Our Corporate Governance Guidelines contain the current Board membership criteria that apply to nominees recommended for a position on the Board. Under those criteria, membersDirectors should:
Management provides regular reports on the risk portfolio and risk response efforts to senior management, and to the Board and its committees as appropriate. The Board and the committees of the Board may also receive reports from external advisors such as outside counsel and industry experts to further understand critical risk areas.
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Annual Review/Evaluation | | ü | | annually reviewing the Committee’s charter and performance; |
| | ü | | overseeing the annual self-evaluation of the Board and its committees; and |
| | ü | | overseeing the annual evaluation of the CEO in conjunction with the HRC Committee and, with input from all Board members and the HRC Committee’s evaluation of senior management.
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Digital Equity
The
Board determined that each of Mr. Banerji, who currently serves as chair of the NGSR Committee, Mr. Bergh, Mr. Gupta, Mr. Mobley and Ms. Brown-Philpot (who are the current NGSR Committee members) is independent within the meaning of the NYSE director independence standards. The Board also determined that each of Mr. Reiner, who served as chair of the NGSR Committee during fiscal 2015, Mr. Kleinfeld and Mr. Russo (who were NGSR Committee members during fiscal 2015 ) was independent within the meaning of the NYSE director independence standards.HR and Compensation Committee
The HRC Committee discharges the Board’s responsibilities relating to the compensation of our executives and directors and provides general oversight of our compensation structure, including our equity compensation plans and benefits programs. Specific duties and responsibilities of the HRC Committee include, among other things:
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Executive Compensation, Stock Ownership and Performance Reviews | | ü | | recommending all elements of the CEO’s compensation to the independent members of the Board; |
| ü | | reviewing and approving objectives relevant to other executive officer compensation and evaluating performance and determining the compensation of other executive officers in accordance with those objectives; |
| ü | | approving severance arrangements and other applicable agreements and policies for executive officers; and |
| ü | | adopting and monitoring compliance with stock ownership guidelines and policies for executive officers.
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Equity Compensation Plans, Incentive Plans and Other Employee Benefit Plans | | ü | | overseeing non-equity-based benefit plans and approving any changes to such plans involving a material financial commitment by HP; and |
| ü | | monitoring the effectiveness of non-equity based benefit plan offerings, including but not limited to non-qualified deferred compensation, fringe benefits and any perquisites, in particular those pertaining to Section 16 Officers, and approving any material new employee benefit plan or change to an existing plan that creates a material financial commitment by HP.
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Director Compensation & Stock Ownership | | ü | | establishing compensation policies and practices for service on the Board and its committees provide input on broad-based strategies to accelerate digital equity and for corporate giving, including annually reviewingfinancial funding and employee engagement. |
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| Climate Action | | |
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| Addressing Our Footprint With a focus on carbon emissions, circularity, and forests, HP is taking a holistic approach to addressing climate change. We are working to reduce climate impacts across our entire value chain, which includes our supply chain, our own operations, and customer use of our products and services. For example, with respect to carbon emissions, our goal is to achieve net zero greenhouse gas (GHG) emissions by 2040, with an interim goal to reduce our absolute value chain emissions 50%, compared to 2019 levels, by 2030. This target is in line with the appropriate levellatest climate science and the 1.5°C reduction pathways called for by the Paris Agreement. | Our goal is to achieve net zero greenhouse gas (GHG) emissions by 2040 |
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| Human Rights | | |
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| Driving Impact Through Our Supply Chain We work to improve labor conditions within supplier factories, tackle industry-wide challenges such as forced labor and conflict minerals, and build essential worker and management skills and capabilities. We engage with suppliers in a wide range of director compensationways to promote responsibility, including social and recommendingenvironmental assessments and on-site audits. We are aiming to reach one million workers by 2030 through worker empowerment programs that will go above and beyond the typical risk management approach to seek positive changes through training and personal development. In addition, for information about diversity, equity and inclusion at HP, please refer to “Our Approach to Human Capital Management.” | We are aiming to reach one million workers by 2030 through worker empowerment programs |
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| Digital Equity | | |
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| Accelerating Digital Equity The digital divide is the economic, educational and social inequalities that exist between those that have access to the hardware, connectivity, quality and relevant content, and digital literacy—and those who do not. Digital equity is the path for everyone, everywhere to have equal access to education, healthcare and economic opportunity. We believe digital equity will be achieved when every person has equitable and inclusive access to skills and knowledge, services and opportunities in the digital economy. Our goal is to accelerate digital equity for 150 million people by 2030 through one or more of these key elements: hardware (e.g., laptop or printer), connectivity (e.g., access to the Internet), quality, relevant content (e.g., learning materials), and digital literacy (e.g., skills to use the technology). Our work contributes to the UN Sustainable Development Goals and focuses on four communities that are most likely to experience the digital divide: women and girls, people with disabilities (including aging populations), historically excluded and marginalized communities, and educators and practitioners. | Our goal is to accelerate digital equity for 150 million people by 2030 |
For more information on our sustainability goals, programs, and performance, we refer you to our annual Sustainable Impact Report, available on our website (which is not incorporated by reference herein).
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| Corporate Governance and Board any changes to that compensation; andof Directors |
| | ü | adopting and monitoring compliance with stock ownership guidelines and policies for directors.
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Executive Succession Planning & Leadership Development
| | ü | | reviewing senior management selection and overseeing succession planning, including reviewing the leadership development process. |
Our Approach to Human Capital Management
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| Compensation Consultants | ü | | assessing the independence of all advisors (whether retained by the Committee or management) that provide advice to the Committee, in accordance with applicable listing standards; and |
| ü | | annually assessing whether the work of compensation consultants has raised any conflict of interest.
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Risk Assessment; Other Disclosure | | ü | | overseeing, approving, and evaluating HP’s overall human resources and compensation structure, policies and programs, and assessing whether these establish appropriate incentives and leadership development opportunities for management and other employees, and confirming they do not encourage risk taking that is reasonably likely to have a material adverse effect on HP; |
| ü | | reviewing and discussing with management the Compensation Discussion and Analysis and performing other reviews and analyses and making additional disclosures as required of compensation committees by the rules of the SEC or applicable exchange listing requirements; and |
| ü | | reviewing the results of stockholder advisory votes on HP’s executive compensation program and recommending to the Board or the Nominating, Governance and Social Responsibility Committee how to respond to such votes.
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Annual Review/Evaluation
| | ü | | annually evaluating Committee’s performance and its charter. |
We employ about 58,000 employees in 59 countries. Together, they power our innovation by applying their diverse skills and perspectives to create transformative solutions for our partners and customers worldwide. Our aim is to attract and retain exceptional talent by providing engaging work experiences that help our employees thrive. We promote ongoing learning and development, offer comprehensive compensation and benefits, and focus on health, safety, and well-being to set employees up to do their best work and achieve their career aspirations. To deliver on these priorities, our senior leaders are accountable for meeting management by objective (“MBO”) goals for employee engagement, diversity and inclusion, and leadership development.
The Board’s Role in Human Capital Management
Our Board, determined that each of Mr. Gupta, who currently serves as chair ofthrough the HRC Committee, Mr. Bass, Mr. Berghoversees HP’s key human capital management strategies and Mr. Mobley (who are current HRC Committee members)programs and is independent within the meaningresponsible for, among other things:
•reviewing employee engagement, talent, and cultural initiatives including key training and development programs, diversity, equity and inclusion programs, leadership succession, and results of the NYSE standards of independence for directorsannual employee engagement survey; and compensation committee members. The
•monitoring key workforce health metrics including workforce diversity, key hires, turnover and retention and restructuring.
Management regularly updates the Board also determined that each of Ms. Russo, who served as chair ofand the HRC Committee duringon the status of such initiatives and programs.
Employee Engagement
We regularly collect feedback from employees to better understand and improve their workplace experiences and to identify ways to strengthen our culture. In fiscal 2015,year 2023, 91% of employees participated in our annual survey, and eachwe continued to see strong overall engagement, exceeding top quartile benchmarks for most of the external comparisons we track. We saw similar strength on our internal inclusion index, and employees demonstrated their engagement by providing a high volume of written comments in this year’s survey. Beyond the annual survey, we regularly seek out employee feedback through a variety of pulse polls and take action to address their ideas, suggestions, and concerns.
Talent and Learning
We have a multi-faceted talent, learning, and skill-development strategy. First, we emphasize diversity of backgrounds, experience, and perspectives in our senior talent pipeline, and invest in targeted approaches such as leadership assessments, external education opportunities, coaching, job rotations, and immersive, experiential learning to ensure our executives are equipped to lead HP, both now and in the future. We also support emerging, technical, and underrepresented talent through an extensive portfolio of internal and external development programs designed to accelerate their career growth. Additionally, we prepare new people managers with a development experience designed, among other things, to build coaching skills and champion inclusion.
We are also committed to the continuous growth of employees. We provide enterprise-wide skill development solutions and resources that focus on the critical skills all employees need to perform at their best in their jobs today and in the future. In partnership with industry thought partners and internal experts, HP offers learning opportunities in key areas such as software development, artificial intelligence, data science, product management, communications, change agility, and strategic thinking. HP prioritizes skill development experiences that accommodate employee-specific needs and demanding schedules, with an emphasis on learning that drives immediate application and measurable behavior change.
In addition to skill development resources, HP also offers formal education assistance through our Degree Assistance Program which provides employees with the opportunity to participate in higher academic education.
In fiscal year 2023, 99% of employees participated in learning and development sponsored by HP, completing an estimated average of 32 hours per person. The 2023 annual employee engagement survey revealed that 83% of employees felt HP actively supported their learning and development, with 82% believing that they are given a real opportunity to improve their skills at HP. Finally, HP encourages ongoing collaboration between people managers and employees to create personalized plans that accelerate skill development and prepare employees for additional opportunities. Our data show that 80% of employees have specific development actions they are working on in collaboration with their managers.
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Diversity, Equity and Inclusion (DEI) We strive to create an inclusive, equitable workplace where everyone can bring their authentic selves to work and reach their full potential. This commitment is at the heart of our innovation model, where people with diverse perspectives, backgrounds, knowledge, and experiences collaborate to create breakthrough technologies and deliver valued solutions to our customers. Our commitment to DEI starts at the top with a highly knowledgeable, skilled, and diverse Board. We are also among the top technology companies for women in executive positions. Globally, women hold 32.7% of HP’s full-time leadership positions. We are committed to improving representation of women at HP overall, with a focus on leadership and technical roles worldwide. We also strive to ensure equal opportunities and access for employees from underrepresented groups. For example in fiscal year 2023, 45% of our external U.S. hires were racially or ethnically diverse. We continue to work on removing barriers for underrepresented employees, providing internal programs and development opportunities as well as training for managers on inclusive leadership. For more information on DEI at HP, including a link to our EEO-1 Report, please visit https://www.hp.com/us-en/hp-information/about-hp/diversity.html (which is not incorporated by reference herein). | |
Pay Equity
People should be paid equitably for what they do and how they do it, regardless of their gender, race, or other protected characteristics. We benchmark and set pay ranges based on relevant market data and consider factors such as an employee’s role, experience, skills, and performance. We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to make sure our pay is fair and equitable.
For the past seven years, we have reviewed employees’ compensation with the support of independent third-party experts to ensure consistent pay practices. In fiscal year 2023, we expanded our annual pay equity assessment to include 17 countries with our largest employee populations, representing approximately 85% of our global workforce. The independent analysis did not reveal any systemic issues and we addressed areas of potential concern as part of our off-cycle compensation process.
Health, Safety and Wellness
The holistic wellbeing of our employees is vital to HP’s success. Our environmental, health, and safety leadership team uses our global injury and illness reporting system to assess worldwide and regional trends as a part of quarterly reviews. We continue to focus on reducing and effectively managing risks at HP-owned and partner-owned manufacturing facilities, and injury rates continue to be low.
We sponsor a global wellness program designed to enhance wellbeing for all HP employees. Throughout the year, we encourage healthy behaviors across our five pillars of wellness—physical, financial, emotional, life balance, and social/community—through regular communications, educational sessions, voluntary progress tracking, wellness challenges, and other incentives. In addition to our regular annual wellbeing programs, we provide specialized programs and campaigns in line with employee needs at the time. Our campaign this year, “Better Me in ’23,” encouraged employees to prioritize themselves and their wellbeing by using mindfulness apps, targeted mental health support, individual assessments, physical and expanded financial wellbeing programs.
Hybrid Work Strategy
We continue to embrace hybrid ways of working, consistent with flexible working guidelines we adopted in July 2021. At HP, hybrid work balances workplace flexibility with time working together to collaborate and connect in person at our sites. Our goal is to provide the ability to work seamlessly across a diverse ecosystem of workplaces, enabled by enhanced tools and technology designed to optimize productivity and collaboration.
We are testing different approaches to making hybrid work effective at multiple pilot sites globally, seeking feedback from HP employees on how best to support them in new ways of working. Overall, we aim to preserve the flexibility offered by hybrid work arrangements while offering our employees a healthy, supportive, and inclusive environment that supports their development, provides connection, and propels team and individual performance.
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| Corporate Governance and Board of Directors |
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Compensation Risk Assessment
Semler Brossy Consulting Group (“Semler Brossy”), independent compensation consultant to the HRC Committee,
members duringconducted an annual risk assessment of our fiscal
2015 (Mr. Gupta2023 executive compensation program as well as incentive and
Mr. Skinner) was independent withincommission arrangements below the
meaning ofexecutive level. In addition, management separately reviewed the
NYSE standards of independenceadministration and controls for
directors and compensation committee members.Compensation Committee Interlocks and Insider Participation
Ms. Russo and Messrs. Gupta and Skinner servedincentive plans below the executive level.
Based on
our HRC Committee during fiscal 2015. No person who served as a member ofthese reviews, the HRC Committee
during fiscal 2015 was or is an officer or employee of HP. During fiscal 2015, none of our executive officers served on the board of directors or on the compensation committee of any other entity, any officers of which served either on our Board or on our HRC Committee.Compensation Risk Assessment
During fiscal 2015, we undertook a review of our material compensation processes, policies and programs for all employees and determinedconcluded that our compensation programs and practicesprogram does not create risks that are not reasonably likely to have a material adverse effect on HP. In conducting this assessment, we reviewedHP, and that our compensation risk infrastructure, includingprogram reflects a balance in design, policies, management controls, and HRC Committee oversight that is consistent with market “best-practice” for mitigating potential compensation-related risk.
Code of Conduct
We maintain a code of business conduct and ethics for Directors, officers and employees known as Integrity at HP, which is available on our material plans, our risk control systems and governance structure,website at https://investor.hp.com/governance/integrity-at-hp/default.aspx. If the design and oversightBoard grants any waivers from Integrity at HP to any of our compensation programs andDirectors or executive officers, or if we amend Integrity at HP, we will, if required, disclose these matters via updates to our website on a timely basis. In June 2023, the developments, improvements and other changes made to those programs since fiscal 2014, and presented a summary of the findings to the HRC Committee. Overall, we believe that our programs contain an appropriate balance of fixed and variable features and short- and long-term incentives, as well as complementary metrics and reasonable, performance-based goals with linear payout curves under most plans. Board received its annual ethics training.
Stockholder Engagement
We believe that these factors, combinedeffective corporate governance should include regular, constructive conversations with effectiveour stockholders. Over the past year, the Board engaged with stockholders, including seeking and management oversight, operate to mitigate riskencouraging feedback from stockholders about our corporate governance practices by conducting stockholder outreach and reduceengagement throughout the likelihood of employees engaging in excessive risk-taking behavioryear.
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| Engagement |
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Our annual director stockholder outreach program In fiscal 2024, prior to the filing of the proxy statement, we conducted our annual outreach regarding our governance profile. | Other ways we engage •Quarterly earnings calls •Industry presentations and conference •Company-hosted events and presentations •Securities analyst meeting |
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Who participated •Chair of the Board •Chair of the HRC Committee •Chair of the NGSR Committee •Other members of the Board •Senior Management •Investor Relations •Subject Matter Experts | How we engage •One-on-one meetings •Written and electronic communications |
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Who we engaged
Fiscal 2023 - Annual Outreach ~40% of our outstanding stock during
fiscal 2023, as well as with proxy advisor firms. Fiscal 2024 - Governance
Profile Outreach ~30% of our outstanding stock. | | Topics discussed |
| | Strategy and Business Performance | Our strategic focus on strengthening the core, accelerating our growth businesses, driving digital transformation, and driving long-term value creation |
| | Governance Practices | Board composition, diversity and oversight and governance practices |
| | Executive Compensation | Structure of executive compensation programs and focus on diversity, inclusion, talent development and culture |
| | ESG & Sustainable Impact | Sustainable Impact strategy, human capital management, pay equity and diversity and inclusion |
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Other Ways HP Communicates with
respect to the compensation-related aspects of their jobs.Stockholders Executive Sessions
During fiscal 2015, the directors met in executive session seven times of which at least one included an additional executive session of only the independent directors. As lead independent director, Ms. Russo scheduled and chaired each executive session held during fiscal 2015. Any independent director may request that an additional executive session be scheduled.
Communications with the Board
Individuals may communicate with
Stockholders and other interested parties can contact the Board by
contacting:Secretary toemail at bod@hp.com or by mail at the HP Board of Directors,
1501 Page Mill Road,
Palo Alto, California 94304
e-mail: bod@hp.com
94304.
All
directorsDirectors have access to this correspondence. In accordance with instructions from the Board, the Secretary to the Board reviews all correspondence, organizes the communications for review by the Board and posts communications to the full Board or to individual
directors,Directors, as appropriate. Our independent
directorsDirectors have requested that certain items that are unrelated to the Board’s duties, such as spam, junk mail, mass mailings, solicitations, resumes and job inquiries, not be posted.
Communications that are intended specifically for the ChairmanChair of the Board, the Lead Independent Director, other independent directorsDirectors, or the non-employee directorsDirectors should be sent to the e-mail address or street address noted above, to the attention of the ChairmanChair of the Board.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Related-Person Transactions Policies and Procedures
Related-person Transactions Policy
We have adopted a written policy for approval of transactions between us and our non-employee Directors, Director nominees, executive officers, beneficial owners of more than 5% of HP’s stock, and their respective immediate family members where (i) the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year and (ii) such related person has, or will have, a direct or indirect material interest in such transaction.
