Member access

4-Traders Homepage  >  News  >  Business Leaders  >  All news

Business Leaders

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 
HomeAll newsMost read newsBusiness Leaders Biography 
Meg Whitman
Country of residence : USA
Birthday : 08/04/1956
Linked companies : Gap - eBay Inc - Procter & Gamble Hygiene & Health Care

H-P Board Faces Critical Vote at Annual Shareholder Meeting Wed

03/20/2013 | 06:37am US/Eastern
Recommend:
0

--Investors are upset by loss of stock value over recent years

--Poor oversight of acquisitions, poor CEO choices among reasons for their ire

--$8.8 billion charged tied to ill-fated Autonomy deal was a bombshell

 
   By Benjamin Pimentel 
 

Hewlett-Packard Co. (HPQ) may see an unusual amount of fireworks at its annual shareholder meeting on Wednesday afternoon, with several board members facing opposition to their re-election.

H-P will kick off the meeting at 5 p.m. EDT at the Computer History Museum in Mountain View, Calif., not far from its Silicon Valley headquarters.

The H-P board, no stranger to controversy over the last several years, is still facing sharp criticism for its leadership of the technology giant--mostly revolving around the brief, but tumultuous, tenure of previous Chief Executive Leo Apotheker and the ill-fated, $11 billion acquisition of Autonomy Corp. in August of 2011.

Among H-P board members, Executive Chairman Ray Lane is facing opposition to his re-election, along with veteran Silicon Valley investor Marc Andreessen, from proxy advisory firms.

The two are expected to survive the firms' negative recommendations to shareholders, but two other directors--John Hammergren and G. Kennedy Thompson--appear to be vulnerable as H-P faces investors still steaming over blunders during Mr. Apotheker's short time in the top job.

H-P is standing firm on the company's slate. "We feel we have the right board in place to turn H-P around," said spokesman Michael Thacker.

Topping the list of shareholder gripes is the controversial acquisition of Autonomy Corp., which is now the subject of fraud probes in the U.S. and the U.K. Mr. Apotheker was the main cheerleader of that deal, but the directors who picked him to lead the company and then later approved the Autonomy deal are now under fire.

Five directors, including Rajiv Gupta, are being opposed by different investor groups and two major proxy solicitation firms.

ISS Proxy Advisory Services is recommending a 'No' vote on Messrs. Hammergren, Lane and Thompson. Glass Lewis is recommending that shareholders reject Messrs. Andreessen, Gupta, Hammergren and Thompson.

In a March 11 letter to shareholders, Mr. Gupta, an independent director, urged stockholders to reject the ISS recommendations, saying, "Changing the composition of the H-P board could be destabilizing to the company."

"Losing some of our directors in an abrupt and disorderly manner could undermine our efforts to stabilize the company," he added.

No alternative board candidates are challenging H-P's slate. But ISS and Glass Lewis, and two institutional shareholders--the New York City Pension Funds and the Change to Win Investment Group--have argued that it is time for a change on the board.

While their positions differ on other issues and which directors must go, these groups agree in their opposition to Messrs. Hammergren and Thompson. Mike Garland, an assistant comptroller in New York City in charge of corporate-governance issues, said there is strong opposition to the two board members.

"They are the two directors we think are the most culpable," he said. "They are the longest-serving and they have repeatedly failed to serve the interests of shareholders."

New York City Pension Funds held roughly 5.5 million H-P shares, worth about $126.4 million as of this week.

Meanwhile, H-P's higher-profile board members also have been scrutinized, including Executive Chairman Lane.

In recommending a vote against him, ISS argued that, "while Chairman Lane brings relevant expertise to the board given his background in information technology, it is reasonable to expect him to be accountable for the past failures in stewardship and poor judgment, leading to significant losses over the last two years, capped by the Autonomy troubles."

"Ultimately, Lane failed to provide independent oversight of the CEO's actions," ISS said.

Glass Lewis, on the other hand, opted not to recommend against Mr. Lane.

"One of the factors for us is he joined the board a little more recently than the four people we are recommending against," said David Eaton of Glass Lewis.

But Glass Lewis criticized Mr. Andreessen as a member of the committee that hired Mr. Apotheker, who was ousted in 2011 and replaced by current CEO Meg Whitman.

"While the current board may have performed its duties appropriately in replacing Mr. Apotheker once it was clear that his leadership was damaging to shareholder value, we do not believe this exonerates those directors whose decision to hire him lacked the rigor that may have been necessary to judge his fitness for carrying out a significant strategic shift by the company," the Glass Lewis report said.

