By Carl HoweI wonder when Hewlett Packard executives are going to learn the basics about crisis management and realize that they need to publicly address their behavior.
MSNBC reported on Friday that a Congressional committee is now looking at why HP CEO Mark Hurd exercised and sold $1.37 million in stock options on the day he was to be interviewed by outside counsel investigating the pretexting scandal. The exercise and sale was not part of any pre-arranged program.
It isn't at all clear that this was illegal in any way, but to an outside observer, it certainly looks like a violation of insider trading laws. Mr. Hurd had to know that being interviewed regarding a scandal isn't the sort of activity that's going to boost HP's stock price. And Hurd took over from former Board of Directors Chairman Patricia Dunn wishing to wipe the slate clean from the Board's pretexting scandal. Now, he is opening a whole new front for Congress to look into exercising of options on inside information. And even if he is completely innocent of all wrongdoing, in the aftermath of CEO scandals such as those at Computer Associates and Comverse, the HP scandal is now going to take on a life of its own.
Blackfriars noted back in September that HP had to be aggressive in airing and addressing the issues behind this scandal to get beyond it. Instead, the company took weeks to dismiss former Chairman Dunn, and then compounded its error by giving Mr. Hurd CEO and Chairman titles, in essence giving Mr. Hurd unfettered control of the company without much concern for board of directors oversight. If he had remained squeaky clean in all his dealings, he had a chance of getting away with it. But this transaction now taints him as well. And HP's brand will suffer for it.
HPQ 1-yr chart: