A judge threw out a Hewlett-Packard Co. (HPQ:US) investor’s lawsuit challenging a $40 million severance payment to former Chief Executive Officer Mark Hurd after finding it didn’t amount to a waste of corporate assets.
Delaware Chancery Court Judge Donald Parsons in Wilmington yesterday concluded that Hewlett-Packard’s board made a good- faith decision to honor Hurd’s severance agreement after he quit in 2010 amid allegations that he had an inappropriate relationship with a company contractor. Hurd, 55, is now co- president of software maker Oracle Corp. (ORCL:US)
“Without question, the amount of Hurd’s severance may appear extremely rich or altogether distasteful to some,” Parsons said in a 30-page ruling. Still, the directors’ decision was a “valid exercise” of business judgment, the judge said.
Hurd resigned as HP’s chairman (HPQ:US) and CEO in August 2010 after an internal investigation of a sexual harassment- allegation made by Jodie Fisher, a company contractor, found that he violated the company’s business-conduct standards. HP officials said they didn’t find that Hurd had violated the computer maker’s harassment policy.
Shelby Watts, a spokeswoman for Palo Alto, California-based Hewlett-Packard, didn’t immediately return a call seeking comment on the judge’s decision.
Lawrence Zucker, the shareholder who filed the lawsuit, argued that Hewlett-Packard directors had grounds to fire Hurd without paying severance and should be held personally liable for wasting company funds.
Parsons said the board could have rationally concluded that the company had received value from Hurd during his years as its top executive and that the severance package was deserved.
“Denying Hurd any severance despite the admittedly considerable value that he has contributed to HP could have undermined its efforts to attract outside executive talent,” the judge wrote.
The case is Zucker v. Andreessen, CA6014, Delaware Chancery Court (Wilmington).
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