* Lane, few other directors narrowly win re-election
* Investors send strong signal with sharply fewer votes than
* Whitworth hints at upcoming board changes
By Poornima Gupta
MOUNTAIN VIEW, Calif., March 20 (Reuters) - Hewlett-Packard
Co Chairman Ray Lane and several other directors
narrowly kept their seats on the board as shareholders conveyed
their displeasure over the botched $11 billion acquisition of
British software firm Autonomy Plc.
Lane, a managing partner at high-powered Silicon Valley
venture capital firm Kleiner Perkins, fellow venture capitalist
Marc Andressen and other board members have come under fire from
shareholders for one of the company's costliest acquisition
mistakes in years.
Director and activist Ralph Whitworth told shareholders at
the company's annual meeting on Wednesday to expect "some
evolution" in the company's board, but did not elaborate.
Lane, whom influential proxy firm ISS recommended voting
against, won just 58.88 percent of shareholder votes. That was
well below last year's 96-percent tally.
ISS and Glass Lewis, a governance analysis firm, had
recommended voting against a roster of other directors.
ISS gave the thumbs-down to McKesson Corp Chief
Executive John Hammergren and former Wachovia Corp CEO G.
Kennedy Thompson, while Glass Lewis recommended shareholders
vote to remove four directors: Andreessen, lead independent
director Rajiv Gupta, Hammergren and Thompson.
Hammergren got 53.91 percent of shareholders' votes versus
81 percent last year, while Thompson had 55.15 percent, down
from 81.2 percent previously. Andreessen garnered 69.77 percent,
off from 82 percent last year.
Problems with the acquisition, spearheaded by former CEO Leo
Apotheker during his tumultuous 11-month reign, came to light
after HP last year accused former management at the British
firm, including then-CEO Mike Lynch, of accounting fraud, which
Lynch again denied on Wednesday.
HP eventually swallowed a multi-billion dollar writedown on
the asset's value, enraging some investors. The misstep capped a
tumultuous decade for the company that encompassed the infamous
"pretexting" scandal of 2006, during which it hired detectives
to pose as journalists and board members to obtain their phone
"Today's vote was a challenge to business as usual for the
HP Board following a decade of failures at HP and the board's
insistence on blaming recent missteps on the previous CEO,"
Dieter Waizenegger, executive director of the CtW Investment
Group, said in a statement. "These votes are too high to
The firm, which advises union pension funds with roughly
$200 billion in assets and has opposed the re-election of
Hammergren and Thompson, wants the board to replace them.
Lead independent director Gupta last week warned
shareholders that disrupting the board would destabilize the
company during a critical turnaround period. Gupta was
re-elected with 80.25 percent of shareholder votes.
"They need to better manage the business," said Michel
Cohen, a shareholder from Sunnyvale who voted against some of
the board members. "They (board) were part of the old school
where they made big mistakes, big acquisitions. They have not
created a stable environment."
NEED SOME CHANGES
Investor unrest comes at a bad time for HP and CEO Meg
Whitman, who has embarked on a multi-year turnaround to
resurrect growth at a company once synonymous with Silicon
Valley but has since stagnated as its core personal-computing
and printing business declines.
She has asked investors for patience while the company
enacts layoffs and cost cuts and expands into areas with
longer-term potential, such as enterprise computing services.
"Despite what you have read in the headlines, we are on a
solid financial foundation. There is still room for
improvement," Whitman told shareholders on Wednesday. She won
re-election to the board with more than 98 percent of the vote.
Whitworth, who runs activist hedge fund Relational Investors
LLC and was named to the board of the struggling Silicon Valley
computing company in 2011, defended HP's board, saying it was
among the best he had seen. But he acknowledged that HP's
investors have "rightfully" questioned some of the transactions
the company has made.
Whitworth, whose firm owned about $800 million worth of HP
shares, said shareholders can expect some changes in the HP
board in the near term.
"I think you can expect some evolution of the board over the
coming years, months maybe," he said at the annual meeting held
at the Computer History Museum in Mountain View, a few miles
from HP's headquarters.
Lynch, who has repeatedly denied HP's allegations, on
Wednesday demanded the board provide more details on its
accounting-related allegations, reiterating that HP mismanaged
the software company after buying it.
HP said it was cooperating with the authorities and "cannot
disclose any information that would interfere with any of the
ongoing investigations into this matter."
"We refuse to be a scapegoat for HP's own failings," Lynch
said in a letter to shareholders.