HP shareholders go for Hurd's jugular

A lawsuit filed in Connecticut by long-term HP shareholders accuses Hurd of running HP like his 'own private fiefdom'

HP: Lawsuit accused Hurd and the HP board of gross misconduct

Beleagured former HP chief executive Mark Hurd is facing a lawsuit from a number of HP shareholders following his departure and multimillion-dollar payoff.

A document was filed with the superior court of the state of California this week by a Connecticut-based law firm on behalf of shareholders, blaming the HP board along with Hurd and interim chief executive Cathie Lesjak, for ‘gross mismanagement’ and questioning the circumstances under which Hurd left the company after soft porn actress Jodie Fisher accused him of sexual harassment.

Following an investigation, Hurd was allowed to resign with a $12m payoff and improved stock options, estimated by some sources to net him up to $50m by the end of the year.

“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 6 August 2010 revelation of Hurd’s termination – slashing its stock ratings and erasing over $9bn in market capitalisation when the company’s stock resumed trading on 9 August 2010,” the lawsuit said.

The lawsuit also dredged up the much-publicised incident in 2006 when HP was accused of spying on a number of then board members, and members of the financial press over alleged leaks. It was forced to pay out a $14.5m civil penalty along with other charges.

“HP was suddenly thrust into a serious crisis on 9 June 2006 amid revelat ions that the corporation, at the direction of its former chairman and counsel, had spied on its own directors and members of the financial press, utilising improper and illegal investigatory techniques…. As a result of these revelations, HP suffered substantial expense and damage,” the document added.

But it went on to say that HP had adopted a series of corporate governance changes, including revisions to its standards of business conduct, that shareholders were assured would “restore credibility to the oversight of the HP board of directors”.

However it continued: “These stop-gap measures went largely unimplemented, and to the extent they were adopted at all, they failed grossly. The HP board of directors failed to hold its highest executive, Hurd, to its standards of business conduct. Instead, Hurd, serving contemporaneously as chairman and chief executive, was permitted to run HP as his own private fiefdom – free from board oversight.”

The plaintiff is aiming to recoup Hurd’s severance package as well as implement governance changes on the board.

HP is yet to comment on the lawsuit.