The policy provides that the NGSR Committee reviews transactions subject to the policy and decides whether to approve those transactions, subject to the standing pre-approvals discussed below. In doing so, the NGSR Committee determines whether the transaction is not inconsistent with the interests of HP and its stockholders. In making that determination, the NGSR Committee considers, among other factors it deems appropriate:
•the extent of the related-person’s interest in the transaction;
•whether the transaction is on terms generally available to an unaffiliated third party under the same or similar circumstances;
•the benefits to HP;
•the impact or potential impact on a Director’s independence in the event the related-person is a Director, an immediate family member of a Director or an entity in which a Director is a partner, 10% stockholder or executive officer;
•the availability of other sources for comparable products or services; and
•the terms of the transaction.
The NGSR Committee has delegated authority to the Chair of the NGSR Committee to pre-approve transactions where the aggregate amount involved is expected to be less than $1 million.
A summary of any new transactions pre-approved by the Chair is provided to the full NGSR Committee for its review at each of the NGSR Committee’s regularly scheduled meetings.
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The NGSR Committee has adopted standing pre-approvals under the policy for limited transactions with related-persons. Pre-approved transactions include:
•compensation of executive officers that is excluded from reporting under SEC rules where the HRC Committee approved (or recommended that the Board approve) such compensation;
•non-employee Director compensation;
•transactions with another company with a value that does not exceed the greater of $1 million or 2% of the other company’s annual revenues, where the related-person has an interest only as an employee (other than executive officer), Director or beneficial holder of less than 10% of the other company’s shares;
•contributions to a charity in an amount that does not exceed the greater of $1 million or 2% of the charity’s annual receipts, where the related person has an interest only as an employee (other than executive officer) or non-employee Director;
•transactions where all stockholders receive proportional benefits; and
•transactions with another publicly traded company where the related person’s interest arises solely from beneficial ownership of more than 5% of HP’s common stock and ownership of a non-controlling interest in the other publicly traded company.
A summary of new transactions covered by the standing pre-approvals relating to other companies (as described above) is provided to the NGSR Committee for its review in connection with that committee’s regularly scheduled meetings.
Fiscal 2023 Related-Person Transactions
We enter into commercial transactions in the ordinary course of our business with organizations for which our executive officers or non-employee Directors, or one of their respective immediate family members, serve as non-employee Directors and/or employees, as well as with entities affiliated with beneficial owners of more than 5% of HP’s stock. We do not believe that any of our executive officers, directors, or 5% beneficial owners (or any of their respective immediate family members) had a direct or indirect material interest in such commercial transactions.
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How We Are Compensated
Director Compensation and Stock Ownership Guidelines
Non-employee Director compensation is determined annually by the independent members of the Board acting on the recommendation of the HRC Committee. In formulating its recommendation, the HRC Committee considers market data for our peer group and input from the independent compensation consultant retained by the HRC Committee. Our non-employee Director compensation program was reviewed in 2023 for changes and the HRC Committee determined that it was competitive with similar programs maintained by our peers and decided not to make any additional changes. Mr. Lores, as an employee of the Company, does not receive any separate compensation for his HP Board service.
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Each non-employee Director receives an annual cash retainer that begins on or around the date of the annual meeting, when non-employee Directors stand for election, and ends on or around the day prior to the next annual meeting (each a “Board Year”). For the 2023 Board Year, which began March 1, 2023, each non-employee Director was initially entitled to receive an annual cash retainer of $105,000. Each non-employee Director also received an annual equity retainer of $220,000 for service during the 2023 Board Year, with grants occurring the date of the annual meeting. Equity grants to non-employee Directors are intended to strengthen alignment with stockholder interests and to reinforce a long-term ownership view of the Company and its value. Retention is not the focus of equity grants for non-employee Directors, which is why such equity grants are not subject to service-related vesting. The Chair receives an additional $200,000 annual cash retainer in recognition of the greater duties that the position requires. In addition to the regular annual cash and equity retainers, and the Chair retainer described above, the non-employee Directors who served as chairs of standing committees during fiscal 2023 received additional cash retainers for such service. | | Annual director compensation | |
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| Additional cash compensation* | |
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| Chair of the Board | $200,000 | |
| Committee Chair Fees | | |
| Audit Committee | $35,000 | |
| HRC | $25,000 | |
| * Each non-employee Director also receives $2,000 for each Board meeting attended in excess of ten meetings per Board Year, and $2,000 for each committee meeting attended in excess of a total of ten meetings of each committee per Board Year. | | NGSR | $20,000 | |
| Other Board standing Committees | $20,000 | |
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Non-employee Directors may elect to defer receipt of up to 100% of their annual cash retainer and 100% of their excess meeting fees and/or chair fees, as applicable. For fiscal 2023, four non-employee Directors elected to defer receipt of a portion of their annual cash retainer, excess meeting fees and/or chair fees. In addition, in lieu of the annual cash retainer, non-employee Directors may elect to receive an equivalent value of equity in fully vested RSUs. For fiscal 2023, five non-employee Directors elected to receive equity in lieu of cash for all or a portion of their annual cash retainers. Non-employee Directors may elect to defer the settlement of the RSUs received as part of the program until either (a) the first to occur of the non-employee Director’s death, “disability” (as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) or such time when the non-employee Director no longer serves as a member of the Board (a “separation from service” as defined in Section 409A of the Code) or (b) April 1 of a given year.
Non-employee Directors are reimbursed for their business expenses in connection with attending Board meetings, and they may use the Company aircraft for travel to and from Board meetings and other Company events.
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Fiscal 2023 Non-Employee Director Compensation
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Name(1) | Fees Earned or Paid in Cash(2) ($) | Stock Awards(3) ($) | Total Compensation ($) |
| Aida Alvarez | 105,000 | | 220,023 | | 325,023 | |
| Shumeet Banerji | 1,648 | | 325,025 | | 326,673 | |
| Robert R. Bennett | 108,648 | | 220,023 | | 328,671 | |
| Chip Bergh | 200,000 | | 325,025 | | 525,025 | |
| Bruce Broussard | 34,904 | | 325,025 | | 359,929 | |
| Stacy Brown-Philpot | 111,000 | | 220,023 | | 331,023 | |
| Stephanie A. Burns | 130,000 | | 220,023 | | 350,023 | |
| Mary Anne Citrino | 41,000 | | 325,025 | | 366,025 | |
| Richard L. Clemmer | 20,352 | | 325,025 | | 345,377 | |
| Judith “Jami” Miscik | 111,000 | | 220,023 | | 331,023 | |
| Kim K.W. Rucker | 129,352 | | 220,023 | | 349,375 | |
| Subra Suresh | 111,000 | | 220,023 | | 331,023 | |
Enrique Lores(4) | — | | — | | — | |
(1)Mr. Meline was appointed to our Board during fiscal 2024. Accordingly, he did not receive any compensation during fiscal 2023.
(2)The determination of Director compensation is based on the Board Year, which does not coincide with our November through October fiscal year. Cash amounts included in the table above represent the portion of the regular annual retainers and committee chair retainers earned with respect to service during fiscal 2023, as well as any additional meeting fees paid during fiscal 2023. This also includes cash earned in the period described that a Director elected to defer under the 2005 Executive Deferred Compensation Plan, which governs a Director’s deferral of his or her cash annual retainer. See “Additional Information about Fees Earned or Paid in Cash in Fiscal 2023” below. Any amounts elected to be received as RSUs in lieu of cash are reflected in the Stock Awards column. Mr. Banerji, Mr. Bergh, Mr. Broussard, Mr. Clemmer, and Ms. Citrino elected to receive RSUs in lieu of cash for all or a portion of their annual cash retainers earned in fiscal 2023.
(3)Represents the grant date fair value of stock awards granted in fiscal 2023 calculated in accordance with applicable accounting standards relating to share-based payment awards, excluding the effect of estimated forfeitures. For Director stock awards, the number is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of shares awarded. For information on the assumptions used to calculate the value of HP’s stock-based compensation, refer to Note 5 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, as filed with the SEC on December 18, 2023. See “Additional Information about Non-Employee Director Equity Awards” below.
(4)Mr. Lores has been serving as President and CEO of HP since November 1, 2019. He does not receive compensation for his Board service.
Additional Information About Fees Earned or Paid in Cash in Fiscal 2023
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| Name | Annual Retainers(a) ($) | Committee Chair and Chair Fees(b) ($) | Additional Meeting Fees ($) | Total ($) |
| Aida Alvarez | 105,000 | | — | | — | | 105,000 | |
| Shumeet Banerji | — | | 1,648 | | — | | 1,648 | |
| Robert R. Bennett | 105,000 | | 1,648 | | 2,000 | | 108,648 | |
| Chip Bergh | — | | 200,000 | | — | | 200,000 | |
| Bruce Broussard | 34,904 | | — | | — | | 34,904 | |
| Stacy Brown-Philpot | 105,000 | | — | | 6,000 | | 111,000 | |
| Stephanie A. Burns | 105,000 | | 25,000 | | — | | 130,000 | |
| Mary Anne Citrino | — | | 35,000 | | 6,000 | | 41,000 | |
Richard L. Clemmer(c) | — | | 18,352 | | 2,000 | | 20,352 | |
| Judith “Jami” Miscik | 105,000 | | — | | 6,000 | | 111,000 | |
| Kim K.W. Rucker | 105,000 | | 18,352 | | 6,000 | | 129,352 | |
| Subra Suresh | 105,000 | | — | | 6,000 | | 111,000 | |
(a)The Board Year does not coincide with HP’s November through October fiscal year. The dollar amounts shown include cash annual retainers earned for service during fiscal 2023 (i.e., the last four months of the 2022 Board Year and the first eight months of the 2023 Board Year). This also includes cash earned in the period described, receipt of which was deferred by Director election under the 2005 Executive Deferred Compensation Plan. Directors may not receive their deferred cash annual retainer earlier than January 2026. In the case of a termination of service, Directors will receive the deferred retainer either the earlier of the January following termination of service or specified distribution year in the form of a lump sum payment or installment payments as elected in advance by the Director.
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(b)Committee chair fees are calculated based on service during each Board Year. The dollar amounts shown include such fees earned for service during fiscal 2023, rather than the 2023 Board Year. Committee chair fees were prorated to reflect committee chair changes that occurred in November 2022.
(c)Mr. Clemmer elected to waive and donate his FIT Committee chair fee for Q4 of the 2022 Board Year and fiscal 2023 additional meeting payments and donate them to the HP Foundation.
Additional Information About Non-Employee Director Equity Awards
The following table provides additional information about equity awards made to non-employee Directors during fiscal 2023, the grant date fair value of each of those awards and the number of stock awards and option awards outstanding as of the end of fiscal 2023:
| | | | | | | | | | | | | | |
| Name | Stock Awards Granted During Fiscal 2023 (#) | Grant Date Fair Value of Stock Awards Granted During Fiscal 2023(a) ($) | Stock Awards Outstanding at Fiscal Year End(b) (#) | Option Awards
Outstanding at
Fiscal Year End
(#) |
| Aida Alvarez | 7,466 | | 220,023 | | 28,961 | | — | |
| Shumeet Banerji | 11,029 | | 325,025 | | — | | — | |
| Robert R. Bennett | 7,466 | | 220,023 | | 49,246 | | — | |
| Chip Bergh | 11,029 | | 325,025 | | 71,063 | | 146,148 | |
| Bruce Broussard | 11,029 | | 325,025 | | — | | — | |
| Stacy Brown-Philpot | 7,466 | | 220,023 | | 95,142 | | — | |
| Stephanie A. Burns | 7,466 | | 220,023 | | 60,644 | | — | |
| Mary Anne Citrino | 11,029 | | 325,025 | | 81,149 | | 159,671 | |
| Richard L. Clemmer | 11,029 | | 325,025 | | 46,852 | | — | |
| Judith “Jami” Miscik | 7,466 | | 220,023 | | — | | — | |
| Kim K.W. Rucker | 7,466 | | 220,023 | | 15,769 | | — | |
| Subra Suresh | 7,466 | | 220,023 | | 21,656 | | — | |
(a)Represents the grant date fair value of stock awards granted in fiscal 2023 calculated in accordance with applicable accounting standards. For Director stock awards, the number is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of shares awarded. For information on the assumptions used to calculate the value of HP’s stock-based compensation, refer to Note 5 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, as filed with the SEC on December 18, 2023.
(b)Includes the grant date fair value of dividend equivalent units accrued with respect to share awards granted in fiscal 2023 and RSUs granted in previous years that have been deferred at the election of the Director.
Non-Employee Director Stock Ownership Guidelines
Under our stock ownership guidelines, non-employee Directors are required to accumulate, within five years of election to the Board, shares of HP’s stock equal in value to at least five times the amount of the regular annual cash Board retainer. Shares counted toward these guidelines include any shares held by the Director directly or indirectly, including deferred stock awards.
At the end of fiscal 2023, all non-employee Directors with more than five years of service have met our stock ownership guidelines and all non-employee Directors with less than five years of service have either met or are on track to meet our stock ownership guidelines within the required time based on current trading prices of HP’s stock.
Audit Matters
| | | | | | | | | | | |
| | |
| Board proposal no. 2 | |
| | |
| | |
| Ratification of independent registered public accounting firm | |
| | |
| | Our Board recommends a vote for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2024 fiscal year. | |
The Audit Committee
of the Board has appointed and
as a matter of good corporate governance, is requesting ratification by the stockholders
of the committee’s appointment of Ernst & Young LLP as the independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending October 31,
2016.2024. During fiscal
2015,2023, Ernst & Young LLP served as our independent registered public accounting firm and
also provided certain other audit-related and tax services. See
“Principal Accounting Fees and Services” and “Report of the Audit Committee of the Board of Directors”
and “Principal Accountant Fees and Services” below. Representatives of Ernst & Young LLP are expected to participate in the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.
Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the
20162024 fiscal year requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted
on the proposal at the annual meeting. If the appointment is not ratified, the Board will consider whether it should select another independent registered public accounting firm.
Recommendation The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as HP’s independent registered public accounting firm is in the best interests of HP and its investors.
Report of the Audit Committee of the Board of Directors
Our
The Audit Committee represents and assists the Board recommends a vote FOR the ratificationin fulfilling its responsibilities for general oversight of the appointmentintegrity of HP’s financial statements, HP’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, the performance of HP’s internal audit function and independent registered public accounting firm, and risk assessment and risk management. The Audit Committee manages HP’s relationship with its independent registered public accounting firm (which reports directly to the Audit Committee) and is responsible for the audit fee negotiations associated with HP’s retention of the independent registered public accounting firm. The Audit Committee has the authority to obtain advice and assistance from outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties and receives appropriate funding, as determined by the Audit Committee, from HP for such advice and assistance.
HP’s management is primarily responsible for HP’s internal control and financial reporting process. HP’s independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of HP’s consolidated financial statements and issuing opinions on the conformity of those audited financial statements with United States generally accepted accounting principles and the effectiveness of HP’s internal control over financial reporting. The Audit Committee monitors HP’s financial reporting process and reports to the Board on its findings.
In this context, the Audit Committee hereby reports as follows:
1.The Audit Committee has reviewed and discussed the audited financial statements with HP’s management.
2.The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
3.The Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence.
4.Based on the review and discussions referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2023, for filing with the SEC.
The undersigned members of the Audit Committee have submitted this Report to the Board of Directors.
AUDIT COMMITTEE
Mary Anne Citrino, Chair
Robert R. Bennett
Stacy Brown-Philpot
Richard L. Clemmer
David Meline
Jami Miscik
Kim K. W. Rucker
Subra Suresh
Principal Accountant Fees and Services
Fees incurred by HP for Ernst & Young LLP
The following table shows the fees paid or accrued by HP for audit and other services provided by Ernst & Young LLP for fiscal 2023 and 2022. All fees paid to Ernst & Young LLP were pre-approved in accordance with the pre-approval policy, as discussed below.
| | | | | | | | | | | | | | |
| | 2023 | | 2022 |
| | In Millions |
Audit Fees(1) | | $ | 19.5 | | | $ | 16.9 | |
Audit-Related Fees(2) | | $ | 6.9 | | | $ | 4.6 | |
Tax Fees(3) | | $ | 2.9 | | | $ | 3.8 | |
All Other Fees(4) | | $ | 0.9 | | | $ | 0.4 | |
| Total | | $ | 30.2 | | | $ | 25.7 | |
(1)Audit fees represent fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements and audit services provided in connection with other statutory or regulatory filings.
(2)Audit-related fees for fiscal 2023 and fiscal 2022 consisted primarily of accounting consultations and employee benefit plan audits.
(3)For fiscal 2023 and fiscal 2022, tax fees consisted primarily of tax advice, tax planning and tax compliance fees.
(4)For fiscal 2023 and fiscal 2022, all other fees consisted primarily of ESG assurance services.
Pre-Approval of Audit and Non-Audit Services Policy
The Audit Committee has delegated to the Chair of the Audit Committee the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by our independent registered public accounting firm
and associated fees up to a maximum for
any one service of $250,000, provided that the
2016 fiscal year.chair shall report any decisions to pre-approve services and fees to the full Audit Committee at its next regular meeting. PROPOSAL NO. 3
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Executive Compensation
| | | | | | | | | | | |
| | |
| Board proposal no. 3 | |
| | |
| | |
| Advisory Vote to Approve Named Executive Officer Compensation | |
| | |
| | | |
| | Our Board recommends a vote for the approval of the compensation of our NEOs, as described in the following compensation discussion and analysis, compensation tables and narrative discussion accompanying such compensation tables, and the other related disclosures in this proxy statement. | |
| | | |
In accordance with SEC rules,
ouryour Board recommends that stockholders
are being asked to approve, on
ana non-binding advisory
or non-binding basis, the compensation of our
named executive officersNEOs as disclosed in this proxy
statement.Our Board and the HRC Committee are committedstatement pursuant to excellence in corporate governance and to executive compensation programs that align the interestsItem 402 of Regulation S-K. A detailed description of our executives with those of our stockholders. To fulfill this mission, we have a pay-for-performance philosophy that formscompensation program is available in the foundation for decisions regarding compensation. Our compensation programs have been structured to balance near-term results with long-term success, and enable us to attract, retain, focus, and reward our executive team for delivering stockholder value. Please refer to “Executive Compensation—Compensation“Compensation Discussion and Analysis—Executive Summary” for an overview of the compensation of our named executive officers.
