December 13, 2006 10:47 AM PST

Congressmen question HP chief's stock sale

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Two members of Congress want Hewlett-Packard CEO Mark Hurd to explain why he sold HP stock just prior to the company's acknowledgement that it had spied on employees, board members and journalists.

In a letter sent Tuesday to Hurd, Reps. Bart Stupak and John Dingell, both Michigan Democrats, asked the CEO why he sold $1.4 million worth of stock options on August 25, the same day he was questioned by HP attorneys about the company's investigation into news leaks.

The congressmen note in their letter that the sale did not seem to be part of a scheduled stock sale. Executives often arrange in advance to sell stock, and the timing of such transactions typically follows a pattern.

"The August 25 transaction does not appear to be part of any prescheduled program," the congressmen wrote to Hurd. "The chart indicates that you exercised options and cashed them out on the same day."

Dingell and Stupak are members of the House Committee on Energy and Commerce's Subcommittee on Oversight and Investigations, which held a hearing in September into HP's internal investigation. Hurd was one of several people to appear before that committee.

HP has acknowledged obtaining the private phone records of journalists, company board members and employees in an effort to uncover a news leak within the company.

During the September hearing, Hurd told Congress that he approved of many of the tactics used by HP investigators, but denied having prior knowledge of a tactic known as pretexting, the term used to describe obtaining records through the use of false pretenses.

Five people involved in HP's leak hunt have been charged with four felonies, including identity theft and conspiracy. Hurd is not among that group.

An HP representative declined to answer specific questions related to the timing of Hurd's stock sale, but said that "this is not a new matter. We look forward to responding to the committee's inquiry."

However, HP has dismissed as "baseless" a shareholder lawsuit making similar insider-trading allegations that was filed against the company last month.

Hurd also came under questioning for stock sales at his prior company, NCR, that took place shortly before he took the HP job. Hurd made $2.3 million by selling NCR stock in the two months prior to being named HP's CEO. An HP representative said in April 2005 that the sales came before Hurd was contacted about the CEO's job and that there had been no impropriety.

See more CNET content tagged:
Mark Hurd, NCR Corp., CEO, Michigan, HP

3 comments

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HP will never play it safe.
Plain and Simple:
HP does not care.
Posted by inachu (963 comments )
Reply Link Flag
1.4 mil is chump change to Hurd
Get a life dude. $1.4 mil stock sale is like $10 to you and me. CEO's, COO's and Board of Directors sell stock all the time. There are certain procedures they must follow based on the amount of stock that is liquidated and the timing but NOT JUST THE TIMING!! Seems the Democrat Senators did not specify whether this is the case or not they just wanted to be on the record that Hurd may have done something wrong. This too will blow over and again will be another case of slanderous innuendos. Washington Politics at best.
Posted by DennyInCary (14 comments )
Link Flag
Just one more reason...
Just another reason why high-ranking company officers and
board members should NOT be allowed to own stock in the
compan(y/ies) they control, or other companies that do a
significant amount of business with them.

Then there would be no questions.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Reply Link Flag
 

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