"Cutting the dividend would really hurt them."
Could be but I don't think so. Some one posted the list of people who are on the board of directors, and I think there are 3 Packards who sit on the Board and who are also involved with the foundations.
Second, The Packard Foundation is what is called a "Private Operating Foundation" under the internal revenue code. If memory serves, it is governed by 4949(j)(3) which requires that 95% of its INCOME, what ever that may be, is paid out and 5% is RETAINED.
As long as the stock appreciates the Foundation has no need particularly of dividend income. It is to be noted that Mssrs. Packard and Hewlett personally would probably prefer the dividend rather than having to sell stock, periodically.
Unlike the Heirs, the Foundation is tax exempt under 501c3 because of 4949, and therefore, it pays NO TAX when the assets of the Trust are periodically sold.
You are right, this would have been be a tough decision for the foundation, but it is one that the Foundation will not make. The Foundation has attempted to delegate the decision to its Outside investment advisor.
Whether this delegation can be done, whether this represents a change of position of the board, whether Walter Hewlett's change of mind could somehow be considered an act of breach of the Merger Agreement are all very interesting questions.
Unfortunately, the will not be resolved in time to affect the outcome of this merger. |
