=DJ H-P, Shareholders Hope Hewlett Keeps A Civil Tongue >HWP
By Peter Loftus Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Walter Hewlett says his involvement in Hewlett-Packard Co. (HWP) won't end with his unsuccessful campaign to block H-P's acquisition of Compaq Computer Corp. (CPQ).
But H-P and some of its shareholders hope he'll stay out of the way as the company tries to digest the $18 billion Compaq purchase, which is slated to close next week. They don't want the bad blood between Hewlett and H-P Chief Executive Carly Fiorina to complicate what's already a difficult task.
Hewlett, son of H-P founder William Hewlett, threw in the towel late Tuesday after a Delaware judge ruled against his challenge of the merger. In a written statement, he said he would "do everything possible to support the successful implementation of H-P's acquisition of Compaq..."
In a sign he won't completely go away, however, he added "I represent two major stockholders and I will continue to monitor the company's performance to ensure that it acts in the best interests of all stockholders." Hewlett is chairman of the William & Flora Hewlett Foundation and trustee of the William R. Hewlett Revocable Trust.
So will Hewlett speak out if he thinks the merger is going badly? His spokesman, Todd Glass, declined to comment beyond Tuesday's statement, except to say Hewlett would continue to be a significant shareholder.
Marty Shagrin, an analyst with Victory Capital Management, hopes Hewlett will keep a civil tongue. Shagrin sympathized with Hewlett during his campaign to block the merger, and Victory voted its H-P shares against the deal. "I commend him," he said of Hewlett.
But now that the deal is going through, Shagrin hopes Hewlett won't throw a wrench into the merger.
"We're more interested that the (company) is run effectively," Shagrin said. "To the extent that strained relationships would get in the way of that, then we're less interested in that."
Asked whether H-P will welcome Hewlett's input, company spokeswoman Rebecca Robboy declined to comment.
Hewlett will have less influence following the merger. He was left off the slate of H-P directors that was approved by shareholders last week, leaving the families of H-P's founders without direct representation on the board.
And the collective ownership stake held by the founders' families and their foundations will shrink from nearly 18% to closer to 10% as a result of the acquisition.
This raises the question of whether the founders' families will seek to regain a board seat. Representatives the family members and their foundations either declined to comment or couldn't be reached.
As for whether H-P would be receptive to the families' representation on the board, spokeswoman Robboy said: "The board has a responsibility to look after the interests of all shareowners."
Although their collective ownership stake will fall following the merger, the families might have an easier time regaining a board seat at H-P than at most U.S. companies. That's because H-P's by-laws allow "cumulative voting" for directors, according to Pat McGurn, vice president at Institutional Shareholder Services, a proxy advisory firm.
In cumulative voting, each shareholder can cast all of his or her votes for a single candidate. For example, if 10 board seats are up for election, a shareholder could cast all 10 votes for one candidate, McGurn said, as opposed to allocating one vote for each open seat. Most companies don't allow shareholders to throw all their votes behind a single candidate, McGurn said.
Cumulative voting makes it easier to elect dissident directors. In the case of H-P, if the founders' families agreed on a single candidate, they could probably exploit cumulative voting to regain a board seat, McGurn said.
But the families apparently didn't pursue that strategy at last month's annual meeting. They would probably have to wait until next year's meeting to do so.
McGurn believes large shareholders like the founders' families should have board representation at H-P.
"I think what shareholders like to see generally is the pressure that comes into the boardroom via having a large shareholder, or group of them, being represented in the boardroom," he said.
That pressure was certainly on display during Hewlett's six-month campaign to derail the merger. -By Peter Loftus; Dow Jones Newswires; 201-938-5267 peter.loftus@dowjones.com
(END) DOW JONES NEWS 05-01-02
04:44 PM |
