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Members of HP Board's Compensation Committee Issue Letter to Walter Hewlett
PALO ALTO, Calif., Feb. 28, 2002
The following letter was sent today to Walter Hewlett from Phil Condit and Sam Ginn, his fellow members of HP's Board of Director's Compensation Committee. For more information on Hewlett-Packard Company's (NYSE:HWP) merger with Compaq, visit http://www.VotetheHPway.com.
February 28, 2002
Walter B. Hewlett
As your fellow members of the Compensation Committee of the HP Board of Directors, we are stunned by your blatant mischaracterizations of the actions of our Committee.
As you know Walter, the three of us all unanimously agreed at our last Compensation Committee meeting that the executive employment terms previously discussed (including discussions at our prior meetings in September) were specifically rejected and that these terms would not serve as benchmark or minimum terms for any future employment arrangements following the merger. We all agreed that we needed to do a better job of aligning management compensation with shareowner interests. We concluded that it would be in the best interests of shareowners that the Board of Directors of the combined HP /Compaq have responsibility for determining appropriate compensation terms for the executive officers of the combined company. To that end, we have requested new market data and input from independent compensation consultants.
Your recent SEC filings and public announcements assert that Section 5.12(c) of the Merger Agreement obligates HP to make the previously discussed terms a benchmark in future negotiations. As you well know, Section 8.5 of the Merger Agreement clearly states that Section 5.12(c) does not give rise to any binding obligation and, as such, did not, and does not, in any way obligate HP to consider, negotiate, offer or agree to any specific terms or consider any terms as benchmarks for future terms.
The Compensation Committee and the Board have the final word on all executive compensation matters, and as you know, the Compensation Committee has overtly rejected the executive employment terms previously discussed. As such, they are irrelevant. Until the Compensation Committee and the Board approve executive employment terms, no agreements or arrangements exist.
You have deliberately made misleading statements to the public. You imply there is an agreement or understanding regarding terms of future executive employment agreements when you know there is none. You assert that HP is under an obligation to negotiate employment agreements when you know it is not. At a time when shareowners should expect transparent and reliable disclosure from public companies, your behavior is extremely suspect and unacceptable.
You know that in order for our Committee and the Board to function properly, we must freely debate proposed strategies and ideas in our meetings. Yet you have put your personal agenda in front of the interests of HP and our shareowners. We are saddened that you have mischaracterized the good work of our Committee.
Very truly yours,
(Original Signed By)
Hewlett-Packard Company -- a leading global provider of computing and imaging solutions and services -- is focused on making technology and its benefits accessible to all. HP had total revenue of $45.2 billion in its 2001 fiscal year. Information about HP and its products can be found on the World Wide Web at http://www.hp.com.
This document contains forward-looking statements that involve risks, uncertainties and assumptions. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, the results of HP and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements.
All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including predictions regarding the outcome and certification of the vote on the merger or the closing of the merger; statements regarding future improvement of HP generally or specifically its profitability, earnings, revenues, synergies, accretion or other financial items; statements about the plans, strategies, and objectives of management for future operations, including the execution of integration and restructuring plans; any statements concerning proposed new products, services, developments or industry rankings; statements regarding future economic conditions or performance; statements of belief; and statements of assumptions underlying any of the foregoing.
The risks, uncertainties and assumptions referred to above include the actual certified results of the vote on the proposal to issue shares of HP common stock in connection with the merger; the ability of HP to retain and motivate key employees; the timely development, production and acceptance of products and services and their feature sets; the challenge of managing asset levels, including inventory; the flow of products into third-party distribution channels; the difficulty of keeping expense growth at modest levels while increasing revenues; the challenges of integration and restructuring associated with the merger or other planned acquisitions and the challenges of achieving anticipated synergies; the possibility that the merger or other planned acquisitions may not close or that HP, Compaq or other parties to planned acquisitions may be required to modify some aspects of the acquisition transactions in order to obtain regulatory approvals; the assumption of maintaining revenues on a combined company basis following the close of the merger or other planned acquisitions; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to HP's annual report on Form 10-K, as amended on January 30, 2002, for the fiscal year ended October 31, 2001 and HP's registration statement on Form S-4 filed on February 5, 2002.
HP assumes no obligation and does not intend to update these forward-looking statements.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
On February 5, 2002, HP filed a registration statement with the SEC containing a definitive joint proxy statement/prospectus regarding the merger. Investors and security holders of HP and Compaq are urged to read the definitive joint proxy statement/prospectus filed with the SEC on February 5, 2002 and any other relevant materials filed by HP or Compaq with the SEC because they contain, or will contain, important information about HP, Compaq and the merger. The definitive joint proxy statement/prospectus and other relevant materials (when they become available), and any other documents filed by HP or Compaq with the SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by HP by contacting HP Investor Relations, 3000 Hanover Street, Palo Alto, California 94304, 650-857-1501. Investors and security holders may obtain free copies of the documents filed with the SEC by Compaq by contacting Compaq Investor Relations, P.O. Box 692000, Houston, Texas 77269-2000, 800-433-2391.