H-P's Autonomy Probe Turns Toward Board
Hewlett-Packard Co.'s (HPQ) board is investigating the company's flawed $11 billion acquisition of software firm
Autonomy Corp., and has set up an informal committee to provide strategic advice to Chief Executive Meg Whitman.
The moves were disclosed by some H-P directors in a private meeting with big investors on Monday, according to a
person who attended the meeting. The efforts appeared to be aimed at demonstrating that the board has put management on
a shorter leash following a string of blunders at the Palo Alto, Calif., company.
Chairman Ray Lane and three other directors agreed to meet with investors holding nearly 7% of H-P's stock after
activist investor CtW Investment Group threatened to run a campaign to unseat Mr. Lane and two other board members at
the company's March 20 annual meeting.
Shareholders have been frustrated by missteps including the acquisition of Autonomy, which was approved in summer 2011
on Mr. Lane's watch and then largely written off.
H-P directors told investors at Monday's meeting that the board has created a special committee and hired outside
lawyers to investigate the board and management's handling of the deal, the attendee said. H-P spokesman Howard Clabo
confirmed the board had formed a special litigation committee to review shareholder lawsuits related to Autonomy and "to
make a recommendation to the full board as to its response to these claims."
The special committee is being run by Ralph Whitworth, co-founder of activist fund Relational Investors LLC
(RELINV.XX). He joined H-P's board in November 2011, shortly after the company finished buying Autonomy.
Investors at Monday's meeting also learned H-P's board has formed an ad hoc strategy committee to advise Ms. Whitman
on "larger directional strategy," the attendee said. For instance, the three-member panel is helping review Ms.
Whitman's possible responses to Dell Inc.'s (DELL) plans to go private, the participant said.
"We had a productive meeting today and appreciate the opportunity to answer questions for our investors," Mr. Clabo
said. "We feel we have the right board in place to turn HP around."
Mr. Whitworth also is on the board's ad hoc strategic panel, along with Marc L. Andreessen, a prominent venture
capitalist, and Shumeet Banerji, a senior partner at consultants Booz & Co., according to the attendee.
The meeting was organized by CtW Investment Group, an arm of labor federation Change to Win.
Following the meeting, CtW Investment Group dropped plans to target Mr. Lane in its vote-no campaign. "He stepped
forward and offered a strong narrative about his role as executive chairman," Executive Director William Patterson said.
CtW did launch a drive late Monday to oppose the reelection of H-P's two longest serving directors, John Hammergren
and G. Kennedy Thompson. Mr. Hammergren, CEO of drug maker McKesson Corp., runs the board's finance committee. Mr.
Thompson, a former head of Wachovia Corp., is chairman of H-P's powerful audit committee.
--Ben Worthen contributed to this article.
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