Former Hewlett-Packard Co. (HPQ:US) Chief Executive Officer Mark Hurd and company directors won dismissal of a shareholder lawsuit alleging that Hurd’s severance pay was wasteful and excessive.
U.S. District Judge Edward Davila in San Jose, California, said shareholders in the so-called derivative complaint failed to show that Palo Alto, California-based HP’s approval of a separation agreement with Hurd was against the corporation’s best interests.
Davila also said the complaint fails to raise a reasonable doubt that the board’s decision about the amount of Hurd’s severance pay was “a valid exercise of business judgment.” The judge dismissed this allegation and gave the plaintiffs 30 days to amend the complaint with additional facts.
Shareholders in the lawsuit are demanding that Hurd be required to disgorge to the company payments and benefits described in his separation agreement, according to the filing.
The lawsuit alleges directors (HPQ:US) at the largest maker of computers wasted company money by awarding Hurd as much as $53 million in severance pay when he resigned in August 2010. Hurd, now co-president of software maker Oracle Corp. (ORCL:US), quit after an internal investigation by HP found that he violated business conduct standards in trying to conceal a personal relationship with Jodie Fisher, a marketing contractor.
Samuel M. Ward, a lawyer at Barrack Rodos & Bacine in San Diego representing lead plaintiff Louis Levine, didn’t immediately return a phone call yesterday seeking comment on the ruling.
The case is In Re HP Derivative Litigation, 10-3608, U.S. District Court, Northern District of California (San Jose).
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