Hewlett-Packard Co. faces mounting pressure to remove chairman Ray Lane and several other board members after proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. urged investors to block their reelection over failures to properly vet acquisitions.
Shareholders should vote against Lane, John Hammergren and G. Kennedy Thompson, ISS said in a report released in advance of the company’s annual meeting, set for March 20. Glass Lewis urged the removal of Hammergren, Thompson, Marc Andreessen and Rajiv Gupta, the lead independent director.
Both proxy advisers faulted Lane’s board for an $8.8 billion writedown in November related to the purchase of Autonomy Corp. after Hewlett-Packard discovered “serious accounting improprieties.”
The revelation followed an August announcement that the Palo Alto, California-based company would take a charge of $9.2 billion, largely tied to its purchase of Electronic Data Systems Corp.
“The company recorded $18 billion in writedowns during fiscal 2012, amounting to approximately 54 percent of the company’s market value,” ISS said.
“These unusually high writedowns, in particular the Autonomy writedown, stem from ill-advised acquisitions, strategic failures and poor deployment of shareholders’ capital.”
Lane and his colleagues on the board should have exercised stronger oversight before the $10.3 billion Autonomy purchase, ISS and Glass Lewis said.
Rebukes by the proxy advisers follow a push last month by CtW Investment Group, part of the labor organization Change to Win, for Hewlett-Packard to remove Lane, Hammergren and Thompson from the board and to drop Ernst & Young LLP as its auditor, though the group later rescinded its call for Lane to step down.
