What really happened between HP ex-CEO Mark Hurd and Jodie Fisher?

November 5, 2010, 2:00 AM UTC

By Adam Lashinsky with Doris Burke

To this day, only two people know the full truth. But one thing is certain: The deeper you dig, the weirder it gets.

Mark Hurd and Jodie Fisher

Mark Hurd was miffed. It was 2007, two years into his tenure as chief executive of Hewlett-Packard, and he was annoyed at the amount of time he was wasting. Hurd was so obsessed with time management that he’d built a spreadsheet to track his movements.

A sales executive at heart, Hurd put a ton of stock in personally meeting HP (HPW) customers, and he had recently attended a handful of client meetings that had gone badly. Hurd would invariably get buttonholed by an executive from some relatively small customer who would never buy much from HP. This kept him from paying enough attention to bigger-spending prospects.

When Hurd was displeased, he let people around him know, and one person who was always around was Caprice Fimbres. A former public relations account executive, Fimbres was Hurd’s “program manager,” an aide with broad sway over the CEO’s schedule.

Fimbres took on the challenge of allaying Hurd’s concerns. At some point, she began thinking about a television show she’d been watching. Fimbres was hooked on reality TV, and that summer she’d been following a particularly bad NBC series called “Age of Love.” Its gimmick was inane, even for an inane genre: “Age of Love” pitted a group of female twentysomethings—the “kittens”—against a group of fortysomethings—the “cougars”—vying for the affections of a real-life tennis star.

Apparently Fimbres concluded that experience in a made-for-TV cat fight was the ideal preparation for playing gatekeeper to one of the most important corporate CEOs in the world. Whatever her rationale (she declined to be interviewed), Fimbres decided to recruit among the cougars, according to Nadine Jolson, a publicist for some of the contestants, who says Fimbres contacted her at the time.

At least two other contestants from the “Age of Love” discussed an HP role with Jolson. But the tech giant ultimately hired a 47-year-old divorced single mom from Los Angeles named Jodie Fisher to act as a greeter at events where Hurd met top customers. Her job was to gracefully steer clients, ensuring that Hurd spent the right amount of time with the right people.

These “CEO/CIO Executive Summit” events—chief information officers are crucial in major tech-buying decisions—worked well enough. Fisher performed her duties at about a dozen events, in the U.S. and abroad (but never in Silicon Valley) for about two years, before her role ended in late 2009.  The programs often included outside speakers, including, at a 2008 event in Chicago, Marc Andreessen, the Web pioneer turned venture capitalist who joined HP’s board of directors in September 2009. FedEx (FDX) CEO Fred Smith spoke at another. Despite their high-level participants, however, the summits weren’t particularly well known around HP. Fimbres ran the program out of the office of the CEO, so very few people were involved. Says one high-ranking HP executive: “Everyone’s running at Mach 3 around here. It’s not that remarkable that I wouldn’t have known about a CIO summit.”

Awareness of the events changed dramatically seven months after Fisher stopped working for HP. On June 29 of this year, Hurd received a letter from celebrity lawyer Gloria Allred alleging that the HP chief executive had sexually harassed Fisher. In lurid detail, Allred painted Hurd as a stalker who also dished personal details—and one professional secret—to Fisher. Six weeks later, on the afternoon of Friday, Aug. 6, Hurd was gone from the company he’d stabilized after the tumultuous reign of his predecessor, Carly Fiorina. He had lost the support of HP’s 10 independent directors, seven of whom joined the board during Hurd’s tenure.

The Allred letter started a bizarre chain of events that has left observers of staid Hewlett-Packard scratching their heads, again, wondering what plagues this storied company—and whether perhaps its board of directors deserves a reality TV series of its own. In 2002 HP endured a months-long fight with Walter Hewlett, the son of its founder, over its acquisition of Compaq. In 2005 the board fired Fiorina and recruited the relatively unknown Hurd. And in 2006, a scandal engulfed HP, toppling then chairman Patricia Dunn as the company had to admit it spied on its own board members.

Now HP has been in the news again, embroiled in a nasty war of words, first with its former CEO and then with software giant Oracle (ORCL), an important partner. Oracle CEO Larry Ellison has seemed to take Hurd’s treatment personally: He publicly ridiculed HP’s decision and then hired Hurd as a co-president of Oracle.