OurAnalysis.”
Your Board and the HRC Committee believe that
we have createdthe HRC Committee has established a compensation program that is tied to performance, aligns with stockholder interests and merits stockholder support. Accordingly, we are asking for stockholder approval of the compensation of our
named executive officersNEOs as disclosed in this proxy statement in the Compensation Discussion and Analysis,
the compensation tables and
the narrative discussion following the compensation tables.
Although this vote is non-binding,
theour Board and the HRC Committee value the views of our stockholders and will
thoroughly review the voting results. If there are significant negative votes, we will take steps to understand those concerns that influenced the vote and consider them in making future decisions about executive compensation. We currently conduct annual advisory votes on executive compensation and
we expect to conduct the next advisory vote at our
2017next annual meeting
of stockholders.in 2025.
The affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted on the proposal at the annual meeting is required for advisory approval of this proposal.
Recommendation of the Board of Directors
Our Board recommends a vote FOR the approval of the compensation of our named executive officers, including the
Compensation Discussion and Analysis
the compensation tables and narrative discussion following such compensation tables, and the other related disclosures in this proxy statement.PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO ELIMINATE CUMULATIVE VOTING
The Board is proposing, for approval by our stockholders, an amendment to HP Inc.’s Certificate of Incorporation to eliminate cumulative voting in director elections.
Summary of Amendment
Under Delaware law, stockholders do not have the right to vote their shares cumulatively in any election of directors unless a company’s certificate of incorporation provides otherwise. Article VII of our Certificate of Incorporation currently expressly authorizes cumulative voting in all director elections. Cumulative voting enables a stockholder to concentrate his or her voting power by allocating to one candidate a number of votes equal to the number of directors to be elected, multiplied by the number of shares held by that stockholder, or to distribute those votes among two or more candidates. Consequently, a stockholder or group of stockholders holding a relatively small number of shares may be able to elect one or more directors by cumulating votes.
As amended, Article VII would eliminate cumulative voting in all elections of directors. The text of Article VII, as proposed to be amended, would read as follows (additions are indicated by underlining and deletions are indicated by strikeouts):
ARTICLE VII
At the election of directors of the Corporation, eachNo holder of stock of any class or series shall be entitled to cumulative voting rights as totheany election of directorsof the Corporation to be elected by each class or series in accordance with the provisions of Section 2.14 of the General Corporation Law of the State of Delaware.
Reasons for Amendment
The Board has determined that it is in the best interests of HP Inc. and its stockholders to eliminate cumulative voting in all director elections for the following reasons:
| • | | Annual Elections. Coupled with the annual election of directors, cumulative voting increases the chances that a minority stockholder could take disruptive actions in opposition to the wishes of the holders of a majority of the shares voting. |
| • | | Majority Voting. The Board has determined that cumulative voting is incompatible, and fundamentally at odds, with a majority vote standard because it allows relatively small stockholders to elect directors who are not supported by a majority of the Company’s stockholder base. The Company and the Board believe that each director should represent the interests of all stockholders rather than the interests of a minority stockholder or a special constituency and that cumulative voting could lead to directors having improper incentives. |
| • | | Proxy Access. When combined with the proxy access right which our stockholders have under our Bylaws, cumulative voting could produce adverse consequences. Cumulative voting increases the risk that minority stockholders with a small economic interest in the company could take advantage of the proxy access right to elect directors who are unsupported by a large percentage of the stockholders. Minority stockholders with special interests and goals inconsistent with those of the majority of stockholders could use the proxy access right coupled with cumulative voting to elect a director whose interests are in accord with the minority group responsible for his or her election, rather than with HP Inc. and all of its stockholders. The election of such directors could result in partisanship and discord on the Board and may impair the ability of the Board to act in the best interests of HP Inc. and all of its stockholders. |
Introduction | | • | Prevailing Practice. A system of one vote per share for each nominee is the prevailing election standard among large U.S. public companies, favored by a substantial majority of the companies in the S&P 500 and the Fortune 500. Very few publicly-traded companies continue to provide for cumulative voting in their governing documents. |
Accordingly, the Board views this Proposal No. 4 as an appropriate balancing measure in light of the annual elections of HP Inc.’s directors, the majority voting standard and proxy access provisions included in HP Inc.’s Bylaws. On February , 2016, the Board adopted a resolution approving and declaring advisable the proposed amendment to the Certificate of Incorporation and recommending that stockholders also approve the proposed amendment. If stockholders approve this Proposal No. 4, the amendment to the Certificate of Incorporation will become effective upon the filing of a certificate of amendment with the Delaware Secretary of State, which we anticipate doing as soon as practicable following stockholder approval.
Vote Required
Approval of the amendment to the Certificate of Incorporation to eliminate cumulative voting requires the affirmative vote of a majority of the outstanding shares of HP Inc. common stock entitled to be voted on the proposal at the annual meeting.
Recommendation of the Board of Directors
Our Board recommends a vote FOR approval of the amendment to the Certificate of Incorporation.
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES
Employee directors do not receive any separate compensation for their Board activities. Non-employee director compensation is determined annually by the Board acting on the recommendation of the HRC Committee. In formulating its recommendation, the HRC Committee considers market data for our peer group and input from the third-party compensation consultant retained by the HRC Committee regarding market practices for director compensation. In fiscal 2015, non-employee directors received the compensation described below.
Each non-employee director serving during fiscal 2015 was entitled to receive an annual cash retainer of $100,000. Non-employee directors may elect to defer up to 50% of their annual cash retainer. In lieu of the annual cash retainer, non-employee directors may elect to receive an equivalent value of equity either entirely in restricted stock units (“RSUs”) or in equal values of RSUs and stock options.
Each non-employee director also received an annual equity retainer of $175,000 for service during fiscal 2015. Under special circumstances, the annual equity retainer may be paid in cash. No annual equity retainer was paid in cash during fiscal 2015. Typically, the annual equity retainer is paid at the election of the director either entirely in RSUs or in equal values of RSUs and stock options. The number of shares subject to the RSU awards is determined based on the fair market value of our stock on the grant date, and the number of shares subject to the stock option awards is determined as of the grant date based on a Black-Scholes-Merton option pricing formula. Non-employee directors are entitled to receive dividend equivalent units with respect to RSUs, but not stock options. RSUs and stock options generally vest after one year from the date of grant. In addition, non-employee directors may elect to defer the settlement of all or a portion of any RSUs received in lieu of the annual cash retainer as part of the director compensation program; however, non-employee directors may not defer the settlement of any stock options received.
In fiscal 2015, the Board approved an annual retainer for the lead independent director in the amount of $35,000. In addition to the annual cash and equity retainers, the lead independent director and non-employee directors who served as chairs of standing committees during fiscal 2015 received a retainer for such service. The Board also approved annual chair retainers as follows:
$25,000 for the Audit Committee Chair;
$20,000 for the HRC Committee Chair; and
$15,000 for other Board committees.
Each non-employee director also receives $2,000 for Board meetings attended in excess of ten meetings per Board term (which begins in March and ends the following February), and $2,000 for each committee meeting attended in excess of a total of ten meetings of each committee per Board term.
Non-employee directors are reimbursed for their expenses in connection with attending Board meetings (including expenses related to spouses when spouses are invited to attend Board events), and non-employee directors may use the company aircraft for travel to and from Board meetings and other company events. Each non-employee director also is eligible to participate in the product matching portion of the HP Employee Giving Program under which each non-employee director may contribute up to $100,000 worth of our products each year to a qualified charity by paying 25% of the list price of those products, with HP contributing the remaining cost.
Fiscal 2015 Director Compensation
The following table provides information on compensation for directors who served during fiscal 2015:
| | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned or
Paid in Cash(1)
($) | | | Stock Awards(2)
($) | | | Option
Awards(2)
($) | | | All Other
Compensation(3)
($) | | | Total
($) | |
Marc L. Andreessen | | | 22,990 | | | | 274,998 | | | | — | | | | 49,780 | | | | 347,768 | |
Shumeet Banerji | | | 4,000 | | | | 274,998 | | | | — | | | | — | | | | 278,998 | |
Robert R. Bennett | | | 132,990 | | | | 175,002 | | | | — | | | | — | | | | 307,992 | |
Rajiv L. Gupta | | | 142,983 | | | | 87,501 | | | | 87,502 | | | | 24,601 | | | | 342,587 | |
Klaus Kleinfeld | | | 43,219 | | | | 137,516 | | | | 137,500 | | | | — | | | | 318,235 | |
Raymond J. Lane | | | 10,000 | | | | 274,998 | | | | — | | | | — | | | | 284,998 | |
Ann M. Livermore(4) | | | — | | | | — | | | | — | | | | — | | | | — | |
Raymond E. Ozzie | | | 110,000 | | | | 175,002 | | | | — | | | | — | | | | 285,002 | |
Gary M. Reiner | | | 30,990 | | | | 137,516 | | | | 137,500 | | | | — | | | | 306,005 | |
Patricia F. Russo | | | 170,962 | | | | 175,002 | | | | — | | | | — | | | | 345,963 | |
James A. Skinner | | | 18,000 | | | | 137,516 | | | | 137,500 | | | | | | | | 293,015 | |
Margaret C. Whitman(5) | | | — | | | | — | | | | — | | | | — | | | | — | |
(1) | For purposes of determining director compensation, the term of office for directors begins in March and ends the following February, which does not coincide with our November through October fiscal year. Cash amounts included in the table above represent the portion of the annual retainers, committee chair fees, Lead Independent Director fees, non-executive Chairman of the Board fees and additional meeting fees earned with respect to service during fiscal 2015. See “Additional Information about Fees Earned or Paid in Cash in Fiscal 2015” below. |
(2) | Represents the grant date fair value of stock options and stock awards granted in fiscal 2015 calculated in accordance with applicable accounting standards relating to share-based payment awards. For awards of RSUs, that amount is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of units awarded. For option awards, that amount is calculated by multiplying the Black-Scholes-Merton value determined as of the date of grant by the number of options awarded. For information on the assumptions used to calculate the value of the stock awards, refer to Note 5 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015, as filed with the SEC on December 16, 2015. See “Additional Information about Non-Employee Director Equity Awards” below. |
(3) | Amounts in this column represent the cost to HP of product donations made on behalf of non-employee directors. |
(4) | Ms. Livermore was an employee of HP during fiscal 2015 and in that capacity performed various tasks and worked on special projects, including acting as an advisor and providing executive support to the CEO. Accordingly, Ms. Livermore did not receive any separate compensation for her Board service. However, Ms. Livermore was paid $850,033 in base salary, received bonuses totaling $1,062,500, received an increase in actuarial value of pension benefits during fiscal 2015 of $275,697 and received other compensation totaling $43,969 with respect to her employment with HP during fiscal 2015. Ms. Livermore also participated in HP’s benefit programs during fiscal 2015. |
(5) | Ms. Whitman served as President and CEO of HP throughout fiscal 2015. Accordingly, she did not receive any compensation for her Board service. |
Additional Information about Fees Earned or Paid in Cash in Fiscal 2015
The following table provides additional information about fees earned or paid in cash to non-employee directors in fiscal 2015:
| | | | | | | | | | | | | | | | |
Name | | Annual
Retainers(1)
($) | | | Committee Chair/
Lead Independent
Director Fees(2)
($) | | | Additional
Meeting Fees(3)
($) | | | Total ($) | |
Marc L. Andreessen | | | — | | | | 14,990 | | | | 8,000 | | | | 22,990 | |
Shumeet Banerji | | | — | | | | — | | | | 4,000 | | | | 4,000 | |
Robert R. Bennett | | | 100,000 | | | | 14,990 | | | | 18,000 | | | | 132,990 | |
Rajiv L. Gupta | | | 100,000 | | | | 24,983 | | | | 18,000 | | | | 142,983 | |
Klaus Kleinfeld | | | 33,219 | | | | — | | | | 10,000 | | | | 43,210 | |
Raymond J. Lane | | | — | | | | — | | | | 10,000 | | | | 10,000 | |
Raymond E. Ozzie | | | 100,000 | | | | — | | | | 10,000 | | | | 110,000 | |
Gary M. Reiner | | | — | | | | 14,990 | | | | 16,000 | | | | 30,990 | |
Patricia F. Russo | | | 100,000 | | | | 54,962 | | | | 16,000 | | | | 170,962 | |
James A. Skinner | | | — | | | | — | | | | 18,000 | | | | 18,000 | |
(1) | The term of office for directors begins in March and ends the following February, which does not coincide with HP’s November through October fiscal year. The dollar amounts shown include cash annual retainers earned for service during the last four months of the March 2014 through February 2015 Board term and cash annual retainers earned for service during the first eight months of the March 2015 through February 2016 Board term. |
(2) | Committee chair fees are calculated based on service during each Board term. The dollar amounts shown include such fees earned for service during the last four months of the March 2014 through February 2015 Board term and fees earned for service during the first eight months of the March 2015 through February 2016 Board term. |
(3) | Additional meeting fees are calculated based on the number of designated Board meetings and the number of committee meetings attended during each Board term. The dollar amounts shown include additional meeting fees earned for meetings attended during the last four months of the March 2014 through February 2015 Board term and additional meeting fees earned for meetings attended during the first eight months of the March 2015 through February 2016 Board term. |
Additional Information about Non-Employee Director Equity Awards
The following table provides additional information about non-employee director equity awards, including the stock awards and option awards made to non-employee directors during fiscal 2015, the grant date fair value of each of those awards and the number of stock awards and option awards outstanding as of the end of fiscal 2015:
| | | | | | | | | | | | | | | | | | | | |
Name | | Stock Awards
Granted During
Fiscal 2015
(#) | | | Option Awards
Granted During
Fiscal 2015
(#) | | | Grant Date
Fair Value of
Stock and
Option
Awards
Granted
During
Fiscal 2015(1)
($) | | | Stock Awards
Outstanding at
Fiscal Year
End(2)
(#) | | | Option Awards
Outstanding at
Fiscal Year End
(#) | |
Marc L. Andreessen | | | 8,231 | | | | — | | | | 274,998 | | | | 44,004 | | | | — | |
Shumeet Banerji | | | 8,231 | | | | — | | | | 274,998 | | | | 8,331 | | | | — | |
Robert R. Bennett | | | 5,238 | | | | — | | | | 175,002 | | | | 5,302 | | | | — | |
Rajiv L. Gupta | | | 2,619 | | | | 12,447 | | | | 175,003 | | | | 2,651 | | | | 72,287 | |
Klaus Kleinfeld | | | 4,116 | | | | 19,559 | | | | 275,015 | | | | 4,166 | | | | 19,559 | |
Raymond J. Lane | | | 8,231 | | | | — | | | | 274,998 | | | | 8,331 | | | | 200,000 | |
Raymond E. Ozzie | | | 5,238 | | | | — | | | | 175,002 | | | | 5,302 | | | | — | |
Gary M. Reiner | | | 4,116 | | | | 19,559 | | | | 275,015 | | | | 4,166 | | | | 103,886 | |
Patricia F. Russo | | | 5,238 | | | | — | | | | 175,002 | | | | 20,272 | | | | — | |
James A. Skinner | | | 4,116 | | | | 19,559 | | | | 275,015 | | | | 4,166 | | | | 37,699 | |
(1) | Represents the grant date fair value of stock and option awards granted in fiscal 2015 calculated in accordance with applicable accounting standards. For awards of RSUs, that number is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of units awarded. For option awards, that amount is calculated by multiplying the Black-Scholes-Merton value determined as of the date of grant by the number of options awarded. |
(2) | Includes dividend equivalent units paid with respect to outstanding awards of RSUs during fiscal 2015. |
Non-Employee Director Stock Ownership Guidelines
Under our stock ownership guidelines, non-employee directors are required to accumulate within five years of election to the Board shares of HP’s stock equal in value to at least five times the amount of their annual cash retainer. Shares counted toward these guidelines include any shares held by the director directly or indirectly, including deferred vested awards.
All non-employee directors with more than five years of service have met our stock ownership guidelines and all non-employee directors with less than five years of service have either met or are on track to meet our stock ownership guidelines within the required time based on current trading prices of HP’s stock. See “Common Stock Ownership of Certain Beneficial Owners and Management.”
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 2015 concerning beneficial ownership by:
holders of more than 5% of HP’s outstanding shares of common stock;
our directors and nominees;
each of the named executive officers listed in the Summary Compensation Table on page 65; and
all of our directors and executive officers as a group.
The information provided in the table is based on our records, information filed with the SEC and information provided to HP, except where otherwise noted.
The number of shares beneficially owned by each entity or individual is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the entity or individual has sole or shared voting or investment power and also any shares that the entity or individual has the right to acquire as of February 29, 2016 (60 days after December 31, 2015) through the exercise of any stock options, through the vesting/settlement of RSUs payable in shares, or upon the exercise of other rights. Beneficial ownership excludes options or other rights vesting after February 29, 2016 and any RSUs vesting/settling, as applicable, on or before February 29, 2016 that may be payable in cash or shares at HP’s election. Unless otherwise indicated, each person has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table.
