Shareholders sue HP over Hurd resignation and subsequent stock losses 16
Sat, 14 Aug 2010 10:49 am EDT 
Ah, lawsuits, so much fun. This isn’t the first time we’ve seen a lawsuit over shareholder losses, and we expect it wont be the last time we see such a lawsuit quickly settled. The day after the firing resignation of HP CEO Mark Hurd, the company’s stock (HPQ) dropped more than 10%. Hurd, while not necessarily popular within HP, was popular with shareholders. For comparison, when Carly Fiorina was forced out of the Chief Executive position, HP stock rallied. In total, the massive drop erased some $9 billion in shareholder wealth. Shares have continued to drop since, bringing HPQ down to levels not seen since July 2009.
For those with large investments in HP, the drop was a kick in the tender nether regions. One of those large investors is Brockton Contributory Retirement System (BCRS), a $266 million pension fund for Massachusetts public employees. BCRS was so enraged by the stock price drop that the decided to sue HP’s board, Hurd, and acting CEO Cathie Lesjak. The defendants are accused of gross mismanagement of HP, and BRCS alleges that HP’s board could have substantially limited Hurd’s multi-million dollar severance package.
BRCS’s demands are unlikely to be fulfilled. The pension fund wants for HP to restrict Hurd’s severance package (a deal likely negotiated as part of his hiring contract, and again for his firing resignation) and for the defendants to pay back HP for money lost due to the scandal (HP itself has lost little money in the grand scheme - stock value has little effect on the company’s profits). Additionally, the suit demands that HP change its corporate rules to prevent board members from also serving as HP executives (Hurd was both CEO and Chairman).
So you might be asking why Lesjak was named in the suit. Both she and Hurd have also been accused by BRCS of insider trading. Hurd sold some $11 million of HP shares in November and May, while Lesjak sold 5,785 shares of HPQ (around $266,000) on July 30, a few days before Hurd’s departure was announced and she stepped into the interim CEO position.
While we’re not legal scholars my any estimation (okay, Jonathan Ezor actually is), our expectation is to see this settled out-of-court for a few million bucks. For BRCS and their lawyers, it’ll be a good day, while for HP it’ll be a drop in their $14 billion cash-on-hand bucket.
Source: PCMag.com
16 Comments
Can't we just give em a hint what's in store so they can see that the stock will go back up. Hey Palm, show the Pre 3 with that flexible display... :)
.. You mean, there are risk owning stocks?
Carly Fiorina termination (scandal?) hardly compares to what Hurd did.
Great!
I have been looking for a buying opportunity with HP.
Im a sucker for deals.... i will take the over 10% !
Maybe this will force them to announce some new products.
Unless they decided to sell, BRCS didn't actually lose any money. If they had half a brain they'd have doubled down on HP when the stock dropped and sold when it rebounded, which WILL happen. CEOs get fired all the time, it's usually a good thing for the company in the long term.
Anyone who sues over financial losses in the stock market, barring some sort of major deceitful business practice, ought to be laughed out of court and slapped with a fine for wasting the court's time.
Speaking as an attorney, I am tired of scum sucking opportunistic bottom feeders filing frivolous litigation. Plaintiff's counsel and plaintiffs should be sanctioned and sent home empty handed.
Speaking as nonattorney, if HP didn't force Hurd to leave, some lawyers would have gone after them for sexual harrassment and the bad news would have caused stock prices to drop and then more lawyers still would get in the mix.....
The problem is there is no barrier to lawsuits. BRCS probably has their own inhouse lawyers and didn't even have to pay alot to start the suit.
...And you invested people's pensions in the stock market for what reason? You're gambling on pensions! If you put money in the stock market, guess what: there's a fair chance that you'll lose money! Who would've thought?
+1
... Adding to that ... They (plantiffs) must have forgotten how the stock price climbed so high. This guy made HP jump Hurddles... (lame pun intended) :-)
These people are idiots. Hurd did a good job to lay down governance at a bloated technology power. The problem is he laid down the rules and could not live by them. No non-executive HP employee would have been allowed to walk away with cash after doing what he did so he deserved to go - and go without a parachute.
It's been pretty clear over the last 12 months that someone other than Hurd needed to lead HP in its next phase. Hurd continued to cut to profitability. That was not going to last as he was beginning to cut to far. HP needs a visionary who can take the pieces that are in place and put together a coherent set of offerings to the market. While the consumer products are fairly self evident, the enterprise products need more cohesion. Believe it or not there is a big need in enterprise for webOS. Whose going to make mobility devices for corporations, Apple? Please, they run from enterprise. RIM? With that OS, right. Google? No, they've got search, but Android is focused on the needs of cell phone companies and manufacturers who sell to them. That leaves HP and if they play their cards right there is a big upside ahead.
Windows Phone 7? Meego?
Big money pushing them pushing them too.
This is absolutley ridiculous, how the hell is it HP's fault that their stock lost 10% after the departure of Hurd. They don't controll it the market does, They should blame all the Idiots that sold hp stock after the news broke, thats what made it go down so much. I say idiots because there must have been a lot of people selling a lot of stock for such a big company to lose 10% percent. And for such a big and profitable company I don't believe that the loss of Hurd is going to affect HP substantially.
Secondly, If I was the shareholders I would have bought a hell of a lot more stock after the 10% loss (doubleingdown) because I am confident it was an overreation. This will bring down my what the average price per stock.
Funny i bet most making these lawsuits bought hp stock under what it is today after the drop, so they didnt technically lose money just didnt make as much.
I think this all crap, stock prices change when things like this happen. Get over it people.
Grab a Snorkel before you look at the stock prices....
Hmm. Did everyone see yesterday's New York Times piece (by Joe Nocera) about Hurd's exit? I'm surprised that no one's mentioned it. It's a pretty interesting article (Hurd's expense account problems had nothing to do with his ouster, the author speculates). Additionally, the Times suggests that it was Hurd's fault that HP didn't have an answer to the iPad.
http://www.nytimes.com/2010/08/14/business/14nocera.html?sq=hurd&st=Sear...
First, the people suing are dumb.
Second, this is not related to webOS.