HP to let shareholders pick some board members
updated 07:30 pm EST, Sat February 4, 2012
HP measure allows shareholders to steer management
HP has taken a potentially major step in its direction by approving a vote on a measure (PDF) that will let shareholders determine some of the board of directors. Any large shareholder holding three percent or more of stock for more than three years will have the option of nominating as much as 20 percent of the board. HP would be required to accept the nominations.
The vote should take place at its 2013 annual meeting. HP was trying to head off a measure from Amalgamated Bank coming up for the 2012 meeting that wouldn't have been binding, but would have forced HP's hand.
While it wouldn't allow complete overturns of HP's direction, the proposal could see HP's longstanding board face more change than it has in the past several years. The group is known for having done little to stop a pretexting scandal under late board chairman Patricia Dunn's tenure, where investigators impersonated both the board and journalists to get phone records and track down the source of a leak. Many have also criticized an insular link between the board and the CEO. Current CEO Meg Whitman was chosen from the board, while ousted CEO Leo Apotheker nominated five board members himself.
The absence of significant board changes has been partly blamed for a lack of adaptability and for the rapid turnaround in CEOs over the past several years. As chosen, only four shareholder individuals or groups could influence the results, but it would allow for independent direction changes without risking ambush investors who suddenly buy large amounts of stock and demand change to satisfy a short-term goal. [via Wall Street Journal]
