HP's board purge cleared but pay packages scolded
Wednesday, March 23, 2011; 8:56 PM
SAN JOSE, Calif. -- Just as Hewlett-Packard Co. seemed to emerge from one controversy, it has found itself immersed in two others.
HP won investors' approval Wednesday for its deep boardroom makeover that came the wake of the company's CEO scandal. At the same time, however, shareholders formally scolded HP over how much it pays top executives, and HP waded into a fresh round of sniping with Oracle Corp., a public bickering that adds a new dimension to the longtime partners' newfound antagonism.
That HP could land at the center of three public quarrels on the same day illustrates the tumult that has engulfed one of Silicon Valley's most storied companies.
The decision by shareholders to approve the 13 directors that HP put up for election is a big step toward the company moving beyond the scandal over the ouster of CEO Mark Hurd in August.
Hurd was forced out after an investigation into allegations of sexual harassment. The investigation didn't turn up evidence of harassment, but did uncover inaccurate expense reports that Hurd submitted for outings with his accuser. Hurd maintains that he didn't prepare his own expense reports, and the woman's name was not intentionally left off them. The two have said they didn't have a sexual relationship, and have reached a confidential settlement.
For HP, the world's biggest technology company by revenue, the boardroom makeover that followed was also plagued with trouble.
In January, HP said it was replacing a third of its board as the company tried to shake off the scandal. Four directors who had been particularly vocal in the debate over Hurd's ouster were leaving the board, and five new directors were coming in. Some corporate governance experts expressed fears that Hurd's replacement, new HP CEO Leo Apotheker, played too big of a role in picking the new directors, and called for investors to punish some sitting board members by withholding their votes for allowing it to happen. HP has said that its board acted properly.
Despite the dispute, HP said Wednesday at its annual shareholder meeting, held this year in Arlington, Va., that all 13 candidates won election, based on preliminary tallies.
Yet just as that dustup appeared to be dying down, HP became embroiled in two others.
At the annual meeting, about half of HP's shareholders expressed their unhappiness with HP's pay packages for top managers by casting votes against HP's executive compensation policies.
For instance, as HP's top manager, Apotheker has received a compensation package that could be worth tens of millions of dollars, including a $1.2 million salary and $4 million cash signing bonus. In addition, HP was heavily criticized for approving a severance package for Hurd that was in the tens of millions of dollars, some of which he had to give back as part of a settlement.
The shareholder vote is "advisory," so HP isn't required to change its policies. But the company said it values shareholders' opinion.