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Hewlett-Packard Co-Chairman Ray Lane, who has come under fire from shareholders for his role in the acquisition of software company Autonomy Plc, has relinquished his post in the No.1 personal computer maker's latest board shake-up.
Two other directors left as HP, which has gone through several board upheavals in the past decade, said director and activist investor Ralph Whitworth will serve as interim chairman until Lane's replacement is found.
HP is also seeking two to three new board members, the company said on Thursday.
The changes come weeks after Lane, a Kleiner Perkins managing partner who will remain an HP director, narrowly won re-election at HP's annual shareholders' meeting with less than 60 per cent of voting shares compared with 96 per cent a year ago.
Two other directors who kept their seats with narrow margins, G Kennedy Thompson and John Hammergren, will leave the board, and the company will look for two to three new, independent replacements.
Lane is one of the most prominent casualties of an acquisition that has incensed investors, who have criticised the company for paying $11 billion for Autonomy and for failing to conduct proper due diligence. HP eventually took a multi-billion dollar writedown on the asset's value.
"After reflecting on the stockholder vote last month, I've decided to step down as executive chairman to reduce any distraction from HP's ongoing turnaround," Lane said in statement. "Since I joined HP's board a little over two years ago, I've been committed to board evolution to ensure our turnaround and future success."
The Autonomy deal capped a tumultuous decade for the company that included the "pretexting" scandal of 2006, which led to the resignation of then-chairwoman Patricia Dunn.
Four directors left HP in early 2011 following the ouster of former CEO Mark Hurd in 2010. In late 2011 Whitworth joined the board and director Whitman became CEO.
Whitworth, who runs activist hedge fund Relational Investors LLC, had said at HP annual shareholders' meeting in March to prepare for an "evolution" of the board.
<B>Shareholders win</B>
Influential proxy firms ISS and Glass Lewis had recommended that investors vote against a roster of directors at HP.
"The board needs to embrace long-term shareholders in the selection of directors who can restore confidence in the audit process, lend the necessary scepticism to quick-fix acquisitions, and bring experience that can help HP nurture its workplace culture of innovation," shareholder CtW Investment Group said in a statement.
Calpers, the largest public pension fund in the U.S. with about $256 billion in assets, said in a statement that it welcomed the resignation of Lane and the departure of two directors.
"It is time to move beyond the recent failures at HP and bring fresh talent to the boardroom. HP needs a board which is unencumbered and will provide rigorous oversight of all decisions, including reviewing the auditor," said Anne Simpson, Calpers senior portfolio manager and director of global governance.
Hammergren and Thompson, who received 54 percent and 55 percent of shareholder votes respectively, will exit after a board meeting scheduled for May, HP said.
Another director, Rajiv Gupta, will remain on the board but will no longer be a lead independent director. He will replace Thompson as chairman of audit committee.
The upheaval comes as HP and CEO Meg Whitman are undertaking a multi-year turnaround to stimulate growth at the company, which was once synonymous with Silicon Valley but has since stagnated as its personal computer and printer business declined.
She has asked investors to be patient while the company undertakes layoffs and cost cuts and expands into areas with longer-term potential, such as enterprise computing services.
HP shares fell to $22.10 in after-hours trade, from their close of $22.30 on the New York Stock Exchange on Thursday.
Two other directors left as HP, which has gone through several board upheavals in the past decade, said director and activist investor Ralph Whitworth will serve as interim chairman until Lane's replacement is found.
HP is also seeking two to three new board members, the company said on Thursday.
The changes come weeks after Lane, a Kleiner Perkins managing partner who will remain an HP director, narrowly won re-election at HP's annual shareholders' meeting with less than 60 per cent of voting shares compared with 96 per cent a year ago.
Two other directors who kept their seats with narrow margins, G Kennedy Thompson and John Hammergren, will leave the board, and the company will look for two to three new, independent replacements.
Lane is one of the most prominent casualties of an acquisition that has incensed investors, who have criticised the company for paying $11 billion for Autonomy and for failing to conduct proper due diligence. HP eventually took a multi-billion dollar writedown on the asset's value.
"After reflecting on the stockholder vote last month, I've decided to step down as executive chairman to reduce any distraction from HP's ongoing turnaround," Lane said in statement. "Since I joined HP's board a little over two years ago, I've been committed to board evolution to ensure our turnaround and future success."
The Autonomy deal capped a tumultuous decade for the company that included the "pretexting" scandal of 2006, which led to the resignation of then-chairwoman Patricia Dunn.
Four directors left HP in early 2011 following the ouster of former CEO Mark Hurd in 2010. In late 2011 Whitworth joined the board and director Whitman became CEO.
Whitworth, who runs activist hedge fund Relational Investors LLC, had said at HP annual shareholders' meeting in March to prepare for an "evolution" of the board.
<B>Shareholders win</B>
Influential proxy firms ISS and Glass Lewis had recommended that investors vote against a roster of directors at HP.
"The board needs to embrace long-term shareholders in the selection of directors who can restore confidence in the audit process, lend the necessary scepticism to quick-fix acquisitions, and bring experience that can help HP nurture its workplace culture of innovation," shareholder CtW Investment Group said in a statement.
Calpers, the largest public pension fund in the U.S. with about $256 billion in assets, said in a statement that it welcomed the resignation of Lane and the departure of two directors.
"It is time to move beyond the recent failures at HP and bring fresh talent to the boardroom. HP needs a board which is unencumbered and will provide rigorous oversight of all decisions, including reviewing the auditor," said Anne Simpson, Calpers senior portfolio manager and director of global governance.
Hammergren and Thompson, who received 54 percent and 55 percent of shareholder votes respectively, will exit after a board meeting scheduled for May, HP said.
Another director, Rajiv Gupta, will remain on the board but will no longer be a lead independent director. He will replace Thompson as chairman of audit committee.
The upheaval comes as HP and CEO Meg Whitman are undertaking a multi-year turnaround to stimulate growth at the company, which was once synonymous with Silicon Valley but has since stagnated as its personal computer and printer business declined.
She has asked investors to be patient while the company undertakes layoffs and cost cuts and expands into areas with longer-term potential, such as enterprise computing services.
HP shares fell to $22.10 in after-hours trade, from their close of $22.30 on the New York Stock Exchange on Thursday.
