NYC COMPTROLLE​R JOHN C. LIU, PENSION FUNDS TO VOTE AGAINST HEWLETT-PA​CKARD DIRECTORS

NEW YORK, N.Y. – City Comptroller John C. Liu today announced that the
New York City Pension Funds will vote against two Hewlett-Packard
(NYSE: HPQ) directors because of their failure to protect investors
from costly, misguided acquisitions. The vote will take place at the
company’s annual shareowner meeting on March 20, 2013.
The directors, John H. Hammergren and G. Kennedy Thompson, are members
of the board’s Finance and Investment Committee, which bears primary
responsibility for oversight failures that led to HP’s disastrous 2011
acquisition of Autonomy Plc. As the two longest-serving directors,
they also bear responsibility for approving HP’s ill-advised
acquisitions of EDS and Palm, and for the board’s hasty decision to
hire Leo Apotheker, whose short-lived tenure as CEO ended shortly
after the Autonomy acquisition that he engineered.
“The Autonomy debacle is the latest and most expensive in a series of
ill-advised acquisitions and boardroom fiascos that have destroyed
tens of billions of dollars in shareowner value,” Comptroller Liu
said.  “While the board now appears to be taking steps to improve
oversight, it will be unable to restore investor confidence without
swiftly replacing these two directors.”
HP, which paid $11 billion for Autonomy in 2011, wrote off $8.8
billion of its investment in 2012. HP has attributed $5 billion of the
write-off to improper accounting at Autonomy that inflated its
pre-acquisition revenues and earnings.  HP took additional impairment
charges of $9 billion in 2012 in connection with EDS and nearly $1
billion in 2011 that related to Palm.
In approving the Autonomy acquisition, the board and its Finance and
Investment Committee ignored the opposition of the company’s own CFO,
who believed it cost too much. The Committee also failed to challenge
management’s decision to have those responsible for the acquisition’s
due diligence report to the strategy group, rather than to the CFO, as
is considered best practice. The board also reportedly assumed more
revenue growth as a result of the combination than it normally assumes
in acquisitions.
HP’s shares are down 61 percent from their 2010 peak.  The company,
whose performance is in the bottom quartile of its peers over the past
three and five years, was among the worst performers of the S&P 500 in
2012.
New York City Comptroller John C. Liu serves as the investment advisor
to, custodian, and trustee of the New York City Pension Funds. The New
York City Pension Funds are composed of the New York City Employees’
Retirement System, Teachers’ Retirement System, New York City Police
Pension Fund, New York City Fire Department Pension Fund, and the
Board of Education Retirement System. The New York City Pension Funds
hold a combined 5,544,018 total shares in Hewlett-Packard for a
combined asset value of $115,592,775.30 as of 3/7/2013.
In addition to Comptroller Liu, the New York City Pension Funds’ trustees are:
New York City Employees’ Retirement System: Janice Emery, Mayor’s
Representative (Chair); New York City Public Advocate Bill de Blasio;
Borough Presidents: Scott Stringer (Manhattan), Helen Marshall
(Queens), Marty Markowitz (Brooklyn), James Molinaro (Staten Island),
and Ruben Diaz, Jr. (Bronx); Lillian Roberts, Executive Director,
District Council 37, AFSCME; John Samuelsen, President Transport
Workers Union Local 100; Gregory Floyd, President, International
Brotherhood of Teamsters, Local 237.
Teachers’ Retirement System: Janice Emery, Mayor’s Representative;
Deputy Chancellor Kathleen Grimm, New York City Department of
Education; and Sandra March, Melvyn Aaronson (Chair) and Mona Romain,
all of the United Federation of Teachers.
New York City Police Pension Fund: Janice Emery, Mayor’s
Representative; New York City Finance Commissioner David Frankel; New
York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch,
Patrolmen’s Benevolent Association; Michael Palladino, Detectives
Endowment Association; Edward D. Mullins, Sergeants Benevolent
Association; Louis Turco, Lieutenants Benevolent Association; and, Roy
T. Richter, Captains Endowment Association.
New York City Fire Department Pension Fund: Janice Emery, Mayor’s
Representative; New York City Fire Commissioner Salvatore Cassano
(Chair); New York City Finance Commissioner David Frankel; Stephen
Cassidy, President, James Slevin, Vice President, Robert Straub,
Treasurer, and John Kelly, Brooklyn Representative and Chair,
Uniformed Firefighters Association of Greater New York; John Dunne,
Captains’ Rep.; James Lemonda, Chiefs’ Rep., and James J. McGowan,
Lieutenants’ Rep., Uniformed Fire Officers Association; and, Sean
O’Connor, Marine Engineers Association.
Board of Education Retirement System:  Schools Chancellor Dennis
Walcott; Mayoral: Joseph Lewis, Jeanette Moy, Ian Shapiro, Tino
Hernandez, Judy Bergtraum, Allison Rogovin, and Milton Williams;
Patrick Sullivan (Manhattan BP), Kelvin Diamond (Brooklyn BP), Dmytro
Fedkowskyj (Queens BP), Robert Powell (Bronx BP) and Diane Peruggia
(Staten Island BP); and employee members Joseph D’Amico of the IUOE
Local 891 and Milagros Rodriguez of District Council 37, Local 372. Press Release.
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