HP's current board survives row over Autonomy purchase
After a contentious annual shareholders meeting, HP's (NYSE: HPQ) current board won re-election on Wednesday evening, but some board members barely received a majority vote, according to a report by the New York Times.
Meg Whitman, HP's current CEO, received a vote of confidence with 90 percent plus shareholder support. But board members who were involved in the controversial $11 billion acquisition of the big data analytics firm Autonomy in 2011 barely squeaked by.
Board members who received less than 60 percent of the shareholder vote were John Hammergren, chairman and CEO of McKesson, G. Kennedy Thompson, the former CEO of Wachovia, and Raymond Lane, the board's chairman. Marc Andreessen, a Silicon Valley investor who had a significant role in the Autonomy acquisition, received 70 percent of the vote.
Two shareholder advisory services--ISS Proxy Advisory Services and Glass Lewis--as well as institutional investors New York City Pension Funds and the Change to Win Investment Group opposed the reelection of long-serving board members Hammergren and Thompson, according to the Wall Street Journal.
Their ire was focused on the appointment of the previous CEO, Leo Apotheker, and the acquisition of Autonomy that he oversaw, as well as the $8.8 billion accounting charge that HP took last year as a result.
"They are the two directors we think are the most culpable. They are the longest-serving and they have repeatedly failed to serve the interests of shareholders," Mike Garland, an assistant comptroller in New York City in charge of corporate governance issue, told the Journal.
In the fourth quarter of its fiscal year 2012, HP reported a $6.9 billion net loss as a result of the $8.8 billion impairment charge related to the Autonomy acquisition. HP blamed the charge on financial irregularities at Autonomy prior to its acquisition by HP, while Autonomy founder Mike Lynch blamed it on mismanagement after the acquisition.
The two sides continued their war of words this week prior to the annual meeting. On Wednesday, Lynch sent an open letter to HP's board, demanding that it provide evidence of the financial irregularities allegations and details about the $8.8 billion charge. "We refuse to be a scapegoat for HP's own failings," the Journal quoted the letter as saying.
HP responded in a statement: "We have handed over our information of serious misrepresentations in Autonomy's accounting to the proper authorities, namely the SEC [Securities and Exchange Commission] and the Department of Justice and in the U.K. the Serious Fraud Office. We continue to cooperate and provide requested information to the relevant authorities on an ongoing basis."
For now, the HP board led by Whitman has survived, but the board members are on a short shareholder leash. Whitman and her board will need to turn the company around in the near term or start looking for another job.