Hewlett-Packard is in the clear with regards to the disputed $40 million (£26 million) severance package it gave former chief executive Mark Hurd following Hurd's August 2010 resignation in the aftermath of a scandal involving doctored expense reports and allegations of sexual harassment.
A Delaware court dismissed a shareholder lawsuit brought against HP's board of directors by Lawrence Zucker seeking to hold the board accountable for supposedly mishandling Hurd's departure and wasting company money. The lawsuit claimed HP could have fired Hurd for cause without a payout after an internal company investigation found he had submitted inaccurate expense reports, though it cleared him of the charges of sexual harassment.
But Judge Donald Parsons of the Delaware Chancery Court ruled that the board had "acted in good faith," according to Reuters. Parsons wrote that denying Hurd severance could have hindered HP's chances of finding a suitable replacement and that the payout could be considered compensation for past services, though the judge also noted that the $40 million amount "may appear extremely rich or altogether distasteful to some."
The judge also dismissed a claim that HP had a poor succession plan in place when Hurd departed, saying that Hurd himself helped in the process of changing the company's leadership and signed a confidentiality agreement when he was hired by Oracle as company co-president in September 2010.
HP's internal investigation cleared Hurd of allegations levied against him by actress and reality TV star Jodie Fisher, who worked for HP as a marketing contractor from 2007 and 2009. A letter from the lawyer representing Fisher which was unsealed by the court last December alleged that Hurd engaged in "the most egregious type of sexual harassment" in his dealings with Fisher, a former Playboy model.
Fisher reached an out-of-court settlement with Hurd, the details of which have not been disclosed.