A group of New York City pension funds is joining the effort to oust the longest-serving members on Hewlett-Packard's board of directors for their roles in a series of costly decisions that have battered the company's stock.
The brewing rebellion is aimed at HP directors John Hammergren and G. Kennedy Thompson, two of the 11 directors seeking to be re-elected at the company's March 20 annual meeting.
Two influential advisory firms, Institutional Shareholder Services and Glass Lewis & Co., are helping to mount the opposition. In separate reports issued earlier this week, both firms recommended that HP shareholders vote against Hammergren and Thompson. The CtW Investment Group also has been urging pension funds that own HP stock to oust those two directors.
In a statement released Friday, New York City Comptroller John Liu said he has concluded Hammergren and Thompson bear responsibility for approving several soured acquisitions that saddled the world's largest personal computer maker with more than $17 billion in losses during the past year.
Liu also criticized them for participating in a "hasty" decision to hire former software executive Leo Apotheker in 2010. The board fired Apotheker less than a year later and replaced him with Hewlett-Packard Co.'s current CEO, Meg Whitman, who is also trying to win re-election to the board.
The New York City pension funds opposing the two HP directors collectively own 5.5 million shares of the company's stock. That's a stake of less than 0.3 percent, but their rebuke of Hammergren and Thompson could lead other frustrated HP shareholders to turn against them.
HP's board said Friday that it "fully supports" the re-election of all its directors.
Revenue at HP, which is based in Palo Alto, Calif., has been sinking amid a slump in PC sales driven by a growing preference for smartphones and tablet computers. To compound that problem the company has absorbed staggering write-offs to account for the diminished value three major acquisitions - technology consulting service EDS, device maker Palm and business software maker Autonomy. The biggest headache has been Autonomy, which HP alleges had been embroiled in financial chicanery that drove up its acquisition price.
The turmoil has sapped HP's stock, which closed Friday at $21. That's 55 percent below its price in August 2010 before HP's board parted ways with then-CEO Mark Hurd in a dispute over his expense reports and his relationship with a company contractor. The downturn has wiped out $50 billion in shareholder wealth and raised questions about the future prospects of a Silicon Valley pioneer.
Hammergren, 53, and Thompson, 62, are prime targets for shareholder ire because they have been on HP's board the longest. Hammergren, the CEO of pharmaceutical drug distributor McKesson Corp., has been on the board since 2005 and Thompson, former CEO of the troubled bank Wachovia Corp., joined in 2006.
All the other HP directors joined the board within the past four years.
Hammergren chairs the finance and investment committee on HP's board and Thompson chairs the audit committee.
Institutional Shareholder Services also is recommending HP shareholders vote against the re-election of Marc Andreessen, a venture capitalist best known as the co-founder of Web browser pioneer Netscape Communications. Glass Lewis also opposes the re-election of Rajiv Gupta, whose tenure on HP's board ranks third behind those of Hammergren's and Kennedy's.