This Motley Fool series examines things that just aren't right in the world of finance and investing. Here's what's got us riled up this week. If something's bugging you, too, go ahead and unload in the comments section below.
Today's subject: Late Friday, Hewlett-Packard's (NYSE: HPQ ) board of directors announced that CEO Mark Hurd had stepped aside. The man who led a renaissance for the computer maker following Carly Fiorina's disastrous reign succumbed to a scandal allegedly involving illicit payments to a consultant.
But the situation may actually be even worse than that. According to an HP press release, the consultant in question levied charges of sexual harassment against Hurd. The company later disputed that description, but admitted that Hurd violated HP's conduct policy.
In a subsequent conference call with analysts, HP general counsel Michael Holston added color to the story, saying that the contractor received compensation or expense reimbursements "where there was not a legitimate business purpose."
Put bluntly, Hurd approved payments for reasons having nothing to do with creating value for shareholders. Do business offenses get any more serious than that? I can't see how.
Why you should be indignant: To be fair, MSNBC reports that Hurd wasn't involved in a sexual affair, and that the payments amounted to less than $20,000 in total. Still, Hurd betrayed shareholders, plain and simple.
You get the sense he knows it, too. In a statement, Hurd says he didn't "live up to the standards and principles or trust, respect, and integrity" he expected from employees he managed at HP.
Nowhere does he mention sex, nor should he have. To do so would be to attempt the worst sort of Jedi mind trick. Mark Hurd isn't Bill Clinton. He's Angelo Mozilo without the tan.
Too harsh a comparison, you say? Hurd's $20,000 misappropriation (allegedly executed by his assistant) is admittedly nothing compared to the $44 million Mozilo got when Bank of America (NYSE: BAC ) bailed out ... I mean bought ... Countrywide. Each man stuck shareholders with a bill they didn't deserve. Is Hurd really so different?
I'm no better than Hurd, and I'm not about to sit in judgment of him or anyone else. But in approving illicit payments -- tacitly or otherwise -- Hurd failed as a steward of shareholders' money. Yet he offers no apology. Why aren't we angrier about this?
"Annoyed" is no longer good enough. We need you-wouldn't-like-me-when-I'm-angry rage, and lots of it, right now. Until shareholders get motivated enough to fire board members via proxy campaigns, executives will continue to treat corporate capital like a piggy bank.
What now? My friend and colleague Rick Munarriz thinks Hurd will be fine. In the wake of this scandal, he believes that another company will land a talented leader for what amounts to peanuts.
He's probably right. Hurd has a track record, and plenty of companies need strong leadership. Here at the Fool, we've wondered aloud whether Goldman Sachs (NYSE: GS ) or Microsoft (Nasdaq: MSFT ) would benefit from a change at the top. There's also Clearwire (Nasdaq: CLWR ) , which is suffering from an identity crisis, and Research In Motion (Nasdaq: RIMM ) , which is lagging in smartphone innovation. Both could benefit from a CEO transplant.
Yet the likely demand for Hurd's services doesn't change the simple truth that he mistreated not only a contractor and HP's employees, but also the owners of his company.
Shareholders deserve an apology.