There could be more to former Hewlett-Packard CEO Mark Hurd's ouster than just a hit to his reputation over a sexual harassment probe. He was not well-regarded among the HP rank-and-file, and it may have come back to bite him.
Hurd (right) resigned as the company's chief executive last week under pressure from the HP board of directors over an investigation of alleged sexual harassment and fudging expense reports.
The whole saga turned a bit bizarre as Hurd settled with the alleged victim, an HP contractor who expressed sadness that Hurd lost his job. Then, Oracle CEO Larry Ellison publicly defended Hurd and basically called the HP board cowardly and idiotic for firing him.
The primary motive being ascribed to the HP board is their fear of media fallout once the press got a hold of the Hurd story, especially since the former HP contractor had hired high-powered attorney Gloria Allred.
But, there may have also been other forces at work. Although Hurd was reportedly in negotiations for a new contract before the sexual harassment allegations came to light, there has been growing discontent with Hurd inside HP.
After taking over for Carly Fiorina as HP CEO in 2005, he helped the company get its financial house in order and in the process grew revenue by 30% and tripled HP's profits. But, Hurd did it with a brutal scorched-earth policy of cost cutting and consolidation that demoralized many of the company's 300,000 employees.
According to the non-scientific polling of employees at Glassdoor.com, Hurd had the lowest employee approval rating of any of the CEOs of big public technology companies (see chart below).
You can't blame HP employees for feeling anger and resentment toward Hurd. Beyond his sweeping layoffs, much of the bad blood stems from Hurd's duplicitous salary cuts in 2008. As The Street explained, Hurd and the HP management team "mandated that year that all Hewlett-Packard staffers would take a 5% pay cut for the year, and they boasted that they — as executives — would stand shoulder to shoulder with the staff by taking 10% pay cuts. They forgot to say that the executive cuts would be only on base salary and that they would more than make up for that on options, restricted stock units and other bonus goodies."
In fact, the HP management team actually increased their compensation in 2008, according to The Street:
- Mark Hurd's total compensation for 2008 (when the global economic crisis reached its nadir) was $43 million, making him the fourth-highest-paid CEO that year, even though HP's shares lost 29% that year.
- CIO Randy Mott's total compensation jumped 400% that year to $28 million.
- Imaging executive vice president Vyomesh (VJ) Joshi's total compensation increased 83% in 2008 to $22 million.
- Personal Systems EVP Todd Bradley's total compensation went up 263% that year to $21 million.
- Technology Solutions' EVP Ann Livermore's compensation went up 31% that year to $21 million.
- Now-interim CEO Cathie Lesjak got a 49% bump in total compensation in 2008 to $6 million.
This should serve as a cautionary tale to business and IT executives. Great leaders don't deceive or sell short their workers. For good advice and best practices, take a look at TechRepublic's Career Management blog and IT Leadership blog.
Jason Hiner has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Jason Hiner is Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He's co-author of the book, Follow the Geeks.