January 19, 2007 4:29 PM PST
HP CEO denies 'bullet dodging' with stock sale
In a December 21 letter to Congress just made public on a congressional Web site (click for PDF of the letter), Hurd said the sale was prearranged and part of an ongoing investment strategy. He wrote that the sale of 100,000 shares on August 25 represented only 5 percent of his HP holdings and noted that Wall Street had yet to punish the company's stock over the spying scandal.
"HP's stock has risen by more than $5 per share since the date of the trade," Hurd wrote in the letter. "My August trade was not a case of bullet-dodging."
Critics charge that the August sale was Hurd's effort to cash out before news broke of the company's potentially illegal probe of journalists and board members.
Though Hurd has not been accused of involvement in the stock options backdating scandal that has swept the technology world, he addresses the subject in his letter. "The trade also had absolutely nothing whatsoever to do with the practice of 'back-dating' or 'spring-loading' which has been of concern in public policy circles," Hurd wrote.
Hurd was asked in December by members of the House Committee on Energy and Commerce to explain the timing of his August stock sale.
The trade occurred two weeks before the public learned that Hurd and Patricia Dunn, HP's former chairman, had signed off on a plan to uncover the source of a news leak from the company's board.
As part of the leak hunt, HP investigators obtained private phone records of board members and journalists, including several CNET News.com reporters, so they could learn which directors had spoken with members of the media. They allegedly did this by misleading telephone employees in a controversial practice, now definitively illegal, known as pretexting. Hurd and Dunn have denied knowing that such tactics were used.
Dunn and four others involved in HP's investigation face felony charges in California, including conspiracy and identity theft. One of the defendants has pleaded guilty to a federal identity theft charge.