updated 04:40 pm EDT, Fri August 6, 2010
HP CEO makes surprise exit after accusations
(Update with compensation) HP faced a shock upheaval on Friday as it revealed that its CEO Mark Hurd was resigning all his positions immediately following accusations of sexual harassment. The decision followed after both HP's general counsel and an outside legal team found that he had violated the PC builder's standards of conduct, although he wasn't found to have engaged in harassment. Hurd didn't directly admit any claims but acknowledged he "did not live up to the standards" of the company.
Chief financial officer Cathie Lesjak is stepping in as temporary CEO until a committee created by the Board of Directors, including Netscape co-creator Marc Andreessen, finds a permanent replacement. Committee member Robert Ryan stressed that the sudden exit wasn't triggered by any financial issues at the company, which is still profitable and is continuing to gain computer market share.
The company believes it will remain stable after Hurd's exit, but the move is a symbolic blow to a company that is in the middle of a significant transition in the home towards mobile. It has publicly confirmed a plan to use Palm's webOS for virtually all of its mobile products, including printers, and has relegated its Windows 7 tablet to the niche enterprise market in favor of a more mainstream webOS device.
HP has had a problematic history in the past decade after criticisms of former CEO Carly Fiorina allegedly hurting company performance and more recently a spying scandal accusing executives of abusing authority in attempting to track leaks.
Update: During an emergency call to discuss the results, HP revealed that a contractor hired for marketing had made the accusations. She reportedly had a "close, personal relationship" with Hurd, who allegedly had numerous personal expenses relating to her reimbursed as company expenses. The former CEO also took steps to conceal the relationship.
The Board of Directors launched an investigation "immediately" afterwards and decided that Hurd couldn't be an effective leader after word of the sexual misconduct became clear.
Update 2: Both an SEC filing and leaks point to Hurd having received between $40 million and $50 million in return for opting out of any legal action against HP. About $12.22 million of the compensation is severance payment, while the remainder includes extending an option to buy 775,000 shares until September.