Lawmakers Question Hurd's Option Action
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Two U.S. House members want to know more about the circumstances surrounding Hewlett-Packard President and CEO Mark Hurd's $1.37 million stock options profit just days before HP went public with its boardroom leaks scandal.
Michigan Democrats John Dingell and Bart Stupak this week co-authored a letter to Hurd asking him to explain his sale of 100,000 shares before the public had any knowledge of the looming scandal.
Hurd cashed in the options on Aug. 25, the same day outside lawyers questioned him about the company's internal investigation of the leaks. The sale was also 15 days before HP publicly revealed in a Securities and Exchange Commission (SEC) filing that it used pretexting to find the leakers.
"Continuing revelations about widespread 'back dating' and 'spring loading' abuses have raised questions about whether executives are cashing in while in possession of potentially damaging material facts that shareholders do not know," the two Congressmen wrote. "Please state whether this is or is not the case with your transaction."
In September, the subcommittee held a high profile hearing on the HP pretexting scandal.
"A key issue in the subcommittee's investigation is how much Hewlett-Packard management knew about the board leak investigation, when they knew it and what actions they took in response," the letter states.
HP has said Hurd's stock sale "was fully proper" and took place within a three-week window the company allows for exercising stock options.
Hurd and other HP executives' stock options sales are also part of a stockholders' civil suit accusing Hurd and seven other executives of selling 1.7 million HP shares between Aug. 21 and Sept. 6.
HP claims the lawsuit is baseless.
In a November filing with the SEC, the Palo Alto, Calif.-based systems vendor said it remains the target of "various governmental inquiries" for its use of pretexting to obtain the personal telephone records of board members and the media.
The SEC, for instance, has upgraded its probe of the HP pretexting scandal to a formal order of investigation. HP has also received a request from the Federal Communications Commission (FCC) for records and other information related to the company's leaks investigation.
The scandal led to a flurry of resignations. Former Chairman Patricia Dunn, general counsel Ann Baskins and Kevin Hunsaker, HP's then ethics chief and in-house lawyer, have all left the company.
Dunn and Hunsaker were subsequently indicted for conspiracy, fraudulent wire communications, wrongful use of computer data and identity theft. Dunn and Hunsaker have pleaded not guilty to the charges.
Earlier this month, HP settled a civil lawsuit brought by California Attorney General Bill Lockyer by agreeing to pay $14.5 million to finance a state fund devoted to violations of privacy and intellectual property rights.