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HP's performance today in Washington

Original post made by HP shareholder, Old Palo Alto, on Sep 28, 2006

I heard this morning that the HP general counsel resigned and will refuse to testify at today's congressional hearing. This mess is now at Mark Hurd's doorstep. I'd be interested in comments from anyone who is watching or following the hearing and the announcements today. Is this likely to bring down Hurd? Should it? Can he get away with claiming he didn't read the report on the investigation earlier this year?

Comments (21)

Posted by J.L.
a resident of Ventura
on Sep 28, 2006 at 12:21 pm

The buck has to stop somewhere, and it's about time it stops at the top. Hurd needs to go, period. He knew about the investigation.

Given that that investigation had to do with what he considered a *deep* problem on his board, he should have been on top of the details. There's a difference between not knowing what's going on at the executive operational level regarding a decision to put out a new printer, and what's going on regarding an investigation of one's own board members *if one is the CEO of the company in question*.

In addition to Hurd, any other board member who knew about the details of this operation should go, as well as corporate counsel (who resigned this morning - he should be disbarred), the security director, and anyone else who thinks they can snoop *illegally* into another's communications.

I just read Dunn's statement; it wreaks of one excuse after another. In her closing, she suggests that Congress create a vehicle of dealing with board violations of confidentiality, *as well as making pretexting illegal* (as if it isn't *already*!). Pathetic.

This whole thing stinks of privilege and money. It's like the steroid "hearings" a while back where people got their hands slapped, and then back home to comfort and whatever else they were doing.

What about the *thousands* of hard-working people at HP that keep that company humming, day after day, while these boardroom cowboys - making millions and taking all the credit (while blaming the "operation" or the "market" if stocks decline) - play "Mission Impossible.

Posted by J.L.
a resident of Ventura
on Sep 28, 2006 at 3:16 pm

Here are a few quotes from Hurd, this afternoon, before congress...

Hurd.. the company's investigation... "became a rogue investigation that violated our own principles and values."

and that "If Bill Hewlett and Dave Packard were alive today, they would be appalled, as are our employees."

He correct in those assumptions, as as "man in charge" should take *responsibility* for same. Hurd and Dunn (the latter, ven after stepping down) are trying to spin *responsibility* away from themselves.

If Hewlett and Packard were alive today, Hurd would no longer be the CEO at HP.

It's simply amazing that Hurd and Dunn are still in positions of power, drawing salaries, winning awards (Dunn), and having nothing more than their wrists slapped. If this was a mid-level director problem, s/he would be out of a job after posting a bail bond.

Posted by Suzie
a resident of another community
on Sep 28, 2006 at 3:22 pm

Mark Hurd should resign! But I will bet anything that he will be kept on by HP because of the "bottom line" Money always will out over ethical behavior. What a shame to see Hewlett Packard in a mess like this!

Posted by Veritas
a resident of Atherton
on Sep 28, 2006 at 10:00 pm

Hurd should stop the blame game and all the spin and do the only honorable thing left for him to do: resign. Harry Truman said it best when he affirmed that "the buck stops here" if you have the power and responsibility of a chief executive. When things go as badly wrong as they have for HP, the guy at the top needs to step up and take responsibility and not side step to avoid accountability. No amount of spin control can make up for lack of a backbone.

Posted by resident
a resident of Professorville
on Sep 28, 2006 at 10:56 pm

I'm sorry, I just don't get it. The tactics HP is being excoriated for are boyscoutish compared to what the insurance industry regularly does with the purpose of cheating vulnerable people. State Farm, for example, has been sued by their own lawyers for requiring illegal and unethical conduct as part of their jobs. Court transcripts from across the country demonstrate that they sponsor contests among adjusters to undercut claims. Web Link And posing to get information? I saw one court case involving another insurer who was discovered to have sent a person to pose as an innocent bystander to influence a jury during one of their breaks. This is not an isolated case, it's an art -- this kind of stuff happens EVERY DAY in insuranceland, destroys people's whole lives, and has been going on for decades without any law enforcement action or Congressional scrutiny.

And the insurance industry is just the tip of the corporate iceberg. I'm just watching this media circus and scratching my head -- who has it out for Mark Hurd that it's come to this, is all I can figure. I mean, I miss the HP way, too, and the actions of the investigators they hired were sleezy, but it doesn't deserve a Congressional investigation.

Posted by chris
a resident of University South
on Sep 29, 2006 at 1:08 am

Mark admitted he handled the situation poorly and that it is now his responsibility to fix it. If you fired a CEO every time he made a mistake, there would be nobody left to run the company.

The thing that bothers me is that you would never guess that Ann Baskins was a direct report to Mark. From the testimony you would never guess that. He tried to distance himself as much as possible from Ann. Isn't it the responsbility of a manager to supervise his subordinates and provide guidance and development to them?

