Hewlett Financial Advisor To Receive $12 Million Fee If Merger Fails

Hewlett-Packard Compaq

Spencer Fleischer, vice chairman of Friedman Fleischer and Lowe, admitted that his company will receive $12 million if the merger is defeated and that in its most recent fiscal year, FFL's income was about $6 million.

Fleischer answered "no" to HP attorneys who asked if that fee would compromise his independent judgment of the deal. Hewlett's attorneys, for their part, raised the issue that Deutsche Bank would receive a $1 million fee if the merger is successful. Hewlett, in his suit being tried in here in Delaware Chancery Court, is alleging that HP management bought votes to get the bank to switch the 17 million votes it had previously voted against the merger.

Compaq CFO Jeff Clarke took the stand later in the morning as a defense witness and was pressed in cross-examination by HP attorney Stephen Neal on a memo he sent to Compaq CEO Michael Capellas and HP CFO on March 12 stating that so-called Value Capture numbers "were ugly" and that "both companies were deteriorating" in their merger progress.

Clarke said he was frustrated that business-unit executives weren't accepting more aggressive revenue targets. He said the managers were balking in part because they lacked key information such as procurement savings and product road maps. He said that information was available to himself and other "clean room" members working on the integration plan but not the business-unit managers, contributing in part to his frustration.

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