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Two more plans say nay to HP

Members of two retirement plans vote their shares against the Hewlett-Packard and Compaq merger in what may be a telling sign of HP employee sentiment toward the deal.

Members of two HP-related retirement plans have overwhelmingly voted their shares against the merger between Hewlett-Packard and Compaq Computer in what may be one of the most telling indications yet of HP employee sentiment toward the deal.

See special coverage: A Fight to the Finish Seventy-two percent of the 34 million shares held by the Hewlett-Packard Tax Saving Capital Accumulation Plan and the Agilent Technologies Savings Accumulation Plan have cast a vote against the $21 billion merger, said Joele Frank, a spokeswoman representing HP director Walter Hewlett, who opposes the merger.

"The plans were the only place where HP employees could vote their shares with total confidentiality," Frank said. "And the results basically matched those of the Field Research poll taken of HP employees." In the HP retirement plan, investors voted 2-to-1 against the deal, while members of HP spinoff Agilent voted 8-to-1 against the deal.

"How can you have a successful merger with so many employees against the deal?" Frank said.

HP would not confirm the accuracy of the retirement plans' votes.

"Once again, (Walter's camp) is mischaracterizing the vote," HP spokeswoman Rebeca Robboy said. "Employees hold shares in a variety of ways. This is not an indication of how employees will be voting. It's the final vote that counts, and we remain confident of a favorable outcome tomorrow."

Hewlett issued a statement Tuesday morning citing the employee plan votes as underscoring "the heightened integration risk of the proposed merger."

Much debate has centered on where HP employees stand in what could be one of technology's largest mergers ever. The simmering over the deal will come to a boil Tuesday at a special HP stockholders meeting, where HP shareholders will vote for or against the merger. Polls previously conducted by both the company and opposing parties have resulted in conflicting results of support for the merger.

Although not all employees participate in the shareholder plans of HP and Agilent, the group represents a sizable voting bloc. Combined, the two plans account for roughly 1.8 percent of HP's outstanding stock. If the employees let their votes stand and do not change them at the shareholders meeting, the 72 percent voting against the deal will represent 1.3 percent of votes against the merger.

Compaq investors are slated to vote Wednesday. Less attention has been paid to Compaq shareholders, who are expected to approve the merger.

Overall, HP employees hold roughly 2 percent of all of HP's outstanding shares. Fifty percent of HP voters who cast ballots must approve the deal for it to go through on the HP side. Those who don't vote don't have any concrete impact on whether the merger goes through.

In the weeks leading up to the shareholders vote, investors have been taking the unusual tack of stating how they plan to vote their shares in the contentious proxy battle.

The Teacher Retirement Systems of Texas on Monday was among the latest pension funds to announce it would vote against the deal. The Texas fund holds 5.9 million shares, or a 0.31 percent stake. Other pension funds that are against the deal include the New York State Teachers Retirement System Pension Fund and the New York State Pension Fund.

HP, however, has had its supporters as well. Alliance Capital, Barclay's Global Advisors and Putnam Investment are among its top 20 institutional investors that have publicly stated support for the merger.

When shareholders gather for the special meeting Tuesday, HP has said it hopes to announce preliminary results for the merger. Final results in the closely contested race may not be available for weeks.