Friday, September 23, 2011
No surprise. The first derivative suit against HP and its board of directors was filed in the Central District of California. Here's the complaint: Espinoza v. Leo Apotheker et al. It was filed on Wednesday - before Apotheker was fired. So it's more concerned with Apotheker's recent moves than it is with the board's firing of Apotheker. Of course, there's no reference to the revelation that the board may have hired Apotheker without actually meeting him. Look for this complaint to be amended to account for these recent events and revelations. As it is, the complaint alleges violations of fiduciary duties by the directors -- essentially that they were reckless in their pursuit of the corporate strategy. The complaint also makes various allegations of securities law violations. The essence of the complaint is that for almost a year the CEO and the board we are all very optimistic about webOS as the center of the corporate strategy. Then, the board turned on a dime. If the strategy was so bad, why did the board pursue it for so long? Anyway, we'll see. While this is the first suit through the door, I doubt it will be the last.
In related news, new HP CEO Meg Whitman is off to a great start. Yesterday, Bloomberg reported:
“It does not signal a change in the strategy,” Whitman said yesterday of her appointment. “We are behind the actions that were taken on Aug. 18. We are firmly committed to Autonomy.”
Presumably that includes sale of the PC business and moving what's left of H-P to some more akin to SAP, Oracle or IBM. Anyway, today CNBC is reporting that her excutive chairman Ray Lane said, "We have no intention of getting out of the PC business." Seems like they are still a little confused.
Update: Tom Hals at Reuters has a nice piece on the prospects for a suit against H-P's board:
Hewlett-Packard's board certainly has plenty of critics. The board could be most vulnerable to claims that it did not properly vet Apotheker. Reuters reported that the full board did not meet with Apotheker before hiring him.
But Delaware, where Hewlett-Packard is incorporated, protects directors from being liable for poor decisions so long as they can prove they were not consciously trying to harm the business.
That's a pretty high bar. Even not bothering to meet the CEO before hiring him may not be enough to clear that.