By Joann S. Lublin and Liz Hoffman
Ralph Whitworth, an activist investor who has served on nearly a
dozen U.S. corporate boards, is stepping down as interim chairman
of Hewlett-Packard Co. and taking a leave of absence from
Relational Investors LLC, the investment firm he co-founded, to
focus on his health.
Mr. Whitworth, 58 years old, was diagnosed with throat cancer in
April 2013, and treated soon after, according to a person familiar
with the matter. That is the same illness J.P. Morgan Chase &
Co. Chief Executive James Dimon is battling. A few weeks ago, Mr.
Whitworth learned his throat cancer had recurred, and "it's a worse
prognosis," the person said.
Relational said co-founder David Batchelder and other senior
employees will take on Mr. Whitworth's duties at the San Diego
firm. H-P's board, meanwhile, will meet starting Wednesday for
several days to discuss appointing a new chairman, according to a
company spokesman.
Relational, which manages $6 billion in assets, is among the
most prominent names in shareholder activism, in which hedge funds
take stakes in public companies and push for changes.
Mr. Whitworth is seen as being more willing than some other
activists to collaborate with companies. He prefers to gain board
seats and influence decision-making from within, an approach he
followed at H-P, Home Depot Inc. and others.
His approach has allowed Relational to engineer big shake-ups.
The firm's involvement in home-improvement retailer Home Depot
ultimately led to the ouster of Chief Executive Officer Robert
Nardelli and the spinoff of the company's wholesale business. Mr.
Batchelder served on Home Depot's board for more than four years,
stepping down in 2011.
Despite the activist label, Mr. Whitworth is also seen as a
steadying force for companies in crisis. In 1999, he was chairman
of Waste Management Inc.'s board in the wake of an accounting
scandal. He also served as Sovereign Bancorp's chairman during the
financial crisis.
Mr. Whitworth first joined H-P's board in 2011 during a period
of turmoil and was named interim chairman in April 2013. His
resignation comes amid a rare period of stability for the company.
Since 2005, three CEOs have departed under fire.
Rather than revive its search for a permanent chairman, H-P
could give CEO Meg Whitman the chairmanship, said a person familiar
with the company. But that could rankle shareholders, as the last
two CEOs to hold both spots were both eventually forced out of H-P.
At least one current independent director is also a candidate to
succeed Mr. Whitworth, according to another person.
Mr. Whitworth was among the early activists, working with Texas
oil man T. Boone Pickens and starting a shareholder advocacy group
called United Shareholders Association. After closing the venture,
he founded Relational with Mr. Batchelder in 1996.
Mr. Whitworth recently joined an effort of corporate directors,
company executives and investors aimed at improving relations
between the camps, which have become fraught amid a rise in
shareholder activism.
"He was thoughtful and collaborative, but not afraid to let
people know when he disagreed with them," said Donna Dabney of the
Conference Board, a business and research association that
organized the group. "That's exactly who you want in a
boardroom."
Activist hedge funds, particularly those built around a
charismatic founder, sometimes struggle to transition to a new
generation of leaders. Mr. Batchelder has served on 11 corporate
boards, including those of five Fortune 500 companies. He isn't
currently on any boards, though Relational has the right to appoint
him to the board of SPX Corp. under an agreement struck in January
with the manufacturer.
Some of Relational's biggest investors expressed concern Tuesday
about Mr. Whitworth's health but aren't worried about its effect on
the firm.
"We have great confidence in their team to carry on during
Ralph's leave, " said Anne Sheehan, director of corporate
governance for the California State Teachers' Retirement System, a
public pension fund that invests in Relational.
Relational holds stakes in several companies. Last month, it
disclosed an 8.5% stake in Manitowic Co. and called for the company
to separate its food-service unit from its crane business, which
makes construction and hoisting equipment.
David Benoit contributed to this article.
Write to Joann S. Lublin at joann.lublin@wsj.com and Liz Hoffman
at liz.hoffman@wsj.com
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