NEW YORK (TheStreet) --HP's (HPQ) ousted and disgraced Chairman and CEO Mark Hurd screwed up and investors have to pay for it.

I don't get it.

Despite concluding that Hurd's conduct "displayed a profound lack of judgment", HP gave him a big-money sendoff to the tune of $12.2 million in severance payments, an extension of the deadline to cash in options on 775,000 HP shares, pro-rata vesting and settlement of 330,177 performance-based restricted stock units, settlement on December 11, 2010 of 15,853 time-based restricted stock and eligibility for continued group medical and dental coverage for up to 18 months., according to an SEC filing retrieved through EdgarOnline.

Why should a single dime come out of the bottom line? Why should a single share be awarded to someone who, in his own words, "did not live up to the standards and principles of trust, respect and integrity" that he demanded of others at HP?

Make no mistake, Hurd wasn't hurting for the money. As Eric Jackson pointed out in his recent column titled Mark Hurd's Excesses Were in Plain Sight, Hurd's total compensation for 2008 was $43 million, making him the fourth-highest-paid CEO that year.

HP's board may think it is fair to reward Hurd for the work he did to set the company back on the road to success -- and there are few who don't acknowledge that the company improved under his leadership -- but what about the damage to HP's reputation that Hurd also inflicted in the end?

The performance of a leader must be measured -- and rewarded -- based on more than the numbers. Integrity matters. Trust matters. We're talking about "violations of HP's Standards of Business Conduct" by the man who held ultimate responsibility for corporate conduct.

Hurd should have been fired, but the board on which he had served as chairman didn't have the stomach for it.

It may appear that the board took the high road by pushing Hurd out, but the severance agreement shows that old-school, nepotistic boardroom behavior is alive and well in America.

The message to investors is clear: The instinct among board members to look out for their own is stronger than their sense of duty to shareholders.

--Written by Glenn Hall in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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