WEDNESDAY 9 APRIL - · PDF file• Pre-merger HP and pre-merger Compaq networks were interconnected and secure at launch. Intranet and e-mail access from any site, anywhere on Day

S U N D A Y 6 A P R I L

Registration and Opening ReceptionExhibit Hall Opens

M O N D A Y 7 A P R I L

Opening Address Ryan Weeden, Global Equity OrganizationKeynote 1 Corporate Governance, Investor Confidence,

and The EconomyWorkshop 1.1 Objectives and Obstacles for Global Share PlansWorkshop 1.2 What’s Next for Global Executive IncentivesWorkshop 1.3 Celtic Pride – Ownership in Ireland Workshop 1.4 The French Connection – Stock Purchase Plans

in France and BeyondWorkshop1.5 The Impact of Data Privacy on Global HR

and BenefitsWorkshop 2.1 Equity Compensation in CanadaWorkshop 2.2 Outsourcing Stock Plan Administration

– How Satisfied Are SponsorsWorkshop 2.3 Improving Accountability and Corporate

Governance of Employee Stock PlansWorkshop 2.4 Wipro Case Study – Employee Ownership

in IndiaWorkshop 2.5 Streamlining Share Settlement, Delivery, and

OwnershipWorkshop 3.1 Administrative Roundtable – Your Place or Mine…

A Discussion on Outsourcing and In-HouseAdministration

Workshop3.2 Smith & Nephew: An International Case StudyWith a Twist

Workshop 3.3 Revisiting Stock Option Grant Allocation PracticesWorkshop 3.4 Changing Stock/Share Compensation from the

Thames to Silicon ValleyWorkshop 3.5 Performance Based Equity Compensation

– Issues and Trends in Europe and the USGeneral Session 1 International Hot Spots

T U E S D A Y 8 A P R I L

Workshop 4.1 Update on AsiaWorkshop 4.2 Getting the Most Out of Technology – Share Plan

Administration and Technological AlternativesWorkshop 4.3 Impact of U.S. Corporate Governance Reform on

Global Equity Compensation PlansWorkshop 4.4 You say Share Plan…I say Stock Plan….Workshop 4.5 How to Successfully Implement Global Stock

Chargebacks: Global PerspectiveGeneral Session 2 View From the Inside - Panel Discussion on Future

and Direction of Equity Compensation

W E D N E S D A Y 9 A P R I L

General Session 3 View From the Top - CEO Panel of LeadingCompanies on How Equity Compensation andEmployee Ownership Will be Used in the Future

Workshop 5.1 The Michelin Guide to Share Administration – A Case Study

Workshop 5.2 Employee Risk Through Equity CompensationParticipation

Workshop 5.3 What To Do With ExpensingWorkshop 5.4 International Issues in Formulating Equity

Compensation Strategies in an Uncertain Market Workshop 5.5 Roundtable on European Stock Plans and

Developments – Part I

Workshop 6.1 The Changing Role of Stock in Total RewardsWorkshop 6.2 Stock Plans in Emerging Economies

– India, South Africa, and BeyondWorkshop 6.3 The Power of Communication

– International Paper Case StudyWorkshop 6.4 Roundtable on Best Practices in

Global Share Plan AdministrationWorkshop 6.5 Roundtable on European Stock Plans and

Developments – Part II

Workshop 7.1 Do You Know Where Your Employee’s Are? Equity Compensation and Expatriate Issues

Workshop 7.2 Is Your Firm at Risk?Workshop 7.3 Hewlett-Packard/Compaq Merger

– Case Study on Combining Global Equity Plans

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Hewlett-Packard Company/Compaq ComputerCorporation Merger Case Study

Greg Gillas – Hewlett-Packard Company

Deborah Luby – PricewaterhouseCoopers LLP

ISS Reported

“The single process most important to thesuccess or failure of a merger is integration.… Half a million man-hours of work havethus far been devoted to integrationplanning, which surely makes the HP-Compaq one of the most exhaustivelyplanned combinations ever.”

Integration Achievements

Employee Focused

• A single portal, @hp, was universally available atlaunch for 150,000 employees to access information.On average, the site continues to receive more than 2million hits per day.

• Pre-merger HP and pre-merger Compaq networkswere interconnected and secure at launch. Intranetand e-mail access from any site, anywhere on Day 1.

Integration Achievements

Customer and partner focused• The new hp.com website, available in 21 languages

in 72 countries, was up and running on Day 1 withmore than 3 million pages and 10,000 SKUsavailable online.

• More than 800 senior managers including region andcountry leaders were named at launch.

• On Day 1, product roadmaps and the overall strategywere in place and communicated.

Executive SteeringCommittee

Program ManagementLeadership

Team

Program Office

EnterpriseSystems Group

HR/OrganizationDesign Team

CommunicationsTeam

CFO ValueCapture Team

PersonalSystems Group

ServicesImaging &

Printing Group

Legal Team

Supply Chain

Support Functions (IM, HR, Finance, Facilities)

Integration Organization

BenefitsExecutive CompSales CompensationEquityBase PayVariable PayCommunications

Global C&B Core Team

Country C & B TeamsFunctional C&B TeamsStock Administration

Extended C&B Core Team

C&B Team Lead

HR Integration Core Team

Core Team� Meet weekly to develop

strategy and moveforward platforms

� Drive implementationand changes asappropriate

Team Leads� Drive project forward

� Facilitate team meetings

� Communicate projectprogress,accomplishments andissues

� Develop Framework

Extended Core Team� Support data gathering efforts within required

timelines� Participate in periodic conference calls� Support and provide feedback to Core Team and

key stakeholders� Support and implement changes as appropriate

HR PMO� Provide high level support and

input� Review and approve

recommendations

Project Mgmt, Legal, Finance, HRIT and Communications Support

C&B Project Infrastructure

Tools

� Integration Milestone Plans for the business and infrastructure, global functions, systems, culture/changemanagement, communications and regions/countries

� Integration Project Plans for the business and infrastructure, global functions, systems, culture/changemanagement, communications and regions/countries

� Dashboards

Process

� Develop integration plans, using the provided templates

� Utilize the PWC resource provided to manage plans, issues, reporting and coordination

� Report progress weekly to the Integration Office

� For each business: ID program lead for your business & region to be the key contact for Program Office, PWC,global functions, region/countries, etc.

