3 Of HP's Board Members Barely Kept Their Jobs — And Changes Are Coming Soon

Business Insider

At its annual shareholder meeting Wednesday,  HP barely quashed an investor revolt that threatened to oust some of its board members.

All 11 board members were voted back in.

But it was close for a few of them:

McKesson CEO John Hammergren got 54 percent of shareholders' votes.

Former Wachovia CEO G. Kennedy Thompson got 55 percent. Chairmain Ray Lane won 58 percent of shareholder votes. (Influential proxy firm ISS had recommended voting against him.)

This is highly unusual. At annual stock meetings, stockholders usually vote in board members with very high majorities, often over 90 percent. An 80-percent range vote is considered a condemnation.

Tech VC Marc Andreessen did somewhat better, landing almost 70 percent; and  Rajiv Gupta , Chairman of Avantor Performance Materials, got 80 percent.

During the question-and-answer session at the meeting, Bill Patterson, executive director of CtW Investment Group, asked whether board changes were coming and if any of the board members involved in the Autonomy acquisition would be replaced.

CtW had been urging investors to vote out several board members, such as Thompson and Lane. (Read CtW's letter here.) Thompson heads up HP's audit committee and oversees HP's financial reporting. Lane hired former CEO Leo Apotheker. The Autonomy buy was Apotheker's signature deal. Patterson blames the board for HP's $16.8 billion in write-offs on its two largest acquisitions, EDS and Autonomy. HP also accussed Autonomy of $5 billion in fraud that HP didn't discover until after its $11 billion purchase of Autonomy closed. Autonomy execs have denied all wrongdoing.

CtW's efforts to replace board members caused a stir. Last month, several of HP's board members met with about 20 of the company's largest institutional investors to calm them ahead of today's vote. HP had recommended that all of the board members retain their positions. CEO Meg Whitman says this is the right mix of people to fix HP's problems. These include declining revenue in every business unit, a multi-year 29,000-person layoff.

The newest board member, Ralph Whitworth, a principal of Relational Investors LLC, answered Patterson 's question. Whitworth isn't just an independent director. He also controls a large chunk of HP stock, about $800 million worth, he said. He joined the board about 18 months ago, and wasn't inolved with the Autonomy acquisition.

Whitworth insisted to the crowd that HP's board is finally healthy: "This board is among the best I've seen." He then admitted that one reason HP couldn't change board members was because it was too hard to get people to sign up for the job.

Last fall "wasn't the most opportune moment to reach out and find directors," he said.  "But things are changing. I think you can expect some evolution of the board over the coming years, months maybe."



More From Business Insider
View Comments (2)