HP's Hurd Out Suddenly Amidst Scandal

HP CEO Mark Hurd suddenly left the company on Friday after an internal investigation revealed that he had secretly funneled money to a consultant with whom he was most likely having an affair. The investigation was actually centered on sexual harassment claims, which were unsubstantiated.

It's a long and sordid tale, but it goes something like this: Hurd allegedly began an affair with a marketing consultant early this year—both continue to claim there was no sexual relationship—and misreported business expenses so that he could fly her around the world for private dinners and meetings while he attended HP events. In addition to handling expenses, Hurd paid this consultant $1,000 to $10,000 for each of these trips, ostensibly for "services rendered."

When Hurd closed HP's wallet in June and stopped wining and dining the consultant across the globe, she filed a sexual harassment lawsuit. HP's board launched an investigation but was unable to corroborate the claim and thus did not charge Hurd with misconduct.

HP is a notoriously staid and traditional company that still tries to follow the moral ideals implied by "the HP way" as outlined by founders Bill Hewlett and David Packard. So it hired a consulting firm to evaluate what the damage would be to the company's reputation if news of Hurd's alleged misconduct was made public. The firm determined that the damage would be irreparable if Hurd stayed on, so the board decided he had to go.

But because it could find no evidence of sexual harassment, HP turned to the comparatively paltry matter of the tens of thousands of dollars of misreported expenses. Noting that the deceit had broken the trust between it and Mr. Hurd, the board told him that he had to resign.

After a weak attempt to pay back the expenses, Hurd did so, issuing a public statement in which he noted that he did not "live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career."

The value of Mr. Hurd's golden parachute has been debated since Friday, and ranges from $12 million—the amount of his severance payment—to over $40 million, which includes the value of his stock grants and outstanding options. Regardless of the actual amount, suffice to say he won't be suffering too much while in exile.

As for the contractor who started all of this, she's gone public and publicity stills aimed at advancing her career have been published broadly. (An aspiring actress, she's appeared in such high quality fair as "Intimate Obsession" and "Body of Influence 2.") She says she is "surprised and saddened" that Mr. Hurd lost his job—despite the fact that she was the person who filed a sexual harassment charge against him—and said she has resolved her claim with Hurd "privately."

HP, meanwhile, will soldier on without Hurd, who had guided the company through one of its most successful and lucrative eras ever. HP is the world's largest technology company by far, the number one PC maker in the US and around the world, and it purchased EDS in 2008 and, more recently, ailing smartphone maker Palm. HP CFO Cathie Lesjak will act as interim CEO while HP seeks a new leader.

I will say this. For all of Hurd's issues, he was still a better CEO than Carly Fiorina.