Timeline

� Weekly schedule (Program Office)

� Project Plan timeline for integration planning – definition of operations on “close/plan day”, “close day” and“operational day”, milestone identification, project plans

� Project Plan timeline for implementation – define operational and business program goals, integrated plans,“The new HP” - moving forward

HR Program Management Office

Guiding PrinciplesDo it fast and good enough – “Adopt & Go”

Decide then act and get results – Once a decision is made, stick to it

Strong integration structure

• Dedicated resources/teams are essential – virtual teams will work

• Active two-way communication process – central point for questions

• Program management with defined structure and timelines for theintegration – place to document issues and solutions

Take ownership for creating new culture (e.g., calling into question ourperceptions about our current natural tendencies)

Goal: Create ONE great new company!

Americas – Population

= High populationBlue

Red

Yellow = Medium population

= Low population

EMEA/Asia Pacific - Population

= HighBlue

Red

Yellow = Medium

= Low

Global Equity Conversion

56 Countries to Prioritize and Analyze

• Options over Compaq shares granted from 12 plans

• Merger agreement provided .6325 HP shares for eachCompaq share--same treatment as Compaq shareholders

• No cash—pure stock exchange

• Countries divided based on population in each country andanticipated conversion issues

• Most Compaq options vesting fully accelerated uponshareholder approval of merger—additional issues in “taxat vesting countries”

Employee Stock Purchase Plan

• Both HP and Compaq sponsoring ESPPs globally• Timing of transaction close uncertain• Administratively impractical to add entire Compaq ESPP

population to HP plan immediately after the close• Failure to allow Compaq employees an offering date/price

equivalent to HP employees created potential HR retentionproblems with employees if HP stock price rose post-closebefore Compaq employees would be allowed to enroll andlock in offering price for discount

• Final solution: Compaq employees enrolled in HP ESPPwith shortened purchase period

Countries with Tax Issues

Taxable event – underwater options as well>500Sweden

Taxable event – “in-the-money” only>1,000Ireland

Taxable event – “in-the-money” only<500Finland

Taxable event – underwater options as well<500Denmark

Taxable event – underwater options as well>500Belgium

Taxable event – underwater options as well>1,000Switzerland

Taxable event – “in-the-money” only>1,000Singapore

Taxable event>1,000Netherlands

Disqualifies favourable tax treatment or restartsholding period

>1,000France

Taxable event – underwater options as well>1,000Australia

IssuePopulationCountry

Australia

• Issue of taxation at “cessation” time

• Underwater options potentially taxed atconversion based on Black Scholes value

• Australian government openly seeking revenuesfrom stock option income

France

• Tax treatment of option conversion heavilydependent upon whether the transaction wasdeemed “Qualifying merger” under French law

• The reverse triangular form of this U.S. mergercreated concerns in France that the resultingwholly-owned subsidiary (Compaq) of HP wasnot equivalent to a straight in merger

• No precedent for French tax authorities that themerger was in substance equivalent to straight-inmerger

Netherlands

• Rulings in place for most options providingfor taxation at exercise

• Accelerated vesting upon change of controltriggered tax on some options

Singapore

• Singapore taxation of options triggered byexercise, assignment or release of a right orbenefit to acquire shares in a company

• Taxation potential of “intrinsic value” atrisk without a ruling

Switzerland

• Risk of conversion being considered a newgrant and taxed based on Black Scholesvalue

• Many of the options were “underwater”which increased the need to confirm thenon-taxable conversion to avoid inequitableresult

Belgium

• High risk that Belgian tax authorities would viewthe conversion as a new grant, thus subjectingoptionees to double taxation

• Reverse triangular form of merger creates issueswith tax authorities negotiations

• Compaq becoming a wholly-owned subsidiary fora period of time before upstream merger into HP -no precedent for such transactions

Denmark

• No existing case law addressing this type oftransaction

• Taxable conversion would create withholding andreporting obligation at conversion

• Underwater options would have been taxed atconversion based upon an interest formula similarto Black Scholes

Finland

• Existing case law confirmed that in the case of aclear merger (i.e., merging company dissolves intoacquiring company) conversion of shares tooptionees is not be a taxable event

• No judicial precedent for exchange of shares forreverse triangular merger where target companycontinues to exist as wholly-owned subsidiary ofparent

• Taxable amount upon conversion potentially theintrinsic value of options

Ireland

• Compaq had Approved Share ParticipationScheme in place in Ireland

• Under this approved scheme, a “paper forpaper” exchange will not normally create ataxable event

Sweden

• Options typically taxed at exercise

• Vested options -- acceleration of vestingprior to conversion put the options at riskfor being treated as “disposed” therebydeemed exercised by optionees

• Unvested options still at risk for taxation atconversion based upon a Black Scholes typeof formula

Administration Issues - Before

Pre-merger CompaqProcesses & policies

Pre-merger HPProcesses & policies

Human Resources Management Systems Stock Administration Systems

50 payrolls

50 payrolls

Pre-merger Compaq

Pre-merger HP

Administration After Integration

New HP

Human Resources Management Systems Stock Administration Systems

50 payrolls

New HP