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.
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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.