Hewlett-Packard Co’s lead independent director defended Chairman Ray Lane and two fellow board members, contesting a recommendation from proxy adviser ISS that shareholders oust them for their role in the mis-managed acquisition of Autonomy in 2011.
In a detailed letter to shareholders on Monday ahead of the company’s annual general meeting, Rajiv Gupta said the board has laid a solid foundation for HP’s turnaround and warned that ejecting longtime directors would de-stabilize the company.
“Losing some of our directors in an abrupt and disorderly manner could undermine our efforts to stabilize the company,” Gupta, a former CEO of specialty materials maker Rohm & Haas DOWRH.UL, wrote on Monday. “What the company needs now is stability and consistency of leadership so that the Board and the management team can devote all of their focus and energy towards executing on our strategic plan.”
HP CEO Meg Whitman is trying to revive a company once synonymous with Silicon Valley but fell on hard times in a contracting personal computing market, by re-focusing the sprawling corporation on enterprise computing services.
Gupta did not address the Autonomy angle in his letter, but outlined the credentials of all three men that leading proxy adviser ISS recommended against. In particular, he highlighted Lane’s global and management experience as former Chief Operating Officer of software giant Oracle.
Leading proxy adviser ISS, closely followed by investors seeking guidance on controversial issues, last week suggested voting against Lane, a managing partner at high-powered Silicon Valley venture capital firm Kleiner Perkins. They also gave fellow board members John Hammergren and G. Kennedy Thompson the thumbs-down.
Thompson was formerly chairman and CEO of Wachovia, the North Carolina bank bought by Wells Fargo & Co in 2008. And Hammergren is chairman and CEO of US drug wholesaler McKesson.
The same day, Glass Lewis – another proxy firm, recommended shareholders vote to remove four directors – venture capitalist Marc Andreessen and 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. Gupta on repeated HP’s official recommendation that shareholders vote to re-elect all current directors.
The recommendation against Lane marked one of the few “special cases” in which ISS has advised shareholders against re-electing the chairman of the board.
In 2012, it recommended against Wal-Mart Stores Chairman Robson Walton and other directors for failing to fully investigate allegations of widespread bribery by company officials in Mexico.
And in 2009, ISS advised shareholders to vote against re-electing Bank of America Chairman Ken Lewis, following its costly acquisition of Merrill Lynch.