SAN FRANCISCO — As the career of
Hewlett-Packard’s chief executive
Mark V. Hurd hung in the balance, a public relations specialist
convinced the company’s directors that H.P. would endure months of
humiliation if accusations of sexual harassment by a company contractor
against Mr. Hurd became public.
Paul Sakuma/Associated Press
Hurd, Hewlett's ex-chief, on a screen at an Oracle event in 2008,
with Lawrence Ellison.
even after following the specialist’s advice, the company has not escaped
According to a person
briefed on the presentation, the representative from the APCO public
relations firm even wrote a mock sensational newspaper article to
demonstrate what would happen if news leaked. The specialist said the
company would be better served by full disclosure, even though an
investigation had produced no evidence of sexual misconduct.
H.P.’s board, according to
the person briefed on the presentation, took this advice, disclosing the
unsupported accusations against Mr. Hurd. The company said Friday that Mr.
Hurd had falsified his expense reports and that because it was enforcing
the same code of ethics it would apply to any employee, he resigned.
in ousting Mr. Hurd, the directors set off a media scrutiny they had
hoped to avoid. Some in Silicon Valley said the technology giant had
overreacted in ousting a chief executive who has been one of the most
successful in corporate America in recent years. Other corporate
governance experts think the company acted admirably.
“What the expense fraud
claims do reveal is an H.P. board desperately grasping at straws in trying
to publicly explain the unexplainable; how a false sexual harassment claim
and some petty expense report errors led to the loss of one of Silicon
Valley’s best and most respected leaders,”
Lawrence J. Ellison, the chief executive of
Oracle and a close friend of Mr. Hurd,
said in an e-mail to The New York Times.
However, Jeffrey A.
Sonnenfeld, an expert in corporate governance and senior associate dean at
the Yale School of Management, said Hewlett-Packard’s directors deserved
credit. The company “stands apart from other companies that have been
scandalized in the headlines this year,” he said, referring to BP and
several Wall Street firms. “They made a courageous call.”
He said that there have
been, and continue to be, plenty of companies that would rationalize
expense-report misdeeds as a gray area and figure out how to keep a
successful chief in place. At such companies, he said, “there may not be a
legal issue, but there is still a moral issue.”
Some management scholars
said that Hewlett-Packard appeared to be putting a great deal of faith in
the counsel of APCO. Others remain perplexed by the way the whole affair
was handled. “There is a missing piece here because it doesn’t make
sense,” said Shane Greenstein, a business professor at
Northwestern University’s Kellogg School of Management.
At a presentation to the
directors of H.P., the public relations specialist from APCO cited recent
sexual imbroglios like the one that diminished
Tiger Woods. The specialist cautioned that only 20 percent of top
executives survive these types of allegations and then they usually end up
leaving because of the weight of negative publicity.
He also warned that Gloria
Allred, the celebrity lawyer representing Mr. Hurd’s accuser, would thrust
H.P. and Mr. Hurd into a media nightmare.
An APCO spokesman said the
company has a policy against discussing counsel given to clients. Based in
Washington, APCO handles a range of media issues, like branding and open
research. The 500-person company does not have a particularly strong
reputation for crisis management or technology expertise, although it has
worked for other technology giants like
Microsoft and the chip maker