HP board survives confidence vote, but only barely
- 21 March, 2013 00:14
Hewlett-Packard's shareholders have voted to reelect its entire board of directors, despite opposition from investors who want some members held accountable for recent troubles at HP, including its ill-fated acquisition of Autonomy.
All 11 HP directors were reelected, with at least 50 per cent of HP's shares voted in their favor, Chairman Ray Lane said at the conclusion of HP's shareholder meeting in California on Wednesday.
Some of the board only barely survived, however. The two directors seen as most vulnerable, G. Kennedy Thompson and John Hammergren, who are both members of HP's Finance and Investment Committee, received 55.15 per cent and 53.91 per cent approvals, respectively.
Lane was reelected with 58.88 per cent of votes and Marc Andreessen with 69.77 per cent, an HP spokesman said. CEO Meg Whitman and most of the other board members received greater than 90 per cent approvals, he said.
HP's shareholders also voted to reelect Ernst & Young as the company's public auditor, again over the objections of some investors.
The meeting, which was webcast, went off with no real fireworks, although several investors mourned what they see as the loss of the "HP Way," a set of principles established in HP's early days that placed a high value on innovation and employees.
One shareholder held up a 20-year-old HP calculator that he said had "taken a few knocks" but was still working. "It's an example to me of the HP Way, and I'd really like to see that return," the shareholder said.
HP's board has faced mounting opposition from shareholders in recent months. They are particularly upset about HP's acquisition 18 months ago of UK software company Autonomy. HP had to wipe $8.8 billion from its books as a result of the deal, because, it says, it was misled about the value of Autonomy's business.
Some of HP's bigger shareholders said before the meeting they would vote against reelecting some of its board members, and they urged other shareholders to do the same.
The New York City Pension Funds, which holds 5.5 million HP shares, said it would vote against Thompson and Hammergren. The Finance and Investment Committee bears "primary responsibility" for the Autonomy deal, the fund said.
"As the two longest-serving directors, they also bear responsibility for approving HP's ill-advised acquisitions of EDS and Palm, and for the board's hasty decision to hire Leo Apotheker, whose short-lived tenure as CEO ended shortly after the Autonomy acquisition that he engineered," the fund said in a regulatory filing ahead of Wednesday's meeting.
Other investment groups said they would vote against the two men as well, along with Lane, Andreessen and Rajiv Gupta.
HP argued before the meeting that changing the board could be "destabilizing" for the company. "Losing some of our directors in an abrupt and disorderly manner could undermine our efforts to stabilize the company," it said in a regulatory filing.
At the meeting, Whitman again laid out her plans for getting HP back on track. They involve building solid products, improving customer satisfaction, expanding sales and energizing HP's channel partners.
"Despite what you might have heard, innovation is alive and well," Whitman said.
Despite reelecting the board, some shareholders are clearly dissatisfied with the current management.
"It seems that when more business-trained executives started taking over the company, rather than engineering-trained executives, it really changed," said the shareholder with the calculator. Another shareholder suggested HP should be more like Oracle, building a single, integrated stack of products.
Autonomy's former management also got in on the criticism Wednesday, releasing an open letter questioning HP's allegations of impropriety. It asked the board to explain how it was misled and to provide evidence of the misconduct.