Ex-HP CEO Hurd gets $28 million severance; Rubinstein an unlikely but inspired choice? 33
Sometimes companies like HP use their money to make problems just go away. Such is the case with Mark Hurd and the sexual harassment allegation that ended his career as HP’s CEO. In order to make Hurd’s exit as smooth as possible, the HP board lined the way with $12.2 million in cash as well as the choice to cash in more than 330,000 shares of HPQ stock (approximately $16 million, prior to the 10% plunge his exit precipitated) plus an extended option to purchase an additional 775,000 shares up until September 7.
The whole deal releases HP of any liability, but has to sting quite a bit for Hurd. Not only does he lose a job he clearly wanted to keep, but he’s also losing out on a three-year $100 million contract that was reportedly in negotiation to keep him on as CEO.
HP CFO Cathie Lesjak is serving as interim-CEO while the search for a new CEO and chairman is under way. Lesjak, a 24-year veteran of HP, has taken herself out of the running, though that hasn’t stopped her name from being bandied around. More serious in-the-running candidates include HP EVP of Personal Systems Todd Bradley; Ann Livermore, HP’s EVP of Technology Solutions Group (Enterprise); and Bob Wayman, retired HP CFO and interim CEO after Carly Fiorina was forced out. Bradley, as you may recall, was the CEO of PalmOne (the hardware division of a divided Palm, Inc) from 2001 to 2005, when he was recruited to HP by Hurd. Ranked by Fortune as one of tech’s smartest executives, Bradley is believed to have been instrumental in arranging HP's $1.2 billion takeover of Palm.
But what of the unlikely choice? There are several, but there’s one that obviously stands out in our mind and was first voiced during the media call over the firing of Hurd: Jon Rubinstein. The last CEO of Palm, Inc, still leading the Palm through its transition and merging into HP, is, as MG Seigler of TechCrunch put it, HP’s shot to be more like Apple. It’s no secret that every tech company has some envy of the fruit company, what with their blockbuster products, spectacular launches, constant media attention, and high-flying profits. On the launches and media attention front, only one other company came close to demanding the same kind of press as Apple, and that was Palm. The potential was there for the other two, if for want of bucks.
Rubinstein’s success or lack thereof at Palm had many contributing factors, least of which was a lack of the necessary resources to have webOS and the Pre ready for primetime at launch, not to mention some fairly questionable advertising choices. But back to Rubinstein and HP being more Appley. Rubinstein, as you might recall, was the SVP of Hardware Engineering at Apple and was responsible for products like the iMac, G4 and G5 processors, and the iPod. The iPod proved to be something of a success, leading to Rubinstein taking over the newly created iPod division of Apple, where he guided the development of the robust ecosystem that helps drive iPod and iPhone sales to this day. Rubinstein retired from Apple in 2006, and was hired by Palm CEO Ed Colligan the next year. The rest is, as they say, history.
So what would make Rubinstein the good choice for HP CEO? The man’s got vision, and HP has the bucks to execute on that vision. HP knows as well as any other tech hardware company that premium products are where it is. Apple doesn’t sell a notebook for less than $999, while HP’s cheapest comes in at a profit-margin-slicing $379 (not to mention netbooks for $100 less). Despite HP’s revenue being double that of Apple, the folks in Cupertino keep more of that as profit than their friends in Palo Alto. As any right-minded businessman will tell you: revenue is great, but profit is better.
With HP’s billions at his back, could Rubinstein transition HP from the cheap consumer brand perception it is currently saddled with to something more akin to Apple premium? Maybe, but that’s an incredibly risky choice for HP’s board. While we would argue that the performance of Palm shouldn’t be held against him (after all, they were in more dire straits than Apple when he came in there), the stumbles and failures can’t help but follow Rubinstein around.
If we were the betting types, we would pick Rubinstein to be our new HP CEO. But we’re not in charge, nor the betting types, so our imaginary money would be better wagered on somebody like Bradley. In fact, given his track record of amping up HP’s consumer PC business (and the aforementioned acquisition of Palm), Bradley is the perfectly logical choice to succeed Hurd. But who would take over his spot as Executive Vice President of Personal Systems and guide HP’s consumer PC business and newly expanded mobile division? Maybe there’s a spot for Rubinstein after all.