X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A federal judge has dismissed a shareholder class action lawsuit alleging that Hewlett-Packard Co.’s board of directors violated its own policies in 2005 when it granted more than $40 million in a severance package to former Hewlett-Packard Co. Chief Executive Officer Carly Fiorina, who spearheaded the company’s failed merger with Compaq Computer Corp. The suit was filed by several pension plans against Fiorina and eight current and former board members, including former Chairwoman Patricia Dunn, who was indicted about two years ago on four felony counts, including conspiracy, by then-California Attorney General Bill Lockyer. Those charges were later dropped. In the suit, the plaintiffs had alleged that Hewlett-Packard violated its own policies by not obtaining shareholder approval before granting Fiorina’s severance package. The suit, which also includes derivative claims, later claimed that recent allegations of “pre-texting,” which were part of an internal investigation into boardroom leaks, were done in order to hide the specifics of the Compaq merger and Fiorina’s termination benefits. In a March 28 order, U.S. District Judge Ronald M. Whyte, for the Northern District of California, said that the plaintiffs failed to prove that demanding books and records from the HP board of directors was futile. Their arguments, he said, do not “support plaintiffs’ proposed inference that the directors who approved Fiorina’s severance and benefits package were concerned of their own alleged wrongdoing in connection with the failed Compaq merger, that they were afraid Fiorina would disclose these purported wrongdoings, and that the severance and benefits package was paid to keep Fiorina silent regarding the failed Compaq merger.” Regarding the recent investigation of the boardroom leaks, Whyte noted that the allegations “do not give rise to a reasonable inference that the directors’ launch of the investigation was for the purpose of covering up their own purported wrongdoing in connection with the Compaq merger or the alleged cover up of ‘hush money’ to Fiorina.” A lawyer for the HP directors, Jonathan Dickey, co-chairman of Los Angles-based Gibson, Dunn & Crutcher’s national securities litigation practice, and a partner in the New York office, said the leak information, which was added later in the case, failed “to show why these plaintiffs would not be required to make demand on the board because all the directors were somehow implicated in this wrongdoing.” As to whether the severance package violated company policies, the “court clearly sided with us in concluding that they were lawful payments,” he said. Michael J. Barry, a partner at Wilmington, Del.-based Grant & Eisenhofer who represents the pension plans, declined to comment.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.