Hewlett-Packard Co. (HPQ) agreed to pay $57 million to settle a shareholder lawsuit accusing former Chief Executive Officer Leo Apotheker of making misleading statements about operations before he was ousted.
The agreement will have “substantial monetary benefits” for the plaintiffs and is in their best interests, according to a filing yesterday in federal court in Santa Ana, California. The lawsuit was filed on Sept. 13, 2011, after Apotheker made strategy shifts and cut sales forecasts three times. He was fired on Sept. 22 of that year.
Hewlett-Packard’s current CEO Meg Whitman, Apotheker and the company’s board face separate lawsuits in federal court in San Francisco alleging they ignored warnings about accounting irregularities at Autonomy Corp. and failed to properly vet its finances before buying the British software company for $10.3 billion. Hewlett-Packard took an $8.8 billion writedown in 2012 related to the acquisition, which was engineered by Apotheker. The company said it was the victim of fraud by Autonomy’s former management.
In February, a person familiar with the matter said lawyers for the company and shareholders were in talks to potentially settle the case. Hewlett-Packard and plaintiff’s attorneys, as well as attorneys for the company’s advisers on the Autonomy deal who are also named as defendants, agreed to keep the lawsuit on hold until May 15, according to a court filing yesterday.
HP faces a securities fraud lawsuit and a suit by shareholders on behalf of the company, known as a derivative suit, over the Autonomy debacle. Whitman, Apotheker and other executives were sued in a third case in February by an investor alleging that mismanagement and botched acquisitions have destroyed shareholder value.
Hewlett-Packard is trying to move past a period of upheaval including declining performance and the departure of Apotheker and Mark Hurd as CEO before him.
Hewlett-Packard didn’t admit any wrongdoing in the settlement of the Santa Ana case.
“HP has reached a mutually acceptable resolution through a mediated settlement,” the company said in an e-mailed statement.
Hewlett-Packard, based in Palo Alto, California, agreed to settle because fighting the lawsuit would be protracted and expensive, according to the filing.
“Defendants believe that they have meritorious defenses to all claims asserted,” the company said.
The case is In Re: Hewlett-Packard Company Securities Litigation, 11-cv-01404, U.S. District Court, Central District of California (Santa Ana).
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