January 21, 2011
HP To Investigate Hurd Departure
Hewlett-Packard Co. announced a shakeup of its board of directors on Thursday as the company faces growing scrutiny for its ouster of former CEO Mark Hurd six months ago amid allegations of sexual harassment.
The management overhaul is the first significant change under HP's new leadership, which was put in place after Hurd's sudden resignation caused shares of the company's stock to plunge.The departure also triggered lawsuits over the size of Hurd's severance pay.
Ray Lane, who took over as HP's chairman after Hurd was forced out, announced the board members' departures in a statement released Thursday after the market had closed.
Although no explanations were given in the statement, Lane said that current board members Joel Hyatt, John Joyce, Bob Ryan and Lucille Salhany would not stand for re-election during HP's annual meeting in March.
The company's current leadership now consists of Lane, a former Oracle Corp. executive, and CEO Leo Apotheker, former chief executive of SAP AG.
Lane's statement coincides with HP's announcement on Thursday that it would investigate the circumstances behind Hurd's departure, including his severance pay.
Hurd received a $12.2 million cash payout upon his departure, and has filed papers to sell some $30 million worth of stock he received by exercising options that were part of his severance package.
The former CEO agreed to return $14 million in restricted stock to avert a court battle over whether he should be allowed to work at HP rival Oracle Corp., where he is now co-president.
HP's shareholders are suing the company on claims that Hurd's severance package constituted "corporate waste."
The company said "a shareholder" had demanded that independent directors, who joined the board after Hurd's departure, with assistance from outside counsel, look into the matter.
At the time of Hurd's resignation, HP's board of directors found no evidence to support the allegations of sexual harassment. However, an internal inquiry revealed inaccurate expense reports, and the company said Hurd's actions had shown a lack of judgment.
The Securities and Exchange Commission is also looking into Hurd's resignation.
Shares of HP's stock rose 46 cents during regular trading hours on Thursday, closing at $46.78. Shares fell 4 cents during afterhours trading following Lane's announcement.
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