All the while, simple questions about the shocking episode have remained more or less unanswered, including the precise reasons HP’s board and its highly valued CEO parted ways. For three months the prominent actors in this saga have performed a corporate kabuki dance, making cryptic statements, often through proxies, while hiding critical secrets. The account that follows, based on dozens of interviews with various people knowledgeable about the players, sheds light on some of the central characters and mysteries, including this fundamental one: How could HP board members come to believe that Hurd was lying to them—even as Hurd vehemently maintained he was telling the truth? At the end of the day, the peculiar story of the downfall of Mark Hurd at the hands of Jodie Fisher remains a drama about what happens when only two people know all the facts, yet many others act on them—with momentous consequences.

The investigation begins

When Hurd received the accusatory letter from Gloria Allred in late June, he immediately showed it to HP’s general counsel, Michael Holston, who had become one of his closest confidants. A native of Philadelphia, Holston was a federal prosecutor before joining the prominent Morgan Lewis firm there. The two had grown close when Holston represented HP in the messy 2006 episode over pretexting, when the company used private investigators to obtain the phone records of journalists and some of its own board members in order to determine who was leaking sensitive information about HP.

Despite having been aware of the pretexting, Hurd emerged from the 2006 scandal with the additional title of chairman. In short order he named Holston HP’s general counsel. Holston brought with him not only a litigator’s prowess but also powerful connections. He counts among his friends U.S. Attorney General Eric Holder, with whom Holston worked on private cases in the past. A newer political pal is California Attorney General (and now governor-elect) Jerry Brown and his wife Anne Gust (a former corporate general counsel herself), whom Holston interacted with in the state’s pretexting investigation. Since joining HP, Holston moved his office closer to Hurd’s, the ultimate symbol of power in HP’s fortress-like executive suite. He and Hurd were known to enjoy the occasional beer at a popular local watering hole, and their daughters attended the same exclusive all-girls prep school in Palo Alto.

After reading Allred’s letter, Holston was in a pickle. He was HP’s lawyer, not Hurd’s. But Hurd was his friend and boss. If matters turned contentious, it would be a no-win situation for Holston. Realizing that a worst-case scenario would be explosive, he called Peter Atkins, the prominent securities and corporate governance lawyer at Skadden Arps in New York and the counsel to HP’s board for about three years. Holston also hired Covington & Burling, where Eric Holder had been in private practice before joining President Obama’s cabinet, to investigate the allegations against Hurd. Finally, Holston tapped Apco Worldwide, a Washington, D.C.-based PR firm that specializes in crisis management and that had recently completed some other assignments for HP.

The investigators from Covington quickly began conducting interviews. Their target list was short and included Hurd—who spoke to investigators for four hours on July 20—along with Fimbres and  Denis Lynch, Hurd’s security guard.

But that was about it. The investigators didn’t talk to anyone outside HP. Given the board’s missteps in the still-painful pretexting episode, hiring a private investigator to snoop among outsiders was out of bounds. Moreover, given the fact that, at that point, Fisher’s allegations hadn’t been made public, there was even more incentive to confine the questions to Hurd’s inner circle.

To learn about Jodie Fisher, for example, HP’s investigators relied on public records and, of course, on the incendiary letter her attorney had sent. The more the board’s lawyers dug into Fisher’s background, however, the more they and the directors began to confront a conundrum: Why would the CEO of the world’s largest technology company hire a failed B-list actress to greet the company’s most important customers?

Girl of the Southwest

Fisher’s story—from ambitious Texas girl to down-on-her-luck actress in Los Angeles—certainly is the stuff of Hollywood pulp-fiction lore. Born near Dallas, she earned a degree in political science from Texas Tech, where she once posed nude for a Playboy Magazine “Girls of the Southwest Conference” spread. On her Playboy questionnaire Fisher described her father as an owner of an oil and construction company. She listed her hobbies as backgammon, “reading a good book,” tennis, ballet and aerobics. She also told Playboy her ambition was to be a corporate lawyer and “then a politician” and remarked that she wanted to be the “first lady president or dean of Harvard Law School.”

