Hewlett Packard Enterprise Grants Elliott Management Board Seats Amid 5% Stock Decline

Hewlett Packard Enterprise (HPE) has entered into a one-year agreement with Elliott Management, an activist investor, which grants Elliott one or possibly two seats on HPE’s board. This move comes as HPE’s stock has declined more than 5% this year, putting significant pressure on CEO Antonio Neri to improve the company’s performance. The agreement also includes the formation of a new subcommittee of the board, chaired by Elliott’s appointee, to explore strategic options for the company.

The deal leaves open the possibility of further management changes at HPE or even a breakup of the company, with parts of it potentially being sold to other investors. This is a significant development given that Elliott has ousted 14 CEOs at companies where it has been involved since 2022. The new board member chosen by Elliott is Robert Calderoni, who brings 30 years of experience in the tech sector and is currently the chairman at KLA Corp.

Pat Russo, chair of the HPE board, welcomed Calderoni, stating that his perspectives and experiences will complement those of the existing directors. Jason Genrich, a partner and senior portfolio manager at Elliott, expressed appreciation for the positive dialogue with HPE’s board and highlighted the potential for substantial value ahead. He also noted that Calderoni’s appointment and leadership of the new Strategy Committee will help HPE identify meaningful operational and strategic opportunities for shareholder value creation.

Neri was not quoted in HPE’s press release, and the company declined to comment beyond its public disclosures. The new Strategy Committee will assess the strategies of HPE’s businesses and identify opportunities for additional value creation. Both Elliott and HPE emphasized “value creation” and “increasing value,” suggesting that Elliott’s next move will depend on whether Neri can boost HPE’s stock performance within the next year. If Elliott is still dissatisfied by the deadline, it has the right to add another board member.

Elliott and Calderoni are likely to focus on execution issues within HPE. The company faced investor disappointment in the first quarter when it had to disclose errors in the pricing of its own products. Additionally, HPE generates less revenue per employee compared to peers such as Cisco or Dell. This agreement marks a critical juncture for HPE, as it navigates the challenges posed by Elliott’s involvement and the need to enhance shareholder value.