City Comptroller John C. Liu today announced that the New York City Pension Funds will vote against two Hewlett-Packard directors because of their failure to protect investors from the costly acquisition of British firm Autonomy.
The vote will take place at the company's annual shareowner meeting on March 20, 2013.
City Comptroller John C. Liu said that HP's directors, John H. Hammergren and G. Kennedy Thompson, were members of the board's Finance and Investment Committee, "which bears primary responsibility for oversight failures that led to HP?s 2011 acquisition of Autonomy Plc."
Liu also attcked the two executives adding that they bear responsibility for approving HP's "ill-advised" acquisitions of EDS and Palm, and for the board's decision to hire Leo Apotheker, "whose short-lived tenure as CEO ended shortly after the Autonomy acquisition that he engineered. "
"The Autonomy debacle is the latest and most expensive in a series of ill-advised acquisitions and boardroom fiascos that have destroyed tens of billions of dollars in shareowner value," Comptroller Liu said. "While the board now appears to be taking steps to improve oversight, it will be unable to restore investor confidence without swiftly replacing these two directors."
HP, which paid $11 billion for Autonomy in 2011, wrote off $8.8 billion of its investment in 2012. HP has attributed $5 billion of the write-off to improper accounting at Autonomy that inflated its pre-acquisition revenues and earnings. HP took additional impairment charges of $9 billion in 2012 in connection with EDS and nearly $1 billion in 2011 that related to Palm.
On Tuesday, two key proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, also recommended voting against those two directors at HP's shareholder meeting on March 20.
ISS issued a call as well to vote against board chairman Ray Lane, a managing partner at high-powered Silicon Valley venture capital firm Kleiner Perkins.
HP, which acquired the British firm for $11.1 billion, took a massive writedown on its value last year
HP's shares are down 61 percent from their 2010 peak. The company was among the worst performers of the S&P 500 in 2012.
New York City Comptroller John C. Liu serves as the investment advisor to, custodian, and trustee of the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees' Retirement System, Teachers' Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and the Board of Education Retirement System. The New York City Pension Funds hold a combined 5,544,018 total shares in Hewlett-Packard for a combined asset value of $115,592,775.30 as of 3/7/2013.