BENEFICIAL OWNERSHIP TABLE
| | | | | | | | |
Name of Beneficial Owner | | Shares of
Common Stock
Beneficially Owned | | | Percent of
Common Stock
Outstanding | |
Dodge & Cox(1) | | | 187,467,799 | | | | 10.61 | % |
BlackRock, Inc.(2) | | | 100,332,640 | | | | 5.68 | % |
The Vanguard Group(3) | | | 98,044,605 | | | | 5.55 | % |
Aida M. Alvarez | | | — | | | | * | |
Shumeet Banerji | | | 27,238 | | | | * | |
Carl Bass | | | — | | | �� | * | |
Robert R. Bennett | | | 9,844 | | | | * | |
Charles V. Bergh | | | — | | | | * | |
Stacy Brown-Philpot | | | — | | | | * | |
Stephanie A. Burns | | | — | | | | * | |
Mary Anne Citrino | | | — | | | | * | |
Rajiv L. Gupta(4) | | | 165,606 | | | | * | |
Stacey Mobley | | | — | | | | * | |
Subra Suresh | | | — | | | | * | |
Margaret C. Whitman(5) | | | 5,994,196 | | | | * | |
Dion J. Weisler(6) | | | 680,732 | | | | * | |
Catherine A. Lesjak(7) | | | 952,905 | | | | * | |
Tracy S. Keogh(8) | | | 780,894 | | | | * | |
Antonio F. Neri(9) | | | 436,233 | | | | * | |
All current executive officers and directors as a group (20 persons)(10) | | | 8,534,213 | | | | * | |
* | Represents holdings of less than 1% based on 1,766,399,930 shares of our common stock outstanding as of December 31, 2015. |
(1) | Based on the most recently available Schedule 13G/A filed with the SEC on August 28, 2015 by Dodge & Cox. According to its Schedule 13G, Dodge & Cox reported having sole voting power over 180,535,840 shares, shared voting power over no shares, sole dispositive power over 187,467,799 shares and shared dispositive power over no shares. The securities reported on the Schedule 13G are beneficially owned by clients of Dodge & Cox, which clients may include investment companies registered under the Investment Company Act of 1940 and other managed accounts, and which clients have the right to receive or the power to direct the receipt of dividends from, and the proceeds from the sale of, HP’s stock. The Schedule 13G contained information as of July 31, 2015 and may not reflect current holdings of HP’s stock. The address of Dodge & Cox is 555 California Street, 40th Floor, San Francisco, CA 94104. |
(2) | Based on the most recently available Schedule 13G/A filed with the SEC on January 26, 2016 by BlackRock, Inc. According to its Schedule 13G, BlackRock, Inc. reported having sole voting power over 83,978,677 shares, shared voting power over 74,845 shares, sole dispositive power over 100,257,795 shares and shared dispositive power over 74,845 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(3) | Based on the most recently available Schedule 13G filed by the Vanguard Group on February 10, 2015. According to its Schedule 13G, BlackRock, Inc. reported having sole voting power over 3,220,971 shares, shared voting power over no shares, sole dispositive power over 94,995,158 shares, and shared dispositive power over 3,049,447 shares. The Schedule 13G contained information as of December 31, 2014 and may not reflect current holdings of HP’s stock. The address for the Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(4) | Includes 59,840 shares that Mr. Gupta has the right to acquire by exercise of stock options. |
(5) | Includes 66 shares held by Ms. Whitman indirectly through a trust and 5,541,022 shares that Ms. Whitman has the right to acquire by exercise of stock options. |
(6) | Includes 594,714 shares that Mr. Weisler has the right to acquire by exercise of stock options. |
(7) | Includes 306 shares held by Ms. Lesjak’s spouse, 29,549 shares held by Ms. Lesjak jointly with Ms. Lesjak’s spouse and 842,077 shares that Ms. Lesjak has the right to acquire by exercise of stock options. |
(8) | Includes 667,312 shares that Ms. Keogh has the right to acquire by exercise of stock options. |
(9) | Includes 431,297 shares that Mr. Neri has the right to acquire by exercise of options. |
(10) | Includes 7,681,094 shares that current executive officers and directors have the right to acquire. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of HP’s stock to file reports with the SEC regarding their ownership and changes in ownership of our securities. Based upon our examination of the copies of Forms 3, 4, and 5, and amendments thereto furnished to us and the written representations of our directors, executive officers and 10% stockholders, we believe that, during fiscal 2015, our directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements.
RELATED PERSON TRANSACTIONS POLICIES AND PROCEDURES
We have adopted a written policy for approval of transactions between us and our directors, director nominees, executive officers, beneficial owners of more than 5% of HP’s stock, and their respective immediate family members where the amount involved in the transaction exceeds or is expected to exceed $100,000 in a single calendar year.
The policy provides that the NGSR Committee reviews certain transactions subject to the policy and decides whether or not to approve or ratify those transactions. In doing so, the NGSR Committee determines whether the transaction is in the best interests of HP. In making that determination, the NGSR Committee takes into account, among other factors it deems appropriate:
| | |
| ü
| the extent of the related person’s interest in the transaction; |
ü | | whether the transaction is on terms generally available to an unaffiliated third party under the same or similar circumstances;
|
ü | | the benefits to HP;
|
ü | | the impact or potential impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, 10% stockholder or executive officer;
|
ü | | the availability of other sources for comparable products or services; and
|
ü | | the terms of the transaction.
|
The NGSR Committee has delegated authority to the chair of the NGSR Committee to pre-approve or ratify transactions where the aggregate amount involved is expected to be less than $1 million. A summary of any new transactions pre-approved by the chair is provided to the full NGSR Committee for its review at each of the NGSR Committee’s regularly scheduled meetings.
The NGSR Committee has adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include:
| | |
ü | | compensation of executive officers that is excluded from reporting under SEC rules where the HRC Committee approved (or recommended that the Board approve) such compensation;
|
ü | | director compensation;
|
ü | | transactions with another company with a value that does not exceed the greater of $1 million or 2% of the other company’s annual revenues, where the related person has an interest only as an employee (other than executive officer), director or beneficial holder of less than 10% of the other company’s shares;
|
ü | | transactions with another company with a value that does not exceed the greater of $1 million or 2% of the other company’s annual revenues, where the related person has an interest only as an employee (other than executive officer), director or beneficial holder of less than 10% of the other company’s shares;
|
ü | | contributions to a charity in an amount that does not exceed $1 million or 2% of the charity’s annual receipts, where the related person has an interest only as an employee (other than executive officer) or director; and
|
ü | | transactions where all stockholders receive proportional benefits.
|
A summary of new transactions covered by the standing pre-approvals relating to other companies (as described above) is provided to the NGSR Committee for its review in connection with that committee’s regularly scheduled meetings.
Fiscal 2015 Related Person Transactions
We enter into commercial transactions with many entities for which our executive officers or directors serve as directors and/or executive officers in the ordinary course of our business. All of those transactions were pre-approved transactions as defined above, except for transactions with Alcoa Inc., which were ratified by the NGSR Committee. Mr. Kleinfeld was Chairman and Chief Executive Officer of Alcoa Inc. during fiscal 2015. HP considers these transactions to have been at arm’s-length and does not believe that Mr. Kleinfeld had a material direct or indirect interest in any of such commercial transactions.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Introduction
As discussed elsewhere in this proxy statement, effective November 1, 2015, Hewlett-Packard Company separated into two independent, publicly traded companies: HP Inc., which comprises now former Hewlett-Packard Company’s printing and personal systems businesses and Hewlett Packard Enterprise, which comprises now former Hewlett-Packard Company’s enterprise technology infrastructure, software, services and financing businesses. Accordingly, references to “HP” and the “company” in this proxy statement refer to Hewlett-Packard Company with respect to events occurring on or prior to October 31, 2015 and to HP Inc. with respect to events occurring after October 31, 2015. Similarly, references to “Board” and “HRC Committee” in this proxy statement refer to Hewlett-Packard Company’s Board of Directors or Hewlett-Packard Company’s HR and Compensation Committee with respect to actions taken on or prior to October 31, 2015 and to the HP Inc. Board and HP Inc. HRC Committee with respect to actions taken after October 31, 2015.
This Compensation Discussion and Analysis contains a description ofdescribes our executive compensation philosophy and programs,program, the compensation decisions the HP HRC Committee has made under those programs,the program, and the considerations in making those decisions. decisions in fiscal 2023.
Named Executive Officers (NEOs)
Our NEOs for fiscal 2015, and their designated titles at HP Inc. or Hewlett Packard Enterprise,2023 are:
| | | | | | | | | | | | | | |
| | | | |
Enrique J. Lores
President and CEO | Marie Myers
Chief Financial
Officer* | Tuan Tran
President,
Imaging Printing &
Solutions | Alex Cho
President,
Personal Systems | Julie Jacobs
Chief Legal Officer &
General Counsel |
*Ms. Myers voluntarily resigned as
applicable, following the separation, are as follows:Margaret C. Whitman, President and CEO of Hewlett Packard Enterprise. Prior to the separation, Ms. Whitman served as Chairman of the Board, President and CEO of HP;
Catherine A. Lesjak, Chief Financial Officer, effective December 31, 2023, and left the Company on January 12, 2024.
Fiscal 2023 Compensation Highlights
For fiscal 2023, the HRC Committee revised our executive compensation programs to better align with our strategic growth agenda and market practice, making the following changes to our short-term incentive and long-term incentive plans, including:
•Reducing the cap on payouts to 200% of HP Inc. Priortarget (versus a maximum of 250% of target in prior years) for each individual metric in the short-term incentive plan. This change will ensure no single metric’s influence on payouts is larger than intended and is consistent with peer practice; and
•For Performance Contingent Stock Options (“PCSOs”), increasing the stock price hurdle to 15% growth over a three-year period while maintaining a one-year time-based vesting requirement for the first tranche of PCSOs.
•Previously, vesting of the first tranche of PCSOs required 10% stock price growth in two years.
•A longer performance period will allow for more time for the market to observe and respond to the separation, Ms. Lesjak served as Executive Vice Presidentexecution of HP’s strategy.
We continue to provide competitive target compensation opportunities, with the amounts and Chief Financial Officermix of HP;pay consistent with peers.
Dion J. Weisler, President and CEO of HP Inc. Prior to the separation, Mr. Weisler served as Executive Vice President, Printing and Personal Systems Group of HP;
Antonio F. Neri, Executive Vice President and General Manager of Enterprise Group of Hewlett Packard Enterprise. Prior to the separation, Mr. Neri served as Executive Vice President and General Manager, Enterprise Group of HP; and
Tracy S. Keogh, Chief Human Resources Officer of HP Inc. Prior to the separation, Ms. Keogh served as Executive Vice President and Chief Human Resources Officer of HP.
Executive Summary
Business Overview and Performance
Prior to the separation and throughout fiscal 2015, HPTarget Total Direct Compensation (“TDC”) was set within a leading global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses, and large enterprises, including customers in the government, health and education sectors. HP offered onecompetitive range of the IT industry’s broadest portfoliosmarket with variations based on each executive’s experience, individual performance, advancement potential and consideration of products and services that brings together infrastructure, software, and services through innovation and enables our customers to create value and solve business problems.
HP was organized into seven business segments: Personal Systems, Printing, the Enterprise Group (EG), Enterprise Services (ES), Software, HP Financial Services (HPFS), and Corporate Investments. Following the separation, HP Inc. is comprisedinternal equity. TDC consists of Personal Systems, Printing, and Corporate Investments and Hewlett Packard Enterprise is comprised of EG, ES, Software, HPFS, and Corporate Investments.
In fiscal 2012, we launched a five-year turnaround plan. The focus in fiscal 2012 was to stabilize our business, identify and define key challenges, develop crisp business strategies, and streamline and improve operations. Our focus in fiscal 2013 was to “fix and rebuild,” to strengthen our foundation for “recovery and expansion” in fiscal 2014 and beyond. In fiscal 2014, we increased investment in research and development, strengthened our product portfolio, and improved our customer and partner experience, building a strong foundation for separating the company. In fiscal 2015, our focus was on executing the separation while continuing to drive the business forward. Our continued efforts resulted in the following strategic accomplishments during fiscal 2015:
completed restructuring of commercial interests in China and established a joint venture with Tsinghua University;
created a compelling brand for Hewlett Packard Enterprise while preserving and redefining the HP brand;
launched innovative server, storage, security and cloud solutions, and a robust portfolio of enterprise-class and consumer PCs;
reinvigorated HP Labsbase salary, target annual incentives expressed as talent incubator and innovation engine; and
executed the largest corporate separation in history without customer or partner disruption, creating two market-leading, independent, publicly-traded companies with strong financial foundations, compelling innovation roadmaps, sharp strategic focus, and experienced leadership teams.
In a challenging global macroeconomic and foreign currency environment, our fiscal 2015 financial results were mixed and included:
$103.4 billion in Corporate Revenue (as defined on page 61) compared to a target goal of $111.3 billion under our annual incentive plan;
$7.2 billion in Corporate Net Earnings (as defined on page 61) compared to a target goal of $8.3 billion under our annual incentive plan;
3.2% Corporate Free Cash Flow (as a percentage of revenue;base salary, and the grant-date value of long-term incentives.
Our short-term incentive plan continued to align with core financial metrics and MBOs, which are critical value drivers of commitments made to stockholders.
For fiscal 2023, NEOs earned annual incentives averaging 77.5% of target. Individual bonuses varied from 76.5% to 81.5% of target with HP’s President & CEO’s bonus equal to 76.5% of target. The Company achieved close to target result with respect to adjusted non-GAAP operating profit. The Company achieved above target results with respect to GAAP net revenue and non-GAAP free cash flow. The HRC Committee exercised its discretion to reduce the financial performance factor in order to create parity with the bonus plan for the broader group of employees within the Company. Twenty-five percent of target annual incentives are contingent upon the achievement of qualitative objectives that we believe will contribute to HP’s long-term success including Growth, People and Sustainable Impact. NEOs successfully delivered progress against their MBOs as defineddetailed on page 61) comparedpages 57-58. Our long-term incentive plan continued to align actual pay with performance by putting a target goalsignificant portion of 7.2% undervariable compensation at risk to support our annualgrowth-oriented strategy.
For fiscal 2023, the performance-based equity weighting for HP’s President & CEO remained at 70% with 35% allocated to Performance Adjusted Restricted Stock Units (“PARSUs”) and 35% allocated to PCSOs. Performance-based equity weightings for the rest of the NEOs remained at 60%, with 30% weighting each for PARSUs and PCSOs.
The remaining 30% to 40%, as applicable, of long-term incentive plan; and
returning $4.1 billion to stockholdersgrant value was delivered in the form of share repurchasesRSUs primarily intended to increase stock ownership among our NEOs, while also supporting retention and dividends.incentivizing NEOs to maximize value for our stockholders. The value of RSUs is tied to stock price and reinvested dividend equivalents.
HP Inc. began
In fiscal 2016 with a renewed culture, energy2023, NEOs received payouts for fiscal 2021 PARSUs (measurement period ending in fiscal 2023) of 125.3%. The average PARSU EPS payout was above target at 125.3%, while the fiscal 2021-2023 TSR modifier approximated the 71st percentile of the S&P 500, resulting in no additional payout.
We continued our strong compensation governance practices.
We periodically review our executive compensation program for peer group alignment and spirit of innovation that we believe will be an important catalyst for improved performance in the years ahead. We have the heart and energystrategic relevance as part of a startup,long-standing compensation governance process that includes stockholder engagement. At the brainsannual meeting in 2023, our say-on-pay proposal was approved by over 95% of the voted shares, indicating significant stockholder support and musclereinforcing our decision to make only limited changes to the program.
Components of a Fortune 100 company, and a singular focus on the printing and personal systems businesses.Compensation Executive Compensation Philosophy
Our
executive compensation program
practices and policies have been structured to reflect the Board’s commitment to excellence in corporate governance, and to reward short- and long-term performance that drives stockholder value.consists primarily of performance-based components. The table below
summarizes key elementsidentifies each major pay component, its role and applicable factors for determining the amount. Percentages are the averages of
our fiscal 2015 compensation programs relative to this philosophy.pay components at target for the NEOs, including the CEO. | | | | | | | | |
| Pay Component | Role | Determination Factors |
| ALIGNMENT WITH STOCKHOLDERS | |
| | |
Base Salary | •Provides a fixed portion of annual cash income | •Value of role in competitive marketplace •Value of role to the Company •Skills, experience and performance of individual compared to the market as well as others in the Company |
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| | |
Annual Incentive Payments to executives for annual incentive purposes, made under the HP Inc. 2004 Stock Incentive Plan, as amended and restated (the “2004 Stock Incentive Plan”) | •Provides a variable and performance-based portion of annual cash income •Focuses executives on annual objectives that support our long-term strategy and the creation of value | •Target awards based on competitive marketplace, level of position, skills and performance of executive •75% of actual awards based on achievement against annual corporate and business unit financial metrics and individual goals as set and approved by the HRC Committee. Financial metrics are: •GAAP net revenue •Adjusted non-GAAP operating profit •Non-GAAP free cash flow •25% of actual awards based on achievement against individualized MBOs relating to Growth, People and Sustainable Impact |
| Pay-for-Performance | |
| | |
Long-term Incentive •PARSUs •PCSOs •RSUs | •Supports long-term sustained performance and growth-oriented strategy •Aligns interests of executives and stockholders, reflecting the time-horizon and risk to investors •Focuses executives on critical long-term performance goals •Encourages equity ownership and stockholder alignment •Retains key employees | Corporate Governance•Target awards based on competitive marketplace, level of position, skills and performance of the executive •Actual earned values based on performance against corporate EPS goals, relative TSR performance and stock price performance |
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All Others •Benefits •Limited perquisites •Severance protection | •Supports the health and security of our executives and their ability to save on a tax-deferred basis •Enhances executive productivity | •Competitive market practices for similar roles •Level of executive •Standards of best-in-class compensation governance |
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2023 NEO TDC (based on target) at a glance
Alignment with Stockholders and Compensation Best Practices
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| | | | |
| Pay-for-Performance | | | Compensation Governance |
| | | | |
| | | | |
 The majority of target total directcompensation for executives isperformance-based as well asequity-based to align theirexecutives’ rewards with sustained stockholder value | | • We generallydo not enter into individual executive compensation agreements
|
• creation.
Total direct compensation istargeted at or near set within a competitive range of our peer group to ensure that it is appropriate and is aligned with the marketmedian | | • Wedevote significant time to management succession planninglevel of position, experience, skills and leadership development efforts
|
• performance of the executive.Actual realized total direct compensation andpay positioning is are designed to fluctuate with, and becommensurate with, actual annual and long-term performance,
| | • We maintain a market-aligned severance policy for executives that doesnot have automaticsingle-trigger equity vesting upon a change in control
|
• recognizing company-wide and individual results.Incentive awards are heavily dependent upon our stock performance and are measured againstobjective financial metrics that we believelink either directly or indirectlyto the creation of value for our stockholders. In addition, 25% of our target annual incentives are contingent upon the achievement of qualitative objectives that we believe will contribute to our long-term success,
| | • The HRC Committee utilizes anindependentcompensation consultant
|
| • Our compensation programsdo not encourage imprudent risk-taking
|
| • We maintainstock ownership guidelines for executive officers including Growth, People and non-employee directors
|
•Sustainable Impact.
