ewlett Packard chief executive Mark Hurd abruptly resigned from the tech giant on Friday after details of a damaging sex scandal came to light. Hurd was considered one of Silicon Valley's most-admired CEOs, and was responsible for a turn-around in fortunes at the computer manufacturer following its troublesome purchase of PC maker Compaq. (Watch a CNN report about HP's post-scandal prospects.) Here, a guide to HP's sex scandal:
What did Hurd do, exactly?
A female marketing contractor accused the married 53-year-old of sexual harassment earlier this year. After a probe, HP concluded that, while there had been no violation of its harassment policies, Hurd had given the contractor "improper payments" from his expense account. These reportedly amounted to some $20,000 over two years. He was forced to resign by HP's board, but will do so with an estimated $28 million severance package.
Who is this contractor?
Jodie Fisher, a 50-year-old actress hired to represent Hewlett Packard at "high-level customer and executive summit events." In addition to working for HP, Fisher has appeared as a contestant on NBC reality TV show "Age of Love," and acted in a string of low-budget softcore pornography movies during the 1980s and 1990s. She is now represented by celebrity lawyer Gloria Allred. "I was surprised and saddened that Mark lost his job over this," Fisher said in a statement. "That was never my intention."
Did Hurd have an affair with Fisher?
Apparently not. HP delicately says they had a "close personal relationship," but neither party claims a sexual relationship. Fisher claims Hurd settled the sexual harassment claim privately.
That doesn't seem all that serious.
In any other company, it might not be. But, after a damaging employee spying scandal in 2006, the company has been desperate to "renew its reputation as a leader in corporate governance standards," say Ben Worthen and Joann S. Lublin at The Wall Street Journal. While corporate expense offenses are often settled by the guilty party simply paying back the money, at HP such an offense falls short of its stringent code of ethical conduct.
How damaging is this for HP?
It has already hurt the company financially: Shares tumbled 10 percent Friday on news of Hurd's departure. The damage to its reputation is less easy to determine. HP is considered "the patriarch of Silicon Valley companies," and its founders Bill Hewlett and Dave Packard were responsible for revolutionizing workforce management. Without their model — dubbed "The HP Way" — such benefits as performance bonuses, employee shares, and Friday afternoon social events might not be commonplace today. "The company now prides itself as a leader in corporate governance," says Matthew Gwyther at Management Today. "It has a reputation to live up to."
Will HP miss Hurd?
Undoubtedly. The chief executive doubled the company's share price in less than five years by slashing overheads and making targeted acquisitions in the booming services industry. He is widely credited for turning HP around after the turbulent reign of Carly Fiorina, who was fired by the board in 2005 after the controversial acquisition of Compaq. She is now running for the Senate in California.
Who will replace him?
It's anyone's guess. The interim CEO, Cathie Lesjak, has already ruled herself out of the top job. Whoever it is, says Management Today's Gwyther, will "hint at [HP's] focus for the next few years." Will it concentrate on competing with rival IBM, or attempt to take on Apple or Cisco? Hurd's strategy was to broaden HP's remit to become a "one step tech shop," says George Stahl at Dow Jones. Shareholders will be desperate to know if that so far successful approach will be maintained.
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