The first lawsuit on behalf of a shareholder has been filed against Hewlett-Packard in connection to the resignation of former CEO Mark Hurd.
The Wall Street Journal first reported on Thursday that a Connecticut law firm is representing HP shareholder Brockton Contributory Retirement System in a complaint against HP's board of directors, Hurd, and interim CEO Cathie Lesjak. The suit accuses the board of breach of fiduciary duties in how it handled Hurd's resignation.
The board on Friday announced that it asked Hurd to resign as chief executive of one of the world's foremost technology companies after he was accused of sexual harassment by former HP marketing contractor Jodie Fisher. Although the HP board's own investigation cleared Hurd of any harassment, it did find that he had submitted inaccurate expense reports. Because of that, the board asked for Hurd's resignation, and Hurd agreed to a severance package worth approximately $28 million.
HP declined to comment for this story.
The suit was filed on Tuesday in California's Santa Clara County Superior Court. Besides breach of fiduciary duties, the board is accused of gross mismanagement, waste of corporate assets, violating the California corporation code, misappropriating information, and unjust enrichment, according to the complaint.
The suit says HP's board failed to notify shareholders of the investigation into Hurd, when it began in late June. It adds that according to his employment contract, Hurd was not entitled to receive such as large severance package, which includes a payment of $12.2 million.
"As a result of Hurd's, Lesjak's, and the HP board's shortcomings, HP lost significant credibility, and the market punished HP (and its shareholders) upon the 8/6/10 revelation of Hurd's termination--slashing its stock rating and erasing over $9 billion in market capitalization when the company's stock resumed trading on 8/9/10," the complaint says.
Updated at 2:05 p.m. PDT with information from court documents.