April 2005

HP’s new CEO sailed to his new company on a stock windfall

Mark Hurd might have been described as vanilla and the antithesis of his flashy predecessor, but the new HP CEO certainly sparkled in the investment game this spring. Government securities reports showed that Hurd sold a massive block of stock in NCR, the company he led as CEO, about six weeks before he took the HP job.

An Associated Press report quoted an HP spokesman as saying “there’s no question whatsoever about the propriety of [Hurd’s stock sales].” Hurd sold more than 145,000 shares of NCR stock in February and March. The first sale occurred in the week before HP CEO Carly Fiorina was ousted. The second took place March 2-3. HP said its recruiters contacted Hurd after the second sale.

The NCR stock sale earned Hurd $2.3 million. NCR’s shares fell 17 percent the day he announced he would take the HP CEO job and leave NCR. HP is protecting Hurd against declines in NCR stock under a provision in his employment agreement. HP will reimburse him for as much as 20 percent of the decline in the NCR stock price until June 30. He can exercise stock options covering 850,184 NCR shares and now holds 100,665 shares.

NCR’s stock was still working to recover to its Hurd mark in mid-April, even after the company had tripled its profit estimates. In the meantime, HP’s stock remained near $20, about a dollar less than its value on the day HP ousted Fiorina.

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