Congressmen Question HP CEOs Stock Transaction
A pair of Democratic congressman from Michigan are asking Hewlett-Packard CEO Mark Hurd to explain why he cashed in more than a $1 million worth of stock options just before a scandal concerning boardroom leaks became public.
In their letter, which was written on Dec. 12 and released this week, U.S. Reps. John Dingell and Bart Stupak, who sit on a panel of the House Energy and Commerce Committee that is investigating the Palo Alto, Calif. company, wrote to Hurd to explain the $1.37 million transaction.
"In that regard, it appears from the enclosed chart on HP executive trading, that you voluntarily cashed in $1.37 million worth of options on August 25, 2006, the very same day that you were questioned by Wilson Sonsini attorneys who were investigating the investigation," the two congressman wrote in the letter.
The letter indicates that Hurd cashed in his stock options just before a Sept. 6 filing with the U.S. Securities and Exchange first detailed that the company had started a far-ranging probe to find the source of leaks from the companys boardroom to various media organizations.
On Dec. 14, an HP spokesperson told eWEEK: "This is not a new matter and we look forward to responding to the committees inquiry."
At the heart of the scandal is the fact that investigators hired by HP used pretextinga controversial method of using a persons Social Security number and other personal information to trick telephone companies into giving out private telephone recordsto find the source of the boardroom leaks.
The resulting investigation led the California Attorney Generals Office to file criminal charges against Patricia Dunn, the former chairman of the companys board of directors, and four other people connected in the case.
On Dec. 7, HP announced that it had settled a civil lawsuit with California prosecutors for $14.5 million.
Hurd and Dunn would later testify before the House subcommittee about the use of pretexting and HPs internal investigation.
In their letter, Dingell and Stupak question the timing of the stock sale. The two congressmen write that there has been a number of "backdating" scandals at large companies, which "have raised questions about whether executives are cashing in (bullet dodging) while in possession of potentially damaging material facts that shareholders do not know."
The letter asks for a response from Hurd and HP by Dec. 21.
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