Dell shareholders rebuke founder

SAN FRANCISCO — Dell's shareholders delivered a sharp rebuke of Michael S. Dell, the company's founder and chief executive, when a fourth of the investors withheld support of Dell in a recent vote.

In a regulatory filing released Tuesday, Dell disclosed that about 378 million of 1.5 billion votes opposed Dell's continued presence on the company's board. Dell held its annual meeting with shareholders earlier in the month.

''Mr. Dell is quite properly an iconic figure at the company," said Joseph A. Grundfest, a Stanford law professor and co-director of the Arthur and Toni Rembe Rock Center for Corporate Governance. "It is extremely rare to have that amount of shareholder disaffection directed toward an executive who is so central to the company's past, present and future."

Last month, Dell settled charges of accounting fraud presented by the Securities and Exchange Commission by paying $100 million. Dell also agreed to pay a $4 million penalty as part of the same inquiry, but did not admit wrongdoing.

The SEC accused Dell of misleading investors by not disclosing the full extent that regular payments from the chip-maker Intel had come to play in Dell's overall financial performance.


The investigation into Dell's accounting included e-mails from Dell and other top executives discussing how the company depended on rebates from Intel to meet Wall Street's expectations from quarter to quarter.

David Frink, a spokesman at Dell, said, "Our board of directors has previously reaffirmed its confidence in Mr. Dell's leadership and a majority of shareholders agreed."

The protest vote faced by Michael Dell, who owns 11.7 percent of Dell's outstanding shares, is unusual, but not unprecedented.

In 2008, Jerry Yang, Yahoo's co-founder and then chief executive, was re-elected to the board but faced a 33.7 percent negative vote. Three months later Yang announced that he would step down as chief.

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