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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: MeDroogies who wrote (96464)	3/21/2002 9:33:51 PM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

HP win would be tough to reverse CHALLENGE WOULD MEAN COURT FIGHT Posted on Thu, Mar. 21, 2002 HP win would be tough to reverse CHALLENGE WOULD MEAN COURT FIGHT By Tracy Seipel Mercury News Walter Hewlett will have a tough time blocking Hewlett-Packard's purchase of Compaq Computer if independent vote counters confirm HP's claim that it won a ``slim but sufficient'' majority of shareholder votes for the deal. Challenging the ruling of the vote-counting firm, IVS Associates, would very likely mean going to court. And corporate election experts say the dissident HP director stands little chance of finding enough problems with the vote to convince a judge to overturn it. Hewlett would have to show that HP made misleading or false statements to shareholders during the proxy battle that were so substantial they tainted the election. Even then, said Stanford University law Professor Bernard Black, ``the question would be, `Why didn't you come out to complain before the vote rather than after?' '' So far, Hewlett isn't threatening any legal challenges. Following Tuesday's shareholder vote on the contentious deal, he said the election was ``too close to call.'' Hewlett said he was ``optimistic'' that the official tally by IVS will show that he won enough ``no'' votes from HP shareholders to defeat the merger. Privately, Hewlett's camp says the difference between the two sides is one-half of one percentage point of votes cast -- or less than 10 million votes. HP officials say the margin of victory is wider but decline to be more specific. Wednesday, HP lawyer Larry Sonsini and Hewlett lawyer Stephen Neal declined to comment on the vote in advance of the official certification by IVS. Because shareholders can change their vote repeatedly, IVS will examine all the proxy cards they have submitted to make sure only the latest one is counted and that other important details, such as signatures, are in order. The firm also will tabulate the bigger votes from banks, brokerage firms and pension and mutual funds. When IVS has a preliminary total, it will contact both sides to review its work and allow them to challenge any of the votes. But a serious challenge to a large number of votes is difficult to mount. ``Everybody keeps comparing this to the Florida election. It's not like that,'' said Tom Ball, senior managing director of Morrow & Co., referring to the 2000 Bush-Gore presidential cliffhanger. Morrow, a New York proxy solicitation firm, isn't involved in the HP-Hewlett proxy fight. Corporate elections use a much more regimented system than government ones. ``You're not dealing with different polling places and gathering the votes and interpreting whether a chad was hanging or not. It's a much more straightforward process,'' Ball said. The votes that could sway the outcome are the large blocs cast by institutional shareholders, such as pension funds. An error recording, say, 10 million votes from a single large fund could turn the election. But such errors are unlikely, experts say, because those bloc votes are screened in advance by a processing firm that collects the votes of shares held by institutions and transfers them to each side's proxy solicitors. When it comes to votes cast by individual shareholders, there typically aren't enough errors and discrepancies in individual proxies to close the gap, Ball said. Ball noted that the IVS counting process only deals with the physical form of the proxies -- signatures, dates and markings. ``That is their charge: to look at proxies and decide whether they're valid or invalid on their face, just looking at them,'' he said. If Hewlett has other complaints, such as unfair election practices or challenges over voter eligibility, he almost certainly will have to go to court, Ball said. Ken Scott, professor emeritus of law and business at Stanford Law School, agreed with Black that Hewlett's best chance to overturn the election would be by showing that HP's proxy solicitation materials were somehow misleading and votes were therefore invalid.