If Hewlett Packard Co. and Compaq Computer Corp. merge, therell be little doubt about whos in charge of the combined company, according to a Securities and Exchange Commission filing made yesterday.
Current H-P executives will head three of four divisions in the combined company. The Enterprise Systems Group, which would encompass servers, storage and related software, will be headed by Compaqs Peter Blackmore, currently executive vice president of Worldwide Sales Service. The combined companys Imaging and Printing, Personal Systems and Services groups would be run by current senior H-P executives Vyomesh Joshi, Duane Zitzner and Ann Livermore, respectively.
The 117-page S-4 filing also outlines hefty severance protections for Compaq and H-Ps top executives if they lose their jobs in the new company. And among the risk factors of the merger, the filing mentions and describes terrorism. The filing also offers a meeting by meeting, call by call description of how the merger came about. According to the filing, it started with an initial conversation between HP Chairman and CEO Carly Fiorina and Compaq Chairman and CEO Michael Capellas on June 22 about Compaq licensing the HP-UX operating systems. The notion of a broader relationship was broached at this meeting, the filing said.
Five days later, Capellas notified the Compaq board that merger talks were being explored. The filing goes on to describe various meetings and telephone calls concerning the formulation of a merger until it was publicly announced Sept. 3.
The document also details at great length senior severance and retention programs as well as employment contracts currently under negotiation. For instance, if Capellas was fired from the combined company within a year, he would a receive cash severance of $14.4 million and forgiveness on a loan -- whose balance is roughly $3.3 million -- used to buy Compaq stock, the filing says.
However, the filing also said it was anticipated Capellas, Fiorina and other top executives will sign new employment agreements in the combined company.
Most of the document discloses financial considerations of the merger, including how the stock exchange calculation was reached. For every Compaq share, .6325 shares of H-P will be awarded. The filing also projects earnings per share for the next several years.
If either side ends the merger agreement, they are obligated to pay the other $675 million within two days of the termination, the filing says. Also, H-P established a wholly-owned subsidiary called Heloise Merger Corp. to "solely effect the merger." Heloise will not conduct any business, the filing says.