HP Directors Hit with Lawsuit by MA Pension Fund

August 13, 2010 (PLANSPONSOR.com) - A Massachusetts pension fund alleges that Hewlett-Packard’s directors violated their fiduciary duties in connection with the abrupt departure of chief executive Mark Hurd, causing the company's shares to fall.

In a shareholder derivative lawsuit, the Brockton Contributory Retirement System accuses the directors of failing to properly disclose the existence of an internal probe into Hurd’s activities, failing to “police insider trading” by company executives, and trying to give Hurd tens of millions of dollars of severance he did not deserve, Reuters reports.  

Hurd resigned as chairman and chief executive after the investigation found he had allegedly falsified expense reports to cover a relationship with a female marketing consultant. The probe also examined a sexual harassment claim, but found it lacked merit, according to Reuters.

The company’s market value has fallen about $14.4 billion since Hurd’s resignation was announced after the August 6th stock market close.

Cathie Lesjak, the company’s chief financial officer who became interim chief executive after Hurd’s departure, is named in the lawsuit.

The news report said the complaint seeks a variety of governance changes, an order that the individual defendants pay Hewlett-Packard damages, the imposition of a constructive trust on Hurd’s severance and profits from alleged improper trading activities, punitive damages, and other remedies.