has Over a Decade of Continuous Storms to Come - 17th Jul 17
Gold and Silver Biggest Opportunity Since Late 2015, Last Chance at These Prices - 17th Jul 17
Stock Market More to Go - 17th Jul 17
Emerging Markets & Basic Materials Stocks Breaking Out Together - 16th Jul 17
Stock Market SPX Uptrending Again After Microscopic Correction - 15th Jul 17

Market Oracle FREE Newsletter

Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts

In Defense of the Hewlett Packard Board to Vote Out Mark Hurd

Companies / Corporate News Aug 18, 2010 - 03:13 AM GMT

By: Static_Chaos

Companies

Best Financial Markets Analysis ArticleThe HP board has taken a lot of heat for their decision to vote out CEO and Chairman Mark Hurd. But the HP board had no other choice in the matter. Some of the confusion surrounding the Mark Hurd saga is the fact that the media is looking for some bigger story than there actually is, after all, controversy sells in their business. Moreover, Mark Hurd who is trying to conduct spin and damage control to save his future corporate career is making a pretty clear cut, necessary, and deserved firing look more mysterious than it actually is. This is a no-brainer, and every board, including Larry Ellison`s would have come to the same conclusion: namely, Mark Hurd had to go.


In almost every account there is a lot of confusion about what really happened. The reason for this is that these are sensitive topics, and corporations have to utilize certain discretion when discussing the events regarding his resignation. But I have read enough about the case, and am pretty good at filtering through the politically correct corporate speak framed by high paid lawyers.

Here is essentially what happened: Mark Hurd had an affair with an event contractor for HP, it ended badly, she was hurt, and wanted to get even with him, so she filed a sexual harassment claim against Mark Hurd and HP. When HP looked into the merit of the claim, they noticed that this event contractor was paid through perks and other means a larger salary than normal for said job duties. This is a major problem for HP and the board. Hurd used his position to show favoritism towards an employee who he had an affair with.

Then Mark Hurd tried to cover up his affair and special treatment of this contractor by filing misleading and inaccurate expense reports, and other corporate reports regarding this contractor`s pay, and working schedule which he had to sign off on and approve. This is another huge red flag for HP and corporate ethics and represents a policy violation at the least. Furthermore, corporations work so hard at pushing corporate policy code of conduct training from the top down to the rank and file employees, and their CEO sets a dangerous hypocritical precedent. Again he had to go for this fact alone.

However, the ultimate reason that Mark Hurd had to go is that he put HP in a bad position. Through his poor decision making process Mark Hurd put HP in the position of having to defend itself against a sexual harassment claim, all because Mark Hurd put himself and HP in this situation in the first place by having a relationship with an employee, i.e., “they visited each other`s hotel rooms late at night.” Yes I am reading between the lines on this statement, and so should you.

HP cannot have a CEO who puts the company in this position. The CEO gets paid a large sum of money to essentially represent the company, to set the standard for all employees to follow, to essentially represent the HP brand for Main Street. Remember this is a public company, and any CEO understands their responsibility as a CEO, and what they represent as the high profile face of the company. Plainly, HP cannot afford to have a reckless CEO who brings about sexual harassment claims due to exercising poor judgment with an employee of the company. So the only person at fault here is Mark Hurd, and the board handled this saga the way any board of a fortune 500 company would upon similar circumstances, according to the book.

The shareholders were put in a bad situation by Mark Hurd, but they should be proud of the way the board acted decisively in this case, to limit the damage, and clean the slate for a bright future with the next CEO leader with no long-term lingering damage which some CEO scandals can inflict on shareholders if not handled properly. They revealed what occurred, didn`t cover up, and made the best decision for the long term interests of shareholders. The HP board should be applauded for doing the right thing in this case, unlike Enron, Arthur Anderson and many other boards who failed to conduct proper oversight of their CEO and protect shareholders from any reckless behavior which could damage long term shareholder value.

So now the question should be resolved as to why the board fired Mark Hurd, but what about the large severance payout. Well, this is complicated by employment contracts, and the way they are worded. Plus Mark Hurd settled with the contractor, so they couldn`t gain evidence for a termination case without severance.

All in all, HP probably could have fought this with Mark Hurd, but it would only drag things through the court, may not even have been a winnable case (I am sure they consulted legal on this fact). I know that the sums involved seem like a lot of money to the average person on the street, but once you factor in the cost of having this saga drag on through the next CEO regime, and distracting HP from competing with the likes of Dell, Apple, Cisco, and IBM in the ultra competitive IT landscape. It makes for economic sense to just clear the desk as soon as possible and move on.

Remember, this isn`t your father`s HP, HP is the largest technology company in the world based on the all important metric of revenues, not market cap which is often based upon an overly inflated stock price with unproven revenues a la Bidu. So even if it comes as a $40 million dollar write-off, as a shareholder it is well worth it to get this ordeal done with in one fell swoop, and move on to the bright future that HP is positioning itself for in the technology space over the next decade. And make no mistake technology, and the productivity gains and quality of life enhancements brought about through technological innovation is what has driven American and global business growth for the last twenty years.

By Static Chaos

http://static-chaos.blogspot.com

© 2010 Copyright Statoc Chaos- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife