Hewlett Testifies He Missed Key HP Board Meetings

Hewlett-Packard Compaq Computer

Hewlett's revelation came under cross-examination by HP attorney Steven Schatz. Hewlett said that his understanding of both the cost-savings synergies and the analysis behind merger revenue loss projections came solely from his financial advisor, Friedman Fleischer and Lowe, San Francisco.

When asked if he requested that HP management or HP's consulting firm explain the underlying financial metrics of the merger to him, Hewlett replied, "No."

When asked if he had an understanding independent of FFL of how HP management reached its merger analysis numbers, Hewlett again responded, "No."

Hewlett then admitted that FFL was scheduled to receive a $12 million payment if shareholders voted down the merger.

"You have to admit that on some level, $12 million is a lot of money," Schatz posed to Hewlett.

"Yes," Hewlett replied amid courtroom laughter.

During reexamination by his counsel, Stephen Neal, Hewlett said he missed the three crucial July board meetings because he was on vacation and had other previous engagements that HP management knew about.

In fact, during a two-day board meeting July 19-20, management knew he would miss the meeting on the 19th but not on the 20th, Hewlett said. HP management, nevertheless, scheduled key merger presentations for the 19th rather than shifting them to the 20th to accommodate his absence.

The other two meetings Hewlett missed were on July 10 and July 30.

At the start of the afternoon session on the second day of the three-day trial, HP lawyers revealed that they have a recording of the key March 19 conference call with Deutsche Bank managers during which HP CFO Bob Wayman and HP CEO Carly Fiorina try to convince the bank to switch its votes cast against the merger to instead favor it.

Hewlett is alleging that HP management engaged in vote buying to secure the switch.

Schatz also asked Hewlett why, if he was so concerned about rumors he was hearing about integration efforts not being on track, he didn't raise those concerns with HP management so they could correct or disclose them before the March 19 proxy vote?

"Prior to the vote, my main concern was getting my message out to investors," he said.

In his suit, filed in Delaware Chancery Court on March 28, Hewlett alleges that HP management knew the integration efforts and their underlying financial projections in support of the merger were off track and that management withheld the information from shareholders.