HP's Hurd resigns after harassment claims

In one of the biggest scandals to hit Silicon Valley, HP chief executive steps down amid sexual harassment allegations

Mark Hurd: This is a painful decision to make after five years

Mark Hurd, chief executive of vendor giant HP, has resigned with immediate effect after a sexual harassment allegation investigation.

In a statement to the New York Stock Exchange this evening UK time, the board of HP has appointed chief financial officer Cathie Lesjak as an interim chief executive until a replacement can be found. Lesjak has worked at the company for 24 years.

Hurd's decision to resign was made after an investigation by outside legal counsel and the General Counsel's Office and overseen by the Board, of the circumstances surrounding a claim of sexual harassment against Hurd and HP by a former contractor.

The investigation determined that there "was no violation of HP's sexual harassment policy", but did find "violations of HP's Standards of Business Conduct".

In a statement Hurd, said: "As the investigation progressed, I realised there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career.

"After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP."

"The corporation is exceptionally well positioned strategically," Hurd added. "HP has an extremely talented executive team supported by a dedicated and customer focused work force. I expect that the company will continue to be successful in the future."

Robert Ryan, lead independent director of the Board, said: "The board deliberated extensively on this matter. It recognises the considerable value that Mark has contributed to HP over the past five years in establishing us as a leader in the industry. He has worked tirelessly to improve the value of HP, and we greatly appreciate his efforts.

"He is leaving this company in the hands of a very talented team of executives. This departure was not related in any way to the company's operational performance or financial condition, both of which remain strong. The board recognises that this change in leadership is unexpected news for everyone associated with HP, but we have strong leaders driving our businesses, and strong teams of employees driving performance, he said.

Lesjak added: "The scale, global reach, broad portfolio, financial strength and, very importantly, the depth and talent of the HP team are sustainable advantages that uniquely position the company for the future. I accept the position of interim chief executive with the clear goal to move the company forward in executing HP's strategy for profitable growth. We have strong market momentum and our ability to execute is irrefutable as demonstrated by our third quarter preliminary results."

The company said it does not expect to make any additional structural changes or executive leadership changes in the near future and added that it would look both inside and outside HP for a replacement chief.

HP's shock news came as it hinted at an 11 per cent increase in revenue for the third quarter 2010 of $30.7bn. The firm is predicting revenue of between $32.5bn and $32.7bn for Q4, with full year revenue expected to hit between $125.3bn and 125.5bn. Its results are due out on 19 August.