HP's Latest CEO Embarrassment: Mark Hurd Resigns In Sexual Harassment Scandal

In a complete shocker, HP (HPQ) CEO Mark Hurd has resigned, effectively immediately because of a sexual harassment claim. CFO Cathie Lesjak will take the post of acting CEO while retaining her financial duties.

The announcement comes out of the blue. According to the company press release, the decision by Hurd and the board of directors came after an investigation by outside counsel into sexual harassment charges brought by "a former contractor" to HP. Although the investigation concluded that there had been no violation of HP's sexual harassment policy, there were "violations of HP's Standards of Business Conduct."

The interesting differentiation immediately raises the question of whether the company's sexual harassment policy only applies to people who are actual employees of the company.

This doesn't appear to be some "gotcha" situation that has forced him out. Bloomberg Businessweek got an interview with HP General Counsel Michael Holston, and the man did not mince words:

While the investigation found no violation of HP's sexual-harassment policy, Hurd "demonstrated a profound lack of judgment that seriously undermined his credibility and damaged his effectiveness in leading HP," General Counsel Michael Holston said in an interview."The board took immediate action in this matter and their decision was right and necessary to uphold HP's values of trust, respect and uncompromising integrity," Holston said.

A few years ago, HP leadership went through a different kind of scandal, in which the company spied on reporters and got copies of their phone records, which led to a federal law against so-called pretexting. Among a number of executives who lost their jobs over that was board chair Patricia Dunn.

If HP's founders would have been "appalled" and "embarrassed" over that escapade, as Hurd said at the time, I'd hate to see what they would have done now. Spun in their graves? Blushed? Hurd then said, "I wish I had asked more questions." Maybe this time he should have kept his mouth shut and not asked questions, particularly of the allegedly salacious variety.

Just a few months ago, HP found itself publicly grappling with a bribery scandal in Germany and Russia. At the time, the company said that it was something that had actually occurred over six years before and was the work of a few rogue employees.

As we've often seen, it's all too easy for the powerful to think they can do as they wish. But when they do, they often trip over their own feet ... and those of innocent people all around them. Now Hurd is left without a position -- I somehow doubt that a run for political office is in the near future for him -- and HP is left without a CEO who was smart and helped the company strategically.

A search committee consisting of directors Marc Andreessen, Lawrence Babbio, John Hammergren, and Joel Hyatt will oversee the selection process for a new CEO. Maybe they can find someone who won't ultimately embarrass or damage the company as the last two have.

Related:

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• HP Shows Foreign Bribery Can Bite U.S. Companies at Home