Posted by chris
a resident of University South
on Sep 29, 2006 at 1:18 am

People should be clear that Pattie Dunn was asked to resign by the board and she complied. As CEO, Mark was responsible to the board;
Pattie as chairman did not report to Mark.

Now Mark has consolidated the CEO and chairman positions. HP had just changed its bylaws when Carly was fired to require that the 2 positions be held by separate people. Now, just 18 months later, HP has to do an about face, and allow 1 person to hold both positions.

There is a trade-off here. This makes him fully accountable, rather than the split between Mark and Pattie which allows both of them to deny culpability. However, corporate governance experts are pushing to split the 2 positions to provide checks and balances in the Sarbanes-Oxley era.

How do you balance this trade-off?

Posted by chris
a resident of University South
on Sep 29, 2006 at 1:24 am

Directors will be elected at the next annual meeting.
Shareholders can exercise their voting rights at that time.

Even if new directors are not proposed, votes can be withheld from the company's nominations. They are supposed to resign if they do not receive a majority of the shares.

Posted by Frank
a resident of another community
on Sep 29, 2006 at 1:56 pm

"Others do it (violate ethical and moral norms) too" was never an acceptable excuse. At HP, the "chief ethics officer" (!) was a ringleader in all the privacy violations, the former Board Chair refuses to admit responsibility, and the CEO (where the buck ought to stop) tries to pass the buck. Meanwhile, everbody is "lawyered up", no one is stepping up, and everybody is spinning like crazy.

Posted by chris
a resident of University South
on Sep 29, 2006 at 2:02 pm

Frank, do you recommend that Mark resign immediately? All of the other people you mention are already gone.

If he leaves immediately, who do recommend take charge now?

or Are you willing to give him a chance to make good on his promises?

Posted by chris
a resident of University South
on Sep 29, 2006 at 2:02 pm

Frank, do you recommend that Mark resign immediately? All of the other people you mention are already gone.

If he leaves immediately, who do recommend take charge now?

or Are you willing to give him a chance to make good on his promises?

Posted by Frank
a resident of another community
on Sep 29, 2006 at 3:48 pm

The HP ethical lapses were so egregious (and explicitly or tacitly agreed to all along the top levels of HP management) that there should be no second chances based on promises by the CEO or any other top executive at HP to "go and sin no more". Replacing Hurd is an HP Board matter, but surely there are many effective AND ethical business executives out there who live the Stephen Covey "Seven Habits" day in and day out. Spin control, buck passing, and side-stepping, and being "lawyered up" are NOT among the seven habits of highly effective leaders.

Posted by J.L.
a resident of Ventura
on Sep 29, 2006 at 9:18 pm

Mark Hurd is spinning this with phrases like "I'm going to straighten out this mess at HP". So, in a single phrase he puts himself above culpability, and spins himself as "savior" of the company.

Go take a look at FTC and SEC parsing of "pretexting". In the eyes of those two agencies it's *identity theft*. That HP's "ethics counsel" was involved in this whole thing points up the folly of having an attorney in that position. He was quoted as saying that "pretexting was not unlawful" - as if being "not unlawful" makes something ethical.

Ethics lives within and holds together the fabric of corporate (and other) institutional cultues. Ethics is, by definition, a fuzzy discipline. Leave it to an attorney to parse words like "it's not unlawful" to imply a claim that "it's OK". This is an insult to all who have gone before, and currently work at HP. Kevin Hunsaker, HP's director of ethics and senior counsel - the person who passed on his responsibility - should go as well.

The very fact that this complex web of questionable, unethical, and probably illegal behaviors was created an permitted to continue speaks VOLUMES about the *kind* of corporate culture that Hurd was happily running, and that his predecessor Carly Fiorina had a large hand in creating.

Hurd needs to go. After this mess, how can he govern HP with confidence?

Posted by chris
a resident of University South
on Sep 30, 2006 at 12:22 am

Who do you think employs all of these security contractors?

Do you propose firing the CEO of every company that used pretexting?

Three levels of managers at HP have left already: Baskins, Hunsaker, and Gentilucci, as well as 3 board members: Dunn, Perkins, and Keyworth.

Do you believe that Mark Hurd made an error of commission or omission? The evidence does not appear to be in yet.

I do not condone what happened, but if you throw out Mark Hurd prematurely you will hurt the people of Palo Alto and the vast majority of ethical employees of Hewlett-Packard around the world
much more than you will gain by making an example of him.

All companies should be held to the same high standard. If Mark is true to his word, he will make HP the world leader in ethics. If he does not follow through, he will be in much more serious trouble than he is now.

