H-P CEO Mark Hurd Resigns

H-P/Hurd story updated with comments from H-P's board and interim CEO Cathie Lesjak.

PALO ALTO, Calif. (

TheStreet

) --

Hewlett-Packard

(HPQ) - Get Report

CEO Mark Hurd has resigned in a shock move, following an investigation into an accusation of sexual harassment.

In a statement, H-P explained that Hurd's decision was made following an investigation by outside legal counsel and the General Counsel's Office, overseen by the Board. This was related to a claim of sexual harassment against Hurd and H-P by a former contractor to H-P, it said.

"The investigation determined there was no violation of H-P's sexual harassment policy, but did find violations of H-P's standards of business conduct," explained H-P.

"Mark had a close personal relationship with an H-P contractor that was hired by the office of the CEO," said Mike Holston, H-P's General Counsel, on a last-minute investor call Friday afternoon. "Mark's conduct displayed a profound lack of judgement ... based on all

we turned up, the board concluded -- and Mark agreed -- that it would be impossible for him to be an effective leader anymore."

Holston explained that H-P had unearthed irregularities in payments made to the contractor, as well as Hurd's expense reports. "It was a systematic pattern of improper expenses and inaccurate reports," he said.

Hurd, who took the helm at H-P following the departure of his controversial predecessor, Carly Fiorina, is credited with turning the tech giant's fortunes around.

Cathie Lesjak, H-P's CFO, will now serve as the company's interim CEO, but ruled herself out of consideration for the permanent CEO's role. "Fundamentally, our strategy isn't changing at H-P," Lesjak said during the call. "I can assure you that as interim CEO, my sole focus will be keeping this great company focused on our its executive strategy."

Hurd issued the following statement on his decision to resign:

"As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at H-P and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at H-P, but I believe it would be difficult for me to continue as an effective leader at H-P and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of H-P."

-- Reported by James Rogers in New York

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