Case 3-4 Hewlett-Packard

Case 3-4 Hewlett-Packard

Summary

HP executives were accused of using questionable spying tactics to uncover boardroom leaks involving violations to privacy and intellectual. Executives then engaged in insider trading just before news of the spying incident became public. The actions of leadership involving corporate ethics and compliance programs do not comply with the protocols of federal regulating councils.

1. The original lawsuit filed in the HP case claimed that the executives breached their fiduciary responsibilities. What are the fiduciary responsibilities of executives and members of the board of directors to shareholders? How were these obligations violated in the HP case?

Traditionally, corporate directors and officers owe fiduciary duties to the corporation and its stockholders. The boards of directors establish company policies and delegate certain duties to corporate officers. Corporate leadership has a fiduciary duty to protect the assets of the organization and guide the company direction. They are responsible for making sound business decisions not to hurt the firm’s interest. Fiduciary duties include the duty of obedience, loyalty, care, disclosure, and good faith (Alces, 2015). In relation to the Hewlett-Packard case, executives within the company breached fiduciary duties through insider and internal spying. The company was threatened with several serious criminal and regulatory investigations. Actions of leadership were unethical and a waste of corporate assets. Ultimately the company suffered criminal indictments and civil enforcement actions against corporate officials.

2. Describe how ethical fading influenced the actions taken in the pretexting scandal, including those identified in the HP investigation. Are there similarities between the actions of management in the HP case and those in the Challenger Shuttle Disaster?

Ethical fading occurs when corporations neglect their ethical duties and instead use rationalization (Suk Bong,...