Shareholders sue HP for 'gross mismanagement'

HP's plans to dump Mark Hurd and move on have gone seriously awry

HP shareholders have filed a lawsuit against the company and its former chief executive Mark Hurd, as the fallout from the expenses and sexual harrassment scandal gathers pace.

The shareholders are seeking damages from Hurd, chief financial officer Catherine Lesjak and the entire HP board of directors.

A 44-page document (PDF) submitted to the Supreme Court in California reveals that the shareholders have accused the defendants of "gross mismanagement".

Hurd was forced to resign after allegations of sexual harassment by a contractor and former actress Jodie Fisher. An investigation found that Hurd had apparently fiddled expenses over a two-year period involving outings with Fisher.

Hurd resigned and HP is believed to have offered an estimated $40m (£25m) severance package, including $12.2m (£7.8m) in cash.

The claimants are seeking remedies for "fiduciary breaches of contract, waste of corporate assets and other violations of state law", and want to enforce a number of changes at board level and recoup Hurd's severance package.

Nearly 10 per cent was wiped off the value of HP on Friday when Hurd's departure was announced.

"HP lost significant credibility, and the market punished HP and its shareholders on the revelation of Hurd's termination, slashing its stock ratings and erasing over $9bn [£5.7bn] in market capitalisation when the company's stock resumed trading on 9 August," the court document said.

"As a result of the defendants' wrongful acts, HP was exposed to substantial liability for defendants' misconduct, [and] faces millions of dollars in potential civil judgements. HP has also suffered severe damage to its r eputation, goodwill and ability to conduct future operations."

The filing also brings up previous incidents at the company, including the use of illegal pre-texting techniques to identify the source of an information leak.

V3.co.uk asked HP for comment, but the firm had not responded at the time of writing.