Friday, April 5, 2013
HP chairman quits as fallout over Autonomy sale rolls on
Story originally appeared on the Guardian.
The chairman of Hewlett-Packard has stepped down and its two longest-serving independent directors are to leave the board as the fallout from the firm's disastrous acquisition of British software firm Autonomy continues.
Two weeks ago at HP's annual meeting, chairman Raymond Lane and directors John Hammergren and Kennedy Thompson scraped through a vote on their re-election with the slimmest of margins.
They were rebuked for mistakes at the world's largest maker of personal computers, including the ousting of two chief executives in as many years and admissions that recent acquisitions are worth billions of dollars less than their purchase price.
Lane has been replaced as chairman on an interim basis by activist investor Ralph Whitworth, who has sat on the HP board since 2011, but will remain a director. Hammergren and Thompson, who have served for eight and seven years respectively, will stay only until the May board meeting and a search is underway for their replacements.
"After reflecting on the stockholder vote last month, I've decided to step down as executive chairman to reduce any distraction from HP's ongoing turnaround," said Lane. "I'm proud of the board we've built and the progress we've made to date in restoring the company. I will continue to serve HP as a director and help finish the job."
Lane, a former executive at leading software firm Oracle, was in charge when the previous HP chief executive Léo Apotheker was given the go-ahead to spend $11.7bn (£7.7bn) acquiring Autonomy, then listed on the London Stock Exchange.
HP's attempts to move away from the low margin PC business into more profitable software sales failed to convince investors, and after a 40% drop in the share price and less than a year in the top job, Apotheker was forced out.
Lane held on, helping to install fellow HP board member and Ebay's former chief executive Meg Whitman as Apotheker's successor. But 41% of shareholders opposed his re-election last month, while 46% voted against Hammergren and 45% against Thompson.
A spokesman for one of the largest North American pension funds, the California Public Employees' Retirement System (Calpers), took the floor at the annual meeting to express "extreme concern with HP's path in recent years".
HP's new interim chairman has a reputation for building small stakes in troubled companies in order to fight his way on to the board and agitate for change. Whitworth's previous scalps include Robert Nardelli, whom he helped oust as chief executive of retailer Home Depot, and mobile network Sprint Nextel's Gary Forsee. His firm, Relational Investors, owns $800m of HP shares.
"Ray, John and Ken are terrific leaders, and they're passionate about doing the right thing for HP," said Whitworth. "Meg is leading a Herculean turnaround, so most of all, we must build and maintain the best possible leadership structure for Meg and HP's entire team to succeed."