Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Compaq Computer Corporation
Commission File No.: 1-9026
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 Susan D. Bowick, HP's Vice
President and Director, Corporate Human Resources, discussing the Merger.
The message is posted on HP's internal web site.
A STRONG NEW CULTURE
BOWICK DISCUSSES WORK UNDER WAY FOR THE NEW HP
SUSAN BOWICK DISCUSSED THE CHALLENGES OF CULTURAL INTEGRATION WITH EMPLOYEES
It was standing-room-only in the Palo Alto, California auditorium as employees
gathered November 28 to hear Susan Bowick, vice president of human resources,
discuss the work being done around culture for the new HP. Susan spent part of
the session outlining HP and Compaq's cultural integration planning, which she
defined as "the process of merging distinct cultures, values, norms, leadership
and people practices." In the latter part of the session, Susan answered
questions from the audience.
From the beginning, Susan acknowledged the personal pull that the topic has for
people, evident by the more than 200 people filling the room. Culture is "really
at the heart of a lot of the changes, uncertainties and the possibilities that
we have going forward," she said.
She used the metaphor of an iceberg to illustrate the huge challenge of
integrating two companies' cultures: Above the iceberg are the "tangible" things
that tend to receive the majority of the attention, issues such as product
roadmaps, fiscal year and financial systems. Below the waterline, however, lies
the "much bigger piece," Susan said, of which culture is a part.
This vast area revolves around issues such as how decisions are made, what
behaviors are the norm, what people are valued for, how the governance structure
will be set up and how a company moves through tough, uncertain times.
"Unless this piece is consciously managed and integrated into everything you do,
it can be where the Titanic would run into it," said Susan.
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HONORING THE PAST
In developing a "strong new culture," the new HP intends to honor and build on
the past, but secure the future, stated Susan. This culture must:
o be clearly defined and broadly understood;
o reflect the business strategy and brand;
o support best-in-class performance with customers, partners,
shareowners and employees;
o produce alignment, commitment and excitement;
o establish a competitive advantage; and
o be reflected in the communications and actions of core leaders.
Each employee in HP and Compaq plays an important part in the culture, added
Susan.
She has held two coffee talks with Compaq employees, she told the audience, and
each time they wanted to know what the new company's culture would be like.
There are "certain stakes in the ground that I can tell you will not change in
the new company," said Susan, "because Carly and I, as well as management teams
in both companies, feel very strongly about them."
When the Executive Council for the combined company met, they brainstormed the
values they wanted to be part of the new HP, Susan continued. These values
mapped closely to the historical values associated with the HP Way. These
constants centered around such principles as trust and respect, achievement,
integrity, teamwork, innovation and an inclusive work environment. Next month,
the new EC will continue to develop the values, which they will then link to
practices related to employees, shareowners, customers and partners, she said.
As part of the work being done to understand HP and Compaq's cultural
attributes, more than 130 focus groups have been conducted with employees and
managers across the world, she said. In addition, interviews with the
companies' senior leaders are about "three-fourths complete." The cultural
integration team -- co-led by HP's Ann Murray Allen and Compaq's Ryan
Robinson -- is also looking at a broader-based, Web survey tool for the
portal.
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COMPAQ CULTURE
In response to an employee question about Compaq's culture, Susan described it
as "candid" and "results-oriented" and an "amalgamation of people from many
different backgrounds and companies."
Like HP, she said, Compaq is a mix of multiple subcultures. A veteran of the
Tandem and DEC acquisitions, Compaq brings a lot of knowledge around "what
worked and what didn't" in those integrations, she added.
How, one employee asked, does she reconcile a "safe environment and respecting
people" with approximately 15,000 layoffs expected after the merger closes?
Acknowledging that she has "wrestled long and hard" with the issue, Susan said
that the company will not be successful if it cannot continue to make "the right
business decisions using a tough head but implementing them with a warm heart."
