Corporate Warrior Wields the Cello

The people on the boards of America’s biggest corporations, often chief executives elsewhere, are chronically overextended. Sometimes, problems at their own companies force them to miss a board meeting or two, as former Enron Corp. Chairman Kenneth L. Lay has lately at Compaq Computer Corp.

Hewlett-Packard Co. director Walter Hewlett, however, might be the first Fortune 500 director to skip a crucial strategy session because of a prior commitment to play the cello.

That choice helps illustrate why Hewlett, a philanthropist, academic and amateur athlete who is the biggest obstacle to HP’s $25-billion bid for Compaq, ranks as one of the most unusual corporate warriors in decades.

“He is the most unlikely guy to wind up in this situation I could possibly imagine,” said Gerald Grinstein, former chief executive of Burlington Northern Inc. and chairman of HP spinoff Agilent Technologies Inc., on the board of which Hewlett also serves.

Hewlett’s associates say he felt compelled to fight the merger publicly not for any emotional bond to his father, the company co-founder, but because he takes his responsibilities as a philanthropist seriously. And most of the money in his family’s foundation is in HP stock, which Hewlett believes will decline with Compaq’s weight.

With several big HP shareholders planning to vote against the Compaq acquisition and Hewlett courting others, HP has turned to his unusual background in an attempt to derail the proxy campaign.

HP sent a letter to 750,000 investors last week, deriding the co-founder’s 57-year-old son as a “musician and academic” who “has never worked at the company.” HP says more experienced businesspeople, including HP CEO Carly Fiorina and the rest of the HP board, are in a better position to advise shareholders.

Hewlett certainly has had an unorthodox career. But interviews with a wide range of colleagues suggest that he is more of a Renaissance man than a dilettante.

“Walter is not a flake,” said Grinstein, who credits Hewlett with being a pragmatic and early advocate for Agilent selling a health-care instruments business that his father had helped nurture. Hewlett declined interview requests.

The eldest of William R. Hewlett’s five children, Walter Hewlett took after his father in many respects. A math star in Palo Alto public schools, he had frequent conversations with Bill Hewlett about the company’s technology and strategy, and he embraced his father’s management philosophy of egalitarianism and consensus.

Now married with three children, Hewlett studied physics as an undergraduate at Harvard University, where he became a star long-distance runner. He was interested in business and could have excelled at it, but friends believe he decided not to pursue a traditional corporate path because of his father’s long shadow.

He returned to Silicon Valley in the mid-1960s, joining the board of his parents’ charitable trust (the William and Flora Hewlett Foundation owns about 5% of HP) and earning the first of three advanced degrees. He gravitated from engineering to operations research, another rigorously analytical field, and then to music and music theory.

The Hewletts had long been a music-loving family, with father and son known to listen to a Puccini recording and argue over who the conductor must have been. While working in Germany, Walter grew interested in Bach, then in rare organs from that era, said Michel Guite, who shared Hewlett’s Stanford dorm.

One day at Stanford, “Walter just put up a sign that said ‘Bach B Minor Mass tonight, bring your own instruments,’” Guite said. People dragged out clarinets, bass guitars and violas for the spontaneous concert. “Walter was at the heart of such things,” Guite said.

Although proficient at cello and organ, Walter Hewlett was never going to be a world-class performer or composer. He reverted to his analytical skills instead, working to develop a system for transcribing written music into electronic databases for study and inexpensive reproduction, potentially saving cash-strapped orchestras vast amounts of money.

“There wasn’t any obvious way to go about doing that,” said Hewlett’s chief academic collaborator, Eleanor Selfridge-Field. “Because he had such a good background in so many fields, he was able to develop a system.”

The books, papers and databases that Hewlett and Selfridge-Field produced at Hewlett’s Center for Computer Assisted Research in the Humanities haven’t set the world on fire. But they have been “a significant contribution to national and international projects,” said Christoph Wolff, a Bach scholar at Harvard.

Hewlett also helped the educational world in more practical ways. As an advisor to Harvard and then a member of the university’s Board of Overseers, Hewlett funded and led an effort to wire one dorm for digital communications in the early ‘90s, far ahead of other universities. And he gave early direction on using the Internet for distance learning, said former Harvard President Neil Rudenstine.

“Coming from well outside the academy, he showed that he could learn very quickly what a complex institution was like, and could understand and respect its own way of doing things, and understand important things that it might do,” Rudenstine said.

And he has kept his interest in business. When Guite worked as a Salomon Bros. analyst following the fractious communications industry, Hewlett tagged along to industry executives’ meetings for big investors. His predictions about the value in local phone lines seemed so perceptive that Guite asked him to join in buying a Vermont phone company and serve as chairman. Vermont Telephone Co. has been a small but profitable investment for both men. It has one of the biggest U.S. penetration rates for high-speed lines, which reach 28% of its customers.

It would be a serious mistake to view Hewlett’s thoughtfulness and non-confrontational style as a weakness of will, friends said. After all, he still undertakes marathon bike races over mountain ranges.

A conscientious shepherd of his charity’s assets, Hewlett’s concern for future giving has forced him into the spotlight now, associates said. Worried that the merger with Compaq will depress HP’s value, he hired outside analysts who came to the same conclusion.

All of that happened after the pivotal board discussions of July 19, which Hewlett missed when he kept a long-standing commitment to perform with the orchestra at the exclusive Bohemian Grove retreat north of San Francisco.

Other directors who were worried about taking on Compaq’s troubled personal computer business changed their minds during the talks that day, which were the first to include investment bankers. When Hewlett returned the next day, he said he was still opposed. Hewlett missed two other meetings during the Compaq negotiations, according to recent regulatory filings, while no other directors missed any after Fiorina told them of early discussions in late June.

“I have huge respect for Walter as an individual, but I have felt very frustrated at the board not being able to engage Walter in constructive dialogue about what to do for the future of HP,” said HP director George Keyworth II.

HP’s attempt to paint Hewlett as an out-of-touch aesthete, however, doesn’t wash with investors, including those who have heard him and his team present their case against the Compaq acquisition.

“He’s a very thoughtful person who, if he had his druthers, wouldn’t be engaged in this activity,” said David Katz of Matrix Asset Management, which opposed the merger before hearing from Hewlett. HP “is trying to make this into a personality conflict, but Walter Hewlett is not being a lone wolf. If the analysts had gone the other way, you would never have heard another word from him.”