HP Appoints Investor Whitworth to Board

Hewlett Packard Co. (NYSE:HP) said it will be appointing Ralph Whitworth, the activist investor,to its board,as the newly appointed CEO Meg Whitman attempts to recover the company after a long period of instability.

Whitworth, who co founded Relational Investors LLC, the activist investment fund based in San Diego, is joining HP board’s compensation, finance and investment  committee. Whitworth will be focusing on improving the discipline of HP’s spending, particularly in the areas of acquisitions, said people familiar with the matter.

HP’s board has been on the firing line time and again since the wire tapping incident of 1990s, which created a scandal involving eavesdropping on the board, and journalists forced Chairwoman Patricia Dunn’s resignation. Recently, the board faced a major blow of shareholder lawsuits and investor criticism over the decision to hire Leo Apotheker as the CEO, whocarelesslydecided on future strategies, including the decision of spinning of the companies PC business.

Relational investors, which had not disclosed a position in HP previously, has approximately a 1 percent stake that the fund gathered following the announcement of an acquisition and a potential PC business spinoff that drew major investor criticism, said people familiar with the new board appointment.

Following the board seat acceptance, Relational Investors agreed that it will not look for a merger, sale or any transactions of similar king that involves HP, according to Thursday’s regulatory filing. Relational also agreed that it will not poll its votes along with other HP stockholders and also will exceed 9.9 percent of the company acquisitions.

According to the filing the deal will become void and Whitworth will resign from the company’s board if the investor’s stake drops below 0.5 percent of the company. Whitworth will bring into the boardroom a constructive voice and track record of value creation, said Ray Lane, HP’s executive chairman.

Relational Investor LLC firm oversees $6.5 billion, told management credibility will polish following Whitworth’s appointment and that he would press for stock buybacks, more investment in RND and  increase dividends, said a person familiar with the talks

The largest computer manufacture, based in Palo alto, California, appointed Rajiv Gupta as the lead independent director and including the appointment of Whitworth brings the total number of board members to fourteen making Hp’s board among the largest in the Silicon Valley.

HP’s shares increased to $27.81 yesterday in after hours trading following Whitworth’s appointment. The stocks had slipped 64 cents to $27.29 at 4 PM trading in New York.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.