We balance growthcash flow, revenue and returnprofit objectives, topas well as short- and bottom line objectives, and short-and long-term objectives to reward for overall performance that does not over-emphasize a singular focus on a particular metric or time period. Also, we have payout governors on key financial metric outcomes designed to avoid significantly overachieving based on one metric without taking into consideration our performance on other plan metrics (as explained in more detail starting on page 55). A significant portion of our long-term incentives are delivered in the form of performance-contingent stock options, referred to as “PCSOs”, which vest only if sustained stock price appreciation is achieved, and performance-adjusted restricted stock units, referred to as “PARSUs”, which vest upon the achievement of EPS objectives and which can be modified by relative total shareholder return (“TSR”) performance. For fiscal 2023, the payouts under annual incentive awards and under PARSUs are capped at 200% of bonus target and 3x target shares, respectively. We validate the pay-for-performance relationship on an annual basis and our HRC Committee reviews and approves performance goals under our incentive plans. The compensation of objectively identified peer companies based on industry and size criteria is considered to ensure that pay levels and program design for the NEOs are appropriate and competitive. | | •
Weprohibit conduct an ongoing, proactive stockholder outreach program throughout the year and use that input to inform our program decisions and pay practices. We disclose our corporate performance goals and achievements relative to these goals. We do not utilize fixed-term executive employment contracts for senior executives. We devote significant time to management succession planning and leadership development efforts. We maintain a consistent market-aligned severance policy for executives and a conservative change in control policy which requires a double trigger for execution. The HRC Committee engages an independent compensation consultant.  We have clawback policies that enable the Board to recoup compensation in the event of a financial restatement or misconduct, which mitigates compensation-related risk and complies with applicable SEC rules and NYSE listing standards. Details are provided in the “Policies for Recoupment of Compensation” section on page 64. We maintain strong stock ownership guidelines for executive officers and directorsnon-employee Directors. We prohibit all employees, including our executive officers, and also non-employee Directors, from engaging in any form ofhedging transaction frominvolving HP securities, holding HP securities in margin accounts andpledging stock as collateral for loans in a manner that could create compensation-related risk for the CompanyCompany. We do not provide excessive perquisites to our executive officers. We do not allow our executives to participate in the determination of their own compensation. We do not provide 280G tax gross ups in the event of a change in control. We do not reprice underwater stock options without prior stockholder approval. |
| • A significant portion of our long-term incentives are delivered in the form ofPCSOs, which vest only if sustained stock price appreciation is achieved, andPARSUs, which vest only upon the achievement of two- and three-yearRTSR andROIC objectives
| | • We conduct a robuststockholder outreach program throughout the year
| | | | | |
• We provideno U.S. supplemental defined benefit pensions
Executive Compensation | | • Wedisclose our corporate performance goals and achievements relative to these goals
|
| • We validate ourpay-for-performance relationship on an annual basis
|
Components ofExecutive Compensation
Our primary focus in compensating executives is on the longer-term and performance-based elements of compensation. The table below shows our pay components, along with the role and factors for determining each pay component.
| | | | |
Pay Component | | Role | | Determination Factors |
Base Salary | | • Fixed portion of annual cash income
| | • Value of role in competitive marketplace
• Value of role to the company
• Skills and performance of individual compared to the market as well as others in the company
|
Annual Incentive (i.e., PfR Plan) | | • Variable portion of annual cash income
• Focus executives on annual objectives that support the long-term strategy and creation of value
| | • Target awards based on competitive marketplace and level of experience
• Actual awards based on actual performance against annual corporate, business unit, and individual goals
|
Long-term Incentives:
• PCSOs/Stock Options
• RSUs
• PARSUs
• Other, as needed
| | • Reinforce need for long-term sustained performance and completion of turnaround
• Align interests of executives and stockholders, reflecting the time-horizon and risk to investors
• Encourage equity ownership
• Encourage retention
| | • Target awards based on competitive marketplace, level of executive, and skills and performance of executive
• Actual value relative to target based on actual performance against corporate goals and stock price performance
|
All Other:
• Benefits
• Perquisites
• Severance Protection
| | • Support the health and security of our executives, and their ability to save on a tax-deferred basis
• Enhance executive productivity
| | • Competitive marketplace
• Level of executive
• Standards of good governance
• Desire to emphasize performance-based pay
|
Program Oversight and Authority over Executive Compensation
Role of the HRC Committee and its
AdvisorsAdvisor
The HRC Committee
oversees and provides strategic direction to management regarding all aspects of our pay program for senior executives. It makes recommendations regarding the CEO’s compensation to the independent members of the Board for approval, and
it reviews and approves the compensation of the remaining Section 16
officers.officers, including our NEOs. Each HRC Committee member is an independent non-employee
directorDirector with significant
experienceexpertise in executive compensation matters.
During fiscal 2015, the The HRC Committee continued to retain Farient Advisors LLC (“Farient”)retained Semler Brossy as its independent compensation consultant during fiscal 2023, and Dentons US LLP (“Dentons”) as its independent legal counsel. Farientworked with them and management on all aspects of our pay program for senior executives.
Semler Brossy provides analyses and recommendations that inform the HRC Committee’s
decisions,decisions; identifies peer group companies for competitive market comparisons; evaluates market pay data and competitive-position
benchmarking,benchmarking; provides
analysisanalyses and
inputinputs on
program structure, performance measures, and
goals, provides analysis and input on program structure,goals; provides updates on market trends and the regulatory environment as it relates to executive
compensation,compensation; advises the HRC Committee on best practices in governance and oversight of human capital management topics; reviews various
management proposals presented to the HRC Committee related to executive compensation,and Director compensation; and works with the HRC Committee to validate and strengthen the pay-for-performance relationship and alignment with stockholders. Pursuant to SEC rules the HRC Committee has assessed the independence of Farient and Dentons, and concluded each is independent and that no conflict of interest exists that would prevent Farient or Dentons from independently providing service to the HRC Committee. Neither Farient nor Dentons performsstockholder interests. Semler Brossy does not perform other services for HP and neither will not do so without the prior consent of the HRC Committee chair. Both Dentons and Farient meetSemler Brossy meets with the HRC Committee chair and the HRC Committee outside the presence of management.
management while in executive session.
The HRC Committee met
tenfive times in fiscal
2015,2023, and
sevenall of these meetings included an executive session.
The HRC Committee’s independent advisorsSemler Brossy participated in
mostall of the meetings and, when requested by the HRC Committee chair, in the preparatory meetings and
the executive sessions.
Role of Management and the CEO in Setting Executive Compensation
On an annual basis, management considers
The CEO recommends compensation for non-CEO Section 16 officers for approval by the HRC Committee. The HRC Committee considered market competitiveness, business results, experience, and individual performance inwhen evaluating fiscal 2023 NEO compensation.compensation and the overall compensation structure. The Chief Human ResourcesPeople Officer and other members of our human resources organization,executive compensation team, together with members of our finance and legal organizations and the input of the HRC Committee’s independent consultant, work with the CEO to design and develop the compensation programs, toprogram, recommend changes to existing plans and programsprogram provisions applicable to NEOs and other senior executives, as well asdevelop financial and other targets to be achieved under those programs, prepare analyses of financial data, peer comparisons and other briefing materials to assist the HRC Committee in making its decisions, and implement the decisions of the HRC Committee.
During fiscal
2015, management continued to engage Meridian Compensation Partners, LLC (“Meridian”) as their compensation consultant. The HRC Committee took into consideration that Meridian provided executive compensation-related services to management when it evaluated any information and analyses provided by Meridian, all of which were also reviewed by Farient.During fiscal 2015, Ms. Whitman2023, Mr. Lores provided input to the HRC Committee regarding performance metrics and the setting of appropriate performance targets. Ms. Whitmantargets for his direct reports. Mr. Lores also recommended MBOs for the NEOs and the other senior executives who report directly to her. All modifications to the compensation programs were assessed by Farient on behalf of the HRC Committee, and discussed and approved by the HRC Committee. Ms. Whitmanhim. Mr. Lores is subject to the same financial performance goals as the executives who lead global functions and Ms. Whitman’sthe businesses, and Mr. Lores’ MBOs and compensation are established by the HRC Committee in executive session and recommended to the independent members of the Board for approval.
Mr. Lores is not present at the portion of any Board meeting during which his own compensation is discussed and considered.
Use of Comparative Compensation Data and Compensation PhilosophyEach year, the
The HRC Committee reviews the compensation of our Section 16 officers and compares itin comparison to that of executives in similar positions withat our peer group companies. Our peer group includes companies we compete with for executive talent due to our geographical proximity and technology industry overlap. The HRC Committee findsuses this information useful in evaluating whetherto evaluate how our pay levels and practices compare to market practices.
When determining the peer group, the following characteristics were considered with exceptions made at the HRC Committee’s determination for labor-market relevance:
•Direct talent market peers.
•U.S.-based companies in the technology sector (excluding distributors, contract manufacturers and outsourced services/IT consulting) with revenues or market cap between 20% and 500% that of HP.
•Select general industry companies (industrials, consumer products and telecom) generally meeting size and business criteria that are currenttop-brands and competitive. This process starts with the selectionconsidering continuity.
•Review of the relevant group of peer companies chosen by companies within our proposed peer group and peer business similarity, to evaluate relevance.
We believe the resulting peer group provides HP and the HRC Committee with a valid comparison and benchmark for
comparison purposes.the Company’s executive compensation program and governance practices. For fiscal 2023, the HRC Committee removed Seagate from the peer group due to market cap, revenue and operational differences between Seagate and HP. The HRC Committee
continuesadded Applied Materials and 3M given each company’s overall size, valuation characteristics, global footprints and comparability to
use a “rules-based” approach for objectively determining our executive compensationthe other companies included in HP’s peer group.
For fiscal 2015, the approach was streamlined and used two primary screening criteria to develop a pool of potential peers that were subject to further consideration based on additional factors.The two primary screening criteria were:
revenue in excess of 25% of HP’s revenue for technology companies and between 50% and 250% of HP’s revenue for companies in other industries; and
publicly traded companies in industries of information technology, industrials, materials, energy, health care, telecommunications services, consumer discretionary, and consumer staples.
Additional factors considered included: business similarities, companies that generally use U.S. compensation practices, global and organization complexity, avoiding industry overweighting, market cap, absence of anomalous pay practices, research and development spending as a percent of revenue, peers of peers, competition for talent, and ISS and Glass Lewis peer selections.
The use of this rules-based methodology results in the appropriate peer group for comparison purposes, as well as a group that is large and diverse enough so that addition or elimination of any one company does not alter the overall analysis. As a result of the screening process, Accenture plc and QUALCOMM Incorporated were added to, and Dell Inc. was removed from, the fiscal 2015 peer group.
TheHP peer group for fiscal 20152023, as approved by the HRC Committee, consisted of the following companies:
| | | | | |
Company Name
Fiscal 2023 Group | | Revenue
($ in billions)* | |
Apple Inc
| | | 233.7 | |
Chevron Corporation
| | | 200.5 | |
General Electric Company
| | | 148.1 | |
Ford Motor Company
| | | 144.1 | |
AT&T Inc.
| | | 132.5 | |
Verizon Communications Inc
| | | 127.1 | |
Hewlett-Packard Company
| | | 103.4 | |
Microsoft Corporation
| | | 93.6 | |
International Business Machines Corporation
| | | 92.8 | |
The Boeing Company
| | | 90.8 | |
The Procter & Gamble Company
| | | 76.3 | |
Johnson & Johnson
| | | 74.3 | |
PepsiCo, Inc.
| | | 66.7 | |
Google Inc.
| | | 66.0 | |
United Technologies Corporation
| | | 64.3 | |
Intel Corporation
| | | 55.9 | |
Caterpillar
| | | 55.2 | |
Cisco Systems, Inc.
| | | 49.2 | |
Oracle Corporation
| | | 38.2 | |
Accenture
| | | 30.0 | |
Qualcomm
| | | 25.3 | |
EMC Corporation
| | | 24.4 | |
| * | Represents fiscal 2014 reported revenue, except fiscal 2015* Represents fiscal 2023 reported revenue, except fiscal 2022 reported revenue is provided for Apple, HP, Microsoft, Procter & Gamble, Cisco Systems, Oracle and Qualcomm. |
In reviewing comparative pay data from these companies against pay for our Section 16 officers, the HRC Committee evaluated some data using regression analysis to adjust for size differences between our company3M, General Electric, Honeywell, IBM, Intel, PepsiCo and the peer group companies. In addition, we excluded particular data points of certain companies if they were anomalous and not representative of market practices.
In fiscal 2015 the HRC Committee continued to set target compensation levels generally at or near the market median, although in some cases higher for attraction and retention purposes. As will be discussed in detail in the fiscal 2016 proxy statement, a new peer group appropriate for the post-separation company was approved for fiscal 2016.
Texas Instruments.
Process for Setting and Awarding Executive CompensationA broad range of facts and circumstances is considered in setting our overall executive compensation levels. Among the
The factors considered
when determining pay opportunities for our
executives generally, and for the NEOs
in particular, are market competitiveness, experience, individual performance, advancement potential and internal equity and individual performance.equitability. The weight given to each factor is not formulaic and may differ from year to year is not formulaic and may differ amongor by individual NEOs in any given year. For example, when we recruit externally, market competitiveness, experience and the circumstances unique to a particular candidate may weigh more heavily in the compensation analysis. In contrast, when determining year-over-year compensation for current NEOs, internal equity and individual performance may factor more heavily in the analysis.
Because such a large percentage of NEO pay is performance-based, theNEO.
The HRC Committee spends significant time determining the appropriate goals for our
annual-annual and long-term incentive
pay plans. In general, managementplans, which make up the majority of NEO compensation. Management makes an initial recommendation
forof the goals, which is then assessed by
Farient,the HRC Committee’s independent compensation consultant and discussed and approved by the HRC Committee. Major factors considered in setting
financial goals for each fiscal year are business results from the most recently completed fiscal year,
segment-levelbudgets and strategic plans, macroeconomic factors,
competitiveguidance and analyst expectations, industry performance
results and
goals, conditions or goals specific to a particular business segmenttrends and strategic initiatives.
To permit eligible compensation to qualify as “performance-based compensation” under Section 162(m)MBOs address a range of
the Internal Revenue Code of 1986, as amended (the “Code”), the HRC Committee sets the overall funding target for the “umbrella” structure for the annual incentives,important topics, including focus areas on Growth, People and
sets performance goals for annual incentives and equity awards within the first 90 days of the fiscal year.Sustainable Impact.
Following the close of the fiscal year, the HRC Committee reviews actual financial results and MBO performance against the goals
that it had set
byfor the
HRC Committee under our incentive compensationapplicable plans for that year, with payouts under the plans determined
by reference tobased on performance against the established goals. The HRC Committee meets in executive session to review the MBO
results forperformance of the CEO and to determine a recommendation for
herhis annual incentive award to be approved by the independent members of the Board.
In setting See “2023 Annual Incentives” below for a further description of our results and corresponding incentive compensation for the NEOs, the HRC Committee generally does not consider the effect of past changes in stock price or expected payouts or earnings under other plans. In addition, incentive compensation decisions are made without regard to length of service or prior awards.
payouts.
Determination of Fiscal 20152023 Executive Compensation Under our Total Rewards Program, executive compensation consists
of:of base salary, annual incentives, long-term incentives, benefits, and perquisites.
Fiscal 2015 Compensation Highlights
Prior to the separation, the HP Board and the HP
The HRC Committee regularly
exploredconsiders ways to improve our executive compensation program
whose philosophy continues with our Board and HRC Committee following the separation. In making changes for fiscal 2015, the HP HRC Committee considered the evolution of our turnaround,by considering stockholder feedback, our current business needs and strategy, and
the anticipated impact of the separation. The objectives were to encourage strong performance from our executives, pay commensurately with the performance delivered, and align the interests of our executives with those of our stockholders and reflect our stockholders’ perspectives and input. While many elements of the fiscal 2015 executive compensation program remained consistent with prior years, some changes were made:Pay-for-Results (PfR) Plan. For fiscal 2015, the maximum funding of Corporate Free Cash Flow as a % of Revenue (25% weighting within the PfR Plan) was capped at 150% of target if Corporate Net Earnings achievement was below target and capped at 100% of target if Corporate Net Earnings achievement was below threshold. If Corporate Net Earnings achievement was above target, the maximum funding level remained 250% of target. This adjustment was made to further balance our executives’ focus on all performance metrics in the PfR Plan.peer group practices.
Performance-contingent Stock Options (“PCSOs”). PCSOs granted in fiscal 2015 will vest solely based on stock price appreciation goals and related service requirements, which remain the same as for grants made in fiscal 2014. But in contrast to the 2014 PCSOs, the fiscal 2015 PCSOs no longer include the opportunity to vest at the end of a 7-year performance period based on relative TSR performance. Relative TSR (“RTSR”) remained a part of the performance-adjusted restricted stock units (“PARSUs”) design.2015
2023 Base Salary
Consistent with our philosophy of tying pay to performance, our
Our executives receive a small percentage of their overall compensation in the form of base salary.salary, which is consistent with our philosophy of tying the majority of executive pay to performance. The NEOs are paid an amount in the form of base salary sufficient to attract qualified executive talent and maintain a stable management team.
The HRC Committee aims to
haveset executive base salaries
set at or nearwithin a competitive range of the market
median for comparable
positions andpositions. In fiscal 2023, salaries generally comprise
on average 10%
to 20% of
theour NEOs’ overall compensation,
which is consistent with the practice of our peer group companies. The HRC Committee typically establishes executive base salaries at the beginning of the fiscal year.When Ms. Whitman joined HP as CEO, the Board established an initial salary of $1 per year, reflecting the company’s plan for a turnaround. For fiscal 2014, considering the stage of our planned turnaround, the Board decided it would be appropriate to begin paying Ms. Whitman a salary consistent with the median of our peer group. Accordingly, Ms. Whitman received a salary of $1.5 million for fiscal 2014, and the Board made no changes to this salary level for fiscal 2015. The Board maintains a total CEO target compensation package that approximates the competitive median of our market and is consistent with our pay positioning strategy and pay-for-performance philosophy.
The HRC Committee did not changepeers. In making its recommendation to the salaries ofBoard regarding the other NEOs in fiscal 2015.
2015 Annual Incentives
PfR Plan Structure
The NEOs are eligible to earn an annual incentive under the PfR Plan. For fiscal 2015,CEO’s salary, the HRC Committee again established an “umbrella” formulareviews analyses and recommendations provided by Semler Brossy.
For fiscal 2023, the HRC Committee approved changes to the base salaries of Ms. Myers, Mr. Cho, and Mr. Tran, and recommended that the Board approve a change in the base salary of Mr. Lores, in each case, as described in the table below. Mr. Lores’, Ms. Myers’, Mr. Tran’s and Mr. Cho’s salary increases were to reflect better alignment to market, peers and performance. Ms. Jacobs joined the Company on October 3, 2022, shortly before the start of fiscal year 2023, and therefore Ms. Jacobs’ salary was not adjusted during fiscal 2023.
Changes in Base Salary
| | | | | | | | | | | | | | | | | |
| Executive | Fiscal Year-end
2022 Base
Salary | Fiscal Year-end
2023 Base
Salary | Percentage
Change |
| Enrique Lores | | $ | 1,250,000 | | | $ | 1,300,000 | | 4 | % |
| Marie Myers | | $ | 780,000 | | | $ | 820,000 | | 5 | % |
| Tuan Tran | | $ | 780,000 | | | $ | 820,000 | | 5 | % |
| Alex Cho | | $ | 780,000 | | | $ | 803,500 | | 3 | % |
| Julie Jacobs | | $ | 700,000 | | | $ | 700,000 | | No Change |
2023 Annual Incentives
The Fiscal 2023 Annual Incentive Plan for the maximum bonus and then exercised negative discretion in setting actual bonuses. UnderExecutive Leadership Team (including the umbrella formula, each Section 16 officer was allocated a pro rata share of 0.75% of net earnings based on his or her target annual incentive award, subject to a maximum bonus of 250%NEOs) consisted of the NEO’s target bonus,following three core financial metrics: GAAP net revenue, adjusted non-GAAP operating profit, and non-GAAP free cash flow. Revenue, operating profit and free cash flow are critical value drivers of the long-term commitment that we have made to stockholders to maximize the value of their investments.
Beginning in fiscal 2023, each individual metric may fund up to 200% of target; and the maximum $10 million cap underannual incentive for each executive is also capped at 200% of target.
A fourth component, MBOs, was used to further drive individual performance and achievement of key strategic goals. Each financial metric and the
PfR Plan. Below this umbrella funding structure, actual payoutsMBOs were
determined based upon financial metrics and MBOs established by the HRC Committee for Section 16 officers and by the independent membersweighted at 25% of the
Board for the CEO.For fiscal 2015, the funding metric used to determine deductibility under Section 162(m) of the Code was approved, as required, within the first 90 days of the fiscal year. After the end of the fiscal year, the actual funding based on this metric was certified, and it exceeded the maximum potential bonus for the combined covered officers.
target award value.
The target annual incentive awards for fiscal
20152023 were set at 200% of salary for the CEO and
125%135% of salary for the
other NEOs, with a maximumCFO, President Personal Systems, and President Imaging Printing & Solutions. The target annual incentive award for the Chief Legal Officer & General Counsel was set at 100% of
250% of target.salary.The performance metrics approved byIn addition, payment under the HRC Committee aligned with our intention to focus business leaders more directly on the financial performance of their own businesses. The fiscal 2015 annual incentive plan consistedis contingent on an NEO’s continued service through the end of three core financial metrics (i.e., revenue, net earnings/profit, andthe fiscal year.
Fiscal 2023 Annual Incentive Plan
| | | | | | | | | | | | | | | | | |
| Corporate Goals | | |
| Key Design Elements | GAAP Net
Revenue
($ in billions) | Adjusted
Non-GAAP
Operating Profit
($ in billions) |
Non-GAAP Free
Cash Flow(1)
($ in billions)
| MBOs | % Payout
Metric(2)
(%) |
| Weight | 25 | % | 25 | % | 25 | % | 25 | % | |
| Linkage | Corporate | Corporate | Corporate | Individual | |
| Corporate Performance Goals | | | | | |
| Maximum | — | | — | | — | | Various | 200 |
| Target | $52.0 | | $4.9 | | $2.6 | | Various | 100 |
| Threshold | — | | — | | — | | Various | 0 |
(1)Maximum funding for non-GAAP free cash flow as a percentageis capped at 150% of revenue)target if adjusted non-GAAP operating profit achievement was below target and as a fourthis capped at 100% of target if adjusted non-GAAP operating profit achievement was below threshold. If adjusted non-GAAP operating profit achievement was above target, the maximum funding level is 200% for this metric. Maximum and threshold information are not disclosed because such disclosure would result in competitive harm. However, goals are set at levels we believe to be achievable in connection with strong performance.
(2)Interpolated for performance between discrete points. Each individual metric MBOs, withmay fund up to 200% of target, and the maximum annual incentive for each metric weighted equallyexecutive is capped at 25%200% of the target award value. | | | | | | | | | | |
| Fiscal 2015 Annual Incentive Plan |
| | | Corporate or Business Unit (“BU”) Goals | | | | |
Key Design Elements | | Revenue(1)
($ in billions) | | Net
Earnings/
Profit
($ in billions) | | Free Cash Flow as a %
of Revenue(2)
(%) | | MBOs | | % Payout(3)
(%) |
| Weight: | | 25% | | 25% | | 25% | | 25% | | |
| Linkage: | | | | | | | | | | |
| Global Function Executives(4) | | Corporate | | Corporate | | Corporate | | Individual | | |
| Business Unit (“BU”) Executives(5) | | BU | | BU | | Corporate | | Individual | | |
| Corporate Performance Goals: | | | | | | | | | | |
| Maximum | | N/A | | — | | — | | Various | | 250% |
| Target | | $111.3 | | $8.3 | | 7.2% | | Various | | 100% |
| Threshold | | — | | — | | — | | Various | | 0% |
| (1) | | | | |
| 56 | For revenue above target, weight is moved to net earnings/profit if net earnings/profit is also above target; otherwise, it is capped at target. |
| (2) | Maximum funding for corporate free cash flow as a percentage of revenue is capped at 150% of target if corporate net earnings/profit achievement was below target and is capped at 100% of target if corporate net earnings/profit achievement was below threshold. If corporate net earnings achievement was above target, the maximum funding level is 250% of target. | | | |
| Executive Compensation |
| (3) | Interpolate for performance between discrete points.
(4) | The Global Function Executives include Ms. Whitman, Ms. Lesjak, and Ms. Keogh. |
(5) | The BU Executives include Mr. Weisler and Mr. Neri. |
The specific metrics, their linkage to
corporate/business unitcorporate results, and the weighting that was placed on each were chosen because the HRC Committee believed that:
performance•Performance against these metrics, in combination, would link to enhancedenhances value for stockholders, capturing both the top and bottom line, as well as cash and capital efficiency;efficiency.
requiring both revenue and profitability above target in order to achieve an above-target payout on these two measures would encourage the pursuit of profitable revenue;
a linkage to business unit results for business unit executives would help strengthen line of sight and drive accountability;
a•A balanced weighting and various caps would limitof metrics limits the likelihood of rewarding executives for excessive risk-taking;risk-taking.
different•Different measures would avoid paying for the same performance twice;twice.
•MBOs address a range of important topics, including focus areas on Growth, People and
MBOs would enhance focus on business objectives, such as operational objectives, strategic initiatives, succession planning, and people development, Sustainable Impact, which will beare important to the long-term success of the company.Company.
The
following chart sets forth the definition of and rationale for each of the financial performance metrics that was used
is described in greater detail below:for the Fiscal 2023 Annual Incentive Plan: | | | | | | | | |
Fiscal 2015 PfR |
Financial
Performance Metrics(1) | Definition(1) | Definition | | Rationale for Metric |
CorporateGAAP Net Revenue | | Net revenue as reported in HP’sour Annual Report on Form 10-K for fiscal 2015 | 2023 | Reflects top line financial performance, which is a strong indicator of our long-term ability to drive stockholder value |
Business RevenueAdjusted Non-GAAP
Operating Profit(2) | | Business net revenue as reported in HP’s Annual Report on Form 10-K for fiscal 2015 | |
Corporate Net Earnings | | Non-GAAP net earnings,operating profit, as defined and reported in HP’sour fourth quarter fiscal 20152023 earnings press release (of $4.6 billion in fiscal 2023) and summarized in footnote (2) below, further adjusted by excluding bonus net of income tax(3) | | Reflects bottom lineoperational financial performance, which is directly tied to stockholder value on a short-term basisbasis. Provides stronger alignment with our long-term strategic and financial plans |
Business Net Profit (“BNP”)(2) | | Business owned net profit, excluding bonus net of income tax | |
CorporateNon-GAAP Free Cash Flow(3) | | Cash flow from operations lessNet cash provided by operating activities adjusted for net capital expenditures (gross purchases less retirements) divided byinvestments in leases and net revenue (expressedinvestments in property, plant and equipment, as a percentage of revenue) | reported in our fourth quarter fiscal 2023 earnings press release and summarized in footnote (3) below | Reflects efficiency of cash management practices, including working capital and capital expenditures, enabling the Company to pursue opportunities that contribute to long-term stockholder value |
(1) | While we report our financial results in accordance with generally accepted accounting principles (“GAAP”), our financial performance targets and results under our incentive plans are sometimes based on non-GAAP financial measures. The financial results, whether GAAP or non-GAAP, may be further adjusted as permitted by those plans and(1)For purposes of establishing financial performance results under the Fiscal 2023 Annual Incentive Plan, our financial results, whether reported in accordance with GAAP or a non-GAAP measure, may be further adjusted as permitted by guidelines approved by the HRC Committee. We review GAAP to non-GAAP adjustments and any other adjustments with the HRC Committee to ensure performance takes into account the way the goals were set and executive accountability for performance. These metrics and the related performance targets are relevant only to our executive compensation program and should not be used or applied in other contexts. |
(2) | For fiscal 2015, PfR Plan payments for Mr. Weisler and Mr. Neri were determined partly based on the Business Revenue and BNP for their respective business units, and partly on Corporate Free Cash Flow. |
(3) | Fiscal year 2015 non-GAAP net earnings of $6.6 billion excludes after-tax costs of $2.0 billion related to the amortization of intangible assets, restructuring charges, and acquisition-related charges. HP’s management uses non-GAAP net earnings to evaluate and forecast HP’s performance before gains, losses, or other charges that are considered by HP’s management to be outside of HP’s core business segment operating results. HP believes that presenting non-GAAP net earnings provides investors with greater visibility to the information used by HP’s management in its financial and operational decision making. HP further believes that providing this additional non-GAAP information helps investors understand HP’s operating performance and evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. This additional non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP diluted net earnings. |
At its November 2015 meeting, the HRC Committee reviewedat the time of establishing the fiscal 2023 financial goals.
(2)As summarized above, adjusted non-GAAP operating profit is a non-GAAP measure that is defined as GAAP operating profit (of $3.5 billion in fiscal 2023) adjusted to exclude (i) costs of $1.1 billion related to restructuring and certifiedother charges, acquisition and divestiture charges and amortization of intangible assets and (ii) bonus. This additional non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP operating profit.
(3)As summarized above, non-GAAP free cash flow is a non-GAAP measure that is defined as net cash provided by operating activities ($3.6 billion in fiscal 2023) adjusted to exclude the impact of net investments in leases ($110 million in fiscal 2023) and net investments in property, plant and equipment ($593 million in fiscal 2023). This additional non-GAAP information is not intended to be considered in isolation or as a substitute for net cash provided by operating activities.
Following fiscal 2023, the HRC Committee reviewed performance against the financial metrics
and certified the results as follows:
| | | | | | | | |
| Fiscal 2015 PfR Plan Performance Against Financial Metrics(1) |
| Metric | | Weight(2) | | Target ($ in billions) | | Result ($ in billions) | | Percentage of
Target Annual
Incentive
Funded |
| Corporate Revenue | | 25.0% | | $111.3 | | Below threshold | | 0% |
| Corporate Net Earnings | | 25.0% | | $8.3 | | $8.0 | | 19.3% |
| Corporate Free Cash Flow (% of revenue) | | 25.0% | | 7.2% | | Below threshold | | 0% |
| Total | | 75.0% | | — | | — | | 19.3% |
(1) | Ms. Whitman, Ms. Lesjak, and Ms. Keogh received PfR Plan payments based on corporate financial metrics. Mr. Weisler received a PfR Plan payment based upon Printing and Personal Systems Group Revenue and BNP, and Corporate Free Cash Flow. Mr. Neri received a PfR Plan payment based on Enterprise Group Business Revenue and BNP, and Corporate Free Cash Flow. Financial results have been adjusted to exclude the impact of foreign currency fluctuations, within the funding level of the umbrella plan, based on HRC Committee discretion. After careful consideration, the HRC Committee determined that adjustment would be appropriate considering the magnitude and speed of foreign currency changes occurring after the goals had been set, and the feasibility of managerial action to counter such changes within the fiscal year. This increased the total payout from 0% to 19.3% with respect to the financial metrics used for Ms. Whitman, Ms. Lesjak, and Ms. Keogh, and increased the total payout from 19.4 % to 48% with respect to the financial metrics for Mr. Neri. The action resulted in no adjustment for Mr. Weisler, whose payout with respect to the financial metrics remained at 0%. |
(2) | The financial metrics were equally weighted to account for 75% of the target annual incentive. |
With respect to
Fiscal 2023 annual incentive performance against financial metrics(1)
| | | | | | | | | | | | | | | | | | | | |
Metric(1) | Weight(2) | Target
($ in billions) | Result(3)
($ in billions) | Percentage of Target
Annual Incentive Funded |
| GAAP Net Revenue | 25.0 | % | | $ | 52.0 | | | $ | 53.7 | | 29.1% |
| Adjusted Non-GAAP Operating Profit | 25.0 | % | | $ | 4.9 | | | $ | 4.9 | | 25.4% |
| Non-GAAP Free Cash Flow | 25.0 | % | | $ | 2.6 | | | $ | 3.1 | | 40.6% |
| Total | 75.0 | % | | | | | 95.1% (Adjusted to 54%(3)) |
(1)Payout governors include that HP adjusted non-GAAP operating profit will need to be achieved at minimum to be eligible for any award related to the MBOs, the independent membersHP GAAP net revenue component. Also, non-GAAP free cash flow is capped at 150% of target if HP adjusted non-GAAP operating profit achievement is below target. Non-GAAP free cash flow is capped at 100% of target if HP adjusted non-GAAP operating profit is below minimum.
(2)The financial metrics were equally weighted to account for 75% of the HP Board evaluatedtarget annual incentive.
(3)The HRC Committee exercised its discretion to reduce the CEO’sfinancial performance during an executive session heldfunding to 54% in November 2015. The evaluation included an analysisorder to create parity with the bonus plan for the broader group of Ms. Whitman’semployees within the Company.
Fiscal 2023 annual incentive performance against all of hernon-financial component (MBOs)
Mr. Lores. The HRC Committee determined that Mr. Lores met or exceeded most MBOs which included, but weredid not limited to: leading the effective separation of HP, delivering 2015 financials considering currency headwinds, delivering 2016 budgets and 3-year plans for Hewlett Packard Enterprise and HP Inc. as two separate companies, delivering new Hewlett Packard Enterprise strategy, helping update HP Inc. strategy, ensuring business groups make appropriate progress on their turnarounds, building business group capability and confidenceachieve certain key growth area targets for the future,year as the Company navigated a challenging external environment. However, Mr. Lores’ leadership enabled the Company to deliver strong accomplishments for the year while making consistent progress against long-term growth priorities and continuingdeveloping the operational capabilities needed to makesupport our growth. Key accomplishments included the following:
•Continued to invest in our Growth Businesses for long term growth. In fiscal 2023, revenue for the Growth Businesses grew mid-single digits year-over-year despite the challenging macro-economic environment.
•Made significant progress in Cloud. After conducting a thorough reviewPeople priorities, advancing diversity, employee experience, and leadership pipeline.
•Exceeded our goal for fiscal 2023 in improving workforce diversity and inclusion.
•Integrated high performing, diverse leaders into the Executive Leadership Team. Also strengthened the broader executive bench.
•Continued to focus on improving employee experience and engagement.
•Exceeded our Sustainable Impact goals for acceleration of digital equity and reduction of value chain Greenhouse Gas (“GHG”) emissions.
•Achieved digital equity for around 15 million people in fiscal 2023.
•Reduced overall value chain absolute GHG emissions by around 10% year-over-year.
Ms. Whitman’s performance, the independent members of the HP Board determined that Ms. Whitman’s MBO performance had been achieved above target. Ms. Whitman’s accomplishments included:defined and skillfully orchestrated the largest global corporate separation in history, resulting in the creation of two Fortune 50 companies;
established 2016 budgets and three-year plans for Hewlett Packard Enterprise and HP Inc. as separate companies;
refreshed HP Inc. strategy and introduced new framework for transformation areas for Hewlett Packard Enterprise;
directed turnarounds in business units across different regions;
acquired Aruba Networks, Inc. (“Aruba”) and what we believe to be sound decisions with respect to mergers, acquisitions, and divestitures;
achieved appropriate cost reductions; and
restructured commercial interests in China and established an historic joint venture with Tsinghua University.
As CEO of HP, Ms. Whitman evaluated the performance of each of the other Section 16 officers and presented the results of those evaluations to HP’s HRC Committee at its October 2015 meeting.Myers. The evaluations included an analysis of the officers’ performance against all of their MBOs. The HP HRC Committee concurred in the CEO’s assessment of the degree of attainment of the MBOs of the other Section 16 officers. The results of these evaluations and selected MBOs for the other NEOs are summarized below.
Ms. Lesjak. The HP HRC Committee determined that Ms. Lesjak’s MBO performance had been achieved above target. She drove oneMyers met or exceeded most MBOs but did not achieve certain key growth area targets for the year as the Company navigated a challenging external environment. However, Ms. Myers demonstrated leadership, personal accountability, and tireless commitment to HP during another challenging year. The success of the most complex financial processour Future Ready plan is a significant example of her leadership impact, resulting in structural savings that are already ahead of plan. Ms. Myers continued to represent HP with credibility among our stockholders and systems separations in corporate history while meeting all financial control, reporting and regulatory obligations. She executed and led all aspects of the separation work including the split of numerous legal entities in a timely manner while minimizing foreign tax exposure, effectuating IP division, and protecting and separating all assets and liabilities.
analysts.
