HP Begins CEO Search as Details About Accuser Emerge

HP officials are beginning to search for Mark Hurd's successor after his abrupt resignation Aug. 6. At the same time, the one-time HP consultant whose sexual harassment charges led to Hurd's demise was identified as Jodie Fisher, who also has acted in films and television shows.

As Hewlett-Packard begins its search for a replacement for former Chairman and CEO Mark Hurd, more details are emerging about the woman at the center of the scandal that led Hurd to resign the post that he has held for the past five years.

HP announced Hurd's resignation late Aug. 6, following an internal investigation of a sexual harassment accusation leveled in late June by a one-time HP contractor, Jodie Fisher. According to HP executives, no evidence of sexual harassment could be found - both Hurd and Fisher have said that there was no sexual relationship between them - but that Hurd had violated company business policies through such actions as filing false expense reports to cover up a personal relationship between the two.

HP has put together a panel that will conduct the search for Hurd's replacement. At the same time, interim CEO Cathie Lesjak, HP's CFO, and other executives are working to reassure customers, partners and Wall Street that despite Hurd's abrupt resignation, the company is stable and on solid footing, thanks in large part to the management team that is in place and also was key to HP's success over the past five years.

During a quickly called Aug. 6 conference call, Lesjak said the company was looking forward at what can be accomplished, not back at what had transpired over the course of a month or so.

"I want to be clear that my principal priority as interim CEO is to continue to move the company forward and execute the strategy that is giving us market momentum while the board conducts the search for the next CEO," Lesjak told those on the call.

HP director Marc Andreessen preceded Lesjak's comments by saying that even though Hurd is gone, the strength of the company remains.

"HP is not about any one person," Andreessen said. "Let me tell you what HP is about. This company is more than 300,000 strong. The dynamic of these amazing people around the world working together as a unified team is the driver for the success of our business. We also have a broad and deep executive bench strength that will continue to lead this company and drive our performance-based culture. HP is a great company, and the reason HP is great is the people, and the people are the reason HP will continue to be great."

Meanwhile, on Aug. 8, Fisher, a 50-year-old single mother, occasional actress and former reality television contestant, released a statement, saying that she and Hurd never had a sexual relationship, that she had settled her dispute with him and that she was "surprised and saddened" that Hurd lost his job over the charge. "That was never my intention," she said.

According to reporting from the Wall Street Journal and The New York Times, HP used to hold party-like events for customers, and Hurd approved of paying Fisher $1,000 to $10,000 to attend the events and dine with him afterward. After HP stopped holding the events, Fisher accused Hurd of sexual harassment, and Hurd was later questioned regarded charges on his expense reports related to the events.

The company's board of directors, already highly sensitive to ethics matters, following a 2006 investigation of then-HP Chairwoman Patricia Dunn, feared that Fisher would publicize her complaint were it not addressed very seriously. HP's general counsel, overseen by its board, investigated the claim and "deliberated extensively," according to an Aug. 6 statement from the company. Eventually, it found no violation of HP's sexual harassment policy, but a violation of HP's Standards of Business Conduct. The investigation of Dunn and Hurd's appointment followed Carly Fiorina's controvesial tenure at HP CEO.

In her statement, Fisher said she first met Hurd in 2007, when she interviewed for a contractor job with the company.

"At HP, I was under contract to work at high-level customer and executive summit events held around the country and abroad," she said. "I prepared for those events, worked very hard and enjoyed working for HP."

According to Gloria Allred, Fisher's lawyer, the one-time contractor is a single mother raising a son, has a political science degree from Texas Tech and most recently was a vice president with a commerical real-estate company. She also at one time worked on the House Select Committee on Narcotics Abuse and Control and was a salesperson for a Fortune 500 company. Fisher also has been in a variety of TV shows and films, some of which were R-rated when she was in her 30s.

Her most recent role was on the NBC reality show "Age of Love," in which seven attractive 40-somethings ("cougars," per the show), along with six 20-somethings (labeled "kittens") competed for the affections of 30-year-old Australian tennis star Mark Philippoussis.

Analysts continue to debate the fallout over Hurd's resignation, though most believe that HP is in a strong enough position to weather any short-term problems Hurd's departure - and the reported $12.2 million severance package he was given after he left - will cause.

Brian Alexander, an analyst with Raymond James Equity Research, said that while there could be a "cloud of uncertainty" until Hurd's successor is named, in the long-term, the company's financials will be unimpacted.

"There is no question that Hurd's departure is bad news, in that he was the key enabler of the company's impressive turnaround over the past five years, where operating margins have nearly doubled and EPS has increased by 175 percent," Alexander wrote in a research report Aug. 9. "However, we believe that HP's management breadth/depth (led by interim CEO Cathie Lesjak) is quite capable, while the core strengths of the company (including brand, market position, product portfolio, distribution network and cost structure) transcend its leader."

He also disputed the idea that HP under Hurd was successful more because of cost-cutting rather than innovation.

"While it is admittedly difficult to find much solace from this news, we should note that many investors have voiced frustration with HP's apparent prioritization of cost reduction over growth and innovation," Alexander wrote. "Thus, perhaps the Board can now find a successor who is more strategically and operationally balanced than Hurd, who is an operating whiz. We actually believe these criticisms are unfair and have stated that recent acquisitions of EDS, 3Com and Palm, along with significant investments in sales headcount, are evidence that management (including Hurd) had become more growth-focused."

In their Aug. 6 statement announcing Hurd's resignation, HP officials also tried to show the strength of the company by offering preliminary results for its fiscal third quarter of 2010 - revenue of about $30.7 billion, which represents a rise of 11 percent from a year earlier. They expect full-year revenue to now fall between $125.3 billion and $125.5 billion.

HP has become a company that the mobile industry in particular has its eyes on, since its April 28 announcement that it planned to buy struggling smartphone maker Palm, an acquisition it completed July 1, HP will release its final third-quarter results during a conference call Aug. 19 at 6 p.m. ET.

When asked during the conference call whether investors could feel confident that no financial transgressions had occurred at the company, HP General Counsel Mike Holston insisted that the expense-account figures were not at all material to HP.

"The fact that drove the decision for the company," added Holston, "had to do with integrity, had to do with credibility, had to do with honesty. That's what drove the decision. It wasn't driven by the dollars involved."