Hewlett-Packard faces growing investor discontent

Hewlett-Packard (HPQ) has made headlines in recent years for reasons that have nothing to do with technology. Now, some investors have had enough and want to replace some of the company's board.

According to The Wall Street Journal, Chairman Ray Lane and three other board members met Monday with 20 of the Palo Alto, Calif., company's biggest shareholders to address their concerns. 

The move, a month before the board stands for re-election, is unusual. First, the odds of any effort to unseat Lane and two other members succeeding are pretty slim. But HP's recent history is anything but typical, and the shareholders have some legitimate beefs.

Shares of HP have slumped nearly 60% over the past five years, even with their recent runup, as the company seemed to be a day late and a dollar short for most important technological trends. A revolving door in the CEO's office didn't help matters either.

Activists at the union-backed CtW Investment Group have questioned the board's diligence in the $11.4 billion acquisition of the U.K. software company Autonomy last year. HP wrote down most of the deal after discovering "accounting improprieties." Autonomy founder Mike Lynch has denied wrongdoing. 

CtW, which is a part of the Change to Win labor union, is campaigning against the reelection of directors Lane, John Hammergem and G. Kennedy Thompson. Its views are shared by other shareholders, which probably worries HP. Anne Sheehan, director of corporate governance for California State Teachers' Retirement System, told the Journal that HP is looking for new directors.

HP couldn't be reached for comment for this story. CEO Meg Whitman, whom some investors are crediting with beginning a turnaround at the company, probably wouldn't appreciate a huge turnover on the board. In the end, though, she may have little choice.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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