HP Invent...: SEC Delays Decision On Board Nominations

January 23, 2007

SEC Delays Decision On Board Nominations

WASHINGTON (Los Angeles Times)

The Securities and Exchange Commission Monday said it would not intervene in a dispute over board election rules at Hewlett-Packard Co. and signaled that a clear policy governing director nomination contests probably would not be implemented until the 2008 season of corporate meetings.

"In the short term, the SEC decision to steer clear of the Hewlett-Packard conflict means the Palo Alto-based technology firm might face a greater risk of being sued if it excludes from its annual meeting in March the election resolution submitted by a group of large public pension funds. The measure would change the company's election rules so that investors who own 3% or more of the stock for at least two years would be able to place nominees on the company's official election materials.

The proposal follows disclosures last year that HP hired private investigators to spy on reporters and its own directors to find the source of a leak to the media. HP had asked the SEC to let it keep the election measure off its 2007 corporate ballot, but on Monday the SEC said its staff would keep quiet on the matter.Having been denied explicit permission to exclude the measure, HP officials run the risk of drawing a legal challenge if they do so." We're prepared to litigate," said Richard Ferlauto, director of pension and benefit policy for the American Federation of State, County and Municipal Employees, one of the groups pushing the proposal. The SEC decision, he maintained, amounted to a "green light" for shareholder election proposals.

HP had no comment Monday on the SEC decision, said Ryan J. Donovan, a company spokesman. The ball is in HP's court now," Borrus said. "The company will have to think long and hard about its next step. Any move to try to boot out the shareowner access proposal would likely be litigated in court. " Shareholder activists, including many pension funds, have long sought greater influence in the director nomination process, which is largely controlled by management and the board. Big-business lobbies have opposed the effort to loosen up elections, saying that such a step could empower special interests whose agenda is more narrow than that of ordinary shareholders.

The subject of shareholder voting rights is one of the most contentious issues in the area of corporate governance. The SEC has been unable to resolve the matter. In the coming months, he said, the SEC would consider the legal issues surrounding the matter, aiming for "one clear rule to protect investors' interests in all jurisdictions during the next proxy season."

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hpwf said...: H-P Avoids Holder Suit By Admitting Disputed Proposal
Kaja Whitehouse

NEW YORK (Dow Jones)--Hewlett-Packard Co. (HPQ) avoided a shareholder lawsuit by placing a controversial proposal in its proxy statement Tuesday.

Two pension investors filed a lawsuit against the technology company early Tuesday with U.S. District Court in Connecticut. Pension shareholders with union group American Federation of State, County & Municipal Employees and the state of Connecticut say they were concerned that H-P was planning to exclude the resolution.

Later Tuesday, the Palo Alto, Calif., company released its proxy statement containing the proposal, which addresses a sticky shareholder-rights issue that the Securities and Exchange Commission has yet to clarify.

"It was a pre-emptive strike," Richard Ferlauto, director of pension and benefit policy for the AFSCME, said of the lawsuit. Now that H-P has admitted the proposal, the lawsuit is "moot," said Ferlauto.

An H-P spokesman declined to comment on the lawsuit.

At issue is the battle over "proxy access," where shareholders are asking - to broad corporate opposition - that investors be allowed to place competing board candidates on a company's proxy card. Under current rules, shareholders have to file a separate ballot if they want to run competing directors.

Shareholders say the access would make it significantly easier and cheaper to run competing candidates for company boards, improving board accountability. Companies argue it would result in a slew of unnecessary and costly contested elections.

Proxy-access proposals have been successfully blocked by companies in recent years with the blessing of the SEC staff. Their position was called into question in September, however, when the Second Circuit U.S. Court of Appeals ruled in favor of a proxy-access proposal brought to New York-based insurer American International Group Inc. (AIG).

The court took the SEC to task for providing inconsistent guidance on these proposals over the years. This forced the agency to announce that it will be proposing rules to clarify the agency's stance.

But the SEC has been reluctant to act, twice pushing back meetings on this and allowing shareholders to rely on the Second Circuit Court ruling when submitting proxy-access proposals to companies.

H-P was the first company to receive a proposal under the protection of the Second Circuit ruling. H-P asked the SEC staff for its blessing to reject the proposal, but the agency's staff Monday declined to weigh in on the matter, saying it "(expresses) no view concerning whether H-P may exclude the proposal."

This no comment gave H-P some room to reject the proposal, but doing so would have left the two sides battling it out in the courts.

H-P's annual meeting is scheduled for March 14, at which time investors will vote on the matter for the first time ever.

H-P recommends shareholders vote against the proposal because it "would result in expensive, divisive director elections," the company said in a statement of opposition included in the proxy statement.

The shareholders behind the proposal, including the AFSCME and the retirement plan for the state of Connecticut, say they are seeking to give shareholders "meaningful control over the process by which directors are nominated and elected."; 1:41 PM, January 25, 2007

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They say the "lights will still go on at HP" without me here. I wonder who will miss the love I have given this company, I wonder who will miss how much I cared about The HP Way. I often chose to come in early, work through lunch and stay late. I thought what I was doing was so important. Especially when it was for customers or when it was something so new, What we were doing would change the world. But the times I was the most selfless, was for my co-workers who needed me. Maybe it was to review a document, give feedback, change the code, whatever... This is what I will miss most, knowing that I was important to my co-workers. I will miss the lifelong friends I have made We had so many days of meaningful work together. We made a difference and we knew it. We understood the power of a team. I will miss that where ever I went in the world, I always found great HP people. People who cared as much as I did. People who loved our HP culture enough to keep it precious. These are the great HP people who shared in success And when times were tough were the first to say, "We'll get through it together". I will miss the picnics and the beer busts. But mostly I will miss the managers who believed in me, who challenged me, who told me that I was a leader and important to the business. I will miss the profit sharing checks. Not for the money but because I knew I was a part of something so much greater than myself. I will always remember the handshake and the "Thank you" of the general manager. Those were some of my favorite times. I will miss the laughter and excitement of creating new businesses and improving processes. I will miss the serious times when customers' needs were on the line. We were all engaged for one purpose. It was our finest hour. I will miss saying I helped create a great HP product. And now will relish in how it changed the world. I wouldn't have missed that for anything. How proud I am to have been an HP employee. I would have worked for free for you HP. I loved you that much. You should know that I cried when Bill and Dave died. I had finally figured out what values really mean to a company's culture. My only regret is I didn't have a chance to say thank you. I'll take that learning with me as a final gift of all the years, of the great company Bill & Dave built. I leave you now HP.