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Hewlett weighs proxy fight
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November 16, 2001: 3:05 p.m. ET
Walter Hewlett will vote against Compaq takeover but unsure on proxy fight.
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NEW YORK (CNN/Money) - Walter Hewlett, son of Hewlett-Packard co-founder William Hewlett, must still decide whether he will mount a proxy fight against the $20 billion HP-Compaq merger, a spokesman said Friday.
Hewlett will himself vote against the merger, and will by joined by sisters Eleanor Hewlett Gimon and Mary Hewlett Jaffe.
But Walter Hewlett has not yet resolved whether he will solicit votes against the merger.
"Walter Hewlett hasn't decided on a course of action and is keeping all of his options open," the spokesman said.
But a Securities and Exchange Commission filing, prepared on his behalf, indicates that this might not be the case. HP Thursday filed with the SEC its proxy on the merger which allows both sides to start soliciting votes.
Hewlett's filing, a form 14A, represents a report to the William R. Hewlett Revocable Trust, and lists his reasons against the Compaq takeover.
The $20 billion merger will result in the combined HP-Compaq taking a larger position in the PC market which will reduce risk and pose a cash drain, the filing said.
The merger also will not solve HP's strategic problems, pose substantial risk and market reaction to the merger has been largely negative.
"Walter B. Hewlett plans to file a statement with the SEC relating to a solicitation of proxies from the stockholders of HP in connection with a meeting of stockholder," the SEC filing said.
The language contained at the end of the SEC filing is the "appropriate legal legend" needed and is not indicative of his proxy stance, a source said.
Hewlett, who has hired McKenzie Partners, could also file a proxy and still not mount a proxy fight, the source said. Form 14A reserves Hewlett's right to take any number of actions, including a proxy fight, a different source said.
The Hewlett descendants account for about 7 percent of HP shares. The deciding vote could come from the David and Lucile Packard Foundation, which are HP's largest shareholders, holding a 10 percent stake. The Foundation has yet to decide which way it will vote, but some believe it ill decide at its next board meeting on Dec. 7.
Shares of HP (HWP: down $0.72 to $21.37, Research, Estimates) dropped more than 3 percent Friday while Compaq (CPQ: down $0.44 to $10.26, Research, Estimates) shed more than 6 percent in afternoon trading Friday.
Hewlett-Packard could not be reached for comment. Compaq declined to comment.
CEOs to forgo bonuses
Separately, Hewlett-Packard Co.'s proposed purchase of Compaq Computer Corp. calls for executives to get bonuses totaling $55.5 million - although the CEOs of both companies are likely to forgo their payments if the merger is completed, according to a filing with regulators.
The chief executive officer of Hewlett-Packard, Carly Fiorina, is entitled to $8 million in bonuses if the deal goes through, while Compaq Chief Executive Michael Capellas would get $14.4 million, according to the filing with the Securities and Exchange Commission Thursday.
But in a move apparently meant to ease the intense scrutiny of the deal, both executives are expected to pass on the payments, according to the filing. That would leave $33.1 million in bonuses for other Hewlett-Packard and Compaq executives.
The filing said many decisions regarding the leadership team for the merged company will not be made until shortly before or after the merger is completed, which may cause some executives to seek other employment.
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Fiorina and Capellas are expected to renew their employment contracts with the new company once the merger is completed, according to the filing.
The companies also said they have each received requests from antitrust authorities for information about their proposed combination.
"Each of HP and Compaq received a request for additional information and other documentary material from the Federal Trade Commission," the companies said in a separate filing Thursday with the SEC. 
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