Right to Act by Written Consent
The Board recommends a vote AGAINST this proposal
This stockholder proposal has been submitted by John Chevedden, 2215 Nelson Avenue, No. 205 Redondo Beach, CA 90278 (the beneficial owner of 200 shares of HP Common Stock). The proponent has requested we include the proposal and supporting statement in this proxy statement, and, if properly presented, the proposal will be voted on at the annual meeting.
This proposal and supporting statement are quoted verbatim below and HP is not responsible for any inaccuracies contained in them.
The HP Board recommends a vote AGAINST this proposal and its opposition statement can be found below the proposal.
Proposal 5 – Right to Act by Written Consent
Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67%-support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. This proposal topic also won 63%-support at Cigna Corp. (CI) in 2019. This proposal topic would have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice.
This proposal topic also won 51%-support at our 2018 annual meeting. Written consent is gaining acceptance as a more valuable right for shareholders than the right to call for a special meeting.
Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director. This is particularly important since our stock has fallen from $25 in October 2019. Poor stock performance also follows a June 2018 announcement of additional share repurchase authorization of up to $4 Billion which was supposed to increase the price of HP stock even if HP does not perform better.
Dion Weisler is no longer our CEO after his $27 million in total realized pay in 2018. And there is the October 2019 headline that HP stock tumbled after HP announced plans to cut up to 9,000 jobs.
Hopefully Mr. Enrique Lores will break with the recent practice of a remote communication annual meeting. A live annual meeting will allow shareholders to be impressed with the plans that Mr. Lores has for HP. A live annual meeting will almost guarantee that there will be a news article on the annual meeting (as opposed to a remote communication meeting) for the benefit of the vast majority of shareholders. A photograph of Mr. Lores that accompanied an article on his new HP job appears to show him enjoying a presentation to a live audience.
Please vote yes:
Right to Act by Written Consent - Proposal 5
Statement in Opposition
The Board has carefully reviewed this proposal and unanimously recommends a vote AGAINST it for the following key reasons:
- the existing right of HP stockholders to call a special meeting of stockholders at a 15% threshold;
- HP’s strong stockholder engagement practices year-round, including recently and specifically with respect to a proposal to permit stockholders to act by written consent without a meeting of stockholders; and
- the Board’s belief that the proposal would circumvent the protections, procedural safeguards and advantages provided to all stockholders by stockholder meetings.
HP continually evaluates stockholder feedback and developments in corporate governance, and implements appropriate changes to its corporate governance policies and practices that it believes are in the best interests of HP and its stockholders.
Our stockholders were given an opportunity to consider a nearly identical proposal at our 2018 Annual Meeting. At that meeting, holders of 37.5% of our outstanding shares expressed support for an advisory proposal to provide stockholders with the ability to act by written consent without a meeting of stockholders. Of the votes cast, 50.4% supported the proposal, while 49.2% voted against it, with 0.3% abstaining. The Board took note of the closeness of the vote on the written consent proposal at the 2018 Annual Meeting and the significant lack of consensus reflected in the vote, as well as the importance of respecting the perspectives expressed by all stockholders. The Board also remained concerned about the disruptive effect a stockholder written consent solicitation could have on the Board’s and our stockholders’ ability to thoroughly consider significant corporate actions and possible alternatives. As such, the Board determined that the appropriate approach was to conduct further engagement with our stockholders to better understand the vote results and incorporate stockholder feedback into the Board’s ultimate response to that vote.
As part of this engagement, we reached out to our 75 largest stockholders at that time (representing approximately 68% of our outstanding shares at the time). We ultimately received feedback from stockholders that represented approximately 50% of our outstanding shares at the time. Of those that provided feedback, approximately 60% (representing almost 30% of our outstanding shares at the time) voted against the written consent proposal at our 2018 Annual Meeting and approximately 40% (representing approximately 20% of our outstanding shares at the time) voted for the written consent proposal at our 2018 Annual Meeting. We believe these stockholders consulted as part of this engagement were representative of our stockholder base, as these stockholders represented a broad-based group, and included stockholders that voted for and stockholders that voted against the written consent proposal at our 2018 Annual Meeting.
