April 11, 2002 1:50 PM PDT

HP exec defends proxy campaign

update Hewlett-Packard Chief Financial Officer Bob Wayman sent a memo to employees Thursday explicitly denying the charge that HP improperly used company assets or coerced shareholders to win votes for its merger with Compaq Computer.

See special coverage: A Fight to the Finish "Frankly, I find these allegations both insulting and infuriating," Wayman said in the memo, which HP released to the media.

The memo comes a day after a sensitive voice mail to Wayman from CEO Carly Fiorina was made public. In that message, Fiorina expressed concern that two key shareholders were turning against the deal just two days before HP shareholders were scheduled to vote.

In the voice mail, Fiorina said of Deutsche Bank and Northern Trust--the two shareholders in question--that HP might "have to do something extraordinary for those two to bring them over the line."

Wayman also warned employees that HP will not tolerate leaks such as the voice mail and others that have taken place in recent weeks.

"Not only do I feel personally violated, but it is illegal and damaging to the company and your fellow employees," Wayman said in the memo. "We are vigorously investigating this breach along with others that have occurred in recent weeks and we intend to prosecute these matters to the fullest extent of HP policy and applicable law."

The voice mail could figure prominently in a lawsuit brought by merger opponent Walter Hewlett, who is seeking to have the results of HP's shareholder vote overturned. That suit, brought in Delaware Chancery Court, is slated to go to trial April 23.

However, Wayman defended HP's conduct in the final days leading up to the vote.

"We spent countless hours presenting the business value of our position up until every vote was cast, but we never, ever crossed any ethical or legal lines," Wayman said. "The only good news about participating in a trial is that the facts will come out, the truth will be heard and our honor will be restored."

Wayman also used the memo to reiterate support for Fiorina, who has come under fire from some employees and from Hewlett, who has called for her ouster.

"I am convinced there is no harder working CEO at any company, anywhere. Carly works courageously and tirelessly on behalf of this company and all of its constituents," Wayman said. "While many of you don't have the opportunity to see it up close, I do, every day. It's time that we embrace this company's future and give our leadership our full support."

Technology Business Research analyst Bob Sutherland said the voice mail incident raises questions about HP's internal security procedures.

"Perhaps there are other voice mails, e-mails or internal records that have been secured and may be handed over to the press in a similar fashion," Sutherland said. "Additionally, the soap opera-like atmosphere of the merger has us wondering if any employee will ultimately be held responsible for this action and subsequently fired."

An HP representative would not say if disciplinary action has been taken against any employees but said HP's internal security workers are being joined by outside consultants to help determine the source of the leak.

 

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