The decision by HP’s board to can CEO Mark Hurd for reasons that are not yet as clear to shareholders as they were to the board has now cost HP shareholders $14 billion–or about 15% of their pre-sacking wealth.The HP board has defended its decision by saying that the expense-account violations the sexual harassment investigation turned up rendered Hurd incapable of leading the company.
Others suspect the board had another motive.
In any event, here’s a question for you (academic, of course).
If, instead of firing Hurd, the board had announced that Hurd had settled the sexual harassment lawsuit, had reimbursed the company for the controversial expenses, and had received a sharp warning from the board, would HP stock be higher or lower than it is today?
Our answer? Much higher.
(Which isn’t to say that the board made the wrong decision. If Hurd really committed fraud and embezzled, which the board says he did, then he should have been canned regardless. Although he shouldn’t have gotten a severance, then).
So, based on what we know today, did the board make the right decision?
You be the judge…
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