Like many a political science graduate, Fisher headed to Washington, D.C., after college. She worked for a short time as a staff assistant for the House Select Committee on Narcotics Abuse & Control. On Capitol Hill, Fisher made more of an impression for her looks than for her hard work. “She was just a head turner,” recalls a woman who worked for the committee. “All the guys in the office would act stupid around her. She took longer lunches than the rest of us because she could get away with it.”

During this period, Fisher experienced a family tragedy. “She made me cry the first time I met her,” says Jayanna Howerton, a fellow “cougar” from the “Age of Love” series. Howerton says that, as the two were holed up in seclusion during the show’s taping, Fisher told her that her sister had been murdered years ago. According to a March, 1985, article in the Dallas Morning News, Jill Fisher, a topless dancer, was shot by a former boyfriend in 1984. (Gloria Allred, who continues to represent Fisher as her lawyer, declined to comment on this or any other aspect of her client’s life. Fisher did not respond to interview requests.)

Fisher eventually made her way to Los Angeles and in her 30s she modeled and acted in commercials and a handful of racy movies. Her manager, Jerry Donato, says Fisher was able to find steady work and that she developed a modest reputation for showing up on time and working hard. Yet her Hollywood career was undistinguished, marked mostly by a willingness to appear in some state of undress.

By her 40s, having married and divorced Frank Coady, a former stockbroker who now works as a chef in Malibu, Fisher had more or less given up her Hollywood dream. Single and raising a young son, Fisher for a time worked for an apartment building known as the Belle Fontaine in Marina del Rey and received discounted rent. According to a lawsuit filed against her by the Belle Fontaine, Fisher was fired from that job in 2006 and ultimately owed more than $18,000 in back rent and other charges. A judge ordered her to relinquish her apartment, according to court records, and the apartment owner won a judgment against Fisher.

Goodbye, Hollywood — Hello, New Jersey

Still, when Fisher made a play to be a reality-TV star, she came across as anything but bitter—or even down. “She was by no means your typical money-hungry divorcee,” says Brandon Nickens, a casting director who interviewed Fisher for “Age of Love.” “I didn’t think she was stereotypical enough for the show. There are some people who are out to make a quick buck. I would’ve never put her in that category.” A vivacious and slender blonde, Fisher struck a cheerful chord among her new reality-TV friends. NBC chose her for the show, but Fisher made a quick exit: She was the first contestant to be eliminated by tennis pro Mark Philippoussis, qualifying her for little more than 15 minutes of fame years after her last sizeable acting role.

One person who did notice Fisher was Caprice Fimbres. The program manager in the office of HP’s CEO around this time had the idea of recruiting one of the more mature women from “Age of Love” for the CIO events she was building for Hurd. In fact, three women from the program—all “cougars,” or the 40-plus cohort—were considered for the HP job, according to Jolson, the publicist whom Fimbres contacted. Jolson suggested the three: Fisher, Jayanna Howerton and Maria Rangel, a professional photographer. Howerton in particular says she was keen on the opportunity, having been a trade-show-booth greeter before. But her interview with HP was called off before it happened, she says. Fisher already had been offered the gig and Jolson negotiated her deal with HP.

If there was anything tawdry about Jodie Fisher and the work she did for HP, no one seems to have complained about it at the time. Fisher’s run as an HP contractor ended as quietly as it had begun.

In late 2009 Fisher relocated to New Jersey to work for a staffing agency owned by her mother, Polly McDonald. Fisher manages a branch in tiny Swedesboro, N.J., about 25 miles from both Philadelphia and Wilmington, Del. Swedesboro is miles from Hollywood and Silicon Valley, in many ways. The branch Fisher manages is located in a strip mall, not far from the Interstate, with a dry cleaners, a chiropractor, and a hair salon. An employee there says Fisher has been on a leave of absence since August.

To this day Jodie Fisher hasn’t spoken publicly about why she approached Gloria Allred. As it happens, at the time Allred was preparing the missive that would disrupt careers and move markets, Fisher was anticipating her 50th birthday. She reached that milestone on July 17, three weeks after Allred’s letter appeared on Hurd’s desk and three weeks before Fisher’s name became synonymous with the downfall of a famous corporate chieftain. Shortly after Fisher turned 50 her life would change forever. And so would Mark Hurd’s.

A loyal board turns against Hurd

On Wednesday, July 28, lawyers from Covington presented their preliminary findings to HP’s board in a session that went into the wee hours of the night and resumed by telephone the next day. Hurd, the board’s chairman, wasn’t present when the board went into executive session, where his fate was discussed.

