Friday, August 13, 2010

Another One Bites the Dust

Another senior executive has been ousted from Corporate America. This time it was HP’s Mark Hurd who resigned last Friday in the midst of allegations of sexual harassment. According to The New York Times, Jodie Fisher’s allegations against Hurd led to an HP internal investigation into the matter.

HP found no violation of their own harassment policy, but uncovered some violations of standards of conduct. Bloomberg reported that Hurd failed to identify a personal relationship with Fisher, and repeatedly filed inaccurate expense accounts.

Does that sound a bit too much like someone is covering their tracks?

Fisher (who is billed as an ex-reality TV star turned marketing consultant) and Hurd both claim that they did not have a sexual relationship. Since they have settled we may never know what really happened.

(On a side note, what is it with senior executives relying on ex-beauty queens and ex-reality TV stars for business advice?)

But here’s the real rub; According to Fortune, Hurd is leaving HP with 12 million dollars cash, and an estimated total of 53 million dollars in stock and options. (Pause for impact.)

Does anyone else detect a double standard here?

Fifty-three million dollars is enough to keep 662 people employed, at an average salary of eighty thousand dollars, for a full year. Fifty-three million dollars is enough to keep twenty-two people employed for thirty years. Fifty-three million would go a long way to relief in Haiti or cleaning up the Gulf, or (pick your favorite cause).

And I’m sure that fifty-three million is more than enough to provide a nice retirement for Hurd and his wife, complete with lavish summer homes, a yacht, and extravagant trips around the world.

Maybe we’ll see Hurd’s memoir on the bookshelves a year from now – attempting to define his legacy around how he replaced Carly Fiorina and restored HP to prominence as the number one hardware vendor (ousting IBM from that spot). He’ll likely pay a ghostwriter a meager sum to write the tale for him while he takes all the credit and rakes in even more cash to supplement his retirement. Worse yet, people will buy it because they’ll want to know the real story.

I’d be willing to bet that if you or I had misappropriated up to twenty thousand dollars in company funds, we wouldn’t be shown the door with twelve million in cash. We’d be out on our butts faster than we could blink. And there would likely be criminal charges.

What do you think? Is this another case of “do as I say, not as I do?” or did Hurd really think the rules just didn’t apply to him?

14 comments:

Anonymous said...

Large companies seem to have one rule for those at the top and another for those at the bottom. I'll let you figure out where I am!

Unless federal regulators are involved (which does not seem to be often enough), it seems that most companies prefer to pay off any bad boys and play down any bad publicity as quickly as possible.

It's only when the fed gets involved that there seems to be any sort of real punishment and even then it a) takes far too long, b) they still get special treatment whilst the case goes through, often for years, c) the 'punishment' is often little more than a slap on the wrist (except maybe for Maydoff) and d) the 'victims' when there are any are still left will little to no compensation.

There was a 1959 British film with Peter Sellers and Ian Carmichael called "I'm All Right Jack" that pretty much seems to sum up the sentiment of many of the execs at these large companies. Look after #1 and screw the rest of you.
Nice!

And they wonder why there is little company loyalty anymore.

Colette said...

I'm going to have to check out that movie.

Melynda said...

I am puzzled each time the news reports on some highly public figure behaving badly - so badly that they lose the job/status/prestige/respect that they had. Are they really so clueless (or badly handled) that they don't know that today and from now on - they can't hide bad acts such as these. I just don't get why chasing some skirt or gaining 20K when you make MILLIONS is worth the risk to you, your family, and your company. Yet examples of exactly this abound.....

Colette said...

Melynda -- exactly! Why risk it all? Perhaps they just feel like the rules don't apply to them.

Anonymous said...

Sorry Colette. I have to take Don Drapper's side on this one.
- Annoying Man

Colette said...

Annoying, are you suggesting that it's okay for men in power to break the rules?

Anonymous said...

Colette,

I agree, very frustrating that company revenue / loans / share sales / etc. are being used to fund the lifestyle of a few rather than provide secure jobs for many.

Unfortunately non executive directors are not stopping this abuse.

Until customers vote with their feet and refuse to buy products from these companies, I suspect the "greed" will continue.

Remember to count your blessings

Peter

SteveB said...

Correct me if I wrong, but IBM's Moffat lost his pension and there was no parachute. Hurd must have had a very well-prepared, tightly worded employment contract that let him squeeze through. Thank his lawyer; shame on the BOD for approving it in the first place.

Colette said...

Steve, that's a good question about Moffat that I haven't been able to find a definitive answer to -- just speculation. My speculation -- We know that he did resign with at least 30 years of service, so I believe he would get his pension. I would also think that he would retain any equity awards he had been granted. On the question of a parachute - I would hope not, as he did clearly violate IBM policy.

Colette said...

An update to the story -- According to Yahoo Finance, Hurd was paid to go away. Yikes!

http://finance.yahoo.com/tech-ticker/article/535328/The-HP-Truth-Comes-Out%3A-The-Board-Fired-Hurd-And-Then-Paid-Him-To-Go-Away

Jackie said...

As I always do, I volunteer to GO AWAY for 1/2 the cost of this ousted exec. Think of the savings! Anytime, anyone?

Colette said...

Jackie, I'll split it with you!

Lynne Spreen said...

Of course he thinks the rules don't apply to him. It's a fascinating fact about the majority of extremely powerful people, who are indulged and cossetted until they really lose a sense of reality. Unfortunately, as you point out, the waste of resources on this man is heartbreaking.

SteveB said...

Moffat dispostion, this:

In an interview with Fortune, Moffat came across as emotional, repentant, and chastened. He wept describing the embarrassment he'd brought upon IBM, his colleagues, and family. While he showed little self-pity, he rebuffed the notion that he hadn't paid a price for his crimes, noting that by leaving IBM he was giving up an estimated $65 million in lost stock options and pension that he would have collected when he retired at 60. "The biggest thing I've lost," he said, "is my reputation."

Source:
http://money.cnn.com/2010/07/06/news/companies/ibm_insider_trading.fortune/index.htm