We knew yesterday’s annual meeting of the HP board was going to be instructive. After the botched Autonomy deal and three CEOs in as many years, observers were watching closely to see what investors would do with their first chance to express their opinions since the whole Autonomy accountancy malpractice claim and counter claim. At the end of the meeting, the board remains in place and it will be business as usual -- for a few weeks anyway.
Autonomy, HP, Governance
If ever there was a lesson to be learned on poor corporate governance -- and we love talking about governance technologies here -- the Autonomy deal is text book.
If, as HP claims, Autonomy had been cooking the books before the deal was closed, then why was due diligence not carried out before the deal to examine what exactly was going on. By not doing so, we witnessed the US $5.8 billion write in the value of the company.
If, as Autonomy founder Mike Lynch claims, the drop in value was created by an attempt by HP to impose a corporate culture that had no place in Autonomy, then why was that not caught by HP in its review of business practices and governance around their newly acquired business.
Ironically, in buying Autonomy, it had bought a technology -- the IDOL server -- that was more than capable of pinpointing governance anomalies. In fact, you could reasonably argue that this was one of the perceived uses of IDOL before the takeover.
So why was all of this not identified before, and what was the board going to say.
HP Board Meeting
Interestingly, the shareholders voted the board back en masse despite earlier indications that at least three heads would roll. Where the vote results were finally counted however, it became clear that some of the members of the board face a few very sticky weeks and, likely, a number of departures.
While all 11 members of the board received the minimum 50% of votes required to stay on the board, there were a few that only just made the minimum by the skin of their teeth. The margins for number of these board members was so low they must have seen the exit lights flashing, especially after one of the more visible members, Ralph Whitworth who runs the Relational Investors Fund and has US$ 800 million in HP stock and who was appointed in 2011, said that there are changes on the way.
This board is among the best I've seen. Having said that, all boards should evolve, certainly when they've had the recent past this one does. You can expect some evolution of the board over the coming years -- months maybe,” he said.
HP Investors Take AIM
There was no indication as to who may be getting the bullet, but there are a number of strong contenders. Two of the boards longest serving members, John Hammergren and G. Kennedy Thompson have been under fire over recent events, while it was expected even at the beginning of this week that Raymond Lane, the board’s chairman, and Marc Andreessen, a Silicon Valley money man wouldn't make it through yesterday’s meeting.
In Wednesday’s voting, Hammergren was re-elected with a mere 54% of total votes cast, Thompson got 55%, Lane received 59% majority, while Andreessen had 70 percent. Far more interesting is the massive vote of confidence that the current CEO Meg Whitman received, probably as a result of her often brutal honesty about the position of HP in the IT market at the moment.
We have already seen that HP is now starting to commercialize the rather expensive IDOL technology, by integrating into a number of HP products, and more on the way.
She has also stressed the importance of cloud computing, mobile and analytics as areas that she aims to make HP a leader in, even if at the moment you wouldn’t necessarily associate HP with any of them.
Just in passing, and in relation to innovation, HP recently announced in the science journal, Nature, that it is creating glasses-free 3D technology for mobile devices. According to HP researchers this type of technology could transform data visualization, medical training and entertainment. It looks like it could be a (long) while before this kind of technology is actually commercially viable, but it does give an insight into the "innovation" culture that Whitman has talked about in the past.
In the meantime, the Autonomy saga drags on like a TV soap opera that no one has the courage to terminate, with Mike Lynch addressing an open letter to the board of HP just before the annual meeting, challenging them to produce the goods on the alleged accountancy malfeasance.
Needless to say, it didn't appear and won't unless it’s in a courtroom. In the meantime HP still has a lot to do at a technology level and at a boardroom level.
Image courtesy of Aaron Nystrom (Shutterstock)