Up to that point (contrary to some press accounts), HP’s board had been overwhelmingly supportive of Hurd. It even had begun discussing Hurd’s new vision for long-term strategy, now that HP’s cost-cutting phase was over. That said, the Fisher allegations had shaken the board’s support. At the beginning of the late-July conversation, two directors favored retaining Hurd: John Joyce, a former chief financial officer of IBM (IBM), and Joel Hyatt, who founded a legal services company and subsequently was involved in Democratic politics.

Two directors, former Medtronic (MDT) CFO Robert Ryan, also the board’s lead independent director, and Lucille Salhany, a media executive and chair of the board’s nominating and governance committee, were convinced that Hurd should go. This was no coincidence: Their roles put them in daily contact with the Covington investigators and they knew much more than their fellow directors about what the investigators were turning up. The other directors, including Andreessen and current and former CEOs Rajiv Gupta (ex-CEO of Rohm & Haas), G. Kennedy Thompson (ex-CEO of Wachovia) and McKesson (MCK) CEO John Hammergren, began the day undecided.

What the board members learned—and what they discussed among themselves—eventually swung all 10 against Hurd. The Covington lawyers, who also culled Hurd’s emails and computer usage, had concluded that though there was evidence of a close relationship—Hurd had admitted being alone with Fisher in each other’s hotel rooms—there was no evidence to support a case that Hurd violated HP’s harassment policy. But they had uncovered some worrisome inconsistencies in Hurd’s expense reports—primarily regarding dinners that Hurd had with Fisher. Hurd, who didn’t prepare his own reports, offered to repay the money, said to be between $2,000 and $20,000. But the CEO was adamant that there needed to be no disclosure of Fisher’s allegations.

The board was warned of the potential cost of silence. Kent Jarrell, a former broadcast journalist who runs the litigation communication practice for PR firm Apco, told the directors that if word leaked that Hurd had been accused of harassment by a client of Gloria Allred, a PR nightmare inevitably would ensue.

The board members assumed that Allred sooner or later would divulge the harassment allegations and that Hurd’s private life would become fodder for gossip websites. Worse, from their perspective, they might again be accused of hiding important facts or misleading shareholders, as they had been during the pretexting brouhaha. The expense-account violations, though small in size, also represented a violation of the company’s standards of business conduct, which would require some kind of disciplinary measure—especially given that Hurd publicly trumpeted HP’s adherence to high ethical standards.

The directors quickly decided that some form of disclosure was necessary. Hurd disagreed, and that disagreement began unraveling his relationship with the board. Some directors became convinced Hurd wasn’t being truthful with them about the nature of his relationship with Fisher or his culpability in the expense-account inaccuracies. Whether or not the two had been physically intimate—representatives of both Hurd and Fisher have publicly asserted that the two did not have a sexual relationship—several directors felt that Hurd’s story had changed from their initial informal inquiries to his answers to the investigators. Hurd’s initial denials of an inappropriate relationship with Fisher had been so vehement that, when it turned out there was evidence of a close relationship—including the fact that Hurd and Fisher dined together out of town on two occasions when Fisher was not working at an HP event—some members of the board simply lost their trust in Hurd.

The significance of that perceptual chasm can’t be overstated. Like a divorced couple disagreeing on key facts, Hurd and his once-supportive board simply don’t see eye to eye on what caused the rupture. It helps explain why HP publicly announced that the company found “no violation of HP’s sexual harassment policy” even as some of its directors harbored doubts on everything from the circumstances of how Hurd first met Fisher to what the true nature of their relationship was. In the end, the board had lost so much faith in Hurd that both sides agreed he had to go.

By Wednesday, Aug. 4, the focus had shifted to the timing of Hurd’s departure. The CEO offered to delay his resignation until the end of the year in order to save HP the embarrassment of not having a replacement ready to announce on the day Hurd resigned. The board rejected Hurd’s proposal. Late that night Hurd and his attorney, Amy Wintersheimer Findley, a San Diego employment lawyer with prior experience negotiating against Allred, agreed to a confidential settlement with Fisher.

