Mark Hurd, Hewlett-Packard Co.’s former chief executive officer, won’t agree to halt a shareholder lawsuit during a probe of his departure from the computer maker until he sees documents the board refused to share with him.
The independent investigation was proposed in a federal suit in San Jose, California, that claims HP’s directors wasted company money by awarding Hurd as much as $53 million in severance when he resigned in August. He quit after the company found that he violated business conduct standards in trying to conceal a personal relationship with a contractor.
The new probe would be conducted by a committee of directors who joined Palo Alto, California-based HP, the biggest maker of personal computers, after Hurd’s departure and by lawyers not involved in the shareholder litigation, according to a case-management statement filed Jan. 14. The statement proposes a “stay” putting the case on hold until the probe is done.
“Mr. Hurd remains willing to consider in good faith HP’s proposal for a stay, provided Mr. Hurd receives the information he requested some time ago that is necessary to evaluate HP’s proposal,” according to the case-management statement.
The investigation will examine “circumstances surrounding the departure of Mark Hurd and the board’s decision to approve the separation agreement between HP and Mr. Hurd,” according to the filing. HP and the directors who are defendants “contemplate that the committee will report to the board on the results of the investigation.”
Hurd, 54, wants a copy of the shareholder “demand” that triggered the planned investigation, and documents under seal in a related shareholder suit filed in Delaware Chancery Court, according to the filing. HP said in its filing that Hurd, as a “potential subject of the inquiry,” isn’t entitled to the documents.
HP’s finding that Hurd violated company standards came after he was accused of sexual harassment by former marketing contractor Jodie Fisher. HP found that Hurd didn’t violate its harassment policy.
The plaintiffs in the San Jose case are demanding, in part, that Hurd be required to disgorge to the company payments and benefits described in his separation agreement, according to the filing. They are “open to settlement” if it’s in the company’s best interests, according to the filing.
“In these cases, to determine responsibility, you need the facts,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Giving everyone a chance to step back and review this neutrally and impartially is probably a good idea.”
A hearing on the plan is scheduled for Jan. 24.
Mylene Mangalindan, an HP spokeswoman, declined to comment yesterday. Glenn Bunting, a spokesman for Hurd, also declined to comment.
The case is Levine v. Andreessen, 10-3608, U.S. District Court, Northern District of California (San Jose).
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