Judge asks whether executives were “getting too broad of a pass” in deal over Autonomy issue.
Reuters reported on US District Judge Charles Breyer’s assessment of HP and its shareholders’ deal to settle a battle over the mismanagement of the OEM’s acquisition of UK software company Autonomy, stating that the settlement “release[s] Hewlett-Packard executives from liability” over its “botched acquisition” of Autonomy a few years ago.
The OEM’s writedown of Autonomy’s worth in November 2012 came one year after it purchased the company, claiming that “accounting fraud and inflated financials” from Autonomy officials, including CEO Mike Lynch, were to blame, and HP’s shareholders had sued the company for mismanagement, though a settlement was announced in June this year.
However, the hearing on 26 September in San Francisco’s Federal Court saw Breyer “sharply question” the details of the settlement agreement, which at this time appears to “release” executives at HP “from liability” over the acquisition of Autonomy. Breyer asked in court “whether HP officials, including Chief Executive Meg Whitman, were getting too broad of a pass from potential shareholder claims related to their leadership”.
He added that the release “appears to be staggering in its breadth”, and had “not yet decided” whether to reject the deal or not, noting that “the question I have to determine is whether [it’s] fair” that the settlement “could absolve HP executives from shareholder liability on subjects beyond the Autonomy deal”.
The Recycler previously reported on US lawyer Ted Frank’s opposition to the shareholder settlement on the grounds of the payment lawyers were receiving, and Breyer removed lawyer fees from the deal having “previously expressed” concerns over the $18 million (€14.1 million) set to be paid, whilst CalPERS (The California Public Employees’ Retirement System) called on him to “reject the deal unless the parties disclosed a revised fee amount”, with $8.7 million (€6.8 million) now agreed.