By Jonathan Stempel
NEW YORK, Aug 12 (Reuters) - Hewlett-Packard Co's directors
have been sued by a Massachusetts pension fund that alleges
they violated their fiduciary duties in connection with the
abrupt departure of Chief Executive Mark Hurd, causing the
company's shares to fall.
The shareholder derivative lawsuit accused 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.
"HP lost significant credibility," according to the lawsuit
by the Brockton Contributory Retirement System, filed Tuesday
in the Superior Court of Santa Clara County, California.
Hurd resigned as chairman and chief executive after the
investigation found that 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.
Michael Holston, Hewlett-Packard's general counsel,
concluded that Hurd had demonstrated a "profound lack of
judgment that seriously undermined his credibility."
The Palo Alto, California-based company's market value has
fallen about $14.4 billion since Hurd's resignation was
announced after the Aug. 6 stock market close, including about
$8.6 billion on Monday alone, Reuters data show.
Hewlett-Packard shares closed down 1.5 percent on Thursday
Hewlett-Packard did not immediately return a request for
comment. Mary Blasy, a lawyer for the Connecticut-based firm
Scott + Scott LLP representing the pension fund, also did not
return a request for comment.
Among the defendants in the lawsuit is Cathie Lesjak, the
company's chief financial officer who became interim chief
executive after Hurd's departure.
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.
Shareholder derivative complaints are filed on behalf of
companies to assert claims that management or directors failed
The case is Brockton Contributory Retirement System v.
Andreessen et al, Superior Court of California, Santa Clara
County, No. 1-10-179356. A copy of the complaint was posted on
the Courthouse News Service website.
(Editing by Dhara Ranasinghe)