Shareholder revolt fails to dislodge HP board members [Updated]
Hewlett-Packard Co. shareholders voted in favor of the current board at an annual meeting Wednesday, shrugging off a campaign by some investors to ignite a protest over a series of troubled acquisitions.
HP announced that all 11 directors received at least 50% of the vote in their favor. The results of the vote were announced at the end of HP’s annual shareholder meeting, held at the Computer History Museum in Mountain View, Calif. The 90-minute meeting included an extensive presentation by Chief Executive Meg Whitman, who outlined the strides she believes have been made in turning around the Silicon Valley icon.
“I’m pleased with the progress we’ve made, although much works remains,” Whitman said. “I hope you’re optimistic that we’re going to bring this company back.”
Leading up to the shareholders meeting, HP’s stock has been enjoying a bit of a revival, indicating growing shareholder optimism. The stock has risen from $16.70 on Feb. 20 to a close of $22.92 on Wednesday. That’s still well below the $53.90 mark the company hit in April 2010, a few months before then CEO Mark Hurd left the company.
Even so, anger had been building over the last couple of years at a board that at times has struggled to escape a reputation for being less than competent. Among the perceived sins: The mishandling of the departure of Hurd amid allegations of sexual harassment; the hiring and abrupt firing of CEO Leo Apotheker after less than 11 months; failing to advocate a strong strategy; and signing off on large acquisitions that resulted in billions of dollars of write-downs.
The most recent of these was Autonomy, the British software company HP bought for $11 billion in 2011. Last fall, HP announced it had uncovered widespread accounting fraud at Autonomy and was writing down another few billion dollars. That was the last straw for some shareholders who have turned their ire toward the board rather than Whitman, though she was on the board during the Autonomy acquisition.
[Updated at 5:45 p.m. with results of the votes] In recent weeks, New York City Comptroller John Liu issued a news release saying that his city’s pension funds would vote against reelecting HP directors John Hammergren and G. Kennedy Thompson “because of their failure to protect investors from costly, misguided acquisitions.” Hammergren and Thompson received 54% and 55% of the votes, respectively.
In addition, two firms that make recommendations on how shareholders should vote on proxies had recommended variously that investors vote against the reelection of Rajiv Gupta, Marc Andreessen and Chairman Ray Lane in addition to Hammergren and Thompson.
Gupta got 80% of the votes; Andreesen, 70% and Lane, 59%. The remaining six directors garnered at least 90% of the votes.
Before the results were announced, Whitman told shareholders she believed the board was making a crucial contribution to the company’s comeback.
“This has been a difficult time for HP over the last number of years,” Whitman said. “That is hard on customers, partners and shareholders. My view on the board of directors is that they are helping turn HP around.”
During a question-and-answer session, Whitman also confirmed that the board had created a special committee of board members Thompson, Gary Reiner and Ralph Whitworth to investigate the handling of the Autonomy acquisition as well as aspects of the purchase of EDS, which resulted in an $8-billion write-down last year.
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