MOUNTAIN VIEW -- Despite a push to oust up to five of its board members over their handling of several costly corporate purchases, Hewlett-Packard (HPQ) investors Wednesday voted to retain all of the company's directors.
That was fine with Jan Terry, a 64-year-old Palo Alto investor who was among about 180 stockholders at HP's annual meeting in Mountain View. Although she was deeply concerned about the company's financial performance, she voted to keep the directors.
"They have enough to worry about," she said. "I think they got the message that investors were displeased."
But given the widespread disaffection with HP, one critical institutional stockholder -- CtW Investment Group -- urged the company's board going forward "to consider significant changes to its membership to restore investor confidence."
In addressing shareholders at the Computer History Museum, CEO Meg Whitman acknowledged that HP has work to do.
"We need to get revenue growing again," she said. "We have to execute better." But she added that the Palo Alto corporation was making strides in many areas and that "despite what you may have heard, innovation is alive and well at Hewlett-Packard."
HP officials had argued that voting out some of its board members would disrupt the company's efforts to revitalize its business. But critics said the board needed revamping because in recent years its sales and profit had been lackluster and its stock price -- despite rebounding somewhat lately -- had taken a nose-dive.
In addition, HP has been under intense fire over some of its high-priced corporate acquisitions. After spending $11 billion for software firm Autonomy in 2011, HP recently announced it had been misled about the deal and wrote down the British company's value by $8.8 billion. It also has taken fire for writing off $8 billion for its 2008 purchase of Electronic Data Systems and nearly $1 billion for its 2010 acquisition of Palm.
The company did tell shareholders that the board has formed a committee to examine how the Autonomy and EDS purchases were done.
Most of the push to remove HP directors had centered on its two longest-tenured board members. They are John Hammergren, a director since 2005 and chairman of health care company McKesson, and G. Kennedy Thompson, a director since 2006 and a principal with private equity firm Aquiline Capital Partners.
Others targeted for ouster were Marc Andreessen, a director since 2009 and co-founder of AH Capital Management; Rajiv Gupta, on the board since 2011 and chairman of Avantor Performance Materials; and Raymond Lane, HP's executive chairman since 2011 and managing partner of private equity firm Kleiner Perkins Caufield & Byers.
Some investors also had wanted to dump HP's auditing firm, Ernst & Young, contending it should have warned HP that the Autonomy deal was ill-conceived. And others had urged a vote against HP's executive compensation plan because they said it didn't sufficiently link pay with performance. But the critics lost those battles, too.
Among those seeking the board shake-up in addition to CtW Investment Group were the powerful California Public Employees' Retirement System, New York City's public pension funds and the American Federation of State, County and Municipal Employees Pension Plan. Also favoring the ejection of some directors were the influential stockholder advisory firms Glass Lewis and Institutional Shareholder Services.
In a report recommending a vote against Andreessen, Gupta, Hammergren and Thompson, Glass Lewis noted that "HP's poor stock performance and the Autonomy fiasco "call into question the oversight of the company's longer-serving directors, all of whom maintain leadership positions on the company's key committees."
Considering the sorts of problems HP has had, Global Equities Research analyst Trip Chowdhry said he was surprised that the shareholders voted to retain all of the company's board members.
"It clearly indicates that the shareholders are fine with this," he said. "I think they have a lot of patience."
HP two years ago reshuffled its board with five new members to heal divisions and bring on new blood after CEO Mark Hurd resigned over an unproved allegation about his relationship with a consultant. Hurd was replaced by Léo Apotheker, who orchestrated the deal to buy Autonomy. He was replaced nine months later by Whitman.
Contact Steve Johnson at 408-920-5043. Follow him at Twitter.com/steveatmercnews.