Two shareholder lawsuits are in progress against Hewlett-Packard Co., challenging the company's decision to award former CEO Mark Hurd a "golden parachute" worth as much as $40 million after he was ousted after a sexual harassment scandal. At the time, HP's board found no evidence of sexual impropriety on Hurd's behalf, but cited irregularities in his expense reports as the reason for demanding his resignation. However, the board's findings have been heavily criticized.

Shortly after his ouster from HP, Hurd moved on to work for HP's competitor Oracle Corp., but the sexual harassment scandal appears not to have been left behind. HP shareholders have filed federal lawsuits in California and Delaware. The lawsuits claim that HP wasted shareholder money by granting such a large severance package to Hurd because he should have been fired for cause. If he had been, he would not have been eligible for the golden parachute.

Shareholder wants access to HP's internal report on the sexual harassment allegations

Allegations of sexual harassment arose last summer, when it was revealed that Hurd was involved in a relationship with a marketing contractor. The woman allegedly received payments unrelated to her work, which could indicate quid pro quo sexual harassment. She also apparently had a past career in the adult film industry, which Hurd denied knowing. However, one of the plaintiffs alleges that Hurd was lying when he denied that, and had actually sought out and watched the woman's films.

Although the woman did accuse Hurd of sexual harassment, she has apparently now said that Hurd did nothing wrong. An internal investigation prepared for HP's board by lawyers at Covington & Burling LLP allegedly found no evidence that Hurd had violated HP's sexual harassment policies, and the board decided to ask Hurd to resign based on violations of its standards of business conduct. Hurd resigned on August 6.

The plaintiff in the shareholder lawsuit filed in Delaware wants to see that report, calling it "a critical piece of the puzzle" of whether Hurd should have been fired for cause.

HP is invoking attorney-client privilege to shield the so-called "Covington report" and other documents that could provide evidence of wrongdoing by Hurd. The documents being sought by the plaintiff include the report, a letter from lawyer Gloria Allred sent to Hurd in an attempt to privately resolve the sexual harassment complaint, and the letter from the woman to Hurd in which she allegedly retracts her allegations. He also seeks access to the company's books and other records.

HP's lawyer says that the plaintiff would need to show a "compelling and exceptional need" in order to obtain materials covered by attorney-client privilege. "Hewlett-Packard has already provided plaintiff copious material concerning the conduct in question and has been remarkably transparent in setting forth the bases for its actions," he said.

The plaintiff in the lawsuit filed in California has also asked for more detailed information about whether Hurd should have been fired for cause. In response, HP has arranged for a New York law firm to conduct an independent probe of the circumstances surrounding Hurd's departure.

Sources: