H-P Won't Renominate Walter Hewlett to Board

Directors cite his increasingly adversarial role and last week's lawsuit.

Author:: Kristen French
Publish date:: Apr 1, 2002 11:03 AM EST

Hewlett-Packard's

(HWP)

board said Monday that it won't renominate director Walter Hewlett, who has fought the company's planned acquisition of

Compaq

(CPQ)

and last week filed a lawsuit to block it.

In a press release, the board cited his increasingly "adversarial relationship" with the company, and called the lawsuit he filed against last Thursday "spurious."

That

lawsuit alleged that H-P executives bought favorable votes on a planned merger with

Compaq

(CPQ)

from Deutsche Asset Management. H-P's 11th-largest institutional shareholder, Deutsche initially voted all of its shares against the pairing, but later changed that vote on a large portion of its shares. There was reportedly some concern that Deutsche Bank's participation in a $4 billion syndicate line of credit might have influenced the change of heart.

Hewlett, of the founding Hewlett family, has vociferously opposed an acquisition of Compaq since the deal was announced in the fall of last year.

The H-P shareholder vote is close, and a final tally won't be available for weeks. Hewlett-Packard says that

preliminary estimates show it won that vote, but Walter Hewlett says it was too close to call, with a margin of victory of less than 1%. Compaq shareholders approved the merger 9 to 1 on April 20.

Commenting on Hewlett's complaints, the board wrote, "The allegations that HP bought votes from Deutsche Bank or improperly coerced it to change its votes are false. In addition, Walter Hewlett's allegations that HP shareowners were misinformed about integration are without basis. There is more information about this merger in full view of shareowners than for any other merger in corporate history."

Sam Ginn, chairman of the board's nominating and governance committee, said that the board planned to renominate Hewlett until he filed his lawsuit.

"His recent actions have again violated basic principles of trust, and his ongoing adversarial relationship with the company undermines the board's ability to effectively conduct business," Ginn said in a statement.

Shares of both Hewlett-Packard and Compaq were falling in early trading. Hewlett shares were falling 1.39% to $17.69 while Compaq shares were losing 2.11% to $10.23.