Posted by Frank
a resident of another community
on Sep 30, 2006 at 9:48 am

Chris, to be plain - yes, Hurd should go because the buck stops at his desk. And yes, HP should be held to a high standard, just as their founders intended. It does not matter how many companies used pretexting, is was and ethically and morally wrong. The legality of it may have been murky, but in ethical/moral terms, whether it was legal or not is quite beside the point. HP will be much better off in the short medium, and long-term with a CEO, Board, and top management that is beyond reproach and has a PROVEN rack record of being BOTH effective and ethical.

There are whole libraries and ethical/moral cultural traditions - both religious and secular - from which individuals and organizations may draw as guides along the path of personal and business life. Surely the first step is for those in charge to be made fully accountable. If this is not done in ta timely way, the messes left behind can end up looking like Enron and World Com.

Posted by J.L.
a resident of Ventura
on Sep 30, 2006 at 5:42 pm

Frank said it all, and I agree.

Chris said: "Three levels of managers at HP have left already: Baskins, Hunsaker, and Gentilucci, as well as 3 board members: Dunn, Perkins, and Keyworth."

That THAT many levels of management have been part of this fiasco is even MORE reason that Hurd shuold go. It looks like this is a problem of corporate culture - one that if left unchecked would have infected the whole of HP.

Can you imagine what would have transpired over and over again in the future - both inside and outside of HP - if they had gotten away with this insult?

Chris, you have submitted to Hurd's spin. You say that Hurd will make HP a better place. etc. etc. Why wasn't it the place it *should* have been before Hurd's current promises to reform it.

How much does Hurd make every year? Compare that to ANY director, or even VP - level employee at HP, who are *not* being paid to do what Hurd is supposed to do - i.e. instill market and organizational confidence. What would happen to a director-level employee if they screwed up like this? Would they be given *another chance* to make it right - especially in the corporate world? I Highly doubt it.

Hurd should do the right thing - resign. If he doesn't resign, HP's Boardroom will continue to live with this tarnish, no matter what Hurd does. We still don't know if Hurd and others will face legal charges.

For the sake of Hurd's and HP's future, Hurd should resign, and take the lesson learned to his next multi-million dollar position.

Posted by Howard
a resident of Crescent Park
on Sep 30, 2006 at 8:45 pm

I can't resist getting back into this.

If Hewlett and Packard were alive, they would have calmly questioned each member of the board and found who had leaked, and that person would have quietly resigned.

Absent those gentlemen, we are left with psychotic egotists of the like of Perkins, who, as more details come out, is the real villian of the piece. He is the one who, when confronted with the fact that his pal was the leaker, diverted attention to the methods used by the investigators to find the leaker. He unnecessarily made this public, fanning irrational flames of overblown self-righteous indignation.

The investigatory methods were at most "impolite." ("Gentlemen do not read other gentlemen's mail). Regardless of the Congressional hearings, regardless of the mea culpas of Hurd and Dunn, and regardless of the multiple resignations of the HP management, the fact is that this has been vastly overblown, a tempest in a teapot cooked up by the press, politicians and self righteous privacy zealots. If HP had any guts, they would have told all of them to go pound sand.

Posted by J.L.
a resident of Ventura
on Oct 1, 2006 at 12:30 am

here's more from Bob Cringely...
Web Link

And to Howard, who says that "Gentlemen do not read other gentlemen's mail", I would like to say "and gentlemen don't steal identities to fraudulently - and probably illegally - obtain information *without a search warrant*". Today "pretexting" (code for 'identity theft'); tomorrow?

'Gentlemen'? Hurd, Dunn, and the rest involved in this fiasco have lost those credentials. As for Hewlett and Packard still being alive - can yuo even imagine for ONE second that any of the people involved in this fiasco would still be receiving an HP paycheck? I don't think so.

Posted by Veritas
a resident of Atherton
on Oct 1, 2006 at 9:05 am

HP's top leadership, including Hurd, has acted without an ethical compass, rather than just engaging in "impolite" behavior. Identiy theft is ethically and morally wrong, period. No amount of spin, being "lawyered up", or post facto resolutions to become ethical changes that.

Posted by chris
a resident of University South
on Oct 1, 2006 at 10:38 pm

Shareholders speak with their investment dollars and with their votes for the board of directors.

Major institutions are actively considering corporate goverance in casting their votes and will do so in casting their HP votes in March.

If investors lose confidence in Hurd's leadership, the price of the stock will drop.

In addition, Carly will appear on 60 Minutes next Sunday and promote her new book in the coming weeks.

This will all be worked through over the coming months.

Posted by bwu
a resident of Greenmeadow
on Oct 17, 2006 at 7:24 am

Very sad that the focus is on the leak investigation as opposed to the two real villians--keyworth and perkins.

Hope everybody saw the 60 mintues article. Dunn has integrity--Perkins does not.

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