Report: Hurd Short-Circuited HP Board's Probe

Hewlett-Packard's board of directors felt that Mark Hurd's settlement of a sexual harassment claim impeded its probe into allegations against its former chief executive's behavior, according to a Wall Street Journal report that cited people familiar with the matter.

The settlement between Hurd and Jodie Fisher, a former marketing contractor and sometime actress, was made without the board's knowledge and increased mistrust among board members who felt Hurd wasn't cooperating fully with their investigation into Fisher's claims, one source told the Journal.

However, a person identified as being familiar with Hurd's thinking said the board repeatedly encouraged Hurd to settle before mediation three weeks before the settlement occurred, according to the newspaper.

HP representatives declined to comment on the report.

Hurd settled with Fisher on August 5, and the board announced his resignation from the helm of the tech giant the next day, concluded that while Hurd had not violated the company's sexual harassment policy, his conduct "exhibited a profound lack of judgment." The resignation took effect immediately, and Hurd was replaced by Chief Financial Officer Cathie Lesjak, who will act in an interim capacity.

Fisher, whose identity was previously unknown to the public, came forward to say that she was "surprised and saddened " Hurd had lost his job but she insisted that the two of them did not have a sexual relationship. The settlement reportedly included a cash payment from Hurd.

Since Hurd's departure, a shareholder lawsuit has been filed against HP's board of directors, Hurd, and Lesjak. The suit accuses the board of breach of fiduciary duties in how it handled Hurd's resignation and says HP's board failed to notify shareholders of the investigation into Hurd, when it began in late June. It adds that according to his employment contract, Hurd was not entitled to receive such as large severance package, which includes a payment of $12.2 million.

Hurd receive the $12.2 million payment, plus other stock benefits, on the condition that he agrees not to pursue any legal action against the company, according to the separation agreement HP filed with the SEC on Friday.

Hurd and was named chairman of the board in September 2006. Prior to that he spent 25 years at NCR, where he became CEO in 2002.