Mr. Weisler.Tran. The HP HRC Committee determined that Mr. Weisler’s MBO performance had been achieved above target. He delivered significant cost structure improvementsTran met or exceeded most MBOs but did not achieve certain key growth area targets for the year as the Company navigated a challenging external environment. However, Mr. Tran demonstrated leadership in Printing despite currency headwinds,navigating a difficult year for HP and the Print business, showing decisiveness in adjusting to challenging business conditions. Mr. Tran’s leadership also led to continued innovation in our Print portfolio, and he made progress on executing on our business model shifts while rebalancing profitability between Hardware and Supplies. Mr. Tran is a strong and proactive leader with the expansion of immersive computingcredibility needed both internally and with external stakeholders to commercial segments, advanced HP strategy in new areas, improved customer and partner scores and relationships, and successfully managed the separation and establishment of HP Inc.help drive HP’s enterprise goals.
Mr. Neri.Cho. The HP HRC Committee determined that Mr. Neri’sCho met or exceeded most MBOs but did not achieve certain key growth area targets for the year as the Company navigated a challenging external environment. However, Mr. Cho made significant progress in several important areas, including share gains, implementation of the Personal Systems transformation plan and the successful integration of Poly from an organizational, systems, and process perspective. Mr. Cho continues to be a well-respected and well-regarded leader recognized for his ongoing attention to growth opportunities, his leadership in AI-enabled offerings, and his strong engagement with our external ecosystem. Mr. Cho’s contributions and tireless commitment to HP will continue to help drive the business forward.
Ms. Jacobs. The HRC Committee determined that Ms. Jacobs’ MBO performance had beenresult was achieved above target. He orchestratedMs. Jacobs worked closely with HP’s business leaders and provided exceptionally strong leadership support. Ms. Jacobs also made significant progress on building her leadership bench, including rotations of internal talent and critical external hires. Ms. Jacobs’ experience and skillsets allowed her to be a significant turnaroundstrong partner and advisor in legal and governance matters, while leading the Enterprise Group, accelerated growth in 3Par, returned Technical Services to growth, helped restructure commercial interest in China, successfully integrated Aruba and strengthened his leadership team in key roles.Ms. Keogh. The HP HRC Committee determine that Ms. Keogh’s MBO performance had been achieved above target. While continuing to increase employee engagement and leadership succession across the Company, she acted asLegal organization through a catalyst and driver for one of the largest and most complex global business separations to date. She also drove a rigorous recruitment process for the new board directors of both companies, and created two of the most diverse boards in the technology industry.
dynamic environment.
Based on the findings of these performance evaluations, the
HP HRC Committee (and, in the case of the CEO, the independent members of the
HP Board)
evaluateddetermined performance against
the non-financialMBO metrics for the NEOs as follows:
| | | | | | |
| Fiscal 2015 PfR Plan Performance Against Non-Financial Metrics (MBOs) |
Named Executive Officer | | Actual Performance as a Percentage of Target
Performance (%) | | Weight
(%) | | Percentage of Target
Annual Incentive
Funded
(%) |
| Margaret C. Whitman | | 250 | | 25 | | 62.5 |
| Catherine A. Lesjak | | 250 | | 25 | | 62.5 |
| Dion J. Weisler | | 150 | | 25 | | 37.5 |
| Antonio F. Neri | | 175 | | 25 | | 43.8 |
| Tracy S. Keogh | | 250 | | 25 | | 62.5 |
| | | | | | | | |
| Named Executive Officer | Target
MBO
(%) | MBO
Funded
(%) |
| Enrique J. Lores | 25.0 | 22.5 |
| Marie Myers | 25.0 | 22.5 |
| Tuan Tran | 25.0 | 22.5 |
| Alex Cho | 25.0 | 22.5 |
| Julie Jacobs | 25.0 | 27.5 |
Fiscal 2023 Annual Incentive Payout
Based on the level of performance described above on both the financial
metrics and
non-financial metricsMBOs for fiscal
2015,2023, the payouts to the NEOs under the
PfR Planannual incentive plan are listed in the chart below. Total payouts were
determined by adding the weighted performance against financial metrics to the weighted performance against the non-financial metrics to determine a total payout as
follows: | | | | | | | | | | | | | | | | |
| Fiscal 2015 PfR Plan Annual Incentive Payout | |
| | | Percentage of Target Annual Incentive Funded | | | Total Annual Incentive
Payout | |
Named Executive
Officer | | Financial
Metrics (%) | | | Non-Financial
Metrics (%) | | | As % of
Target Annual
Incentive
(%) | | | Payout ($) | |
| Margaret C. Whitman | | | 19.3 | | | | 62.5 | | | | 81.8 | | | | 2,453,262 | |
| Catherine A. Lesjak | | | 19.3 | | | | 62.5 | | | | 81.8 | | | | 868,864 | |
| Dion J. Weisler | | | 0 | | | | 37.5 | | | | 37.5 | | | | 386,719 | |
| Antonio F. Neri | | | 48.0 | | | | 43.8 | | | | 91.8 | | | | 831,709 | |
| Tracy S. Keogh | | | 19.3 | | | | 62.5 | | | | 81.8 | | | | 715,535 | |
Long-Terma percentage of the target opportunity for each executive:
| | | | | | | | | | | | | | |
| Percentage of Target
Annual Incentive Funded | Total Annual
Incentive Payout |
Named Executive Officer(1) | Financial
Metrics
(%) | Non-Financial
Metrics / MBOs
(%) | As % of Target
Annual Incentive
(%) | Payout
($) |
| Enrique J. Lores | 54.0 | 22.5 | 76.5 | 1,989,000 |
| Marie Myers | 54.0 | 22.5 | 76.5 | 846,855 |
| Tuan Tran | 54.0 | 22.5 | 76.5 | 846,855 |
| Alex Cho | 54.0 | 22.5 | 76.5 | 829,815 |
| Julie Jacobs | 54.0 | 27.5 | 81.5 | 570,500 |
Long-term Incentive
IncentivesThe HRC Committee establishedCompensation – Fiscal 2023 Awards
In order to motivate and reward our NEOs for their contributions towards achieving our business objectives, long-term incentives comprise the majority of each NEO’s total target compensation opportunity with a total long-term incentive target value for each NEO
established by the HRC Committee in early fiscal
2015 that was 40% weighted in the form2023. The long-term incentives consist of
PCSOs, 30% weighted in the forma mix of
35% PARSUs,
35% PCSOs and 30%
weighted in the formtime-based RSUs for our CEO and a mix of
30% PARSUs, 30% PCSOs and 40% time-based
RSUs.RSUs for our other NEOs, and are linked to EPS, relative TSR and stock price performance. The high proportion of performance-based awards
(70% and 60%, respectively) reflects our pay-for-performance philosophy. The time-based awards
helpsupport retention and are linked to stockholder value and ownership, which are
also important goals of our executive compensation program.
2015 PCSOs
2023 PARSUs
The fiscal 20152023 PARSUs cliff-vest following the end of a three-year performance period in fiscal 2025. Vesting of the PARSUs is based on achievement of an adjusted non-GAAP EPS goal with a relative TSR “payout modifier.” The EPS goal consists of three annual goals that roll up into our three-year annual average EPS. A relative TSR “payout modifier” is then applied to the EPS average payout at the end of year three to ensure alignment with our stockholders’ experience and stockholder value creation. Relative TSR is measured over the full three-year period based on performance against the S&P 500. The relative TSR modifier is a market-based payout modifier that adjusts payout (-50%, 0% or +50%) so there is alignment with stockholder results. Final payout is subject to an overall maximum of 300% of the target number of shares. This structure is summarized in the charts below:
| | | | | | | | | | | |
| PARSU Measures | •Adjusted Non-GAAP EPS(1) – 100% of the units •Relative TSR vs. S&P 500 – “Payout Modifier” |
| PARSU Measurement Periods | •Earnout and vesting at the end of 3 years, subject to continued service •EPS based on three 1-year goals, set at the beginning of each year(2) •TSR measured over the full 3-years from FY23-25 |
| PARSU Goal Scoring | •EPS funds payout from zero to 300% of target units according to threshold-target-maximum(3) |
•Max •Above target •Target •Threshold •Below Threshold | 300% 200% 100% 50% 0% | |
•TSR adds 50% if in the top quartile and subtracts 50% if in the bottom quartile (no adjustment from 25th percentile to 75th percentile). |
•Relative 3-year TSR > S&P 500 75th percentile | +50% |
•Relative 3-year TSR is equal to or between S&P 500 25th and 75th percentile | No change |
•Relative 3-year TSR < S&P 500 25th percentile | -50% |
•Subject to overall 300% of target shares max | |
| | |
(1)Adjusted non-GAAP EPS for PARSU measurement is calculated using non-GAAP net earnings (as defined and reported in our fourth quarter fiscal 2023 earnings press release (of $3.3 billion in fiscal 2023)) further adjusted to include bonus at target (net of income tax). As summarized in the preceding sentence, adjusted non-GAAP net earnings is a non-GAAP measure that is defined as GAAP net earnings (of $3.3 billion in fiscal 2023) and (i) excluding costs of $908 million related to restructuring and other charges, acquisition and divestiture charges and amortization of intangible assets and gains of $894 million associated with debt extinguishment benefit, tax adjustments, and non-operating retirement-related (credits) and (ii) further adjusted to include bonus at target (net of income tax). This non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP net earnings.
(2)Performance measurement occurs at the end of the year one, year two, and year three performance periods.
(3)Interpolate for performance between discrete points.
In November of 2023, the HRC Committee determined that fiscal 2023 EPS for fiscal 2023 PARSUs was achieved at 76% based on actual PARSU EPS performance of $3.21 (target of $3.33). The final payout will also depend on performance in fiscal 2024 and 2025 along with the three-year relative TSR performance.
| | | | | | | | | | | | | | | | | | | | | | | |
| Metric PARSU EPS(1) – 100% | | Results |
| Fiscal 2023 EPS Target: $3.33 | Fiscal 2024 EPS | Fiscal 2025 EPS | | Average EPS Performance | 3-year TSR Payout Modifier | Total Payout |
| Fiscal 2023 PARSUs | 76% | — | — | | TBD | TBD | TBD |
| | | | |
(1)EPS for PARSU measurement is calculated on an adjusted non-GAAP basis. See footnote (1) of the immediately preceding table for additional information.
2023 PCSOs
PCSOs support our growth-oriented portfolio and strategy and align the interests of our executives with our stockholders by driving long-term sustained stock price growth and reflecting the time-horizon and risk to investors. The fiscal 2023 PCSO awards will vest in three tranches provided certain stock price requirements are
met. Specifically,met as follows: •one-third of the PCSO award will vest upon continued service of one year and ourachievement of a closing stock price that is at least 10% over the grant date stock price for at least 20 consecutive trading days within two years from the date of grant;
one-third will vest upon continued service for two years and our closing stock price is at least 20%15% over the grant date stock price for at least 20 consecutive trading days within three years from the date of grant; and
•one-third of the PCSO award will vest upon continued service of threefor two years and ourachievement of a closing stock price that is at least 30%20% over the grant date stock price for at least 20 consecutive trading days within four years from the date of grant.grant; and
The HRC Committee has determined this vesting structure
•one-third of the PCSO award will encourage consistent stockholder value creation over time while maintaining comparable stock increase requirements to prior designs. In contrast to the PCSOs granted in fiscal 2014, in response to stockholder feedback, the HRC Committee did not includevest upon continued service of three years and achievement of a seven-year relative TSR vesting alternative. The PCSOs will be forfeited if theclosing stock price goals are not attained inthat is at least 30% over the applicable time periods.grant date stock price for at least 20 consecutive trading days within five years from the date of grant.
As of the end of fiscal
2015, none of the2023, stock price appreciation conditions
had not been met for
the fiscal 2015 PCSO awards had been met. For additional information, please see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2015.”2015 PARSUs
The PARSUs have two- and a three-year performance periods that began at the start of fiscal 2015 and continue through the end of fiscal 2016 and 2017, respectively. Under this program, 50%any of the PARSUs (including dividend equivalent units) are eligible for vesting based on performance over two years with continued service, and 50% are eligible for vesting based on performance over three years with continued service. The two- and three-year awards are equally weighted between RTSR and ROIC performance. This structure is depicted in the chart below.
| | | | | | | | | | |
| 2015-2017 PARSUs |
| Key Design Elements | | ROIC vs. Internal Goals | | Relative TSR vs. S&P 500 | | Payout |
| Weight | | 25% | | 25% | | 25% | | 25% | | % of Target(2) |
| Performance/Vesting Periods(1) | | 2 years | | 3 years | | 2 years | | 3 years | |
Performance Levels: Max > Target Target Threshold < Threshold | | Target to be disclosed after the end of the performance periods only, out of concern for competitive harm | | > 90th percentile 70th percentile 50th percentile 25th percentile < 25th percentile | | 200% 150% 100% 50% 0% |
| (1) | | | | | | | | | | | | | |
| Stock Price Hurdle (Grant Price: $28.48) | Performance measurement and vesting occur at the endTime to Achieve Hurdle | Service Condition | Status as of the two- and three-year periods, subject to continued service.10/31/23 |
| First Tranche | 115% of grant price ($32.75) | 3 years | 1 year | Stock price hurdle has not been met |
| Second Tranche | 120% of grant price ($34.18) | 4 years | 2 years | Stock price hurdle has not been met |
| Third Tranche | 130% of grant price ($37.02) | 5 years | 3 years | Stock price hurdle has not been met |
(2) | Interpolate for performance between discrete points. |
Internal ROIC goals were set after consideration of historical performance, internal budgets, external expectations, and peer group performance.
Relative TSR was chosen as a performance measure because it is a direct measure of stockholder value, and complements the absolute measure of stock price growth in the PCSOs. ROIC was chosen because it measures capital efficiency, which is a key driver of stockholder value.
For more information on grants of PARSUs to the NEOs during fiscal 2015, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2015.”
2015
2023 RSUs and related dividend equivalent units vest ratably on an annual basis over three years from the grant date.
Three yearThree-year vesting is common in our industry and supports executive retention and
alignment with stockholder
alignment.value.
Fiscal 2023 Long-term Incentive Compensation at Target
The following table shows combined total target grant values for annual grants attributable to fiscal 2023. These values represent target opportunities to earn future value-based compensation and are not actual earned amounts, which for PCSOs and PARSUs will be determined after the end of the applicable performance period based on continued employment, stock price growth and performance against pre-established performance goals.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Named Executive Officer | PARSUs | PCSOs | RSUs | Total Fiscal 2023 Long-term Incentive Grant |
| Enrique J. Lores | | $ | 5,985,000 | | | $ | 5,985,000 | | | $ | 5,130,000 | | | $ | 17,100,000 | |
| Marie Myers | | $ | 1,800,000 | | | $ | 1,800,000 | | | $ | 2,400,000 | | | $ | 6,000,000 | |
| Tuan Tran | | $ | 1,815,000 | | | $ | 1,815,000 | | | $ | 2,420,000 | | | $ | 6,050,000 | |
| Alex Cho | | $ | 1,776,900 | | | $ | 1,776,900 | | | $ | 2,369,200 | | | $ | 5,923,000 | |
| Julie Jacobs | | $ | 1,050,000 | | | $ | 1,050,000 | | | $ | 1,400,000 | | | $ | 3,500,000 | |
Values in the Summary Compensation Table are different than the target values described in the table above. In the Summary Compensation Table, amounts reflect the grant date fair value for the EPS component for Year 1 (2023), for which goals were approved in January 2023, and the grant date fair value for the TSR modifier, consistent with accounting standards. Grant date fair values for the EPS component for Year 2 (2024) and Year 3 (2025) are not included in the Summary Compensation Table since EPS goals for those years are approved in their respective fiscal years.
The Summary Compensation Table for fiscal 2023 also includes a portion of the fiscal 2022 PARSUs Year 2 EPS (2023) and 2021 PARSUs Year 3 EPS (2023) for which goals were approved in January 2023.
For more information on grants
of RSUs to the NEOs during fiscal
2015,2023, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal
2015.2023.”
Special Retention RSUs
In June 2011, the HRC Committee granted special retention awards of restricted stock units (“SRRSUs”) to key members of the executive team, including Ms. Lesjak, upon the recommendation of the then-current CEO.
Long-term Incentive Compensation – Continuing Performance Awards from Prior Fiscal Years
2022 PARSUs
The
awards were intended to provide both performance and retention incentives and vest after four years with accelerated vesting possible upon the attainment of certain stock price increases. The SRRSUs vested in June 2015.Separation-Related Equity Award Amendments
In connection with the separation of HP into two separate companies, the HRC Committee approved accelerated vesting for awards that were otherwise scheduled to vest between September 18,
2015 and December 31, 2015, truncating the performance period for the fiscal 2014 PARSUs, and settlement of equity awards as described below in order to: enable employees to become HP shareholders with respect to equity awards substantially earned based on service with HP and HP’s performance through the time of the separation; acknowledge that PARSU performance goals set for HP would no longer be relevant post-separation, and that over 73%design of the fiscal 2014 PARSU performance period had been completed; and ensure2022 PARSUs is consistent with that employees who would otherwise vest in awards during the equity administration systems blackout period, before and after the separation, could exercise options and receive vested shares in a timely manner.
On July 29, 2015 the HRC Committee approved amendments to certain outstanding long-term incentive awards. These amendments affected most outstanding awards that were originally scheduled to vest between September 18, 2015 and December 31, 2015, including such awards held by HP’s NEOs. The amendments provided for the accelerated vesting on September 17, 2015, of any time-based RSUs and related accrued dividend equivalent shares, stock options, PCSOs, or SARs that were otherwise scheduled to vest between September 18, 2015 and December 31, 2015. Vesting was accelerated for such PCSOs only to the extent that the underlying performance conditions had been satisfied by September 16, 2015. RSUs and related accrued dividend equivalent shares held by U.S. employees who qualified for retirement treatment (i.e., those who have attained age 55 with 15 years of qualifying service), including Ms. Lesjak, were settled as originally scheduled in order to comply with Section 409A of the Code.
