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HP Board Tries to Cover Its Butt with Another Hurd Investigation

The Hewlett-Packard (HPQ) board has an abysmal record in picking CEOs. Now it's showing us all how bad it can be at firing them, too. HP plans a new independent investigation into the departure of former CEO Mark Hurd. Why? Because of a pesky lawsuit by shareholders who think that Hurd shouldn't have walked with a $35 million severance package, given that the board gave him the boot for financial irregularities.

First, a quick refresher on this train wreck of corporate governance:

Shareholders want to release the original accusatory letter from Gloria Allred, attorney to former soft-port actress and Hurd's "consultant," Jodie Fisher. Hurd's lawyers have tried to block such an embarrassing release.

And now, the board is scurrying to promise an independent investigation of Hurd's departure run by outside lawyers and the two directors new to the board since Hurd's departure: Apotheker and new chairman of the board, Ray Lane.

Pulling together an independent examination isn't unusual, given the circumstances. Still, this is the second such investigation. Only this time it's really about whether the board was in such a rush to avoid further scandal that paid Hurd too much to go away. The board first embarrassed itself by planning on $40 million in severance and then, when people complained that no one fired for cause should reap such a reward, reduced it by a whopping 13 percent to $35 million.

Had this been the first time the board showed bad judgment, it might have been able to calm everyone down. Given that it it effectively installed a revolving door in the CEO's office, though, there's no way the board can brush these criticisms off. The directors have made too many mistakes over too many years.

All the ones who came from the old era should tender their resignations and leave. Maybe a new board can break with old habits and help create a culture of responsibility and ethics from the top. If not, you can expect HP's problems to continue.


Image: courtesy HP. Photo editing, Erik Sherman.