HP’s Board Is Vindicated

In August, Joe Nocera of the New York Times tossed out quite a few negative assessments of the HP board’s firing/resignation of former CEO, Mark Hurd, to wit:

When pressed, H.P. said that Mr. Hurd had fudged some expense reports. (It also said that his relationship with the woman, a small-time H.P. contractor, was a conflict, even if no sex was involved.)

H.P. says its board should be applauded for not letting Mr. Hurd off the hook. But this is just after-the-fact spin. In fact, the directors should be called out for acting like the cowards they are. Mr. Hurd’s supposed peccadilloes were a smoke screen for the real reason they got rid of an executive they didn’t trust and employees didn’t like.

 So instead, it ginned up a tabloid-ready scandal that only serves to bring shame, once again, on the H.P. board.


However, a Wall Street Journal investigation brought out information that would have backed any board into the “he has to go” corner.  A November 6, 2010 article in the Journal (“Accuser Said Hurd Leaked an H-P Deal,” (Robert A. Guth, Ben Worthen, and Justin Sheck) reveals the following:

  • Jodie Fisher, the vendor who came calling at H-P headquarters with attorney Gloria Allred, alleged that Mr. Hurd disclosed that H-P planned to buy EDS;
  • Mr. Hurd told investigators for the company that he did not know Ms. Fisher acted in adult movies, but said investigators found that Mr. Hurd had visited Web sites that featured Ms. Fisher’s pornographic scenes: “erotic4u.com” was one the gumshoes found on his computer.;
  • Mr. Hurd’s expense claims listed his dinner guest as his security guard, Denis Lynch, when his dinner guest was Ms. Fisher, and Mr. Lynch told investigators he was nowhere near the claimed dining sites;
  • Mr. Hurd told the investigators at one point that he did not know Ms. Fisher well, but then later indicated that the two had a “very close personal relationship.”; and, well, it is too painful to disclose more.

One can understand why the HP board would utter a collective, “Yikes.” Some insights all around:

  • Pundits and Larry Ellison sometimes don’t have all the info — The HP board was gracious enough to help Mr. Hurd save face with the expense account explanation and few details on what truly was conduct unbecoming a leader.  Joe Nocera and Larry Ellison jumped on the board without full information.  Mr. Ellison wrote in an e-mail, “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago.”  One big distinction is that Mr. Jobs’s departure was over strategic disagreements – those happen and they are under the business judgment rule. Reasonable minds can differ and be wrong. Reasonable minds should not differ on issue of trust and HP’s board faced an issue of trust (see below). How interesting that some folks got it right from the get-go, even without the November revelations about the details of the Hurd investigation.  With their wisdom about human nature, their business experience, and their understanding of the components and characteristics of long-term survival, the Barometer, leadership professor A. Allan Lind of Duke, David Costanza, OB professor at George Washington, and Paul Hodgson of  Corporate Library all understood that the HP board knew more that was not being disclosed and also realized that what was disclosed by that board was sufficient in and of itself for resignation/termination because of the impact of the indiscreet conduct on the company culture ;
  • Trust, once lost, is difficult to regain and a queasy board can’t work with a CEO who has lost the board’s trust;
  • This stuff comes out – despite the debate among board members of “To disclose or not to disclose,” it was not their call to make.  Natural forces are in charge of information, particularly juicy stuff.  Remember the Hell’s Angels’ motto, “Three people can keep a secret if two are dead.” And if Gloria Allred is involved, the secrets are coming out sooner. Their aborted explanation resulted in the Nocera assessment and too many unanswered questions. Take your pain now or take it later, but bad news will percolate to the surface;
  • Mr. Hurd’s assistant should have thrown down the penalty flag on the dinners that she set up in order to save her boss.  Her e-mails to Ms. Fisher demonstrated her knowledge of the arrangements and served to provide the set-up for questioning expenses that listed Mr. Lynch as the dinner companion.  She knew otherwise. Employees don’t want to “snitch,” but they may be saving their bosses from themselves;
  • The cover-up is always worse than the misstep.  We are an enormously forgiving nation.  If you say you have made a mistake, who wouldn’t help you through a misstep?; and
  • The same observation the Barometer makes for all of these leaders who have activities on the side:  How do they have the time for this?  You shouldn’t have time to run a company, have a family, and date someone who is not part of that family! Imagine if an employee had visited the “erotic4u.com” site and landed on 30 different pages there?  Sack city for using work time to surf the net.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
This entry was posted in Analysis, Truth Percolates. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.