Besides, the fallout from Mr. Apotheker's reign continues to be felt at the Palo Alto, Calif.-based company.

In November, H-P dropped a bombshell on Wall Street when it disclosed it was posting an $8.8 billion impairment charge related mostly to the deal. H-P also disclosed that the deal was overpriced and that it had found accounting irregularities at Autonomy.

The Autonomy deal was such a big blunder, it has heightened the attention on how the board has operated and its recent missteps.

"They've had multiple problems over the decades," Mr. Eaton said. "In prior years, their issues have been around the turnaround of the CEO position, the revolving door of the CEO spot and how much money the company had to pay out to keep bringing in new CEOs."

"The Autonomy deal is a different egg," Mr. Eaton said. "An $8.8 billion impairment is really significant. In some ways, it's another category of issues that H-P needs to deal with."

Mr. Garland of the New York City government also noted issues with H-P's other acquisitions, including EDS and Palm Inc., which are now widely considered failures.

"So much value destruction has happened here because of failed mergers and acquisitions," he said.

H-P has recovered some of its value. The stock is currently up more than 60% this year, the top gainer on the Dow Jones Industrial Average. Some of that has been attributed to the leadership of Meg Whitman.

"We don't have concerns right now in terms of management," Mr. Garland said. "I think she is trying to keep the Winnebago on the road and actually put a strategy in place."

Write to Benjamin Pimentel at bpimentel@marketwatch.com.

Recommend :
0
React to this article
Latest news about Meg Whitman 
HP reins in revenue slide as turnaround progresses
02/20 - SAN FRANCISCO (Reuters) - Hewlett Packard Co's revenue fell less than Wall Street expected in the first quarter and it raised its outlook for fiscal 2014 earnings as the computing giant grew sales at its two largest businesses and again signa...
HP was aware of Autonomy's loss-making hardware sales
02/18 - (Reuters) - Hewlett-Packard Co's senior executives were aware of certain Autonomy Corp sales practices months before a whistleblower flagged them, prompting HP to write down the value of Autonomy, the Financial Times reported, citing email re...
Bracknell and Warrington hardest hit, says Unite: Global overhaul for firm as sales of PCs go into decline
2013 - Hewlett-Packard has announced plans to cut 1,124 UK jobs in the first three months of next year as part of its global plan to combat falling demand and overhaul the company. The Uni
Bracknell and Warrington hardest hit, says Unite Global overhaul for firm as sales of PCs go into decline
2013 - Hewlett-Packard has announced plans to cut 1,124 UK jobs in the first three months of next year as part of its global plan to combat falling demand and overhaul the company. The Uni
Advertisement
Popular Business Leaders 
Sheldon Adelson Paul Allen Mukesh Ambani Bernard Arnault Luc Besson Vincent Bolloré Martin Bouygues Richard Branson Warren Buffett Steve Case Benjamin De Rothschild Paul Desmarais Bill Gates Philip Green Carl Icahn Steve Jobs Li Ka-shing Eric Knight Arnaud Lagardère Lakshmi Mittal Rupert Murdoch François-henri Pinault Jim Rogers Naguib Sawiris Stephen Schwarzman Carlos Slim George Soros Donald Trump Jerry Yang Romain Zaleski
A-Z Business Leaders
Most Read News 
Icahn backs down from demand that eBay spin off PayPal
7 days ago - SAN FRANCISCO/NEW YORK (Reuters) - Carl Icahn backed off calls for eBay Inc to spin out its fast-growing PayPal payments u...
Brazil's Batista faces insider trading probes
6 days ago - RIO DE JANEIRO (Reuters) - Eike Batista, who was Brazil's richest man for most of the past decade, is under investigation ...
Industry - THE DANGOTE EFFECT
7 days ago - The Dangote Group founded by billionaire, Aliko Dangote in 1978, has contributed to the ongoing renaissance in Nigeria, ...
Dollar Gets Boost From March Wholesale Prices
6 days ago - By Saumya Vaishampayan, MarketWatch NEW YORK -- The dollar gained against major rivals Friday after U.S. pro...
Fairfax-led group to invest in Eurobank in bet on Greek turnaround
2 days ago - ATHENS (Reuters) - International investors are to invest 1.3 billion euros (1billion pounds) in Eurobank (>>&nb...
More news
Dynamic quotes  
ON
| OFF