DailyTech - HP's Mark Hurd Investigated in Stock Options Probe

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IT HP's Mark Hurd Investigated in Stock Options Probe
Michael Hoffman (Blog) - December 14, 2006 5:28 PM

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1 comment(s) - last by lemonadesoda.. on Dec 17 at 5:11 AM

Hewlett-Packard chief executive Mark Hurd simply can't stay out of the headlines

The congressional panel that has investigated a spying scandal within Hewlett-Packard is now seeking answers as to why HP chief executive Mark Hurd sold $1.4M worth of HP stock options immediately prior to the scandal becoming public news. Hurd's stock activity took place the same day HP attorneys questioned him over the company's involvement in a spying scandal that has rocked the company. Hurd reportedly exercised options to purchase 100,000 shares and then sold them on Aug. 25, which is the same day he was questioned by legal advisers.

A total of eight HP executives and insiders cashed out options from Aug. 21 until Sept. 5, according to internal reports. The transaction time frame fell within a window in which executives are allowed to sell their shares after the company's earnings have been announced. Those involved claim the unscheduled transactions had nothing to do with the scandal.

Securities and Exchange Commission filings show Hurd bought 100,000 shares for $21.73 each and then sold them at values ranging from $35.20 to $35.44 per share. He made more than $1.37 for the total transaction.

Hurd has Dec. 21 to also report whether or not other HP officers or executives also had similiar stock transactions.

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SEC / FSA rules need changing

By lemonadesoda on 12/17/2006 5:11:28 AM , Rating: 3

Corporate governance rules , and law governing what/when directors may trade stock and derivatives, need to be changed.

Directors of listed companies should not be in a postition to trade shares or share options in their own, or related, companies.

Stock options should not be gifted as part of the salary/compensation package. Rather, the directors should be given real cash bonueses, linked to true measureable performance indicators, like operating profit, or long term share growth.

Changes are needed. There are too many scandals relating to "insider" trading.

Can you REALLY expect someone NOT to act, if they have $millions invested in a company and they have some insider info that means they could lose a significant (or gain a significant) amount? Of course not. Its natural human risk-adversion. The only way to remove this possibility is to legislate against director being able to trade these investments.

If they are stockholders... these stocks need to be placed in a fiduciary account until they leave the organisation. Thats the only way.