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HP Shareholders Sue Over Fiorina Package
SAN
FRANCISCO (March 06) – A group of Hewlett Packard Co. shareholders are
suing the company, alleging its board broke its own rules by awarding
more than $42 million in cash, stock and other benefits to Carleton
“Carly” Fiorina after she was dumped as CEO last year.
The
complaint, filed late Monday in U.S. District Court in San Jose,
depicts the payments to Fiorina as a blatant violation of a board
policy adopted in 2003 so the company’s severance payments would be
limited to 2.99 times an executive’s combined salary and annual bonus.
Based
on that formula, the suit contends Fiorina’s severance package
shouldn’t have exceeded $16.7 million when HP ousted her 13 months ago
after nearly six years in the job. HP paid Fiorina $21.4 million in
cash, plus stock worth about $19 million and pension benefits valued at
about $2 million, the suit said.
The four pension plans that filed
the suit hope to force Fiorina to pay back millions of dollars by
proving HP’s board improperly approved her severance package.
HP believes the suit is meritless, spokesman Ryan Donovan said Tuesday.
Besides
Fiorina, the suit names eight other current or former HP directors:
Patricia Dunn, Lawrence Babbio, Richard Hackborn, George Keyworth II,
Robert Knowling Jr., Thomas Perkins, Robert Ryan and Lucille Salhany.
The
suit threatens to put HP in the uncomfortable position of defending the
lucrative package given to Fiorina as its new CEO, Mark Hurd, strives
to cut more than 15,000 jobs to help boost the Palo Alto-based
company’s profits.
Since Hurd took over, HP’s stock has surged by
more than 60 percent to reverse a downturn that occurred under Fiorina
– a flashy leader who defied intense shareholder opposition to engineer
a $19 billion takeover of Compaq Computer Corp. in 2002.
Michael
Barry, a Wilmington, Del. attorney representing shareholder interests
in the case, described Fiorina’s severance package as a prime example
of corporate America’s penchant for overindulging top executives at its
owners’ expense.
“We are trying to make the point that HP and other
major companies have got to get some control on these outrageous
compensation practices,” said Barry, a partner at Grant &
Eisenhofer. The same law firm filed a 2002 lawsuit that prompted
another Silicon Valley company, Siebel Systems Inc., to reform its
executive compensation practices before its recent sale to Oracle Corp.
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