Mark Hurd, forced to resign last week as chief executive officer of Hewlett-Packard Co., may have a career ahead of him in private equity rather than as head of a publicly held company, analysts and executive recruiters said.
Hurd, 53, stepped down Aug. 6 after allegations of sexual harassment led to an internal probe, which turned up inaccurate expense reports and a personal relationship with an HP contract worker.
While the scandal might preclude CEO positions at businesses like Nokia Oyj or competitors like Dell Inc., Hurd probably won’t settle for a smaller company after almost eight years as chief of HP and his previous employer NCR Corp., said Steven Kaplan, a professor at the University of Chicago Booth School of Business. A private-equity firm -- or a company owned by one -- may be an acceptable compromise.
“There is a market for talented people,” Kaplan said in an interview. “As long as he didn’t do anything beyond what we know now has happened -- that he messed up his expenses and it was a one-time mistake, and not fraud or something worse -- he will be very attractive to private equity.”
Private-equity companies, which often acquire distressed businesses in need of restructuring, may like what Hurd accomplished at HP, including aggressive cost-cutting, said Shaw Wu, an analyst at Kaufman Brothers LP in San Francisco. HP’s operating margin widened 68 percent last year from fiscal 2005, according to data compiled by Bloomberg.
“Private-equity firms typically want someone with a proven operational track record, someone who can execute,” said Wu, who recommends buying HP shares and doesn’t own any himself “This is something he has proven he can do.”
Hurd might be a good fit as CEO of First Data Corp., a merchant payment processor that is actively searching for a new chief after Michael Capellas stepped down in March, said Thomas Egan, an analyst at J.P. Morgan Securities Inc. in New York. First Data is owned by private-equity firm KKR & Co.
“What First Data needs is some heavy-duty cost-cutting and that is what Mark Hurd is good at,” Egan said.
Large, publicly traded companies aren’t likely to be interested in Hurd because of the negative publicity, said John Challenger, CEO of job placement firm Challenger, Gray & Christmas.
“He’s too radioactive, and there’s too many good people out there,” Challenger said. “The story has been too big. It won’t be forgotten.”
Hurd will probably take time off -- six months to a year -- to plan his next move, said Neil Sims, a managing director of Boyden, an executive search firm based in Hawthorne, New York.
“I’d be surprised if he aggressively pursued an alternative immediately,” said Sims, who is based in San Francisco. “Step one is to repair himself and his family personally. Step two is his public image.”
Hurd wouldn’t be the first executive to turn to private equity to resurrect a career. Robert Nardelli was ousted from the top job at Home Depot Inc. in 2007 amid criticism of his pay and the chain’s performance. He joined Cerberus Capital Management LP and led Chrysler after the investment firm bought the carmaker. He returned to Cerberus in 2009 after Chrysler’s bankruptcy.
Ray Lane, who unexpectedly resigned as president and chief operating officer of Oracle Corp. in 2000 after a fallout with his boss, Larry Ellison, joined venture-capital firm Kleiner Perkins Caufield & Byers and is now a managing partner.
Some public figures tainted by scandal have found careers in the media. Eliot Spitzer, who was forced to resign as New York governor in 2008 after a call-girl scandal, was hired by CNN in June to co-host a nightly TV show. Henry Blodget, a former analyst at Merrill Lynch & Co. who was barred from the securities industry for publishing biased research on Internet stocks, now runs financial blog Business Insider.
Hurd took the top spot at HP in April 2005 and set out to return the technology firm to growth after rivals such as Dell took market share. Under Hurd, HP cut jobs and real estate holdings and closed data centers to reduce costs and increase profitability. It added sales people and redesigned laptops to boost revenue, and in 2006 overtook Dell as the world’s leading maker of personal computers.
Profit at the computer maker more than tripled and sales jumped 32 percent from fiscal 2005 to 2009 under Hurd’s regime, even as a global recession battered sales of PCs and printers to businesses, shrinking revenue and net income at rivals, such as Dell. The company also made more than 30 acquisitions on his watch, including Electronic Data Systems Corp., 3Com Corp., and most recently, Palm Inc.
$12.2 Million Severance
Hurd will get severance of $12.2 million, plus access to restricted HP shares. He received $30.3 million in compensation last year and $42.4 million in 2008. He stands to receive as much as $50 million before the end of the year, said Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC.
Hurd will likely pick a job “where he can be successful and even be successful quickly,” said Brannon Cashion, president of brand consulting firm Addison Whitney in Charlotte, North Carolina.
“He’ll always carry the scarlet letter of this, but memories are short and people are often given second chances,” Cashion said. “When you’ve run a company like HP, you can springboard or leverage that into any kind of organization in the world just because of the depth and breadth of what HP brings to the market.”