It happened again last week. On Friday, August 6, 2010, Hewlett-Packard (HPQ) forced Chairman and CEO Mark Hurd to resign for actions the Board found inappropriate related to his relationship with an HP contractor some of the costs of which ended up on his expense reports for reimbursement.
HP has had a string of bad luck with its CEOs and Board members over the years, and some have taken to calling it the “HP Curse” because it seems to repeat itself periodically. Most of those conflicts were over differences about strategy, direction of the company, acquisitions or management style. This was different.
I don’t really know—or care, for that matter, about the juicy details behind this latest incident, but let’s give the HP Board some credit for naming it, framing it, and acting on it quickly in what appears to be a very healthy and professional manner. That the Board forced out a CEO who, by all accounts, has done a very good job of turning HP around and re-focusing it on growth is even higher praise for their actions. It is tough to hold employees down the line in any organization accountable for personal integrity, if the boss does not have to live by the same rules.
The stock dropped 10% on Friday following the news and there may be more price volatility in the near term as the shock of this situation plays out. My guess is HP will weather this latest problem and may even break the curse by the surety with which the Board acted. Shareholders expect no less and want management and the Board to get back to business and not get sidetracked by another scandal.
Let’s hope they can do that.