Skip to main content

Hurd Questioned on Options

Congress asks about a stock sale the H-P CEO made on a day he faced a 'pretexting' probe.

Hewlett-Packard (HPQ) CEO Mark Hurd's stock transactions have raised eyebrows on Capitol Hill.

Two members of the House Energy and Commerce Committee sent a letter to Hurd on Tuesday, seeking information about $1.37 million worth of options-related stock sales Hurd made in August.

According to the letter, Hurd cashed the options in on the same day that he was questioned by attorneys retained by H-P to sort out a controversial internal investigation into boardroom media leaks.

The sale also preceded an H-P filing with the

Securities and Exchange Commission

in which controversial aspects of the investigation were publicly disclosed.

The investigation, which involved accessing personal telephone records of H-P directors, employees and journalists through a practice known as "pretexting," has resulted in

criminal charges against former H-P chairwoman Patricia Dunn and the resignation of several H-P executives. Dunn has pleaded innocent.

Scroll to Continue

TheStreet Recommends

Last week, H-P paid $14.5 million to

settle civil claims brought by the California attorney general.

The House Energy and Commerce Committee, which is considering legislation regarding pretexting, held hearings earlier this year in which Hurd, Dunn and others testified.

"A key issue in the Subcommittee's investigation is how much Hewlett-Packard management knew about the board-leak investigation, when they knew it, and what actions they took in response," reads the letter to Hurd, penned by Representatives John Dingell and Bart Stupak.

According to the lawmakers, Hurd's stock sale does not appear to have been part of any prescheduled program.

"Continuing revelations about widespread 'backdating' and 'spring loading' abuses have raises questions about whether executives are cashing in ('bullet dodging') while in possession of potentially damaging material facts that shareholders do not know," the letter continues, asking for Hurd's reply by no later than Dec. 21.

A representative from H-P said the company was reviewing the matter and looking forward to responding to the committee's questions.

Ironically, H-P's shares have gone up, not down, since news of the scandal emerged, with the stock trading near its 52-week high throughout much of the affair.

Shares of H-P closed Wednesday's regular session down 14 cents at $39.69