Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
Subject Company: Compaq Computer Corporation
Commission File No.: 333-73454
This filing relates to a planned merger (the "Merger") between Hewlett-Packard
Company ("HP") and Compaq Computer Corporation ("Compaq") pursuant to the terms
of an Agreement and Plan of Reorganization, dated as of September 4, 2001 (the
"Merger Agreement"), by and among HP, Heloise Merger Corporation and Compaq. The
Merger Agreement is on file with the Securities and Exchange Commission as an
exhibit to the Current Report on Form 8-K, as amended, filed by Hewlett-Packard
Company on September 4, 2001, and is incorporated by reference into this filing.
The following is a message to HP employees from HP. This message is posted on
HP's internal web site.
EMPLOYEE MESSAGE
In recent days, the Hewlett-Packard board of directors met to consider the
re-nomination of Walter Hewlett as a director to the board. We'd like to take a
few minutes to explain the decision we made and how we made it -- as well as a
few issues related to that decision.
Let us start by conveying categorically that Mr. Hewlett's allegations in his
March 28th lawsuit are completely baseless and we intend to contest them
vigorously. Yesterday, we filed a motion in Delaware court to dismiss the suit.
The allegations that HP bought votes from Deutsche Bank or improperly coerced
the firm to change its votes are false. In addition, Walter Hewlett's
allegations that HP shareowners were misinformed about integration are without
foundation.
This proxy contest has been waged in the court of public opinion for many
months. There are more facts and figures about this merger in full view of
shareowners than any other merger in corporate history. After considering all of
the information at their disposal, shareowners have made their decision. It's
time we let the votes be counted and whoever gets more votes wins. That's what
real corporate democracy is all about.
Mr. Hewlett's legal action is especially regrettable because the board was
trying to put this proxy contest behind us and move forward as a unified board.
On March 19, immediately following the shareowner meeting, at Carly Fiorina's
encouragement, Sam Ginn, chairman of the board's nominating and governance
committee, met with Walter Hewlett to reach out and re-establish a constructive
working relationship. On Wednesday March 27, the nominating committee convened
all of the independent directors into executive session, including Walter
Hewlett, to continue these discussions. Based on these deliberations and
representations made by Walter Hewlett in the meetings, the HP Board unanimously
determined to re-nominate him.
Our decision to re-nominate Mr. Hewlett was based on several factors, including
special consideration for HP employees who hold Mr. Hewlett and his father's
legacy in high esteem; our desire to demonstrate our willingness to work
together with the Hewlett and Packard families to be good stewards of this proud
company; and our commitment to proving that this board not only tolerates
different views, we embrace them.
In our board deliberations on March 27, Mr. Hewlett committed to support this
company's strategy and our management team and do all he could to work for the
successful implementation of the merger if it is approved.
In those meetings, Walter Hewlett expressed no concerns nor asked any questions
about HP's conduct of the proxy contest or disclosures related to integration
planning. He said nothing at all about the fact he was filing a lawsuit against
the company the following morning. He gave no cause for concern whatsoever that
would suggest we did not all share the same objective -- to find common ground
and move forward together for the good of all who care about HP.
The board was shocked therefore when just hours after these meetings, Walter
Hewlett filed a lawsuit against the company continuing his assault on the
integrity of the HP board and management team. In essence, Walter Hewlett
continues to allege -- now in the courts -- that the board and management team
are systematically deceiving shareowners. We will not standby and let this go
unchallenged.
As a director, Walter Hewlett has every right to disagree with this merger. But
that right also carries with it the responsibility to voice his concerns openly
and honestly. Vigorous debate leads to better decisions. When the debate is over
and a decision is made, there is also a time to move on.
In a speech to the Council of Institutional Investors one week ago today, Mr.
Hewlett spoke about the importance of transparency and accountability in the
governance of
corporations. He spoke about principled actions. He spoke about democracy,
fiduciary responsibility and ethics in the boardroom.
But corporate democracy, transparency, accountability and fiduciary
responsibility are not platitudes to dress up speeches and please crowds. They
are actions to be practiced during the hard discussions that take place in the
boardroom on behalf of shareowners and they are inherently based on candor
between board members and management.
Mr. Hewlett's latest actions have again violated basic principles of trust and
his ongoing adversarial relationship with the company now undermines the board's
ability to effectively conduct business. After consulting with Columbia law
school professor John Coffee, a national corporate governance expert, on
considerations related to pending and continuing litigation and its impact on
our ability to have a collegial and cohesive board, the board unanimously
concluded that we cannot re-nominate Walter Hewlett to HP's board.
In related news, the board announced that five Compaq board members will join
the new company's board pending legal closure of the merger. They include:
Lawrence T. Babbio, Jr., vice chairman and president of Verizon Communications,
Inc.; Michael D. Capellas, chairman and chief executive officer of Compaq
Computer Corporation; Sanford M. Litvack, former vice chairman of The Walt
Disney Company; Thomas J. Perkins, general partner of Kleiner, Perkins, Caufield
& Byers; and Lucille S. Salhany, co-president and chief executive officer of
LifeFX Networks, Inc. The new board will consist of 10 independent outside
directors compared to six on HP's current board.
We're excited about the experience and insights these new directors will bring
as we take on the important work of building on this great company's legacy of
market leadership, customer service, innovation and growth by setting the pace
and being the best place to work in our industry.
FORWARD-LOOKING STATEMENTS
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.
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