HP: Same issues, different year

February 10, 2012: 5:12 PM ET

It is a new year at HP with yet another CEO. But while things seem to change at the tech giant, they continue to face the same old governance problems.

By Eleanor Bloxham, CEO of The Value Alliance and Corporate Governance Alliance

Meg Whitman

HP CEO Meg Whitman

FORTUNE -- Last proxy season, HP achieved the dubious distinction of receiving a majority no vote from its shareholders on its executive compensation programs.  According to a Council of Institutional Investors study, investors bestowed that distinction on less than 1.6% of companies, those deemed to be the worst pay offenders.

Last year, too, HP's (HPQ) board nominations process (which removed four board members and added five more) came under fire because the process did not conform to stated board policy guidelines. In the run up to the proxy filing, HP provided varying explanations about the process, which had been headed by chair Ray Lane. As a result, proxy advisory firm Institutional Shareholder Services (ISS) recommended against the election of some HP board members.

It is a new year and HP issued its new proxy last week. But the more things seem to change at the tech giant, the more they stay the same.

HP sports a different CEO this year for the third year running (Meg Whitman replaced Leo Apotheker who replaced Mark Hurd who left in August 2010). HP, yet again, is proposing a new board slate to shareholders (with two new board members and four, including the former CEO, having exited). And the proxy this year reveals the same shortcomings as it did last year: misguided compensation and board nominations.

Maybe HP has good intentions, but it's falling down on execution.

Plenty of pay, but where's the performance?

To keep things simple, let's not even get into the issue of former CEO Leo Apotheker's $25 million exit pay for failure last year. Let's focus on what's to come. HP has made some changes in its compensation policies, which it outlines in the Compensation Discussion and Analysis section of the proxy in hopes this may satisfy investors. "HP has a 'pay-for-performance' philosophy which forms the foundation of all of the HR and Compensation Committee's decisions regarding compensation," an HP spokesperson says. More

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