Oracle Boss Ellison Slams HP Over Hurd’s Exit

Oracle CEO Larry Ellison slammed the Hewlett-Packard Board of Directors for pressuring chairman and CEO Mark Hurd into leaving, accusing the group of “cowardly corporate political correctness.”

In an e-mail sent to The New York Times on 9 Aug, Ellison called the HP board’s move “the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”

Hurd resigned under pressure on 6 Aug. after being accused of sexual harassment by a former HP contractor. After an internal investigation, the HP board found no evidence to support the sexual harassment charge levied by Jodie Fisher, a 50-year-old one-time actress who attended HP functions with Hurd.

Sexual Harassment Complaint

Both Hurd and Fisher said they did not have a romantic relationship, and Fisher said she had settled her sexual harassment complaint with Hurd.

The HP board said Hurd’s falsifying of expense reports violated HP business policies, and had made it impossible for him to continue to lead the company.

Ellison, reportedly a close friend of Hurd’s, said the board’s decision to push Hurd out of HP was not in the best interests of anyone connected wit the company. “In losing Mark Hurd, the HP board failed to act in the best interest of HP’s employees, shareholders, customers and partners,” Ellison wrote in the e-mail. “The HP board admits that it fully investigated the sexual harassment claims against Mark and found them to be utterly false.”

The drop in stock price following Hurd’s ouster has cost investors at least $10 billion (£6.32bn), and that could grow, he said. Ellison, without disclosing the source of his information, said the HP board initially was split 6-4 over whether to fire Hurd when first discussing the issues. Eventually the vote was unanimous.

According to The Times, Hurd and the board of directors were at odds whether anything regarding the issue needed to be disclosed once the investigation revealed no basis for the sexual harassment charge. After the decision was made to disclose the charge, the discussion between Hurd and the directors turned to his resignation.

The board named HP CFO Cathie Lesjak interim CEO while a search for a permanent replacement takes place.

Hurd’s abrupt departure after five years on the job has continued to roil the waters inside and outside HP. Many analysts saw Hurd as the key reason for the company turnaround and strong financial performance following Carly Fiorina’s controversial tenure. However, several have said that HP, with its strong management team, is in a good position to continue that growth despite Hurd’s resignation.

However, Hurd’s severance package—reportedly as high as $40 million—given by the HP board has been criticised as too high, particularly given the circumstances surrounding Hurd’s departure.

There’s also been debate—as illustrated by Ellison’s missive—over whether the HP board overreacted to the situation by getting rid of Hurd. There are a number of high-level executives still in their offices after questionable ethics issues. Dell CEO Michael Dell recently was fined $4 million by the Securities and Exchange Commission for his role in an accounting fraud case against the company involving payments made over several years to the PC maker by Intel to keep Dell from using products from rival chip maker Advanced Micro Devices.

The company was fined $100 million for not disclosing to investors the role the Intel payments had in bolstering Dell’s operational budget.

In addition, Oracle President Charles Phillips admitted to a lengthy affair with a woman, and despite the publicity surrounding that case, Phillips remains in his job.

Severance Package

However, other say HP’s directors did the right thing by pushing out Hurd. In a blog posting on The Corporate Library Website, editor Neil Minow said Hurd got off easy by being allowed to resign, and that the board further mishandled the issue by giving him a hefty severance package.

In these days—after the Enron scandal and the financial meltdown—the government is taking a harder tone with corporations, and the pressure is on boards of directors to ensure that their companies have a strong ethical culture that reaches the top, Minow said. In HP’s case, Hurd not only created an ethical issue with his padding of expense reports, but that also came out soon after HP was fined $50 million for filing false claims with the government.

The board, he said, is responsible for ensuring the ethical nature of the company. “They cannot keep in place an executive who has demonstrated such a failure of judgment and responsibility,” Minow wrote. “They cannot keep in place an executive they cannot trust. It is hard not to conclude that the culture that created a $50 million liability to settle fraud charges needs a new leader.”