* As many as four directors should not be re-elected - proxy
* ISS, Glass Lewis want directors held responsible for
"costly" Autonomy deal
By Poornima Gupta
March 5 Two leading proxy advisers on Tuesday
urged Hewlett-Packard Co shareholders to oust several
board directors for their role in the ill-fated 2011 acquisition
of British software company Autonomy.
ISS, the No. 1 proxy adviser which is closely followed by
investors seeking guidance on controversial issues, has
suggested voting against Chairman Ray Lane and fellow board
members John Hammergren and G. Kennedy Thompson.
And Glass Lewis has recommended shareholders vote to remove
four directors - including venture capitalist Marc Andreessen,
and Rajiv Gupta along with Hammergren and Thompson.
Both firms blamed the directors for inadequate due diligence
relating to the acquisition of Autonomy. HP, which acquired the
British firm for $11.1 billion, took a massive writedown on its
value last year and accused former Autonomy executives,
including then-Chief Executive Mike Lynch, of accounting fraud.
Lynch has denied the allegations. A HP spokesman said the
"Board fully supports the election of each of the director
nominees named in the proxy statement."
The recommendations, which could help sway undecided
shareholders ahead of HP's annual meeting on March 20 in
Mountain View, California, came days after a strongly worded
declaration from union pension adviser and shareholder CtW
CtW also urged shareholders to reject board members
Hammergren and Thompson, though CtW and Glass Lewis are not
opposing Lane's re-election.
Despite the recommendation to vote against the directors, it
is fairly rare for directors to not get elected, said David
Eaton, vice president of research at Glass Lewis.
"This raises some issues for HP that they would want to get
ahead of," Eaton said, adding that it is fairly common for
companies to reach out to shareholders in such cases to get a
sense of how they would be voting.
Glass Lewis had also recommended against the re-election of
Andressen, Gupta, Hammergren and Thompson last year for their
role in the hiring of former HP CEO Leo Apotheker. Now, both
proxy firms say directors should be held accountable for
Autonomy - a deal many on Wall Street say was sharply
over-priced and has so far borne little fruit for HP's software
division. Current CEO Meg Whitman also voted for the deal, but
was not mentioned in Tuesday's filings.
"While developments surrounding the 2011 Autonomy deal may
continue in the coming months, it is clear that the due
diligence process that occurred at that time was not robust,"
ISS said in a report.
It said Lane, Hammergren and Thompson "bear the most
responsibility for a very costly oversight failure."
Thompson was formerly chairman and CEO of Wachovia Corp, the
North Carolina bank bought by Wells Fargo & Co in 2008.
Hammergren is chairman and CEO of U.S. drug wholesaler
McKesson Corp. Thompson chairs the HP board's audit
committee, while Hammergren chairs its finance and investment
committee, according to HP's proxy.
On Tuesday, CtW welcomed ISS' recommendation, saying it
would help finish an overhaul of the board that had begun a year
or two ago, after a series of missteps starting with a
wiretapping scandal in which it gave the go-ahead to monitor
journalists' conversations, up to the ouster of former CEO Mark
Hurd over his relationship with a female contractor.
"The ISS recommendation adds enormous weight to the case for
removing long-tenured Hewlett-Packard directors and finish the
Board renewal," said Dieter Waizenegger, recently appointed
executive director of CtW.
"Despite having unanimously approved the Autonomy deal, the
board continues to try to sweep the debacle under the rug by
blaming the mess on a previous CEO it appointed. The Board must
hold itself accountable, especially those directors who most
clearly failed investors."
HP shares rose 2 percent to $20.37 as the Dow Jones
Industrial Index surged to a new high.