Shock as Hewlett-Packard boss quits after sex claims
Wall Street was in shock today after the chief executive of technology giant Hewlett-Packard was forced to resign over claims of sexual harassment and fiddling expenses to hide a secret relationship with a former contractor.
The swift and stunning downfall of Mark Hurd, 53, sent HP's stock tumbling yesterday.
Mr Hurd had a nearly bulletproof reputation on Wall Street for his stewardship of the world's biggest maker of personal computers and printers.
HP said he was forced out after the company discovered that he had a secret relationship with a woman who worked with the company on marketing matters.
He also falsified expenses and other financial reports to hide the relationship and help pay her for work she did not do, HP said.
Mr Hurd, who will get a £7.7m (€9.24m) severance payment, said it was a "painful decision" to leave but admitted 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".
Michael Holston, HP's general counsel, said in a conference call with analysts that Mr Hurd's actions showed "a profound lack of judgment" and that his "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".
"The facts that drove the decision for the company had to with integrity, had to do with credibility, had to do with honesty," Mr Holston said.
He added that the inaccurate financial reports "related to Mark's conduct with this specific individual and wasn't broader than that".
HP said it became aware of the relationship several weeks ago when the former contractor accused Mr Hurd and the company of sexual harassment.
An investigation found that HP's sexual harassment policy was not broken but that its standards of business conduct were.
Beloved by investors for his relentless cost-cutting - and scorned by thousands of redundant employees for the same - Mr Hurd was seen as HP's white knight, an outsider who rescued the company from the mess left behind by his ill-fated predecessor, Carly Fiorina.
Ms Fiorina was forced out in 2005 in the wake of a fight over her decision to acquire Compaq and an upheaval over her personality and business strategies.
Mr Hurd transformed the 71-year-old company from a computer and printer maker hooked on profits from printer ink into a company that looks a lot like its arch-rival IBM and is now a major player in technology services and other fast-growing areas.
Under Mr Hurd, HP's stock price doubled, its market value grew by more than €30bn and HP has become the world's top technology company by revenue.
Yesterday HP's shares closed trading on the New York Stock Exchange at $46.30, then tumbled to $41.85 as investors reacted to the stunning news of his resignation.
The company's chief financial officer Cathie Lesjak, 51, who has been with the company for 24 years, was named interim chief executive and HP has set up a search committee to look for a permanent replacement.
High-profile Los Angeles lawyer Gloria Allred, representing the woman contractor, said today "there was no affair and no intimate sexual relationship" between her and Mr Hurd.
