HP CEO Carly Fiorina announced shortly after the meeting that a majority of shareholders had approved the merger in a preliminary, unofficial tally. HP's support came primarily from banks, pension funds and other institutional investors that control a majority of outstanding shares and have pledged support over the past several weeks.
But institutional approval of the $20 billion deal has done little to quiet the ranks of upset workers, retirees and other individual shareholders who packed the Flint Center in Cupertino, Calif., filling hundreds upon hundreds of rows of seats--some even perching in the balcony seats. Shareholders flew from as far as France to attend Tuesday's meeting and speak out against the merger--an indication of how passionate many voters felt and how much work could lie ahead if the merger goes through.
A chorus of angry investors booed Fiorina and yelled "No!" when she said most employees were in favor of the merger. By contrast, board member Walter Hewlett, son of HP co-founder William Hewlett, received standing ovations before and after a five-minute speech reiterating his opposition to the merger.
The jam-packed event seemed especially popular with HP retirees and other former workers, many of whom have been squarely in Hewlett's opposition camp. They have insisted that HP should remain independent, competing against archrivals Dell Computer and IBM as a standalone company without getting bogged down by trying to absorb Compaq's contrasting culture and overlapping product lines.
Shareholders who hadn't already mailed in their proxy statements could vote between 8:40 a.m. PST and 10:30 a.m. PST at the Flint Center. But many attendees showed up several hours earlier--long before doors opened on schedule at 6:30 a.m. Many shareholders said this was their first shareholder event, even though some had owned shares for decades.
Opposition from retirees was so intense that it even seemed to surprise Fiorina. When she said that "the majority of employees support this merger," she was silenced by an eruption of boos and angry shouts from the crowd.
"I said a majority of employees--not retirees, but active employees--support this merger," Fiorina clarified. A second round of boos met her remark.
Hewlett fidgeted throughout the meeting, rubbing his hand against his mouth and face and playing with his shirt collar as if it were uncomfortable around his neck. He wore a dark suit and red tie--not his signature bow tie--and a green pin emblazoned with the word "dissident."
"We have listened to investors we have spoken with...and we've learned that people have been studying the issues and they care very deeply about the company and its future," Hewlett said during his short speech. "I think the company can be the best it can be," he said, only to be drowned out by a round of applause and a standing ovation by at least three-quarters of the audience.
Although no one booed Hewlett, and the crowd seemed heavily on his side, attendees were not unanimous in their support. Cle Riggins, a 40-year HP veteran who retired in 2000 as director of federal government accounts, came to his first shareholder meeting to cast his shares in favor of the merger.
"I wanted to see how these meetings were conducted and vote for the deal," said Riggins, of Cupertino, Calif. "Bill Hewlett, Walter's father, would not take kindly to his son's actions today."
"A clear sign to management"
In addition to legions of retirees, shareholders and a smattering of crying infants, a number of prominent HP stakeholders came to express support for Hewlett, including Hewlett's wife Esther; their son, Ben; Hewlett's brother, Jim; and Pamela Packard, wife of David Woodley Packard and daughter-in-law of the co-founder.
"This was a clear sign to management about how HP workers really feel about the merger," Pamela Packard said. "David (Woodley Packard) feels very passionate about this merger, but he did not want to come to make any kind of presentation."
Former HP executive Michael Gardner rushed to greet Hewlett as he entered the conference room and shouted, "Good luck!" He also managed to show Hewlett, who was surrounded by an entourage of bodyguards, an actual HP stock certificate that HP founders William Hewlett and David Packard signed in the early 1980s.
"I'm voting with Walter Hewlett," proclaimed Gardner, who used to work in HP Labs and oversaw the building of the Spectrum computer before resigning to start his own business. "His arguments make an extraordinary amount of sense. I have no doubt that Walter's dad and he would be on the same page in regards to this merger."
The fallout over the bruising merger battle could drift both ways, of course.
One shareholder wanted to express his support for Hewlett regardless of whether the merger is approved or rejected. During the open-microphone session, he asked Fiorina to take personal responsibility for keeping Hewlett on the board of directors, even if the merger is approved. Fiorina was noncommittal in her response.
"The bylaws call for all board members to be nominated each year, and the nominating committee has not made up its mind," she stated. When the investor again implored her to keep Hewlett on the board, Fiorina stood firm.
"It's not my role to do so," Fiorina said.
Outside, agitation at the merger continued. Fifteen Compaq employees from France handed out anti-merger leaflets and explained that the job cuts could total 50,000 by the time the layoffs are complete.
"For the customers, the shareholders and the employees, the Compaq-Digital merger was a disaster. We are not finished with that one and they want to go for a second one," said Grace Taiana, an employee with Compaq France.
Ironically, the French employees attended the meeting courtesy of Compaq. Under French law, employers are required to contribute funds to employee organizations, and some of the funds this year were used to send the anti-merger delegation, Taiana explained.