Hewlett-Packard Co. on Wednesdaybarely rebuffed a shareholder rebellion aimed at ousting the twolongest-serving directors from personal computer maker's board.
Shareholders had sought the board members' ouster aspunishment for a series of botched acquisition and other pratfalls that havedecimated HP's stock price.
John Hammergren and G. Kennedy Thompson both were re-electedby unusually narrow margins during HP's annual shareholder meeting. The resultswere based on preliminary tallies that still need to be certified.
Hammergren, an HP director since 2005, received support fromnearly 54 percent of the ballots cast. Thompson, board member since 2006, wasbacked on 55 percent of the ballots.
At last year's annual meeting, Hammergren and Thompson eachreceived 81 percent of the vote.
Directors standing for re-election at most publicly heldcompanies typically are backed by overwhelming margins. All but two of theother nine HP directors, including CEO Meg Whitman, were supported by at least80 percent of the vote.
The other HP directors facing significant resistance wereChairman Ray Lane, who was backed by 59 percent of the vote, and MarcAndreessen, who was was supported on 70 percent of the ballots.
If any of the directors had received less than 50 percent ofthe vote, they would have been required to submit their resignations under HP'srules.
The dissent against Hammergren and Kennedy still may havebeen strong enough to shake up HP's board, based on a response given by anotherdirector to a shareholder question during Wednesday's 80-minute meeting held ata computer history museum in Mountain View, California.
"I think you can expect to see some evolution of theboard in the coming years, months maybe," said Ralph Whitworth, ashareholder who joined HP's board in 2011.
Disgruntled shareholders said Wednesday's vote will emboldenthem to keep pressing for a board overhaul.
"Shareholders have sent a clear message that thedirectors most responsible for HP's recent debacles must be heldaccountable," said New York City Comptroller John Liu, who oversees agroup of pension funds that voted against Hammergren and Thompson. "Theonus is now on the board to take the steps necessary to ensure that all of itsdirectors enjoy broad investor support."
Whitman, HP's CEO for the past 18 months, gave all the boardmembers a vote of confidence in response to one of the other dozen shareholderquestions posed at the meeting.
"I feel like the line-up we have right now is actuallyhelping us turn around the company," she said.
Hammergren, the CEO of pharmaceutical drug distributorMcKesson Corp., and Thompson, the former CEO of troubled bank Wachovia Corp.,had drawn the ire of shareholders upset by soured acquisitions that havesaddled HP with more than $17 billion in losses during the past two years.Hammergren and Thompson were targeted because they have been on the board forthe longest periods and are involved in committees that had oversight over thedeals.
Two shareholder advisory firms, Institutional ShareholdersServices and Glass Lewis & Co., had recommended both men be removed fromthe board. ISS also opposed Lane's re-election while Glass Lewis hadsupplemented its arguments against Hammergren and Kennedy by coming out againstAndreessen and Rajiv Gupta, too.
Wednesday's meeting might have turned into an even biggergripe session if not for a recent upturn in HP's stock price. The shares havesurged by more than 60 percent so far this year on the hope that the company isstarting a gradual turnaround under Whitman, who won Wall Street's respectduring the decade that she ran eBay Inc.'s online bazaar.
"It's a relief rally that things haven't gotten anyworse," said Bill Patterson, executive director of CtW Investment Group,an HP shareholder who has been at the forefront of the rebellion. "Itshouldn't be seen as a vote of confidence."
Even with the recovery, HP's stock closed Wednesday at$22.92, about the same level it was in September 2011 when Whitman took over.During the same period, the technology-driven Nasdaq composite index and theDow Jones industrial average, which includes HP, have been climbed by more than30 percent.
Long-time HP shareholders have another reason to beirritated: The company's market value has been sliced in half since Mark Hurdstepped down as CEO in an August 2010 rift with HP's board. That downturn haswiped out about $45 billion in shareholder wealth.
HP, which is based in Palo Alto, California., is beinghaunted by the rotten performance of a trio of major acquisitions: technologyconsulting service EDS, device maker Palm and business software maker Autonomy.The most vexing of the bunch has been Autonomy, where HP alleges it uncoveredfinancial chicanery that the company says drove up the acquisition price by atleast $5 billion.
Autonomy's former CEO Mike Lynch, who was fired by Whitmanlast year, has vehemently denied HP's allegations. The claims are underinvestigation by the U.S. Justice Department and financial fraud authorities inthe U.K., according to HP. At least 12 lawsuits revolving around the handlingof the Autonomy deal have been filed against HP.
In an apparent attempt to incite HP's shareholders, Lynchurged them to use the meeting to ask Whitman and the rest of the HP's boarddetailed questions about the circumstances surrounding the Autonomy deal in anopen letter distributed Wednesday. Among other things, Lynch's letter for thefirst time raised the possibility that HP may have approached U.K. regulatorsabout how the company might be able to back out of the deal before the $10billion acquisition closed in October 2011.
"This meeting provides a moment of accountability forHP's board of directors to all its stakeholders," Lynch wrote, adding thathe refused to be turned into "a scapegoat for HP's own failings."Lynch wasn't at the meeting.
No one in the crowd of about 200 people at Wednesday'smeeting confronted Whitman about the Autonomy deal or other acquisitions.Several shareholders groused about how much HP's stock has fallen in recentyears.
Beyond its troubled acquisitions, most of HP's other woesstem from a decline in PC sales as more technology spending shifts to smartphonesand tablet computers. The upheaval has caused HP's revenue to fall from theprevious year in six consecutive quarters. Whitman has repeatedly warned theslump may persist through the rest of this year. To offset the drop-off in PCsales, Whitman has cut about 15,300 jobs in the past year and is still planningto eliminate about 14,000 more positions.
In the meantime, HP is expanding its lineup oftablet computers and intensifying its focus on other technology fields, such asbusiness software and data analytics, that are more profitable than sellingPCs.