HP CEO Meg Whitman told shareholders that the oft-criticized board of directors is helping to turn... [+]
Hewlett-Packard confirmed that it has formed a special board committee to investigate its $11 billion acquisition of Autonomy and the subsequent $8.8 billion write-down it took after claiming there were instances of financial fraud related to the deal.
And despite ongoing complaints about the board, all 11 of HP's directors were re-elected with more than 50 percent of the vote, even after two shareholder advisory groups called for some members to be ousted.
Three directors -- Ralph Whitworth, the activist investor who joined HP's board in 2011, former Wachovia CEO Ken Thompson and former General Electric CIO Gary Reiner -- will investigate the Autonomy transaction, as well as certain impairment charges the company took related to its buyout of Autonomy in 2011 and its 2008 purchase of EDS for $13.9 billion, Hewlett-Packard told shareholders today at its annual meeting in Mountain View, California. The committee is looking at issues prompted by lawsuits over the acquisitions.
In November, HP disclosed $8.8 billion in non-cash charges “linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy … that occurred prior to HP’s acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term.” In effect, the company is writing down close to 90% of the value of the transaction.
There have been numerous lawsuits against HP as a result of its write down. The Autonomy acquisition was led by HP's previous CEO Leo Apotheker and closed under current CEO Meg Whitman. Former CEO Mark Hurd oversaw the takeover of EDS, which expanded HP's services business.
While two shareholder advisory groups had recommended that investors oppose the re-election of some of the directors, investors gave them a nod for another year-long term. Institutional Shareholder Services had opposed the re-election of Lane, as well as McKesson CEO John Hammergren and Thompson. Glass Lewis & Co. recommended re-electing Lane, but encouraged investors to oust several directors, including Hammergren, Thompson, Rajiv Gupta and Internet pioneer Marc Andreessen.
"My view of the board of directors is that they are helping turn around the company," Whitman said today during the 90-minute meeting, after recapping her plans for a turnaround at the world's biggest PC maker. "I came to Hewlett-Packard to set this company up for the next 75 years. Not the next quarter."
