HP board members hold on to positions

Critics tried to oust five of them over costly purchases

By

Published:

 

Despite a push to oust up to five of its board members over their handling of several costly corporate purchases, Hewlett-Packard Co. investors on Wednesday voted to retain all of the company’s 11 directors.

The stockholders also said no to proposals to reject the company’s auditor, Ernst & Young, and to change HP’s executive compensation plan.

Jan Terry, a 64-year-old Palo Alto, Calif., investor who was among about 180 stockholders at HP’s annual meeting in Mountain View, Calif., said she voted for all the directors despite her concerns about the company’s financial performance.

“They have enough to worry about without having to think about that,” she said. “I think they got the message that investors were displeased.”

In addressing the group at the Computer History Museum, CEO Meg Whitman also acknowledged that HP has work to do.

“We need to get revenue growing again,” she said. “We have to execute better.”

But Whitman said the company was making strides in many areas and that “despite what you may have heard, innovation is alive and well at Hewlett-Packard.”

HP officials had argued that voting out some of its board members would disrupt the company’s efforts to revitalize its business. But critics said the board needed revamping because in recent years its sales and profit had been lackluster and its stock price — despite rebounding somewhat lately — had taken a nose dive.

In addition, HP has been under intense heat over some of its high-priced corporate acquisitions. After spending $11 billion for software firm Autonomy in 2011, HP recently announced it had been misled about the deal and wrote down the British company’s value by $8.8 billion. It also has been criticized for writing off $8 billion for its 2008 purchase of Electronic Data Systems and nearly $1 billion for its 2010 acquisition of Palm.

Most of the push to remove HP directors had centered on its two-longest tenured board members: John Hammergren, a director since 2005 and chairman of health care company McKesson, and G. Kennedy Thompson, a director since 2006 and a principal with the private equity firm Aquiline Capital Partners.

Others targeted for ouster were Marc Andreessen, a director since 2009 and co-founder of AH Capital Management; Rajiv Gupta, on the board since 2011 and chairman of Avantor Performance Materials; and Raymond Lane, HP’s executive chairman since 2011 and managing partner of private equity firm Kleiner Perkins Caufield & Byers.

Some investors also had wanted to dump HP’s auditing firm, Ernst & Young, contending it should have warned HP that the Autonomy deal was ill-conceived. And others had urged a vote against HP’s executive compensation plan because, they said, it didn’t sufficiently link pay with performance.

Among those seeking the shake-up were the powerful California Public Employees’ Retirement System, New York City’s public pension funds, union pension adviser CtW Investment Group, and the American Federation of State, County and Municipal Employees Pension Plan. Also favoring the ejection of some directors were the influential stockholder advisory firms Glass Lewis and Institutional Shareholder Services.

In a report recommending a vote against Andreessen, Gupta, Hammergren and Thompson, Glass Lewis noted that “HP’s poor stock performance and the Autonomy fiasco “call into question the oversight of the company’s longer-serving directors, all of whom maintain leadership positions on the company’s key committees.”

HP two years ago reshuffled its board with five new members to heal divisions and bring on new blood after CEO Mark Hurd resigned over an unproven allegation about his relationship with a consultant. Hurd was replaced by Leo Apotheker, who orchestrated the deal to buy Autonomy. He was replaced nine months later by Whitman.