HP investors take aim at board of directors

Investors at HP are calling for blood, citing years of “poor judgement, lack of accountability and weak oversight of critical functions”.

In a letter, the CtW Investment Group, which currently holds around a seven per cent stake, urged other shareholders to vote against the re-election of directors G. Kennedy Thompson and John L. Hammergren and against the ratification of Ernst & Young as independent auditors.

According to the letter, Hammergren bears responsibility for the string of unsuccessful acquisitions, including the Autonomy merger, while Thompson apparently bears primary responsibility for the unusually high fees paid to Ernst & Young.

Meanwhile, the letter also expresses ‘grave concerns’ over Ernst & Young, which provided advice over the acquisitions and presided over the tax situation that is currently being investigated by a US Senate subcommittee. It also questioned the high fees being paid to the company and said that this may have compromised its effectiveness as an outside auditor.

“Despite membership changes, we believe the board is hobbled by years’ worth of poor judgment, lack of accountability and weak oversight of critical functions,” stated CtW’s research director, Richard Clayton, in the letter.

“Since last year’s meeting, the company has announced approximately $17 billion in write-downs associated with past acquisitions, including $8.8 billion attributable to the 2011 acquisition of Autonomy. Moreover, the board continues to neglect what we view as the conflicted relationships with independent auditor Ernst & Young.”