Shortly after the market closed at 1p.m., California time, on Friday, Aug. 6, HP announced that Hurd had “decided with the board of directors to resign his positions effectively immediately.” The bombshell news knocked almost $9 billion off HP’s market value by the time the company’s stock closed for trading the following Monday.

The initial announcement said only that in the course of investigating a claim of sexual harassment by a former contractor, HP’s outside lawyers found that Hurd had violated the company’s standards of business conduct. It wasn’t until a call with investors that HP disclosed further details: Hurd had committed expense-account violations and had acknowledged having had a close relationship with a still-unnamed contractor.

The board’s fears come true

Hurd with Larry Ellison, soon after joining Oracle

The aftermath of that initially vague announcement has been ugly. Hurd walked away with a $12-million severance package and was allowed to keep millions more in restricted stock and retirement benefits. Just a few days after his resignation Fimbres followed him out the door. HP’s board apparently expected that the media’s curiosity about Hurd’s departure would quickly simmer down, even after the identity of Allred’s client came to light. If so, the board was wrong. Everyone from Larry Ellison to Jack Welch to New York Times columnist Joe Nocera mocked the board’s actions.

Indeed, the directors appear to have stumbled more than once. First the board didn’t have a succession plan in place. Then it filed suit against Hurd on Sept. 7 seeking to block his employment at Oracle, a seemingly quixotic effort given that Hurd hadn’t signed a non-compete agreement with HP. (The two sides settled on Sept. 20, with Hurd agreeing to forfeit restricted stock potentially worth more than $13 million but not his severance payment.) The board’s decision on Sept. 30 to replace Hurd with Leo Apotheker, a former CEO of software maker SAP (SAP)—Oracle’s archrival—also was greeted with derision by investors.

The question of whether the board needed to disclose the harassment allegations remains murky. “This is one of those practical issues that turn on human judgment and motivations,” says Robert Daines, a law professor at Stanford and an expert on securities law. Clearly, there is no need to disclose an unfounded allegation, says Daines. What’s more, disclosure of small business-conduct violations could hurt shareholders more than the violations themselves. At the end of the day, disclosure seems not to have been merely a securities-law issue for the board. Public embarrassment or the fear of appearing to have covered up compromising information seems to have driven the board’s actions. The obvious irony is that the result has been exactly the sort of PR nightmare the board hoped to avoid.

Before his term as HP’s non-executive chairman officially began, venture capitalist (and former Oracle president) Ray Lane accused Hurd, in a letter to the New York Times, of repeatedly lying to HP’s board. Lane hasn’t elaborated on his charge, and Hewlett-Packard’s management and directors have repeatedly declined requests to explain their actions on the record. Hurd also declined numerous requests to be interviewed for this article.

Meanwhile, innuendo continues to whip around Silicon Valley. Several people close to the HP board, for example, have claimed that Oracle’s board did no due diligence before hiring Hurd.  In fact, according to two sources, Oracle’s board—which includes such well connected Silicon Valley executives as venture capitalist Donald Lucas, ex-Cadence Design Systems (CDNS) CEO Ray Bingham and Bruce Chizen, former CEO of Adobe (ADBE)—personally contacted people in their network, including employees of HP and NCR (Hurd’s previous employer), to satisfy themselves that whatever happened at HP was tantamount to a misdemeanor and would have no bearing on Hurd’s performance at Oracle. Board members also spoke with Hurd as well as his wife, Paula.

As far as Hurd’s personal life goes, if there is any rift between him and his wife, they have done a good job hiding it. The Hurds are often seen walking together in their neighborhood in tony Atherton, sometimes strolling from their home to the house they are building nearby. Paula Hurd has been described as gorgeous, charming and smart, a former senior executive at NCR (NCR) who openly jokes that she knows all about office romances—that’s how she and Hurd met. They both were single at the time, Hurd’s first marriage having ended in 1987, the year before he re-located from a Dallas field office to NCR’s corporate headquarters in Dayton, Ohio. The Hurds married in 1990 and have two teenage daughters.

Paula Hurd worked at NCR for 18 years and stepped down in 2002, the year before her husband became CEO. She has a reputation for calling the shots at home. On her LinkedIn page, presumably written before Hurd’s departure from HP, she writes: “[I’m] retired, but remain CEO of the CEO.” At least someone’s responsibilities haven’t changed in the last three months.

Additional reporting by Beth Kowitt