HP Adds Activist Investor Whitworth To Board
Activist investor Ralph Whitworth is joining Hewlett Packard Co's board after taking a small stake in the Silicon Valley behemoth, a move that may cheer many on Wall Street frustrated by the company's recent decisions.
The addition of Whitworth, who co-founded San Diego-based activist investment fund Relational Investors LLC, makes HP's board one of Silicon Valley's largest, with 14 directors.
HP's board has found itself time and again on the firing line since the infamous wire-tapping incident of the 1990s, when a scandal involving eavesdropping on directors and journalists forced then-chairwoman Patricia Dunn's resignation.
More recently, it has faced a storm of investor criticism and shareholder lawsuits over decisions from the hiring of former SAP AG CEO Leo Apotheker as chief executive, to the haphazard way it has communicated its strategy, including a consideration to hive off its personal computer division.
Apotheker was replaced by former eBay Inc CEO Meg Whitman in September.
"HP is taking a proactive approach to upgrading its board of directors in the face of heavy investor frustration," said Brian Marshall, analyst with ISI Group.
CNBC reported that Whitworth has a nearly 1 per cent stake in HP. Neither the company nor Whitworth has disclosed the amount of shares that he owns. Whitworth was unavailable for comment. HP declined to comment beyond its statement.
Whitworth has previously urged companies he owned stakes in to sell or spin off divisions.
His firm pressured industrial conglomerate ITT Corp to split up its defense and water purifying businesses this year, boosting its share price. And it is urging contractor L-3 Communications to divest low-performing units.
HP, in announcing Whitworth's appointment to the board on Thursday, also said that Rajiv Gupta, chairman of chemical materials company Avantor Performance Materials and HP board member since 2009, will be the lead independent director.
"Relational will support the HP board, and the board will nominate and support Whitworth, for the next two years, as long as Relational continues to be a significant stockholder of HP," HP said, adding that it hashed out a separate agreement with Relational.
Whitworth will have to vacate his board seat if Relational's stake falls below 0.5 per cent, according to the agreement, which also stipulates that Whitworth's firm has to vote in accordance with the board's recommendation on any proposal at shareholder meetings.
Whitworth will join the board's finance and investment committee and compensation committee, the company said.