$40 million severance package for former CEO called a waste of corporate assets.
A private investor has filed a lawsuit against Hewlett-Packard's board, alleging it effectively robbed shareholders by awarding a $40 million severance package to disgraced ex-CEO Mark Hurd.
The lawsuit, filed earlier this week by stockholder Louis Levine, names numerous HP board members, including Marc Andreessen, Rajiv Gupta, John Joyce, and Joel Hyatt, as well as Hurd himself, as defendants.
Levine complains Hurd's severance package is a waste of money and that the former CEO's actions should have disqualified him from receiving a generous payout. "The payment to Mr. Hurd constitutes a waste of corporate assets by the Board," Levine states in court papers filed in U.S. District Court for Northern Califorina.
"In announcing his resignation, Hurd acknowledged that 'there were instances in which I did not live up to the standards and principles of trust, respect, and integrity that I have espoused at HP,'" Levine notes in his complaint.
Hurd stepped down on August 6 after admitting to an inappropriate relationship with Jodie Fisher, a former soft-core porn star who had been employed by HP as a marketing contractor. Upon his exit, Hurd collected cash, stock, and options worth roughly $40 million.
"By agreeing to transfer assets to defendant Hurd for illusory or non-existent consideration, the Board wasted and squandered HP's assets," Levine alleges in his complaint. "No reasonable person could conclude that the Board's decision to approve these payments represented a fair or reasonable exchange," said Levine.
Levine is asking the court to order HP's board to rescind payments to Hurd.
For its third quarter, HP on Thursday reported profits of $1.8 billion, or 75 cents per share, compared to profits of $1.7 billion in the same period a year ago. Revenue increased 11% year-over-year, to $30.7 billion.
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