HP Partners Cheer Lane's Decision To Step Aside As Exec Chairman6:43 PM EST Thu. Apr. 04, 2013
Embattled Hewlett-Packard Executive Chairman Ray Lane has stepped aside in a move that is being hailed by the company's solution provider partners as a much needed change for the HP board of directors.
HP Thursday in a statement said Lane is vacating his position as executive chairman but retaining his seat on the board.
Lane has come under fire for a number of miscues including his early support of Leo Apotheker -- the highly-criticized former CEO of HP -- and HP's high-priced acquisition of Autonomy.
Lane took a more prominent role overseeing the computer giant with a $10.6 million pay package when he ascended to the executive chairman seat in September 2011, when Apotheker was ousted and replaced with current CEO Meg Whitman.
HP partners said they see the changing of the guard as a boost for partners, customers and HP employees.
"I think it is fabulous," said the CEO for a top HP enterprise partner who did not want to be identified. "This makes me feel hopeful that things are going to get better. I applaud the board. It is encouraging to see that someone that makes huge multiple mistakes cannot continue on in the same position. I don't see how that can be tolerated, and obviously it wasn't. There have obviously been a lot of decisions that came out of the board that have been head-scratchers."
Lane will be replaced "on an interim basis" by current board member and activist shareholder Ralph Whitworth, whose firm Relational Investors owns about $800 million worth of HP shares. Whitworth joined the board in November 2011.
HP board members John Hammergren and G. Kennedy Thompson, both members of HP's Finance and Investment Committee, which played a role in the Autonomy acquisition, also decided to leave the board effective after the May board meeting.
The board changes come only two weeks after Lane, Hammergren and Thompson were reelected to their seats by narrow margins in a shareholder vote. Lane received 58.88 percent of the votes; Thompson received 55.15 percent of the votes and Hammergren received 53.19 percent of the votes.
"After reflecting on the stockholder vote last month, I've decided to step down as executive chairman to reduce any distraction from HP's ongoing turnaround," said Lane in the statement. "Since I joined HP's board a little over two years ago, I've been committed to board evolution to ensure our turnaround and future success. I'm proud of the board we've built and the progress we've made to date in restoring the company. I will continue to serve HP as a director and help finish the job."
HP's board is searching for a permanent chairman and two new board members, according to the statement. With Hammergren's departure, Whitworth will become chairman of the Finance and Investment Committee.
"This is definitely a positive step in the right direction," said Bob Venero, the CEO of Future Tech, a Holbrook, N.Y.-based HP enterprise partner. "Nobody felt there were going to be any adjustments at that level. Change is good, especially change at the board of director's level where you heard lots of negative connotations, whether it was [justified] or not. This is a boost. It shows they are listening."
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HP said that with Lane stepping down as executive chairman, the role of lead independent director, currently held by Rajiv Gupta, is no longer necessary and will be eliminated. Gupta will remain on the board and will replace Thompson as chairman of the Audit Committee.
Lane characterized HP's $11.1 billion blockbuster acquisition of U.K. software maker Autonomy in 2011, initiated by former HP CEO Leo Apotheker, as a cloud computing game-changer aimed at driving higher investor returns with a unique software asset.
But only 15 months later, HP claimed it was hoodwinked by Autonomy, taking an $8.8 billion charge against earnings after discovering what HP alleges were "serious accounting improprieties."
In a statement on HP website HPnext.com, Whitworth promised in the coming months "further evolution" of the HP board. "We will recruit a world-class chairman to take my place as soon as possible, and we also hope to recruit at least two other outstanding directors before the end of this year," said Whitworth. "While sooner is better, rest assured we will not allow the rush of time to compromise our focus on recruiting the best of the best."
PUBLISHED APRIL 4, 2013