>Ms. Fiorina said that speaking of an "ongoing relationship"
>was a phrase she routinely used in speaking to investment
>bankers.
>
>When asked whether she intended to link the Deutsche Bank
>vote to conducting business with Hewlett-Packard in the
>future, Ms. Fiorina replied: "Absolutely not. And I don't
>think it was interpreted that way."

OK, 'it's very important to our ongoing relationship that you vote as I
direct' is not a veiled threat.  What DOES it mean then?  I sure hope the
friendly lawyer gets a chance to ask, as I've been wondering for quite a
while what many of Carly's 'routine phrases' mean; this one I understood,
but incorrectly?

While I'm at this, what's the point of
"the ceo of a publicly traded corporation" instead of "me"
in the meaningless observation "you're accusing !who of lying"?

Tracy Pierce

> -----Original Message-----
> From: Tom Brandt [mailto:[log in to unmask]]
> Sent: Friday, April 26, 2002 4:53 AM
> To: [log in to unmask]
> Subject: NYTimes: Fiorina Scoffs at Accusation of Coercion
>
>
> Hewlett's Chief Scoffs at Accusation of Coercion
>
>
> April 26, 2002
>
>
> By STEVE LOHR with ANDREW ROSS SORKIN
>
>
> WILMINGTON, Del., April 25 - The chief executive of
> Hewlett-Packard, Carleton S. Fiorina, returned to the
> witness stand here today to explain what she meant when she
> told a major institutional investor that a vote in favor of
> the company's merger with Compaq Computer was "of great
> importance to our ongoing relationship."
>
>
> Walter B. Hewlett, a dissident director who is trying to
> overturn a proxy vote in favor of the merger, introduced
> Ms. Fiorina's statement in an effort to show that she was
> trying to influence the votes of the big investor, Deutsche
> Bank, by threatening its banking business with
> Hewlett-Packard.
>
>
> Recorded conversations between the arms of Deutsche Bank
> about the Hewlett vote, also introduced into evidence
> today, have set off a preliminary investigation into the
> bank by the Securities and Exchange Commission, people
> close to the inquiry said today. The commission was already
> looking at Hewlett-Packard's activities in trying to
> persuade investment banks to influence their asset managers
> to vote in favor of the deal.
>
>
> At a time when federal and state regulators are
> increasingly investigating the efficacy of "Chinese walls,"
> which are supposed to keep a firm's investment analysis
> independent from its deal-seeking investment bankers, the
> Deutsche Bank evidence raises questions about conflicts.
>
>
> Ms. Fiorina's testimony, near the end of a three-day trial
> in a Delaware court, came after lawyers for Mr. Hewlett
> introduced the transcript of a conference call among
> Deutsche Bank representatives, Ms. Fiorina and Robert P.
> Wayman, the chief financial officer of Hewlett-Packard, on
> March 19 - the day of the shareholder vote.
>
>
> The asset management side of Deutsche Bank held millions of
> proxies that it could vote for or against the merger. But
> the banking side of Deutsche Bank did business with
> Hewlett-Packard as a large corporate client, including
> working to help the company win the proxy fight against Mr.
> Hewlett.
>
>
> After a presentation on the merits of the merger of Hewlett
> and Compaq, Ms. Fiorina concluded the call by saying the
> vote on the deal was "of great importance to our ongoing
> relationship."
>
>
> She added, "We would very much like to have your support
> here."
>
>
> A Hewlett-Packard lawyer, Boris Feldman, later told the
> court: "So this is what the bribery charge comes down to
> now: a comment made at the end of a conference call."
>
>
> Ms. Fiorina said that speaking of an "ongoing relationship"
> was a phrase she routinely used in speaking to investment
> bankers.
>
>
> When asked whether she intended to link the Deutsche Bank
> vote to conducting business with Hewlett-Packard in the
> future, Ms. Fiorina replied: "Absolutely not. And I don't
> think it was interpreted that way."
>
>
> But according to an internal call recorded after Ms.
> Fiorina's call on March 19 and introduced into evidence
> today, Dean Barr, chief investment officer for Deutsche
> Bank Asset Management in New York, said to the proxy team
> that controlled Deutsche's vote on its shares: "You may or
> may not be aware we have an enormous banking relationship
> with Hewlett-Packard. Obviously if you don't want to change
> your vote, that's your call. I would suggest to you, and
> I'm not trying to put undue pressure, but make sure that
> you have a very strong documented rationale for why you
> voted the way you did as it relates to this merger."
>
>
> According to the court transcript, Klaus Kaldemorgen,
> another executive on the call, replied to Mr. Barr: "I
> don't want to be smarter than your people in New York, so
> if the majority of you come to the conclusion that it's
> better for our customers to vote in favor, I tried to
> change our vote here, but I have to see what I can
> overcome. All the technical problems. I have to react very
> quickly."
>
