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Boss's stumble may also trip Hewlett Packard

Boss's stumble may also trip Hewlett-Packard

By Ashlee Vance, NYT News Service | Updated: 5 June 2012 02:26 IST

Highlights

The events were billed as CEO executive summit meetings, exclusive gatherings, often lasting several days, where Hewlett-Packard officials wooed top customers. When Mark V. Hurd, HP’s chief, appeared at them, he sometimes relied on Jodie Fisher, a 50-ye

The events were billed as CEO executive summit meetings, exclusive gatherings, often lasting several days, where Hewlett-Packard officials wooed top customers. When Mark V. Hurd, HP's chief, appeared at them, he sometimes relied on Jodie Fisher, a 50-year-old former reality television contestant turned HP marketing consultant, who would introduce him to customers and keep him company.

Mr. Hurd's relationship with Ms. Fisher, which led to his ouster last week, has put an unsavory end to one of the great executive runs in recent American business history. And it has stunted a long search by HP's employees for stability and pride at the patriarch of Silicon Valley companies.

On Sunday, Ms. Fisher, who had accused Mr. Hurd, 53, of sexual harassment, disclosed her identity in a statement from her lawyer and said that she had never had a sexual relationship with Mr. Hurd. "I was surprised and saddened that Mark lost his job over this," she said. "That was never my intention."

Mr. Hurd, who is married, has settled the matter with Ms. Fisher for an undisclosed sum.

HP's top executives on Sunday said they would no longer discuss Mr. Hurd's situation and vowed to find a new chief executive to keep the business running smoothly. "We are not going to slow down one bit," said Cathie Lesjak, the chief financial officer and interim chief executive.

But turning the page on the scandal will not be easy. While Ms. Lesjak maintained that investors remained confident in the company, HP's share price tumbled 10 percent on Friday as word of Mr. Hurd's departure rippled through Wall Street.

Analysts had come to view Mr. Hurd as a stabilizing presence who galvanized the formerly chaotic company, and as the glue that held a complex organization with more than 300,000 employees together.

They saw him as having a knack for finding new areas where HP could lower costs, and for maintaining order among the top executives. And Mr. Hurd led the company's charge past I.B.M. as the top seller of technology.

In a nod to Mr. Hurd's influence on the company, Ms. Lesjak said, "Disciplined execution has become part of HP's DNA."

The new leader of HP will have to maintain fiscal discipline while also coming up with a second act that stimulates new growth for the company.

Over the past 10 years, HP's employees have endured a series of unsettling events. "If I was an HP employee, I would feel betrayed," said Michael S. Malone, a historian who wrote "Bill and Dave," a book about the company's founders, William Hewlett and David Packard. "It's almost like there is a stigma attached to this company where you have people at the top who have done you in again and again."

When Carly Fiorina, Mr. Hurd's flashy predecessor, began the contentious acquisition of the PC maker Compaq Computer, some veterans argued it would put an end to HP's culture. Ms. Fiorina went on to preside over years of inconsistent financial performance and large layoffs.

Mr. Hurd took over the chief executive job in 2005. HP's board hoped he could put a bit of the boring back into the company by delivering steady results and staying out of the limelight.

In his days playing tennis at Baylor University, Mr. Hurd had long hair, wore shorts everywhere and puffed on cigarettes during breaks. He went on to build a rather different persona as the suit-wearing master of metrics, glasses at the tip of his nose, a memorizer of business minutiae.

"Everyone hoped for this resurrection of Bill and Dave," Mr. Malone said. "They didn't get that, but they got the next best thing -- a guy who was low key and straightforward."

But Mr. Hurd soon was embroiled in controversy, as he inherited a corporate espionage debacle in which HP was found to have spied on reporters, its board members and employees. Still, Mr. Hurd emerged from this episode with a promotion, adding the chairman title, previously held by Patricia C. Dunn.

Part of Mr. Hurd's role in recent years has included showing up at the C.E.O. summit meetings where customers would sometimes spend a weekend at a resort in the United States, Europe or Asia with their families.

People close to Mr. Hurd portrayed him as abhorring business lunches and dinners, preferring instead to do business on his own. One said that while Mr. Hurd did not have a romantic relationship with Ms. Fisher, he did enjoy her company at meals as he wound down from long days.

Gloria Allred, Ms. Fisher's lawyer, said that her client, "is a single mom focused on raising her young son." She said Ms. Fisher had a degree in political science and had worked in commercial real estate. Ms. Fisher appeared in "Age of Love" on NBC.

An executive who attended a number of these events said Mr. Hurd would often give a talk at the beginning and make the occasional appearance at a party.

HP has said that Mr. Hurd approved paying Ms. Fisher $1,000 to $10,000 per event and then dined with her afterward. After the company stopped holding the events, Ms. Fisher presented HP with a sexual harassment claim against Mr. Hurd, although a company investigation did not result in charges of misconduct.

After HP's board learned of the sexual harassment charges, it began the investigation and hired the consulting firm APCO to evaluate the damage such a revelation could cause if made public, according to people with direct knowledge of the situation.

A debate subsequently erupted over whether Mr. Hurd needed to disclose the charges against him publicly, according to a person close to Mr. Hurd. APCO told the board that the company would most likely endure a devastating public relations hit if Mr. Hurd stayed on as chief executive, according to that person.

Last week, HP's executives said that Mr. Hurd had falsified expense reports and had broken the trust of the board by trying to hide his relationship with Ms. Fisher. They cited the fiscal malfeasance as the primary reason for his ouster, since sexual harassment was not supported by the investigation.

The person close to Mr. Hurd said the expense reports were not discussed in meetings leading up to Mr. Hurd's resignation, with the focus instead on whether the company needed to disclose the situation.

According to his peers, Mr. Hurd has set a high bar for any successor. "He has done such a brilliant job at HP," wrote Lawrence J. Ellison, the chief executive of HP's partner and rival Oracle, in an e-mail. "He will be very hard to replace."

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