Saturday, August 14, 2010;
HP shareholders file suit over CEO's exit
Shareholders of Hewlett-Packard have filed a "derivative lawsuit" against the technology company and its board over former chief executive Mark Hurd's abrupt resignation last week.
A derivative lawsuit lets shareholders sue executives or board members over claims that their actions harmed the company as a whole.
The lawsuit seeks unspecified damages and changes to HP's corporate governance.
It was filed in California Superior Court Tuesday on behalf of shareholders by Brockton Contributory Retirement System against Hurd; Catherine Lesjak, interim CEO and chief financial officer; and HP's other board members.
The suit claims HP lost "significant credibility" because of the controversy, which erased more than $9 billion in market capitalization when HP's shares started trading Monday after the resignation.
It also says that Hurd's severance package, which could top $40 million, could have been "dramatically limited" by HP's board by firing him for cause.
Hurd resigned Aug. 6 after an investigation into a sexual harassment claim found that he falsified expense reports covering meetings with a female events contractor. Hurd has settled separately with the woman.
HP declined to comment on the lawsuit.
-- Associated Press
Penney cuts outlook on consumer weakness
J.C. Penney cut its profit outlook for the rest of the year, a sign of jitters that Americans, still stinging from the recession and worried about jobs, aren't going to spend more any time soon.
The reduced outlook came Friday as Penney reported a second-quarter profit as it benefited from tight inventory controls and exclusive store-label brands.
Shares fell 98 cents, or 4.7 percent, to close at $19.82.
Penney, based in Plano, Tex., earned $14 million, or 6 cents per share, in the three months ended July 31, compared with a loss of $1 million, or break-even per share, in the same quarter last year.
-- Associated Press
ALSO IN BUSINESS
-- Senator seeks review of soldiers' death benefits: Richard C. Shelby, ranking Republican on the Senate banking committee, requested the panel review insurers' practice of profiting by retaining soldiers' death benefits rather than making lump-sum payments to survivors.
"It is unclear whether service members and beneficiaries understand the full range of financial choices" offered by the Department of Veterans Affairs' insurance program, Shelby (Ala.) wrote in a letter Friday to Sen. Christopher J. Dodd (D-Conn.), who heads the panel.
Shelby joins Rep. Edolphus Towns (D-N.Y.) in pressing for congressional review of life insurers' practices. Prudential Financial, which provides coverage through the VA program, and MetLife have been under fire since Bloomberg Markets magazine reported last month that the industry holds about $28 billion in retained-asset accounts.
-- Blackstone taking Dynegy private for $542.7 million: Asset manager Blackstone Group said Friday it is paying $542.7 million to take Dynegy private in a three-way deal that will see Dynegy sell four power plants to NRG Energy.
New York-based Blackstone is taking on more than $4 billion in Dynegy debt as well, bringing the deal's total value to $4.7 billion.
Dynegy said it is allowed to solicit other bids for the next 40 days.
The acquisition is expected to close by the end of the year.
-- From news services