The Curious Case of Mark Hurd: Would you Fire a CEO Over Expenses?

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Aug 9, 2010

* See updates below

In case you’re one of those who believe that corporate executives get handled with kid gloves for issues in the workplace that would get rank-and-file employees fired, consider the curious case of ousted Hewlett-Packard CEO Mark Hurd: What DID he lose his job for exactly (and you can vote on this yourself below)?

Was it:

A) Sexual harassment?

B) Falsifying expense reports?

C) Violating the company’s code of conduct?

D) All of the above?

E) Something else entirely?

It’s not often that a highly successful, Fortune 500 CEO gets handed his walking papers so quickly, and mysteriously, but that’s what happened to HP’s Hurd.

Henry Blodget at Business Insider made this point about the situation (as published in the San Francisco Chronicle):

HP said Hurd lied about the identity of his dinner companions in his expense reports to conceal secret dinners with his apparent crush (who both sides say he didn’t have sex with but who still sued him for sexual harassment anyway). Hurd’s people counter that Hurd’s secretary filed his expense reports and may not have known exactly who he was having dinner with (the reports are still his responsibility, obviously, but people do make mistakes). Hurd’s people also counter that Hurd’s expense reports sometimes DID list the woman as a dinner guest and that Hurd himself paid for other dinners with her where no business was discussed.

In a second allegation, HP also says Hurd had HP pay to fly the woman near to where he was staying even when she wasn’t working for HP. That woul be embezzlement if true, but Hurd’s people deny that. They say in one of these instances, an event the woman was involved in was canceled at the last minute, after she had already made the trip.

So, what happened, exactly?

Good question, but the only thing we know now is the name of the woman Hurd was involved with in some manner (Jodie Fisher, a 50-year-old marketing consultant, reality TV contestant, and former actress “in a handful of steamy films,” according to the San Jose Mercury News), and, that that the HP board “said that he Hurd didn’t violate HP’s sexual harassment policy but other irregularities were uncovered,” according to The Wall Street Journal.
So did Hurd get canned for fiddling expense reports? And if so, does the punishment fir the crime? Here’s what The Journal said:

Corporate governance experts were split on whether HP’s board acted properly in forcing Hurd’s resignation. Corporate expense offenses can be regarded as relatively minor and can typically be settled if an executive pays back the amount, some experts said.

Joseph Grundfest, a professor at Stanford University’s Law School and former member of the Securities and Exchange Commission, said HP directors also could have considered a private or public reprimand and financial penalties. “When all this comes out you’ll have directors of other companies saying we would have dealt with it differently,” he said…

At a different company, such offenses might have resulted in a reprimand or financial penalty. But HP tried to renew its reputation as a leader in corporate governance standards after the probe of the 2006 board scandal, in which private investigators hired by a former H-P chairman were accused of using false pretenses to obtain phone records of directors and reporters.

Over the ensuing years many HP employees were dismissed for violating the company’s policies, said people familiar with the matter. In some cases, people were terminated for offenses that would have been dealt with more leniently prior to Hurd’s arrival, one of these people said.”

It sounds to me that Hurd pushed some incredibly strict and inflexible standards while he was CEO at HP, and those standards turned around and bit him in the rear.

I’m all for tough standards and holding people accountable, but as we have found with three-strikes laws and term limits, sometimes there are unanticipated consequences when inflexible standards get put in place. In other words, Mark Hurd is a black-and-white kind of guy and he helped to impose black-and-white standards on Hewlett-Packard and its many employees.

Unfortunately, we live in a world with lots of shades of gray. Hard-nosed, this-is-how-it-is, no wiggle room laws and regulations may sound good in the abstract, but they don’t always work very well in reality when flawed and human real people are involved.

Unless there is another shoe to drop in this case — and who knows? maybe there is — Mark Hurd got hung on his own petard, as they say. Yes, he has a nice package that he’s taking with him, but he leaves behind a ruined reputation and a sense that maybe, we need to remember that black-and-white standards just don’t work very well in a shades of gray world.

UPDATE No. 6: Now HP shareholders have gotten involved. A shareholder has sued the HP Board claiming that “disclosures surrounding his (Mark Hurd’s) resignation led to a drop” in the price of HP stock.

UPDATE No. 5: From my friend Mark Lacter over at, a lot of HP employees are happy to see Mark Hurd go, with some referring to him as a “thug” and “Mark Turd.”

UPDATE No. 4: Still more speculation on the REAL reason why Mark Hurd got fired, this time from Gawker-owned website Valleywag. They sketch out some possible scenarios that seem to make make sense given all we know (and given what HP is saying).

UPDATE No. 3: More from the San Jose Mercury News — and they have been all over this story — and columnist Scott Herhold on the vague reasons for Hurd’s departure and a little speculation on the motivations of Jodie Fisher. Writes Herhold:

A piece of this story — maybe not a crucial one — remains a pebble in my shoe. And that is Fisher’s statement when she came forward Sunday.

“I was surprised and saddened that Mark Hurd lost his job over this,” she said in a prepared statement. “That was never my intention.”

The problem with those words is that Fisher, 50, hired Los Angeles attorney Gloria Allred, perhaps the most aggressive attorney on sexual harassment charges in the U.S.

For Fisher to say that she was surprised Hurd lost his job was like saying, “Gee, all I did was release my crocodile into your pool. I’m shocked, shocked he bit off your leg.”

In other words, Jodie Fisher is either naive, or she is — how shall I say it? — about as candid as Baghdad Bob.”

UPDATE No.2: Oracle CEO Larry Ellison has come to the defense of his friend Mark Hurd, saying the HP Board “just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago.” According to the San Jose Mercury News:

Ellison also lambasted the board for “cowardly corporate political correctness” when it revealed a sexual harassment allegation against Hurd even though its own investigation determined the claim was unfounded…

Since the board pushed Hurd out, Ellison noted, stockholders have lost “$10 billion … and my guess (is) it’s going to cost them a lot more…

(And) Ellison disputed the expense account allegations against Hurd.

“Mark Hurd, like most other CEOs, does not fill out his own expense reports, so even if errors were made, Mark didn’t make them.”

UPDATE: The latest on all this, including the impact of Hurd’s departure on HP’s stock price, in the 60-Second BizBreak blog in the San Jose Mercury News.