Investment
Office
P.O.
Box
2749
Sacramento,
CA 95812-2749
Telecommunications
Device for the Deaf - (916) 795-3240
(916)
795-3400; FAX (916) 795-2842
February
15, 2007
Dear
Shareowner of Hewlett-Packard Company:
CalPERS
believes that allowing shareowners access to the company’s proxy materials in
order to nominate candidates for election to the board of directors is the
most
effective mechanism for ensuring director accountability at Hewlett-Packard
(“HP”). The right to nominate directors at HP is currently not afforded to
shareowners. With HP’s Annual Meeting of Shareowners to be held on March 14,
2007, we are writing to call your attention to an important proposal (Proposal
3
on the proxy card) which would amend HP’s bylaws to provide such shareowner
access to HP’s proxy materials under certain circumstances. CalPERS intends to
vote in favor of Proposal 3 and urges other shareowners to do the same.
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HP
shareowners do not currently have the right to include nominees for
election to the board of directors on the company proxy statement
as a
means to promote board accountability and a culture focused on creating
long-term value.
|
We
believe that responsible shareowner access to the director nomination process
is
a vital priority for sustaining a system of corporate governance that fosters
democracy, director accountability, and long-term value creation.
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Proposal
3 seeks to amend HP’s bylaws to establish procedures for requiring the
inclusion of shareowner nominated director candidates in the company’s
proxy statement. If adopted by shareowners, Proposal 3 would allow
shareowner nominees to be included for shareowner consideration along
with
management nominees in board
elections.
|
Today
at
HP, only the board is empowered to put a director nominee up for election on
the
proxy statement. CalPERS believes that Boards that control their own membership
can lead to a culture characterized by unaccountable and entrenched directors.
It is our experience that such a culture often results in abusive executive
compensation practices, fraud, or other misconduct - which in turn causes the
destruction of shareowner value.
PROPOSAL
3 IS A FUNDAMENTAL SHAREOWNER RIGHT
We
believe that Shareowners deserve to be represented by a board of directors
that
is focused on creating sustainable shareowner value while demonstrating a
culture of holding company management accountable. The right of shareowners
to
adopt and amend the bylaws of their corporation lies at the heart of true share
ownership. By supporting Proposal #3, you are exercising a fundamental
shareowner right to gain access to our proxy materials for director nominations
and elections.
PROPOSAL
3 WOULD NOT LEAD TO “SPECIAL INTEREST” DIRECTORS
We
disagree with critics who assert that allowing shareowners to nominate director
candidates could lead to the election of “special interest directors” who do not
represent the interests of all shareowners. Proposal 3 includes proposed
ownership requirements intended to ensure that long-term shareowners can
responsibly invoke use of the proxy access provision when they satisfy certain
criteria. For example, only shareowners that have beneficially owned 3% or
more
of HP’s outstanding common stock for at least two years will be eligible to
nominate up to two candidates for election to the Board. (See attached for
full
text of the proposal.)
VOTE
FOR PROPOSAL 3
CalPERS
believes providing shareowners with an effective mechanism to nominate qualified
director nominees is essential to restoring genuine accountability in the
boardroom and fostering a culture that aligns the interests of directors with
those of the owners of a company - its shareowners. In our opinion, Proposal
3
would ensure such a mechanism exists at HP.
As
one of the largest shareowners of Hewlett-Packard, CalPERS urges you to vote
FOR
Proposal 3.
Please
refer to the proxy statement for more information or call The Altman Group,
Inc.
who is assisting us with this effort toll-free at (800) 314-9816 or at (201)
460-1200 if you have any questions or need assistance in voting your
shares.
Sincerely,
Christianna
Wood
Senior
Investment Officer, Global Equity
PLEASE
NOTE:
The cost
of this solicitation is being borne entirely by CalPERS and is being done
through the use of one or more of the following forms of communication: mail,
e-mail, and/or telephone communication. CalPERS is not asking for your proxy
card. Please
do not send us your proxy card but return it to the proxy voting agent in the
envelope that was provided to you.
California
Public Employees’ Retirement System
Lincoln
Plaza - 400 Q Street - Sacramento, CA 95814
ATTACHMENT
PROPOSAL
NO. 3
STOCKHOLDER
PROPOSAL RELATING TO
STOCKHOLDER
NOMINEES FOR ELECTION TO THE HP BOARD
STOCKHOLDER
PROPOSAL
RESOLVED,
pursuant to Article IX of the Bylaws (the "Bylaws") of Hewlett-Packard
Company ("HP") and section 109(a) of the Delaware General Corporation Law,
stockholders amend the Bylaws to add section 3.17:
"HP
shall
include in its proxy materials for a meeting of stockholders at which directors
are to be elected the name, together with the Disclosure and Statement (both
as
defined in this section 3.17), of any person nominated for election to the
Board of Directors by a stockholder or group thereof that satisfies the
requirements of this section 3.17 (the "Nominator"), and allow stockholders
to vote with respect to such nominee on HP's proxy card. Each Nominator may
nominate up to two candidates for election at a meeting.
A
Nominator must:
(a)
have
beneficially owned 3% or more of HP's outstanding common stock ("Required
Shares") continuously for at least two years;
(b)
provide written notice received by HP's Secretary within the time period
specified in section 2.2(c) of these Bylaws containing (i) with
respect to the nominee, (A) the information required by section 2.2(f)
of these Bylaws and (B) such nominee's consent to being named in the proxy
statement and to serving as a director if elected; and (ii) with respect to
the Nominator, proof of ownership of the Required Shares; and
(c)
execute an undertaking that it agrees to (i) assume all liability stemming
from any legal or regulatory violation arising out of the Nominator's
communications with HP stockholders, including, without limitation, the
Disclosure and Statement; (ii) to the extent it uses soliciting material
other than HP's proxy materials, comply with all applicable laws and
regulations, including, without limitation, the SEC's Rule 14a-12.
The
Nominator may furnish a statement, not to exceed 500 words, in support of
the
nominee's candidacy (the "Statement"), at the time the Disclosure is submitted.
The Board of Directors shall adopt a procedure for timely resolving disputes
over whether notice of a nomination was timely given and whether the Disclosure
and Statement comply with this section 3.17 and any applicable SEC rules."