Hewlett-Packard shareholders urged to oust chairman
Two leading proxy advisory firms are advising Hewlett-Packard shareholders to vote against a number of board directors – including chairman Ray Lane – over their roles in the acquisition of software company Autonomy.
Ahead of the Palo Alto-based firm’s March 20 annual meeting, ISS is advising a vote against Lane as well as board members John Hammergren and G Kennedy Thompson, according to media reports. Glass Lewis is calling on shareholders to remove Hammergren and Thompson, plus Marc Andreessen and Rajiv Gupta.
The two proxy advisors blame directors for due diligence failings that led to a massive write-down in the value of Autonomy last year. HP acquired the British software company for $11.1 bn in 2011 only to write it down by $8.8 bn in November last year and refer the case to the SEC’s enforcement division and the UK’s Serious Fraud Office (SFO).
Announcing the impairment charge, HP said in a statement at the time: ‘HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP.
‘These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management’s ability to fairly value Autonomy at the time of the deal.’
The SEC began looking into the case in December, but the SFO only announced its own involvement on Monday. The saga took yet another turn yesterday, however, when the SFO was forced to admit a conflict of interest over its own use of Autonomy software that will stall the investigation.
‘As has been widely reported, allegations have been made to the SFO about the circumstances of the sale in 2011 of Autonomy to Hewlett-Packard,’ reads an SFO statement. Talking about its use of Introspect, an Autonomy document management tool, the statement continues: ‘The SFO is keen to ensure that there is now no conflict of interest, or perception of such a conflict and it is obliged as a first step to make inquiries to ensure that it can continue as the investigating body. It is undertaking this work at present.’
Autonomy denies any wrongdoing, and in a statement to the the Guardian, the company says: ‘We confirm that we have recently been contacted by the SFO. We continue to have confidence that HP’s allegations are without merit and appreciate the director of the SFO's comment that the opening of a criminal investigation does not mean that individuals are guilty of a crime or indeed that a crime has been committed.’