HP board survives by the skin of its teeth
By Reuters and Barry Collins
Posted on 21 Mar 2013 at 09:17
HP chairman Ray Lane and several other directors narrowly kept their seats on the board as shareholders conveyed their displeasure over the botched $11 billion acquisition of British software firm Autonomy.
Lane, a managing partner at high-powered Silicon Valley venture capital firm Kleiner Perkins, fellow venture capitalist Marc Andreessen and other board members have come under fire from shareholders for one of the company's costliest acquisition mistakes in years.
Director and activist Ralph Whitworth told shareholders at the company's annual meeting on Wednesday to expect "some evolution" in the company's board, but didn't elaborate.
Despite what you have read in the headlines, we are on a solid financial foundation
Lane, whom influential proxy firm ISS recommended voting against, won only 58.88% of shareholder votes. That was well below last year's 96% tally.
ISS and Glass Lewis, a governance analysis firm, had recommended voting against a roster of other directors. Netscape founder Andreessen garnered 69.77%, down from 82% last year. Three other directors saw their support diminish.
Problems with the acquisition, spearheaded by former CEO Leo Apotheker during his tumultuous 11-month reign, came to light after HP last year accused former management at the British firm, including then-CEO Mike Lynch, of accounting fraud, which Lynch has repeatedly denied.
HP eventually swallowed a multi-billion dollar writedown on the asset's value, enraging some investors. The misstep capped a tumultuous decade for the company that encompassed the infamous "pretexting" scandal of 2006, during which it hired detectives to pose as journalists and board members to obtain their phone records.
"Today's vote was a challenge to business as usual for the HP Board following a decade of failures at HP and the board's insistence on blaming recent missteps on the previous CEO," Dieter Waizenegger, executive director of the CtW Investment Group, said in a statement. "These votes are too high to ignore."
"They [the board] need to better manage the business," said Michel Cohen, a shareholder from Sunnyvale who voted against some of the board members. "They were part of the old school where they made big mistakes, big acquisitions. They have not created a stable environment."
Investor unrest comes at a bad time for HP and CEO Meg Whitman, who has embarked on a multi-year turnaround to resurrect growth at a company once synonymous with Silicon Valley but has since stagnated as its core PC and printing business declines.
She has asked investors for patience while the company enacts layoffs and cost cuts and expands into areas with longer-term potential, such as enterprise computing services.
"Despite what you have read in the headlines, we are on a solid financial foundation. There is still room for improvement," Whitman told shareholders on Wednesday. She won re-election to the board with more than 98% of the vote.
Lynch, who has repeatedly denied HP's allegations, demanded the board provide more details on its accounting-related allegations, reiterating that HP mismanaged the software company after buying it.
HP said it was cooperating with the authorities and "cannot disclose any information that would interfere with any of the ongoing investigations into this matter."
"We refuse to be a scapegoat for HP's own failings," Lynch said in a letter to shareholders.
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