Saturday, August 7, 2010

HP CEO to resign

HP CEO and President Mark Hurd have decided to resign his position as soon as possible. The Board has appointed CFO Cathie Lesjak as CEO on an interim basis. Lesjak has been working as CFO and as a member of company’s Executive Council since January 2007 and will retain her CFO responsibilities during the interim period.

Hurd’s decision was made following an investigation about sexual harassment against Hurd and HP. The investigation determined there was no violation of HP’s sexual harassment policy.

A Search Committee of the Board of Directors has been created, consisting of Marc L. Andreessen, Lawrence T. Babbio, Jr., John H. Hammergren, and Joel Z. Hyatt, which will oversee the process for the identification and selection of a new CEO and Board Chair. HP’s lead independent director, Robert Ryan, will continue in that position.

A source familiar with the situation told Reuters that Hurd never had sex with the woman and that the expense account issues stretched over two years and amounted to no more than $US 20,000.

"The board investigation found that Mark demonstrated a profound lack of judgment that seriously undermined his credibility and damaged his effectiveness in leading HP and Mark agreed," HP General Counsel Mike Holston said.

Hurd said he felt painful to leave the company after serving five years as top of the company and he felt it would not be good for him to continue in the position after such dramatic incidents. He also said that he knew that he would have to take such decision as the investigation progressed.

Robert Ryan, lead independent director of the Board, said: “The board deliberated extensively on this matter. It recognizes the considerable value that Mark has contributed to HP over the past five years in establishing us as a leader in the industry. He has worked tirelessly to improve the value of HP, and we greatly appreciate his efforts.”

Lesjak will serve as interim CEO until the selection process of the new CEO is complete. Candidates from both inside and outside the company will be considered. The selection of a new chairman will occur in conjunction with the CEO decision.

Meanwhile HP announced preliminary third quarter results and there is an increase in the company revenue by 11% compared with the prior-year period, approximately $30.7 billion rise.

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