Two Hewlett-Packard institutional investors are suing
the company’s board of directors for approving the $42m (£24m)
severance package paid last year to ousted chief executive Carly
Fiorina.
They claim deal was excessive and violated HP corporate
policy.
The lawsuit has been filed by the Indiana Electrical Workers
Pension Trust Fund, and pension funds administered by the Service
Employees International Union (SEIU).
It claims the severance package breached an HP policy that
dictates that such packages should not exceed 2.99 times the sum of
an executive’s annual base salary, plus target bonuses, without
seeking shareholder approval.
HP shareholders adopted this policy in 2003, following a $16m
payout to former HP president Michael Capellas.
Fiorina, whose contract was terminated at the beginning of last
year, received $21.4m in cash, substantial stock options and other
benefits. The total of these items amounted to $42m, the
shareholders claim.
This exceeded the 2.99 formula, but no vote was sought to
authorise the payout, they allege.
The investors are seeking damages against the HP board for an
alleged breach of fiduciary duty. They also want a court to freeze
the cash payment to Fiorina pending a final ruling.