She reminded the audience that the layoffs will be implemented over a two-year
period after the close date. One of HP's goals will be to handle the reductions
with as much sensitivity as possible, she stressed.
Another employee asked how she thought the management style might change in the
new HP. Prefacing her remarks with "this is speculation at this point," Susan
said that Compaq has more sharply defined lines of accountability, while HP
tends to have team accountability.
"I think we'll end up with more of a balanced scorecard, or blended approach,"
she said, with more of a structure around governance, goals and metrics. HP will
bring its "globalness" to how teams operate, she said, pointing out that
Compaq's teams tend to be more site-based than HP's global, far-flung work
groups.
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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 any projections of earnings, revenues,
synergies, accretion or other financial items; any statements of the plans,
strategies, and objectives of management for future operations, including the
execution of integration and restructuring plans and the anticipated timing
of filings, approvals and closings relating to the Compaq transaction or
other planned acquisitions; any statements concerning proposed new products,
services, developments or industry rankings; any statements regarding future
economic conditions or performance; any statements of belief and any
statements of assumptions underlying any of the foregoing. The risks,
uncertainties and assumptions referred to above include 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 Compaq transaction or other planned
acquisitions and the challenges of achieving anticipated synergies; the
possibility that the Compaq transaction 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 Compaq transaction 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
the annual report on Form 10-K for the year ended Oct. 31, 2000, and
subsequently filed reports. 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 November 15, 2001, HP filed a Registration Statement with the SEC
containing a preliminary joint proxy statement/prospectus regarding the
Merger. Investors and security holders of HP and Compaq are urged to read
the preliminary joint proxy statement/prospectus filed with the SEC on
November 15, 2001 and the definitive joint proxy statement/prospectus when it
becomes available 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
will be sent to the security holders of HP and Compaq seeking their approval
of the proposed transaction. The preliminary joint proxy
statement/prospectus filed with the SEC on November 15, 2001, 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. Investors and security holders are urged to
read the definitive joint proxy statement/prospectus and the other relevant
materials when they become available before making any voting or investment
decision with respect to the Merger.
HP, Carleton S. Fiorina, HP's Chairman of the Board and Chief Executive
Officer, Robert P. Wayman, HP's Executive Vice President, Finance and
Administration and Chief Financial Officer, and certain of HP's other
executive officers and directors may be deemed to be participants in the
solicitation of proxies from the stockholders of HP and Compaq in favor of
the Merger. The other executive officers and directors of HP who may be
participants in the solicitation of proxies in connection with the Merger
have not been determined as of the date of this filing. A description of the
interests of Ms. Fiorina, Mr. Wayman and HP's other executive officers and
directors in HP is set forth in the proxy statement for HP's 2001 Annual
Meeting of Stockholders, which was filed with the SEC on January 25, 2001.
Investors and security holders may obtain more detailed information regarding
the direct and indirect interests of Ms. Fiorina, Mr. Wayman and HP's other
executive officers and directors in the Merger by reading the preliminary
joint proxy statement/prospectus filed with the SEC on November 15, 2001 and
the definitive joint proxy statement/prospectus when it becomes available.
Compaq and Michael D. Capellas, Compaq's Chairman and Chief Executive
Officer, and certain of Compaq's other executive officers and directors may
be deemed to be participants in the solicitation of proxies from the
stockholders of Compaq and HP in favor of the Merger. The other executive
officers and directors of Compaq who may be participants in the solicitation
of proxies in connection with the Merger have not been determined as of the
date of this filing. A description of the interests of Mr. Capellas and
Compaq's other executive officers and directors in Compaq is set forth in the
proxy statement for Compaq's 2001 Annual Meeting of Stockholders, which was
filed with the SEC on March 12, 2001. Investors and security holders may
obtain more detailed information regarding the direct and indirect interests
of Mr. Capellas and Compaq's other executive officers and directors in the
Merger by reading the preliminary joint proxy statement/prospectus filed with
the SEC on November 15, 2001 and the definitive joint proxy
statement/prospectus when it becomes available.
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