(Updates with shares in sixth paragraph.)
Nov. 17 (Bloomberg) -- Hewlett-Packard Co., the largest computer maker, appointed activist shareholder Ralph Whitworth to its board after he accumulated an almost 1 percent stake, two people with knowledge of the matter said.
Whitworth’s Relational Investors LLC bought shares following the Aug. 18 announcement that Hewlett-Packard was buying Autonomy Plc, said one of the people, who asked not to be identified because the appointment hasn’t been made public. Whitworth is joining the board’s compensation committee and its finance and investment committee, the people said.
Hewlett-Packard is bolstering oversight to assuage investors who sold shares amid strategy shifts and slashed growth forecasts before Chief Executive Officer Meg Whitman was named successor to Leo Apotheker. Whitworth, whose firm oversees $6.5 billion, has used his shareholdings to agitate for change at other companies including industrial conglomerate ITT Corp. and defense contractor L-3 Communications Holdings Inc.
Relational, based in San Diego, began accumulating its stake in late August, according to one of the people familiar with the matter. That came after Hewlett-Packard announced the $10.3 billion Autonomy deal and said it may spin off the personal-computer division. Investors said Hewlett-Packard overpaid for Autonomy and that the proposed spinoff was ill conceived. The firm kept buying shares through September, this person said. Whitman was appointed on Sept. 22.
A spokeswoman for Whitworth declined to comment. A spokeswoman for Palo Alto, California-based Hewlett-Packard didn’t immediately return a message seeking comment.
Whitworth contacted Whitman and Executive Chairman Ray Lane in early October, the person said. While Whitworth did not threaten a proxy contest aimed at gaining a board seat, he told the company he’d bring credibility and focus Hewlett-Packard on using its cash to buy back shares, increase its dividend or put more money into research and development, this person said.
After a few weeks of conversation, the company agreed to put Whitworth on the board, this person said.
Hewlett-Packard climbed to $27.65 in late trading. It had slipped 64 cents to $27.29 as of 4 p.m. New York time.
Whitman, former CEO of online commerce pioneer EBay Inc., has already begun unraveling strategies pursued by her predecessor. Last month, she abandoned a proposal to spin off the company’s market-leading PC unit and she shares management responsibilities with Lane.
Whitworth’s Relational pushed for changes at industrial products maker ITT and L-3 Communications before those companies announced spinoffs this year. Last year, Whitworth was elected to the board of Genzyme Corp., which in February agreed to a sale to Sanofi-Aventis SA after a nine-month pursuit.
Whitworth served on as chairman of Waste Management Inc. from 1999 to 2004, overseeing a turnaround at the company after it settled lawsuits alleging former executives overstated earnings. He also led an effort at Tyco International Ltd. to oust directors who served under former CEO Dennis Kozlowski, and sat on the board of Apria HealthCare Group Inc., which was acquired by Blackstone Group LP in a 2008 buyout.
Whitworth and David Batchelder founded Relational in 1996 with an initial allocation of $200 million from the California Public Employees’ Retirement System, the nation’s largest public pension fund. The two had previously worked for billionaire oil executive T. Boone Pickens.
--With assistance from Tom Giles and Aaron Ricadela in San Francisco. Editors: Tom Giles, Jennifer Sondag
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