Follow up to the article El posted yesterday.
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January 09, 2002 03:28
Hewlett-Packard Executives Pitch Compaq Computer Deal to Retirees
By Therese Poletti, San Jose Mercury News, Calif.
Jan. 9--Hewlett-Packard executives are reaching out to thousands of retirees of the venerable Palo Alto-based computer company as they try to win shareholder votes for HP's proposed $24 billion purchase of Compaq Computer.
This morning, HP Chief Executive Carly Fiorina, Chief Financial Officer Bob Wayman and other top executives will meet with 300 to 400 retirees for two hours at the company's Cupertino campus.
Separately, the company is settling a class-action lawsuit brought last January by retiree Mark Leonard of Los Altos, who claimed that HP broke its promise to provide lifetime discounts on HP products to retirees.
Leonard, who left HP in February 1999, was re-classified as a retiree of Agilent Technologies after HP spun off its test and measurement businesses into Agilent. Following the reclassification, Leonard was told he was no longer eligible for rebates of as much as 10 percent on HP products that all HP "Gold Badge" retirees are entitled to receive.
Leonard filed the lawsuit on behalf of himself and all HP "Gold Badge" retirees who were reclassified as Agilent retirees -- about 3,800 people. According to a proposed settlement filed with Santa Clara County Superior Court, HP agreed to reinstate the discount effective Nov. 19, 2001, and form a $150,000 fund so that retirees can make claims and receive retroactive discounts on HP products already purchased.
HP spokesman Dave Berman declined to comment Tuesday on the proposed settlement, which hasn't yet been approved by the court. "Until it's approved, we can't discuss any details," Berman said.
Ron Katz, Leonard's attorney, said he believed that it's just a coincidence that HP is settling the case now, as it tries to win shareholder support for the Compaq deal. "They just didn't have any legal arguments against us," Katz said.
But it's clear HP believes its retirees are an important constituency in its fight to win approval for the Compaq deal.
Walter Hewlett and David W. Packard, sons of HP's co-founders, are leading the battle against the acquisition, arguing that it doesn't make financial sense. Packard has also argued that the deal violates HP's core principles, known as the HP Way. The founding families have pledged to vote the 18.1 percent stake in HP that they control against the acquisition.
While HP says it doesn't know how much of its stock is held by retirees, the amount is probably a small percentage of 1.94 billion shares. However, HP's thousands of retirees are a vocal and organized group, and many of them are critical of the deal.
"Carly, in my opinion, is in deep trouble," said Bill Fallon, 81, who retired from HP in 1986 after 22 years and was reclassified an Agilent retiree. "She needs votes, and she isn't going to get any retirees' votes as far as I know."
Fiorina, Wayman and two other executives involved with the acquisition, Webb McKinney and Susan Bowick, will make their case for the deal and take questions at today's session.
A second session for those retirees who could not get into today's session, including Agilent retirees, is planned for February. HP also will send retirees a videotape of the presentation.
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