While it wasn’t stated among the platitudes in HP’s carefully worded statements, Dunn clearly was asked by the board to step down she said just last week that she had no intentions of quitting but would do so if asked.
George Jay Keyworth, who served 21 years at the company and admitted leaking information to a reporter in January, also announced that he was resigning from the board, effective immediately.
Swooping in to mop up the mess is chief executive and president Mark Hurd who will take Dunn’s job as chairman next year. Investors reacted to the news by sending HP shares up 1.5% to close at $36.92 on the New York Stock Exchange.
However, Hurd’s newest job at the company likely will stir action by some shareholder-rights activists who are fighting for independent boards.
Dunn will remain on the board after January. That she was not pressured into resigning from it altogether might imply some shared responsibility on the board over the allegedly illegal internal probe.
As chairwoman, Dunn authorized the use of private investigators to determine who on the board was an unauthorized leak to the media.
Former board member Thomas Perkins, a prominent Silicon Valley venture capitalist, alleged those investigators improperly recorded phone calls, including his own, as part of the investigation. Since then, it has been discovered that investigators also obtained the phone records of some HP directors and several reporters and their families.
Perkins quit in May in protest over the tactics. On Saturday, he called for Dunn’s resignation.
Dunn previously denied any knowledge about the private investigator’s methods. HP said it did not eavesdrop on conversations or recorded any phone calls, but said some form of pretexting of phone records had been used.
Pretexting is a murky area of US law. As part of an ongoing investigation into pretexting, the US House and Energy and Commerce Committee recently requested information relating to HP’s investigative methods.
HP has had similar enquiries from the Justice Department, the US Securities and Exchange Commission and the California attorney general, which are all also investigating the matter. It was not clear whether yesterday’s statements would have any bearing on those investigations.
Keyworth, who had worked closely with HP co-founder David Packard, has admitted to leaking information to one of the nine reporters whose phone records were obtained on allegedly false premises by the private investigators.
The invasion of my privacy and that of others was ill-conceived and inconsistent with HP’s values, Keyworth said, in a statement.
I was frequently asked by HP corporate communications officials to speak with reporters – both on the record and on background – in an effort to provide the perspective of a longstanding board member with continuity over much of the company’s history, he said.
In a joint statement, HP board members said that while the company had asked Keyworth to contact the media, but that his contact in January was not appropriately vetted through internal channels. However, Keyworth spoke to the journalist in January in an attempt to further HP’s interests, acknowledged the board members.
Even in the face of Keyworth’s resignation, the board was not united. Keyworth refused to back down, and maintained the information he disclosed was not damaging or confidential. However, Dunn continued to defend the investigation and said, These leaks had the potential to affect not only the stock price of HP but also that of other publicly traded companies.
Dunn and Hurd both apologized for the intrusions into Keyworth’s privacy.
Hurd, who replaced Carly Fiorina as chief executive close to 18 months ago, also said those investigative tactics would not be used by the company again. They have no place in HP, he said, in a statement.