As previously disclosed, as part of that engagement, we heard the following key perspectives from our stockholders.
- A large majority of the stockholders we consulted preferred the right to call a special meeting over the right to act by written consent, expressing views that the former is more protective of stockholders, accessible and inclusive.
- Nearly 76% of the stockholders we conversed with during our engagement (representing over 38% of our outstanding shares at the time) preferred that we consider lowering our special meeting threshold instead of implementing written consent.
- Many of those with whom we spoke volunteered that they had voted against the written consent proposal specifically because HP already afforded stockholders the right to call a special meeting (at the time, with a 25% threshold).
Moreover, of the stockholders consulted, approximately 40% (representing approximately 20% of our outstanding shares at the time) had supported the written consent proposal at our 2018 Annual Meeting. However, when presented with the option of lowering our special meeting threshold instead of implementing the right to act by written consent, approximately 40% of these stockholders preferred lowering our special meeting threshold.
Accordingly, the Board determined it would be consistent with the wishes of the broadest group of our stockholders and responsive to the vote on the written consent proposal at the 2018 Annual Meeting to further facilitate the ability of stockholders to act in between annual meetings. Specifically, in lieu of adopting a written consent right, effective as of February 7, 2019, the Board amended our Bylaws to lower the threshold share ownership required to call a special meeting from 25% to 15% of our outstanding shares.
HP also regularly engages with its stockholders regarding a variety of topics, including corporate governance, in order to stay informed of issues important to its stockholders. These practices provide stockholders with meaningful, year-round opportunities to bring important matters to the attention of HP and the Board.
Following the receipt of this proposal, the Board revisited its review and analysis from last year. Specifically, the Board considered whether there have been any material changes to the factors that the Board considered last year with respect to the potential adoption of a written consent right. After thorough consideration, the Board determined that adopting a written consent right is not in the best interests of HP or our stockholders at this time for the following reasons:
- HP’s most recent stockholder engagement conducted in January 2020 confirmed once again that many of our stockholders (representing approximately 34% of our outstanding shares at the time) continue to be satisfied with our current corporate governance profile, robust record of engagement with and responsiveness to stockholders, and commitment to transparency;
- the slim margin by which the 2018 proposal passed, and the significant number of stockholders that opposed that proposal;
- a nearly identical written consent stockholder proposal having failed at our 2015 Annual Meeting, with support of only 43.3% of votes cast;
- other governance rights we already provide our stockholders, including a meaningful proxy access right;
- the fact that the written consent process is less transparent and less democratic than action at a stockholder meeting, because stockholder action by written consent may not result in all stockholders receiving advance notice of a proposed action prior to its approval by written consent and does not permit a variety of views on a proposal to be exchanged;
- the fact that action by written consent can create substantial confusion and disruption, as different stockholder groups may solicit multiple written consents simultaneously, some of which may be duplicative or contradictory; and
- our current stockholder base and the relatively consistent presence of at least one stockholder that has owned or controlled the vote of more than 10% of our outstanding shares over the past few years, which makes the 15% threshold to call a special meeting realistic to achieve.
For all of the above reasons, the Board continues to believe that the risk of abuse associated with stockholder action by written consent, including bypassing procedural protections that offer transparency and advance notice, both of which are afforded with a stockholder meeting, as well as HP’s commitment to good corporate governance, HP’s strong stockholder engagement program and HP stockholders’ existing right to call a special meeting with a 15% threshold, make this proposal not in the best interest of all of our stockholders.
The Board believes that adoption of this proposal is unnecessary and not in HP’s or our stockholders’ best interests for the reasons described above. Accordingly, the Board recommends that you vote AGAINST this proposal.
Approval of this stockholder proposal requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to vote on the proposal at the annual meeting.