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March 6th, 2013 
David Schulberg the 3rd (Reuters) – Two leading proxy advisers on Tuesday urged Hewlett-Packard Co shareholders to oust several board directors for their role in the ill-fated 2011 acquisition of British software company Autonomy.
ISS, the No. 1 proxy adviser which is closely followed by investors seeking guidance on controversial issues, has suggested voting against Chairman Ray Lane and fellow board members John Hammergren and G. Kennedy Thompson.
And Glass Lewis has recommended shareholders vote to remove four directors – including venture capitalist Marc Andreessen, and Rajiv Gupta along with Hammergren and Thompson.
Both firms blamed the directors for inadequate due diligence relating to the acquisition of Autonomy. HP, which acquired the British firm for $11.1 billion, took a massive write-down on its value last year and accused former Autonomy executives, including then-Chief Executive Mike Lynch, of accounting fraud.
Lynch has denied the allegations. A HP spokesman said the “Board fully supports the election of each of the director nominees named in the proxy statement.”
The recommendations, which could help sway undecided shareholders ahead of HP’s annual meeting on March 20 in Mountain View, California, came days after a strongly worded declaration from union pension adviser and shareholder CtW Investment Group.
CtW also urged shareholders to reject board members Hammergren and Thompson, though CtW and Glass Lewis are not opposing Lane’s re-election.
Despite the recommendation to vote against the directors, it is fairly rare for directors to not get elected, said David Eaton, vice president of research at Glass Lewis.
“This raises some issues for HP that they would want to get ahead of,” Eaton said, adding that it is fairly common for companies to reach out to shareholders in such cases to get a sense of how they would be voting.
‘OVERSIGHT FAILURE’
Glass Lewis had also recommended against the re-election of Andressen, Gupta, Hammergren and Thompson last year for their role in the hiring of former HP CEO Leo Apotheker. Now, both proxy firms say directors should be held accountable for Autonomy – a deal many on Wall Street say was sharply over-priced and has so far borne little fruit for HP’s software division. Current CEO Meg Whitman also voted for the deal, but was not mentioned in Tuesday’s filings.
“While developments surrounding the 2011 Autonomy deal may continue in the coming months, it is clear that the due diligence process that occurred at that time was not robust,” ISS said in a report.
It said Lane, Hammergren and Thompson “bear the most responsibility for a very costly oversight failure.”
Thompson was formerly chairman and CEO of Wachovia Corp, the North Carolina bank bought by Wells Fargo & Co in 2008.
Hammergren is chairman and CEO of U.S. drug wholesaler McKesson Corp. Thompson chairs the HP board’s audit committee, while Hammergren chairs its finance and investment committee, according to HP’s proxy.
On Tuesday, CtW welcomed ISS’ recommendation, saying it would help finish an overhaul of the board that had begun a year or two ago, after a series of missteps starting with a wiretapping scandal in which it gave the go-ahead to monitor journalists’ conversations, up to the ouster of former CEO Mark Hurd over his relationship with a female contractor.
“The ISS recommendation adds enormous weight to the case for removing long-tenured Hewlett-Packard directors and finish the Board renewal,” said Dieter Waizenegger, recently appointed executive director of CtW.
“Despite having unanimously approved the Autonomy deal, the board continues to try to sweep the debacle under the rug by blaming the mess on a previous CEO it appointed. The Board must hold itself accountable, especially those directors who most clearly failed investors.”
HP shares rose 2 percent to $20.37 as the Dow Jones Industrial Index surged to a new high.
(Additional reporting By Ben Berkowitz and Ross Kerber, Editing by Edwin Chan, Gerald E. McCormick, Grant McCool, Jeffrey Benkoe and Richard Chang)
Source Article from http://news.yahoo.com/iss-recommends-against-election-three-hp-directors-152531801–finance.html
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