Hewlett-Packard Chairwoman Agrees To Step Down
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Hewlett-Packard Co. Chairwoman Patricia Dunn agreed to resign next year in an effort to defuse a widening scandal surrounding the company’s use of private investigators to obtain directors’ phone records.
Chief Executive Officer Mark Hurd will take over as chairman of the world’s second-largest personal computer maker in January, and Mrs.Dunn,53,will continue as a director. Richard Hackborn will become lead independent director, Palo Alto, California-based Hewlett-Packard said today in a statement.
Pressure on Mrs. Dunn escalated in the past week as the Justice Department, the Federal Bureau of Investigation and California’s attorney general began investigating tactics used to get phone records of directors’ as part of a probe to find the source of media leaks. Mrs.Dunn stepped down after two days of board meetings and a call by former director Tom Perkins for her to resign.
California Attorney General Bill Lockyer said today that “crimes have been committed” and he has enough evidence to indict officials at Hewlett-Packard and the firms hired by the company. Hewlett-Packard has refused to name the firms involved, leading to demands by the U.S.House Energy and Commerce Committee for the company to share their identities.
Shares of Hewlett-Packard rose 55 cents to $36.91 at 11:27 a.m. in New York Stock Exchange composite trading, a sign investors predict that the boardroom battle and any regulatory probes won’t hurt demand for the company’s products. “I don’t think H-P is selling any fewer servers or computers or printers because of what’s going on,” said Tony DeSpirito of Pzena Investment Management.
Mrs. Dunn, named chairwoman in February last year after the ouster of Carly Fiorina, led an investigation into leaks to the media by directors. She hired an outside consultant to find out who had given information about the company’s strategy and board deliberations leading up to the departure of Mrs. Fiorina. The consultants hired a third firm, which used fake identities to obtain phone records of directors and nine reporters, a method known as pretexting. Hewlett-Packard said it initially thought the practice was legal, then was advised that it may not be.
