HP Lawyers Have One Less Lawsuit to Worry About
Hewlett-Packard’s board of directors now officially has one less lawsuit stemming from its various fits of corporate drama to worry about. Today, a judge in a Delaware Chancery Court threw out a shareholder lawsuit over the $40 million severance package that former CEO Mark Hurd received after abruptly resigning in 2010, according to a Reuters report.
Lawrence Zucker, an HP shareholder, sued the company’s directors, arguing that they had wasted company money by agreeing to such a large severance package, and that directors could have fired Hurd for cause and thus paid him nothing.
However, doing so, wrote Judge Donald Parsons in his opinion, would have made it more difficult to attract and hire a possible replacement, though he conceded that the amount “may appear extremely rich or altogether distasteful to some.”
Hurd resigned from HP in August of 2010, after complaints by a female marketing contractor led to the discovery of irregularities in Hurd’s expense reports that appeared intended to conceal a relationship. Aside from the expenses, Hurd was cleared by HP of any wrongdoing, but he was forced by the board to resign.
The severance package soon shrunk. A month later, Hurd accepted a job as president at HP rival Oracle, which prompted HP to sue Hurd and Oracle. The two companies later settled that lawsuit and, as part of the settlement agreement, Hurd forfeited 346,000 stock options that had initially been included in the severance, options then worth $13.6 million (though they would be worth a lot less today).
And, of course, we know that the Hurd settlement is central to the current legal mishegas under way between HP and Oracle over Intel’s Itanium chip. HP says there’s a section of the agreement that requires Oracle to port its software to HP’s Integrity servers, which use the Itanium chip. Oracle says there’s no such agreement in force, and that the Itanium chip is on its way to the graveyard, anyway. That trial is still going on in a San Jose, Calif., courtroom.