Hewlett boss' parachute has its own ethics problem

August 09, 2010|By Jay Hancock

Hewlett-Packard's Standards of Business Conduct, like most corporate ethics policies, are earnest, precise and admonitory.

"We know that actions speak louder than words," company Chairman and CEO Mark Hurd wrote a couple years ago in a preface to the code. "We must make decisions and behave in ways that we can be proud of, that reflect our commitment to doing the right thing."

Only Hurd can say whether he was proud of fudging thousands of dollars in expense reports and concealing his alleged romantic relationship with contractor Jodie Fisher from the company's board and the accounts-payable department. But several of the ethical standards he approved and promoted would seem to be pertinent.

Employees are warned to "keep personal use of HP assets to a minimum." They must "create business records that accurately reflect the truth of the underlying transaction." They're supposed to "provide and accept gifts, favors and entertainment only if they are reasonable complements to business relationships."

If Hurd violated those rules while wining and dining the former real-estate vice president and R-rated movie actress — and the board says he did — then he should have been fired, not allowed to resign.

What's the difference? Probably tens of millions of dollars.

We won't know the exact amount until the company publishes its 2011 proxy statement. But an executive-pay consultant quoted Sunday in the Wall Street Journal figured Hurd's golden parachute could exceed $35 million in stock grants, cash severance and other dough. CNBC quoted experts saying it could break $40 million.

If Hurd had been fired "for cause," as they say in the human resources racket, he would have walked away with far less. It's another example of the double standard at the uppermost corporate levels. The only exit package received by most people who lie about their expenses is a box to clean out their desk.

Hewlett spells out what sorts of actions are sufficient to get one fired for cause. Either "material neglect of responsibilities" or "conduct that is not in the best interest of, or injurious to, HP" will do the job, according to the proxy statement.

Misspending $20,000 of Hewlett's money is not exactly in the company's best interest. A higher offense, however, is the violation of ethics by the leader of a corporation that has woven ethics into its culture and brand.

As for "injurious," Hewlett-Packard shareholders have lost $8 billion thanks to the dive in the company's stock on Monday in reaction to Hurd's departure. The shares fell 8 percent to $42.60, their lowest level of the year. Hurd was widely credited with reviving the computer- and printer-maker's fortunes after the stormy tenure and departure of Carly Fiorina.

For her part, Fisher was hired to "organize forums" for Hewlett customers and "gather background information on invitees and introduce executives to one another," according to Bloomberg News.

Why Hurd felt he needed a former reality-TV contestant for this job rather than a professional in Hewlett's marketing department is another facet perhaps known only to him.

"The Age of Love" was a brainless NBC show from 2007 in which Fisher, now 50, and other middle-aged women competed with younger females to date some bachelor. The show's website describes Fisher's take on the opposite sex: "As long as a man is confident, takes care of himself and isn't hung up on age (Jodie once dated a man who was 22!), she is ready to find a new partner who is as spontaneous and wild as she is."

Both Hurd, 53, and Fisher deny that their relationship was sexual. But Hurd's misconduct came to light because she told Hewlett's board that he sexually harassed her while the two spent time together in the United States and overseas.

Upon investigation, the board concluded that Hurd didn't violate Hewlett's sexual harassment policy, according to the company. But it uncovered "numerous instances" in which Fisher "received compensation and/or expense reimbursement where there was not a legitimate business purpose," Hewlett General Counsel Michael J. Holston said on a Friday conference call.

Hurd engaged in "professional and personal behavior that compromised his ability to lead the company" and showed "systematic pattern of improper expenses and inaccurate reports." Holston said. The upshot was a "disregard for the values of HP of trust, respect and integrity."

And for that, the prize is more money than the average American could earn in 15 lifetimes.

One Hewlett ethics guideline is something the company calls "the headline test." Stop and think, the company urges employees: "Before I make a decision, I consider how it would look in a news story. … If you are uncomfortable with the answer, don't do it!"

Here is the headline just created by the company's board of directors:

"CEO Lies on Expense Reports, Walks Away with $35 Million."


Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.