HP shareholders advised to give chairman Ray Lane the boot
Lane should have poked around a bit in the Autonomy deal
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Two leading proxy advisors are trying to convince HP shareholders to boot out several directors over the ill-fated acquisition of Autonomy, including chairman Ray Lane.
ISS, the world's top proxy advisor - a firm hired by shareholders to make recommendations and sometimes cast votes on their behalf - has told HP stockholders to get rid of Lane, marking one of the few times it has ever advised anyone against re-electing a chair, according to a report seen by the Financial Times, Bloomberg and others.
ISS advised Wal-Mart shareholders last year to oust chairman Robson Walton and other directors for failing to fully investigate allegations of widespread bribery by company officials in Mexico. In 2009, it advised against re-electing Bank of America's chair Ken Lewis, after its expensive acquisition of Merrill Lynch.
At HP, ISS is also advising against retaining board members John Hammergren and G Kennedy Thompson, while the second proxy advisor, Glass Lewis, is recommending that shareholders get rid of those two along with Marc Andreessen and Rajiv Gupta.
“The company recorded $18 billion in write-downs during fiscal 2012, amounting to approximately 54 per cent of the company’s market value,” ISS said.
“These unusually high writedowns, in particular the Autonomy writedown, stem from ill-advised acquisitions, strategic failures, and poor deployment of shareholders’ capital.”
Both of the advisory firms say that the directors and chair weren't duly diligent on the acquisition of Autonomy, which HP bought for $11.1bn and then had to write down by $8.8bn last year.
ISS also pointed out that the firm has gone through a lot of changes in the last few years and seems to lack firm direction.
“HP’s challenges with multiple CEO turnovers over the last three years, the back-and-forth in the decision to spin-off or sell its PC business, and announcement of the goodwill impairment charges related to the EDS and Autonomy transactions likely exacerbated the decline in the company’s stock price,” the advisor said.
The proxy firms aren't the first to suggest that heads should roll over the Autonomy debacle. CtW Investment Group stopped short of asking shareholders to get rid of Lane, but it also suggested Thompson and Hammergren should go and urged against keeping Ernst and Young as HP's independent auditors.
HP said in a statement that it "fully supports the election of each of the director nominees named in the proxy statement".
The company has claimed that Autonomy had inflated its value prior to its acquisition, alleging that there were "serious accounting improprieties, disclosure failures and outright misrepresentations" that convinced HP to make the buy. ®
COMMENTS
Not Surprising
HP said in a statement that it "fully supports the election of each of the director nominees named in the proxy statement".
These statements are usually issued and/or approved by the board aren't they? Its hardly surprising that they're supporting the fact they were given the job.
Now if they issued a statement saying "We made a complete mess of things and we're not any good at the job so we should be removed", then it would make a refreshing change. However I suspect that statement will be issued on the back of a flying pig.
Why stop at Lane ...
fire the whole damn lot of dummies and take loser Whitman with them.
ManOnTheHill
My vote will be get rid of the lot of them. But it would be nice to see this lead to something like reform in the way the board works - maybe a non-executive employee member of the board? Or two?
Wait, that can't work, none of those HP employees are smart enough to understand how the board (and executives!) are protecting shareholder value by buying 11 billion dollar companies that are worth 3 billion.... Or was it reducing the value of an 11 billion dollar company to 3 billion through mismanagement in a year and a half? I can't figure out which one really happened!
Idiots. Not much the board did made sense while I was an HP employee and nothing they're doing now makes sense.
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