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Jack
Ehnes
Chief
Executive Officer
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California
State Teachers’
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Retirement
System
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7667
Folsom Boulevard
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Post
Office Box 15275
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Board
Members
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Sacramento,
CA 95851-0275
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Chair
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Carolyn
Widener
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916.229.3706
Tel
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www.calstrs.com
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Vice
Chair
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Dana
Dillon
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Kathleen
Brugger
Jerilyn
Harris
Roger
Kozberg
Gary
Lynes
Peter
Reinke
Elizabeth
Rogers
Ex
Officio Members
State
Controller
John
Chiang
Director
of Finance
Michael Genest |
Dear
Fellow Hewlett-Packard Company Shareholder:
REGARDING: Proposal
Number 3 on the ballot at the annual meeting to be held on March
14,
2007
As
one of the largest public employee pension funds in the nation,
and as a
significant owner of the Hewlett-Packard Company (HP), the California
State Teachers’ Retirement System (CalSTRS) has serious concerns regarding
the director nomination process that is in place at HP. CalSTRS
is sending
this letter in support of the shareholder proposal resolution submitted
by
the AFSCME Employee Pension Plan, the New York State Common Retirement
Fund, the Connecticut Retirement Plans and Trust Funds and the
North
Carolina Equity Investment Pooled Trust and labeled as Proposal
Number 3
on the Company’s most recent proxy statement.
CalSTRS
believes that this proposal will improve director and management
accountability at HP
because:
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State
Treasurer
Bill
Lockyer
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This
shareholder proposal, if approved by you, would amend the HP Bylaws
to
require the inclusion of the name of any shareholder nominated
candidate
for the HP Board of Directors in the Company’s proxy
materials.
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The
effect of this Bylaw change would be to allow shareholders to vote
on such
nominees on HP’s proxy ballot. CalSTRS believes that the continued absence
of a legally structured process for access to the Company’s proxy
materials allows for the repeat of recent unacceptable and risky
events at
HP, such as the pretexting scandal.
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Superintendent
of
Public
Instruction
Jack
O’Connell
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Episodes
like this place shareholder value at risk. Shareholders require
meaningful
participation in the election of their fiduciaries in order to
ensure
accountability from Board Members and Senior Management. Boards
of
Directors are the only fiduciaries that shareholders have in the
governance structure of the Company: We believe that the independent
director fiduciary protection should be reinforced by the right
of access
to the nomination of independent directors. A process that included
shareholders on the front-end of the nomination process would enhance
the
fiduciary duty of independent directors at the
Company.
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Proposal
Number 3 is a thoughtful resolution:
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A
shareholder nominator must have beneficially owned 3 % or
more of HP’s
common stock continuously for a minimum of two years. This
ensures that
only long-term holders will be allowed to use this
process.
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Proposal
Number 3
Page
Two
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The
shareholder nominator must provide written notice to the Company’s
Corporate Secretary within the time specified in the HP Bylaws.
This
ensures that the process will be explicit and
well-managed.
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Proposal
Number 3 is respectful of shareholder capital:
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Under
the current governance process at HP, only management and their
selected
nominees are allowed to participate in the nomination process,
despite the
fact that shareholder capital is what pays for the process. The
current
group of executive officers and directors of the Company includes
20
people, yet this group does not own enough holdings in HP to amount
to one
percent (1 %).
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This
proposal would only allow shareholders that have held three percent
(3 %)
or more of HP’s common shares to participate. In dollar terms, this amount
of ownership would have a market value of $3.49 billion and represent
81,624,240 shares in the Company.
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Shareholder
capital deserves meaningful governance participation and representation.
Please
vote in favor of Proposal Number 3 at the March 14, 2007 annual
meeting.
As
one of
the largest shareholders of Hewlett-Packard with over $500 million in market
value, CalSTRS urges you to vote FOR Proposal 3.
Please
refer to the proxy statement for more information. If you have any questions,
or
need assistance in voting your shares, please call The Altman Group, Inc.
toll
free at (800) 314-9816 or at (201) 460-1200 as they are assisting us with
this
effort.
Sincerely,
Jack
Ehnes
Chief
Executive Officer
PLEASE
NOTE: The cost of this solicitation is being borne by CalSTRS and 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. CalSTRS and
CalPERS are 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.