* CtW says will also oppose HP auditor E&Y, but not chair
* Sets up battle ahead of HP annual meeting March 20
By Ross Kerber and Poornima Gupta
Feb 25 A union pension adviser said it will
oppose two Hewlett-Packard Co directors and the
company's auditor over governance issues, after HP leaders
assuaged few of their concerns at a meeting on Monday.
The declaration by pension adviser CtW Investment Group sets
up a potentially distracting battle in the weeks before the
California computer maker's annual shareholder meeting on March
Despite a good run lately HP stock has been held back by a
string of troubled acquisitions. Michael Pryce-Jones, CtW senior
governance policy analyst, said after Monday's meeting that the
adviser will not campaign against board chairman Raymond Lane's
nomination for re-election.
Pryce-Jones cited the risk of possible disruption to the
giant California computer maker were Lane to lose re-election.
But he said two other HP directors, G. Kennedy Thompson and John
Hammergren, should be held responsible for HP missteps, like its
purchase of UK software company Autonomy, tainted in the fall by
accusations of accounting improprieties.
The two directors "have overseen so many missteps, so much
destruction of value, that it's hard to believe this effort to
turn around the company can proceed with them on the board,"
Pryce-Jones said in a telephone interview.
Thompson was formerly chairman and CEO of Wachovia Corp, the
North Carolina bank bought by Wells Fargo & Co in 2008.
Hammergren is chairman and CEO of U.S. drug wholesaler
Thompson chairs the HP board's audit committee, while
Hammergren chairs the board's finance and investment committee,
according to HP's proxy.
Pryce-Jones also said the adviser will urge investors to
vote against the renewal of HP's auditing firm Ernst & Young
Since last month, CtW has been raising questions about HP's
governance and the role of auditor Ernst & Young, which has
performed non-auditing work for HP as well.
Shares in HP have performed well so far in 2013, helped by
better-than-expected quarterly results last week under
cost-cutting by CEO Meg Whitman. The stock fell 0.7 percent to
$19.07 in trading on Monday.
But the shares have failed to recover to their value above
$54 in 2010 as it cycled through CEOs. In addition to the
Autonomy deal, CtW has criticized HP for write-downs following
acquisitions of Electronic Data Systems Corp and Palm.
Monday's meeting, held at the Washington, D.C., office of
the Council of Institutional Investors, was attended by HP's
Lane and by about 20 other investors, both in person and via
conference call, said Pryce-Jones.
Asked about the meeting before it ended, HP sent a statement
that read: "HP regularly meets with our investors, particularly
in advance of our annual shareholder meeting. These meetings
often include members of our Board of Directors. We look forward
to discussing any concerns this particular group of investors
An Ernst & Young spokeswoman declined to comment.
Pryce-Jones declined to give many specifics about what Lane
and others from HP said at the meeting. He said Lane "came
across as credible. He turned up and he's laid his reputation"
on the company's turnaround, Pryce-Jones said.
CtW, affiliated with the labor group Change to Win, advises
union pension funds with roughly $200 billion in assets.
Change to Win is a federation of U.S. unions with 5.5
million members pushing to organize and represent workers in
sectors like health care, hotels and ports.
HP's annual meeting is scheduled for March 20 in Mountain