Here's The Letter That Has HP's Board Back On The Hot Seat

Ray Lane

Four of HP’s board members, including chairman Ray Lane, met with about 20 of its biggest investors yesterday in the hopes of calming an investor revolt, the Wall Street Journal reports.

The meeting seemed to be spurred, at least in part, by a campaign lead by activist shareholder Richard Clayton, research director of CtW Investment Group, which advises union pension funds. He wants HP’s shareholders to take action against the board, possibly replacing chairman Ray Lane and one or two other directors at the company’s annual shareholder’s meeting next month.

Clayton is concerned that auditor Ernst & Young may have a conflict of interest because of the non-audit fees it earns from HP. He’s also concerned about the $16.8 billion in write-offs HP has taken on its two largest acquisitions, EDS and Autonomy, and HP’s accusations that Autonomy cooked its books.

He’s not alone. HP is already facing 10 shareholder lawsuits.

While it’s not unusual for board members to meet with big shareholders, four of them attending a meeting of this size indicates that HP is taking its investors’ concerns to heart.

But HP isn’t worried about an ouster. A spokesperson told us:

“We had a productive meeting and appreciate the opportunity to answer questions for our investors. We feel we have the right board in place to turn HP around.”

Here’s the letter that CtW Investment Group sent to the board that got the board’s attention.

Letter from CtW to HP Board by

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