Dunn Out As HP Tries Again To Recover From Scandal

CEO Mark Hurd steps in as chairman, beginning by releasing details of a media probe that has drawn scrutiny from investigators, the press, and, finally, investors.

K.C. Jones, Contributor

September 22, 2006

3 Min Read

Hewlett Packard Board Chair and Director Patricia Dunn resigned Friday and President and CEO Mark Hurd took over her responsibilities as Chair, beginning by releasing details of a media probe that has drawn scrutiny from investigators, the press and finally investors.

Hurd announced the resignation during a press conference with outside counsel Mike Holton. Holton and Hurd said that some employees of HP were knowledgeable about details of the company's media leak probe.

Dunn issued a joint statement with the board of directors, saying that she was resigning at the request of the board to serve the best interests of the company. Dunn said she took responsibility for identifying the leaks but did not choose the people who conducted HP's controversial probe. She also said that she did not propose the specific methods of the investigation. Dunn had planned to step aside from the chair in January and remain a member of the board.

"The unauthorized disclosure of confidential information was a serious violation of our code of conduct," she said through a prepared statement. "I followed the proper processes by seeking the assistance of HP security personnel. I did not select the people who conducted the investigation, which was undertaken after consultation with board members."

"I was a full subject of the investigation myself and my phone records were examined along with others," she continued. "Unfortunately, the people HP relied upon to conduct this type of investigation let me and the company down."

Dunn and Hurd will testify before a congressional committee next week. The panel is one of several government entities requesting documents and interviews to shed light on how apparently illegal methods were used in a probe led by an American technology company once looked up to for its high standards.

Even as she left, the board continued to praise Dunn's hard work and expertise.

"Pattie Dunn has been a valuable director of HP for many years," board members said through a prepared statement. "We acknowledge all of the good work that Pattie has accomplished on behalf of HP. She helped stabilize the business during the CEO transition. She led the search committee for our new chief executive officer, which led to our hiring of Mark Hurd and the outstanding performance of the business over the last 18 months."

The board said Dunn served with distinction and had their support in tracking down the source of media leaks. Hurd said that she strengthened HP's composition and governance capabilities.

"We have never questioned her intentions, her integrity or her ethics," the board stated. "To move forward, we believe it is in the company's best interest that she now step aside given the distraction her presence on our board continues to create. We regret that we will lose her contributions to the board and appreciate that she has agreed to our request."

Hurd said Dunn agreed to leave to ensure that her presence would not distract from the company's goals. He said her decision was a "testament to her deep commitment to HP's success and her ability to put the interests of HP before her personal interests."

"She has contributed greatly to our company during a period of unprecedented growth and development," he said. "We intend to continue our investigation until we determine the root causes of the failure. We will introduce process changes to correct the situation.

Hurd said he has no doubt that Dunn had the best interests of HP in mind during her entire tenure.

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