HP asks judge to clear CEO Fiorina, CFO

Company lawyers seek `public vindication' of actions in proxy fight

April 30, 2002|By BLOOMBERG NEWS

WILMINGTON, Del. - Hewlett-Packard Co. asked a judge to absolve Chief Executive Officer Carleton S. "Carly" Fiorina and Chief Financial Officer Robert P. Wayman of wrongdoing in gathering votes for an $18.3 billion bid for Compaq Computer Corp.

Former Director Walter B. Hewlett, who opposes the acquisition, sued the company March 28, saying executives coerced Deutsche Bank AG to switch at least 17 million votes in favor of the purchase. He also claims Fiorina and her deputies misled investors about the potential benefits of the buyout.

In a post-trial brief sent over the weekend to Delaware Chancery Judge William Chandler III, lawyers for Hewlett-Packard said cost savings from the combination are targeted to be as much as $4 billion, rather than the $2.5 billion Fiorina had announced before the shareholder vote March 19.

"We ask for a public vindication by the chancellor of the integrity and moral rectitude" of Fiorina and Wayman, lawyers wrote in the 43-page brief.

Shareholders approved the Compaq acquisition by a 2.8 percent, 45-million-vote margin.

Chandler presided over a three-day, nonjury trial on Hewlett's claims last week. He may release his decision within a few days.

Hewlett's spokesmen weren't available to comment, and his lawyers haven't released their post-trial summary. He is the son of company co-founder William Hewlett

Fiorina testified during the trial that in a last-minute call before the vote, she told Deutsche Bank its support was "obviously of great importance to Hewlett-Packard and of great importance to our ongoing relationship."

Lawyers for Hewlett suggested the phrase "ongoing relationship" constituted coercion. Fiorina testified that the language was routine in such calls.

In the brief, Hewlett-Packard's lawyers say a five-member Deutsche Bank proxy group agreed to support the purchase after listening to arguments from both Hewlett and company executives. They "felt that the arguments that were made by HP management showed a better vision and were a better alternative," the lawyers said.

"Can one really conclude that the decision to support Fiorina and Wayman instead of Hewlett was so preposterous as to smack of fraud?" company lawyers asked.

Deutsche Bank officials have said they made their decision independently.

Shares of Hewlett-Packard rose a penny to $16.97 yesterday. Shares of Houston-based Compaq gained 15 cents to $10.30.

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