HP Board Balks at Hewlett Renomination
After deciding just last week to once again renominate board member Walter Hewlett to its board of directors, Hewlett-Packard Co. announced early Monday that it has withdrawn his nomination.
In a statement, HP cited the "adversarial relationship" between Hewlett and the board over the companys proposed $20 billion merger with Compaq Computer Corp.
Hewlett, the son of one of the companys co-founders, led a bitter proxy fight against the deal, a battle that became an increasingly personal struggle between him and Carly Fiorina, the companys chairman and CEO.
Hewlett escalated the fight last week when he filed suit against the Palo Alto, Calif., company, claiming executives improperly pressured Deutsche Bank, HPs 11th largest institutional shareholder, into voting for the deal. Hewlett claimed the banks vote may have swung the shareholder vote in favor of the merger.
HP executives called Hewletts claims "baseless."
"The boards decision not to nominate Walter Hewlett is based on his ongoing adversarial relationship with the company, as evidenced by his recent litigation against HP, as well as concerns about his lack of candor and issues of trust," HP said in the statement released Monday.
Sam Ginn, chairman of the boards nominating and governance committee and the retired chairman of Vodafone AirTouch Plc., said he met with Hewlett immediately after the March 19 shareholder vote in hopes of re-establishing a working relationship with Hewlett.
He said the board members and the nomination committee met with Hewlett again March 27, after which the board then decided unanimously to renominate him.
"My fellow board members and I were therefore shocked when just hours later Walter Hewlett filed a spurious lawsuit against the company, continuing his assault on the integrity of the HP board and management team," Ginn said in a prepared statement. "His recent actions have again violated basic principles of trust, and his ongoing adversarial relationship with the company undermines the boards ability to effectively conduct business."
In his lawsuit, Hewlett said that Deutsche Bank was "led to understand [by HP executives] that if it did not switch votes in favor of the proposed merger, its future dealings with HP would be jeopardized."
As a result, the suit claims, the bank changed its vote March 19, voting 17 million of its 25 million shares in support of the merger.
Just 30 minutes after the polls closed March 19, Fiorina said a preliminary review of the proxy votes indicated that HP had received the necessary votes to go forward with the acquisition of Houston-based Compaq.
However, Hewlett at the time said the vote was too close to call. The official tally make take several more weeks to complete, but HP and Compaq already are moving forward with the merger, increasing the number of employees on the integration team fro 900 to 1,200, creating a "launch team" to prepare for life after the merger and informing employees that HP will detail how jobs will be filled in the new company.