>
> Deutsche Bank declined to comment on the S.E.C. inquiry.
>
>
>
> In a statement, the bank said that: "Deutsche Asset
> Management's proxy committee was not influenced by any
> banking relationships with Hewlett-Packard. The committee
> cast its votes in favor of the merger solely in the
> interest of Deutsche Asset Management's clients, taking
> into account the presentations made on the morning of the
> merger vote by Walter Hewlett and by Hewlett-Packard
> management on the advantages and disadvantages to
> shareholders of the proposed merger."
>
>
> Mr. Hewlett is seeking to have the shareholder vote on the
> Compaq merger - which Hewlett-Packard apparently won by a
> slender margin - tossed out by court order. He has
> contended that the company's management improperly withheld
> important information - damaging to the promerger argument
> - from shareholders and that the management bribed or
> coerced a large institutional investor to switch its vote
> in favor of the deal.
>
>
> The vote-buying allegation is no longer the featured charge
> in Mr. Hewlett's suit. The Deutsche Bank shares switched to
> vote in favor of the deal, 17 million shares, would not be
> enough to change the outcome of the vote. Last week, the
> independent inspectors tallying the results of the proxy
> contest said Hewlett-Packard had won by about 45 million
> shares, based on their preliminary count.
>
>
> Indeed, the Deutsche Bank evidence at the trial may prove a
> greater problem for the bank than for the computer company.
>
>
>
> For Hewlett-Packard, the Deutsche Bank evidence was
> intended by Mr. Hewlett's side to depict a management
> willing to bend the rules to win. Mr. Hewlett's lawyer,
> Stephen C. Neal, has called the evidence "circumstantial
> but powerful."
>
>
> Later in the day, Philip Condit, the chairman of Boeing and
> a director of Hewlett-Packard, gave a spirited defense of
> the role played by the Hewlett-Packard board in supporting
> the planned purchase of Compaq Computer. He portrayed board
> deliberations as lively, candid and well informed.
>
>
> Mr. Condit's testimony at the end of the three-day trial in
> a Delaware court directly refuted the assertion made by a
> lawyer representing Mr. Hewlett that the Hewlett-Packard
> board had "abdicated its responsibilities" and passively
> approved the plans of the company's management team.
>
>
> "I've never participated on a board that was more fully
> informed," said Mr. Condit, a longtime executive who
> personally oversaw Boeing's merger with McDonnell Douglas.
> He called the information management supplied to the
> Hewlett-Packard board "the most complete data I've seen
> going into a merger."
>
>
> Mr. Condit was essentially a character witness not only for
> the management team, led by Ms. Fiorina, but also for the
> integrity of the governance process at Hewlett-Packard.
> Those considerations of management's credibility and
> integrity will be crucial in the deliberations of
> Chancellor William B. Chandler III.
>
>
> Mr. Hewlett's main contention - and best hope for having
> the vote tossed out, legal experts say - is the allegation
> that Hewlett-Packard consistently withheld from
> shareholders information showing that the merger planning
> was going poorly.
>
>
> The information, presented at the trial, came mainly from
> the teams inside the two companies, whose reports appeared
> to be far more pessimistic than the company's upbeat public
> statements.
>
>
> The executives of Hewlett-Packard and Compaq Computer have
> replied in court that the reports were planning documents
> that they were working on in the individual business
> groups, and not forecasts for the company as a whole. The
> business groups, they added, had incomplete information
> that did not include large cost savings from areas like
> joint procurement of supplies and services.
>
>
> Jeffrey Clarke, Compaq's chief financial officer, testified
> today that one broad-based internal estimate showed
> possible cost savings of nearly $4 billion from the merger
> instead of the publicly stated $2.5 billion. There was
> discussion of disclosing the larger number, but the
> management chose not to.
>
>
> "Ms. Fiorina specifically wanted to be conservative," Mr.
> Clarke said.
>
>
> And Mr. Condit testified that as long as the management
> remained confident it could reach its overall financial
> objectives, there was no need to bring the business-group
> reports to the board or disclose them to shareholders. He
> acknowledged that he had never seen the business-group
> reports.
>
>
> "Those reports are part of the process of getting to the
> final numbers," Mr. Condit said. "Management has to
> exercise some judgment."
>
>
> http://www.nytimes.com/2002/04/26/technology/26BANK.html?ex=10
20821938&ei=1&en=12554077471691e3


Copyright 2002 The New York Times Company

--------------------------------
Tom Brandt
Northtech Systems, Inc.
313 N. 1st Street
Ann Arbor, MI 48103
http://www.northtech.com/

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