Ethics Upgrade at Oracle?

I’m not sure what to make of Mark Hurd, Hewlett-Packard, Larry Ellison, and Oracle.

HP threw Hurd out on the street for some stupid behavior. By throwing out on the street, I mean let him keep most of his compensation package.

Larry Ellison immediately came to his defense. He even went a step further and hired him as co-president of Oracle. Not only that, they are giving him a seat on their Board of Directors.

That angered H-P so much they filed a lawsuit to stop him from taking the job. They want him on the street, not with a competitor.

I keep scratching my head over the behavior of H-P’s board. They fired him, but let him keep a compensation package. If they thought it was a serious ethical lapse, then they should have made it for cause and kept the compensation. The definition of “for cause” was probably set too high for Hurd’s stupid actions. But the H-P Board didn’t even try.

Oracle’s stock jumped on the news of Hurd’s hiring. H-P’s Stock took a tumble when they announced his firing.

It makes a compliance and ethics guy like me scratch his head and wonder: does compliance and ethics really matter? To answer that, we need to look at the original incident and decide if Hurd’s behavior so unethical that he should have been fired.

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Compliance Bits and Pieces: Mark Hurd Special

Mark Hurd

Last Friday, the big news in compliance was the sudden resignation of Mark Hurd as the CEO and Chairman of the Board of Hewlett-Packard. I decided to put together a compilation of other stories I found interesting.

HP and me: Coincidence or not? by Michelle Leder in Footnoted

Of course, footnoted had done its own poking at HP over the years. But one piece that seems particularly prescient right now in light of the shared meals between Hurd and the recently named consultant, Jodie Fisher, is this post from nearly two years ago that talked about some hefty gross-ups for Hurd’s meal. As we noted at the time, we used some back-of-the-envelope math to come up with a total meal bill of $243K. Several days later, HP filed a revised proxy to say that $79,814 tax gross up that was originally reported was actually only $4,117, which we viewed with a healthy serving of skepticism.

(It’s good to see Michelle back after having a baby. Congratulations Michelle!)

Hurd and ethics? Nah, it’s the money by Dennis Howlett in ZDNet’s Irregular Enterprise

The old saying that money talks while BS walks is a good standby but it doesn’t always apply. Sometimes money blinds you. As it seems to have done over some of Hurd’s expenses and the board in bending over to make a messy settlement.

The FCPA – Tone at the Top and in the Middle by Tom Fox in the FCPA Complaince and Ethics Blog

We have previously noted that Hewlett-Packard is under investigation for allegations of paying bribes to obtain commercial sales contracts in Russia. (See here and here) Given the current situation with the former Chairman and Chief Executive and the ongoing bribery investigation by not only German and Russian governmental authorities but also the SEC and Department of Justice for possible FCPA violations, it might be a propitious time for Hewlett-Packard’s top management to implement some or all of Hanson suggestions regarding the communication of Hewlett-Packard’s commitment to FCPA compliance and ethics to its middle management and indeed throughout its organization.

HP, Hurd, Deloitte and Tone at the Top by Francine McKenna in re: The Auditors

What do HP, Boeing and Navistar have in common?  All three companies, over the years, have fought SEC investigations, internal investigations, and shareholder lawsuits. … There’s one more thing these three companies have in common:  Deloitte was their auditor during the worst of these troubles.

The Week in Ethics: Mark Hurd’s Leadership Failure by Gael O’ Brien in The Week in Ethics

Tone at the top only counts when leaders use words that they believe in enough to live.

HP’s letter to employees on Hurd resignation from cnet

On Friday afternoon [Chief Financial Officer Cathie] Lesjak sent a memo to company employees explaining the leadership change and going into some detail about the nature of the claim, and the results of the the HP board of directors’ investigation. CNET has obtained a copy of that e-mail, which we’ve posted below in its entirety.

Here’s The Real Reason HP CEO Mark Hurd Was Fired (As Best We Can Tell…) by Henry Blodgett in Business Insider

Now that everyone has gotten over the shock of HP CEO Mark Hurd getting ejected on an August Friday afternoon–with the timing of the announcement obviously chosen to minimize bad PR–people are looking more closely at the details. And the details leave big questions as to what really happened.

How HP General Counsel Michael Holston Handled CEO’s Sex Harassment Nightmare by Sue Reisinger in Corporate Counsel

For Hewlett-Packard Company general counsel Michael Holston the nightmare began when CEO Mark Hurd handed him a June 29 letter accusing Hurd of sexual harassment. Hurd took the letter to Holston, reportedly within a half hour of receiving it.

Mark Hurd’s Excesses Were in Plain Sight by Eric Jackson in The Street

There are lots of good CEOs who suddenly lose their touch. What alarmed me about Hurd last year was the piggish behavior he and his executive team were exhibiting at the expense of H-P shareholders. What was worse, they were gorging at the trough of lavish compensation and excess perks at the same time that they were hypocritically turning the screws on H-P employees (who remained after a series of layoffs) to accept pay cuts and reduced benefits.

I wrote about the mixed messages from H-P

Mixed Messages from H-P

On Friday, Hewlett-Packard fired its CEO because he violated the company’s code of conduct. Mark Hurd had submitted inaccurate expense reports.

That sounds like a good message from the Board. Anyone can be fired for violating the code.

However, Mr. Hurd was given a severance package that may be worth more than $35 million, including a cash payment of $12.2 million. He violated the code, but was not fired “for cause” so he gets to keep his severance package.

That sounds like a bad message from the board. If it is company policy to fire someone for violating policy, then you should fire him and deny him severance.

However, as a top executive, Hurd had an employment agreement that better defined “cause for termination.” Cause involves “material neglect” of an individual’s duties or conduct “that is not in the best interest of, or is injurious to, H-P.” Mr. Hurd’s $20,000 of inaccurate expenses probably did not meet that standard.

Mr. Hurd stepped into the role of CEO after the poorly handled corporate espionage investigations by the prior CEO Carly Fiorina. He talked about improving the ethics of H-P.

Hewlett-Packard’s Standards of Business Conduct starts off with the headline test: “Before I make a decision, I consider how it would look in a news story.”

Mr. Hurd should have taken his own test.

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