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HP shareholder says no to Compaq pact

Cliff Saran
Money management firm Brandes Investment Partners LP plans to vote against the proposed acquisition of Compaq.

Brandes said it would favour an HP strategy concentrating on enterprise products where the company's lucrative printing and imaging business was spun off. The company controls 1.27% of HP stock, which makes it HP's 11th largest institutional investor.

HP will hold a shareholder vote on the proposed deal on 19 March. While the board of HP stands by the acquisition's merits, a number of parties have objected to the deal. Most notably, members of the Hewlett and Packard families have engaged in an aggressive media campaign against the deal. Family members and related organisations control close to 18% of HP stock.

Walter Hewlett, son of one of HP's founders and a board member, has been the most vocal opponent of the acquisition. On 26 February, Hewlett filed another document opposing the merger to the US Securities and Exchange Commission (SEC).

In his latest document, Hewlett alleged that HP is trying to "hide the ball" with regard to the compensation packages that Carly Fiorina, chairman and chief executive of HP, and Michael Capellas, chairman and chief executive of Compaq, would receive upon completing the deal.

Hewlett claims the companies considered rewarding Fiorina and Capellas with more than $117m (£82m) in compensation packages, but failed to disclose those potential post-acquisition costs and repeatedly changed its compensation-related disclosures about the deal. Under the proposal, including salaries, bonuses and stock options over two years, Fiorina would have received about $70m (£49.4m) and Capellas would have received more than $47m (£33m).

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