HP Invent...: HP Shareholder Meeting

March 15, 2007

HP Shareholder Meeting

Shareholders rejected a proposal that would have made it easier for shareholders to field their own candidates during board elections

Another shareholder proposal to separate the roles of the board chairman and the CEO was also defeated.

However, stockholders approved a proposal to require the board to hold a shareholder vote for any future poison pill. Also known as a stockholder rights plan, a poison pill gives a board the right to sell new shares at lower prices as a way to prevent a competing party from acquiring majority interest in the company.

Shareholders also approved a proposal linking senior executive pay to performance. HP had urged shareholders to reject both nonbinding proposals. The company said it is disappointed with the vote but vowed to "review its current policy."

2 comments:

hpwf said...: HP shareholders OK two moves to give them more say-so
San Jose Mercury News, 3/15/07, Nicole C. Wong

Hewlett-Packard shareholders approved two proposals and strongly supported another, even though it failed, at their annual meeting Wednesday, sending a message to the scandal-tarnished board that investors want more say in how the company operates.

HP's board was at the center of a controversy last year in which company investigators used false pretenses to obtain the private phone records of directors, journalists and others in order to plug leaks to the media. The probe resulted in criminal charges, a congressional inquiry, the ouster of HP's board chairwoman and the resignation of two other directors.

The high-profile spying scandal helped push forward four shareholder proposals that were voted on Wednesday, including the first attempt to give investors the right to nominate board members.

That proposal failed after garnering 39 percent of shares voted -- very strong support for a new proposal, corporate governance experts said. Currently, investors can suggest candidates, but only the HP board's nominating and governance committee can put director candidates on the ballot. Passage of the nominating change required approval of two-thirds of shareholders; the others needed only a majority vote.

The two proposals that passed included one requiring shareholders to approve ``poison pill'' plans, which make it harder for a hostile takeover to succeed, and another that pegs executives' compensation to a more rigorous evaluation of company performance. They passed with 72 percent and 53 percent of shares voted, respectively.

HP issued a statement after the meeting saying it was disappointed. While the proposals are not binding, HP will review its policies relating to the proposed changes.

Chief Executive Mark Hurd tried to steer clear of talking about the spying scandal at the meeting, even as an investor blasted HP's board over the controversy.

During the first 40 minutes of the 90-minute meeting at the Hyatt Regency Santa Clara, where a ballroom overflowed with more than 265 attendees, Hurd talked about the $1 trillion market opportunity the computer and printer maker can take advantage of in 2009 and its focus on becoming more efficient.

But Scott Adams, representing the group that proposed allowing major investors to nominate board members, told shareholders that HP's board ``has exemplified dysfunction.''

``The board's greatest accomplishment in 2006 was introducing the word `pretexting' into the American lexicon,'' he said when defending his proposal. Pretexting is the term for impersonating someone to obtain their private information.

Just hours before Hurd's address Wednesday, state charges were dismissed against former HP chairwoman Patricia Dunn in the scandal. In addition, three other defendants who faced four felony counts of conspiracy and identity theft offered no-contest pleas to a misdemeanor charge.

Hurd opened the floor to 30 minutes of questions from shareholders, saying he was aware of the morning's media reports about Dunn and the others, but ``we do not intend to answer any questions today on that subject.''

At one point, an HP retiree asked Hurd, ``What are you going to do to give us confidence in the board? . . . Some of us perceive this as a private country club.''

The CEO responded: ``Let me assure you, no one's proud of what happened last year. No one. And you have my commitment that we will do the hard work to deliver you a board you can be proud of.''

James Post, a professor of corporate governance and business ethics at Boston University, watched part of the meeting online. He said the failure of the fourth shareholder proposal -- to separate the roles of chairman and CEO to increase management's accountability to shareholders -- shows shareholders are happy with Hurd and ``they're willing to give him . . . more space to lead in the two roles.''; 11:36 AM, March 15, 2007
hpwf said...: HP shareholders want exec pay more tied to performance
CNET, 3/14/07 17, Tom Krazit

SANTA CLARA, CALIF.--Hewlett-Packard shareholders approved two proposals related to executive pay
and antitakeover provisions, and vented some of their frustration with the company's board of
directors at the company's annual meeting Wednesday.

The measures were only given preliminary approval and they are nonbinding, an HP representative
said. One of the proposals demands that HP adopt a more rigorous long-term compensation policy
linked to executive performance. The other would subject any future adoption of a "poison pill"
antitakeover provision to a shareholder vote.

The poison pill proposal passed with 72.5 percent of the voted shares, and the executive pay
proposal passed with 53.1 percent of the voted shares. HP had recommended against both proposals,
and the company only promised to review its policies in statements distributed immediately
following the close of the polls.

"As with most public companies, these are nonbinding proposals that were preliminarily approved
by shareholder vote today. Once the votes are officially tallied, they will be reviewed and acted
upon by the board, with the serious consideration they deserve," HP said in a statement.

Poison pills are enacted when a company is the subject of a takeover bid from another company.
Existing shareholders are offered the right to buy more shares at discounted prices, which
dilutes the value of their shares but makes it much harder and expensive for any potential
acquirer to lock up all the outstanding shares. Although HP is an unlikely takeover target at the
moment, given its size, shareholders could now be given the chance to vote before any poison pill
technique could be used in the future.

The measure regarding executive pay would require HP to ensure that long-term compensation
packages involving stock options and hefty bonuses be tied to performance. The proposal stems
from shareholder dissatisfaction over the pay received by former CEO Carly Fiorina, especially
after her dismissal by the board, according to the proxy statement.; 11:41 AM, March 15, 2007

I leave you now HP

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.