Prior to July 31, 2015,fiscal 2023 PARSUs.
In November of 2022, the HRC Committee determined to end the performance periodthat fiscal 2022 EPS for outstandingfiscal 2022 PARSUs was achieved at the end of the last fiscal quarter before separation (i.e.,0% based on July 31, 2015) because it allowed accurate measurement of the performance results as of that date and would allow the amounts earned in respect of such equity awards to reflect solely the pre-separationactual PARSU EPS performance of HP. Accordingly,$3.91 (target of $4.38). In November of 2023, the HRC Committee amendeddetermined that fiscal 2023 EPS for fiscal 2022 PARSUs was achieved at 76% based on actual PARSU EPS performance of $3.21 (target of $3.33). The final payout for fiscal 2022 PARSUs will also depend on performance in fiscal 2024 along with the three-year relative TSR performance.
| | | | | | | | | | | | | | | | | | | | | | | |
| Metric PARSU EPS(1) – 100% | | Results |
| Fiscal 2022 EPS(2) Target: $4.38 | Fiscal 2023 EPS Target: $3.33 | Fiscal 2024 EPS | | Average EPS Performance | 3-year TSR Payout Modifier | Total Payout |
| Fiscal 2022 PARSUs | 0% | 76% | — | | TBD | TBD | TBD |
| | | | |
(1)EPS for PARSU measurement is calculated using non-GAAP net earnings adjusted to include bonus at target.
(2)The actual EPS performance achievement results were adjusted from $4.01 to $3.91 for fiscal 2022 in connection with the revision of financial statements described in the Form 10-Q for the quarter ended July 31, 2023. The adjustment did not impact the payout amount of the fiscal 20142022 EPS, which remained at 0%.
2021 PARSUs (those granted in December 2013) to provide that vesting and settlement with respect to 50%
The design of the target units and accrued dividend equivalent shares subject to each award that were scheduled to vest in October 2015 (i.e., that portion near the endfiscal 2021 PARSUs is consistent with those of the second year of a two-yearfiscal 2023 and 2022 PARSUs.
The EPS performance period) were accelerated to September 17, 2015 (based on relative TSR and ROIC performance as of July 31, 2015); andtarget for fiscal 2023 is the remaining target units that were scheduled to vest in October 2016 (i.e., those near the end of the second year of a three-year performance period) were converted to time-vested RSUs (based on relative TSR and ROIC performance as of July 31, 2015), and will vest on the original vesting date, October 31, 2016, subject to continued employment through such date. Forsame for the fiscal 2014 PARSUs granted to Ms. Lesjak, 50%2021, 2022 and 2023 PARSU awards. As a result, the Year 3 performance level was 76% based on PARSU EPS performance of $3.21 in fiscal 2023 (target of $3.33), as determined by the target units subject to such award were settled on October 1, 2015 (based onHRC Committee in November of 2023.
The 3-year TSR performance for fiscal 2021-2023 was at the 71st percentile relative
TSR and ROIC performance as of July 31, 2015) in order to comply with Section 409A of the Code due to her retirement eligibility; and the remaining target units were converted to RSUs on the same basis and subject to the
same vesting conditions as forTSR performance of other
Section 16 officers. The fiscal 2014 PARSUs were subjectS&P 500 companies during this period, resulting in no modifier to equally weighted RTSR and ROICthe 3-year average EPS performance goals. result.
The actual performance achievement
as a percent of target for the
three-year performance period (i.e., fiscal
20142021-2023) for the 2021 PARSUs as of
JulyOctober 31,
20152023 is summarized in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal 2014 PARSUs(1) | |
| Segment | | ROIC vs. Internal Goals(2) (% of target earned) | | | Relative TSR vs. S&P 500(3) (% of target earned) | | | Percent of Target
Vested
(Segment 1) or Converted to
RSUs
(Segment 2) | |
| | Fiscal
2014 | | | Fiscal
2015 | | | Fiscal
2016 | | | Average | | | Fiscal 2014- Fiscal 2015
Q3 | | | Fiscal 2014- Fiscal 2016 | | |
| Segment 1 (50%) | | | 95.4% | | | | 54.9% | | | | — | | | | 75.2 | % | | | 109.0 | % | | | — | | | | 92.1 | % |
| Segment 2 (50%) | | | 95.4% | | | | 54.9% | | | | N/A | | | | 75.2 | % | | | 109.0 | % | | | N/A | | | | 92.1 | % |
(1) | As noted above, the fiscal 2014 PARSUs performance period was truncated based on performance as of July 31, 2015. | | | | | | | | | | | | | | | | | | | | | | | | | Metric PARSU EPS(1) – 100% | | Results | | Fiscal 2021 EPS(2) Target: $2.74 | Fiscal 2022 EPS(2) Target: $4.38 | Fiscal 2023 EPS Target: $3.33 | | Average EPS Performance | 3-year TSR Payout Modifier | Total Payout | | Fiscal 2021 PARSUs | 300% | 0% | 76% | | 125.3% | 0% | 125.3% | | | | | |
(1)EPS for PARSU measurement is calculated using non-GAAP net earnings adjusted to include bonus at target. (2)The fiscal 2015 result was annualized from three to four quarters. |
(2) | For fiscal 2014 and fiscal 2015, the ROIC target was 11.0% and the actual EPS performance achievement results were 10.9% and 9.7%, respectively. |
(3) | For the truncated performance period from November 1, 2013 to July 31, 2015, HP’s relative TSR performance was at the 53rd percentile of the S&P 500. The target was the 50th percentile as disclosed in the fiscal 2014 proxy. This is the same as for 2015 PARSUs. |
Awards that were originally scheduledadjusted from $4.08 to vest after December 31, 2015 are generally expected$4.12 for fiscal 2021 and $4.01 to continue to vest$3.91 in accordancefiscal 2022 in connection with the original termsrevision of such grants.
Treatment of HP Equity Followingfinancial statements described in the Separation
Half of Ms. Whitman’s HP stock options that were vested immediately prior toForm 10-Q for the separation were converted into HP Inc. stock options, and half of Ms. Whitman’s HP stock options that were vested immediately prior toquarter ended July 31, 2023. The adjustment did not impact the separation were converted into Hewlett Packard Enterprise stock options. The exercise price, and number of shares of HP Inc. common stock or Hewlett Packard Enterprise common stock, as applicable, were determined in a manner intended to preserve the aggregate intrinsic valuepayout amount of the HP stock options as measured immediately beforefiscal 2021 EPS and immediately after the separation, subject to rounding. The adjusted awards are otherwise subject to the same termsfiscal 2022 EPS, which remained at 300% and conditions that applied to the original HP stock options immediately prior to the separation. The reasons for the treatment of her outstanding and vested stock options include: Ms. Whitman’s continued leadership obligations in both companies as CEO of Hewlett Packard Enterprise and Chairman of HP Inc.0%, Ms. Whitman has not exercised any vested options during her tenure as HP’s CEO and any HP options exercises on her part leading up to separation would be viewed very negatively by investors and employees, as well as her significant contributions over the past 4 years in establishing both companies. Ms. Whitman’s stock options that were unvested immediately prior to the separation as well as her other outstanding equity awards were treated the same way as HP equity awards held by individuals that would become employees or directors of Hewlett Packard Enterprise following the separation, as described below.
Other than as discussed above with respect to Ms. Whitman’s vested HP stock options, equity awards held by individuals that would become employees or directors of Hewlett Packard Enterprise
respectively.following the separation, including the NEOs, as applicable, were converted into equity awards, with respect to Hewlett Packard Enterprise common stock. The exercise price of (in the case of stock options or SARs), and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original HP awards as measured immediately before and immediately after the separation, subject to rounding. The adjusted awards are otherwise subject to the same terms and conditions that applied to the original HP awards immediately prior to the separation, except that, for PCSOs, the performance requirements were adjusted to relate to the price of Hewlett Packard Enterprise common stock in a manner that preserves the original ratio of stock price hurdle to exercise price, and except as provided above for fiscal 2014 PARSUs, the performance conditions applicable to such awards were adjusted to relate to Hewlett Packard Enterprise for the remainder of the performance period.
Other than as discussed above with respect to Ms. Whitman’s vested HP stock options, equity awards held by individuals that would remain employees or directors of HP Inc. (other than Ms. Whitman) following the separation, including the NEOs, as applicable, or who were former employees or directors of HP as of the separation, continue to relate to HP common stock, provided that the exercise price of (for stock options or SARs), and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original HP award as measured immediately before and immediately after the separation, subject to rounding. The adjusted awards are otherwise subject to the same terms and conditions that applied to the original HP award immediately prior to the separation, except that for PCSOs, the performance requirements will be adjusted in a manner that preserves the original ratio of stock price hurdle to exercise price, and for fiscal 2015 PARSUs granted in December 2014, the performance conditions applicable to such awards were adjusted to relate to HP Inc. for the remainder of the performance period.
Relationship between CEO Pay and Performance
Fiscal 2024 Compensation Program
The HRC Committee regularly
assesses the potential pay-for-performance relationships inherent in our pay programs. The table below shows various definitions of pay that can be used in conducting such an assessment: | | | | | | |
Rationale/Pay Component | | Target | | Realized | | Realizable |
Rationale for use of definition | | • Represents intended value of compensation
• Treats options and other equity as though it were currency based on accounting value (grant date fair value)
| | • Recognizes that there is no assurance that this pay opportunity will be earned until it is actually earned
• Represents income earned
| | • Matches time horizon of compensation with performance
• Recognizes that unexercised options and unvested awards have inherent potential value
|
Base Salary | | • Actual salary in fiscal year earned
|
Annual Incentive (PfR Plan) | | • Amount that would be earned for fiscal year if goals were achieved at 100%
| | • Actual bonus in fiscal year earned
|
PCSOs | | • # of PSCOs granted multiplied by the grant date fair value
| | • # of PCSOs exercised multiplied by the intrinsic value at time of exercise
| | • # of PCSOs outstanding for which performance goals have been met multiplied by the Black-Scholes-Merton value at end of fiscal 2015
|
RSUs | | • # of RSUs granted multiplied by the grant date price
| | • # of RSUs vested multiplied by the price at the time of vesting
| | • # of RSUs outstanding multiplied by the price at end of fiscal 2015
|
PARSUs/PRUs * | | • # of target PARSUs granted multiplied by the grant date fair value
| | • # of PARSUs/PRUs vested multiplied by the price at the time of vesting
| | • # of PARSUs outstanding for which performance goals have been met multiplied by the price at end of fiscal 2015 (no such PARSUs were outstanding at the end of fiscal 2015)
|
All Other | | • Actual value of all other compensation as reported
|
* | Performance restricted stock units (PRUs) were last granted in fiscal 2012, paid out at the beginning of fiscal 2015, and are included in realized compensation only for fiscal 2015. They were included in target and realizable compensation in the fiscal 2014 proxy. |
The first chart below shows Ms. Whitman’s three-year average annual pay for fiscal 2013-2015 calculated as target compensation, realized compensation, and realizable compensation. The second chart below shows annualized total stockholder return (“TSR”) for fiscal 2013-2015, fiscal 2014-2015, and fiscal 2015.
3-Year Average Total Compensation
By Pay Definition, Fiscal 2013-2015 ($ in millions)
* | The Board set CEO target total direct compensation (salary, target annual incentive, and long-term incentive value) at $17.5 million for fiscal 2015. The numbers shown here are three-year averages, and include additional “All Other Compensation” and the actual grant date fair value of equity as determined after the grant for financial reporting purposes. |
Annualized Total Stockholder Return
The charts above demonstrate a strong relationship between our CEO’s pay and performance over the past three years since:
the pay mix is variable (93% of target pay) and equity-oriented (77% of target pay);
our TSR over the past three years (both absolutely and relative to the S&P 500 Index) reflects our turnaround results; and
realizable pay is 112% of target pay consistent with our stock price performance over the past three years and our CEO having received most of her target pay in equity and not exercised any of her PCSOs. As a result, equity makes up 83% of realizable pay, with 57% coming from PCSOs, versus only 5% from salary.
Fiscal 2016 Compensation Program
The Board and the HRC Committee regularly identify and evaluateevaluates ways to improve our executive compensation program. We engagebelieve that our current compensation structure effectively aligns real pay delivery with critical financial and strategic non-financial goals, reinforces year-over-year improvement and our growth-oriented strategy, offers a stable and consistent message to both stockholders and participants, and provides an attractive pay-for-performance incentive opportunity to elicit their feedback,encourage retention and leadership engagement. Our ongoing review of executive compensation programs and engagement with stockholders indicate that our fiscal 2023 incentive designs continue to support the Company’s business strategy and compensation philosophy. However, we take this feedback very seriously. In 2015,also see opportunities to increase our “say-on-pay” proposal was approved by 95%performance focus while simplifying our design and aligning more closely to the market. Changes for fiscal 2024 include the following:
•Increasing the weighting of PARSUs to 70% of total long-term incentive award value for the CEO and 60% for other NEOs;
•Adjusting our PARSU performance metrics to include a new growth metric that will be weighted at 20% of the voted shares. We did not make any specific program changes for 2016 because of this support and determined that it wouldoverall PARSU award, with the remaining 80% continuing to be appropriate to maintain the same overall program structure for 2016.
However, as we plan to discuss in further detail in the fiscal 2016 proxy statement, we made the following changes that we believe are in our stockholders’ interests and appropriatebased on EPS performance, subject to the characteristicsrelative TSR modifier; and business strategy
•Discontinuing PCSOs as a component of the post-separation company:PfR Plan. For fiscal 2016, the maximum funding level for our Pay For Results plan was reduced from 250% to 200% of target. Each individual metric may fund up to 250% of target, however, the maximum annualexecutive incentive for each executiveprogram.
These changes will be capped at 200% of target. This adjustment was made to further support stockholder alignment.
Long-Term Incentive Compensation Program. To simplify the long-term incentive program, which will now have one less component, while improving our ability to drive and further support stockholder alignment, fiscal 2016 annual equity grants were made 60% inreward performance, including achievement of our growth strategy and driving value for our stockholders over time. The increased focus on PARSUs and 40% in RSUs. This equity mix is more alignedelimination of a stock option component also better aligns our practices with stockholder interests since more equity is granted in the formthose of PARSUsother large technology peers with multi-year RSTR and ROIC metrics. PCSOs are not be a part of HP Inc.’s fiscal 2016 annual equity program.
In fiscal 2016, the HRC Committee plans to continue to carefully review HP’s talent needs, and compensation programs and actions to:
achieve a successful transition following the separation;
support the business strategy;
continue to align pay with stockholder interests; and maintain good governance standards.
Launch Grants
As will also be discussed in further detail in the fiscal 2016 proxy statement, the HRC Committee approved a launch grant program pursuant to which selective equity grants would be made in connection with the separation to key talent, including the NEOs. The HRC Committee determined that such a program was integralwhom we compete for the retention and continuity of leadership at a critical time for both companies and that the launch grants would strengthen alignment with stockholders’ interests. The launch grants to the NEOs were made on November 2, 2015, and were granted 50% in PCSOs and 50% in RSUs, vesting ratably over three years (contingent on achievement of performance conditions for the PCSOs), and subject to continued employment at each vesting date.
talent.
We do not provide our executives, including the NEOs, with special or supplemental
U.S. defined benefit pension or health benefits. Our NEOs receive health and welfare benefits (including retiree medical benefits, if eligibility conditions are met) under the same programs and subject to the same eligibility requirements that apply to our employees generally.
Benefits under all U.S. pension plans were frozen effective December 31, 2007. Benefits under the
EDSElectronic Data Systems (“EDS”) Pension Plan ceased upon HP’s acquisition of EDS in
2009.2008. As a result, no NEO or any other HP employee accrued a benefit under any HP U.S. defined benefit pension plan during fiscal
2015. The2023. After the U.S. pension plans and the EDS were frozen, any amounts reported
in previous years as an increase in pension benefits
in the Summary Compensation Table are for those NEOs who previously accrued a benefit in a defined benefit pension plan prior to the cessation of accruals and reflect changes in actuarial values only, not additional benefit accruals.
The NEOs, along with other
HP executives who earn base pay or an annual incentive in excess of certain limits of the
Internal Revenue Service (the “IRS”),Code or greater than $180,000, are eligible to participate in the
HP2005 Executive Deferred Compensation Plan (the “EDCP”). This plan is maintained to permit executives to defer some of their compensation in order to also defer taxation on such amounts. This is a standard benefit plan also offered by most of our peer group companies. The EDCP permits deferral of base pay in excess of the amount taken into accountallowed under the qualified HP 401(k) Plan ($265,000 in fiscal 2015)(the “HP 401(k) Plan”) (the 401(k) deferral limit for calendar 2023 was $22,500) and up to 95% of the annual incentive payable under the PfR Plan.2004 Stock Incentive Plan, the Pay for Results Plan and other eligible plans. In addition, we make a 4% matching contribution to the planEDCP on base pay contributions in excess of IRS limits up to a maximum of two times that limit.limit (maximum of $13,200 in calendar 2023). This is the same percentage as that whichof matching contributions those executives are eligible to receive under the HP 401(k) Plan. In effect, the EDCP permits these executives and all eligible employees to receive a 401(k)-type matching contribution on a portion of base-pay deferrals in excess of IRS limits. Amounts deferred or matched under the EDCP are credited with hypothetical investment earnings based on investment options selected by the participant from among nearly all the proprietary funds available to employees under the HP 401(k) Plan. No amounts earn above-market returns.
Benefits payable under the EDCP are unfunded and unsecured.
Executives are also eligible to have a yearly HP-paid medical exam as part of the HP U.S. executive physical program. This includes a comprehensive exam, thorough health assessment and personalized health advice. This benefit is also offered by our peer group companies.
Consistent with its practice of not providing any special or supplemental executive defined benefit programs, including arrangements that would otherwise provide special benefits to the family of a deceased executive, in 2011 the HRC Committee adopted a policy that, unless approved by our stockholders pursuant to an advisory vote, we will not enter into a new plan, program or agreement or modify an existing plan, program or agreement with a Section 16 officer
(including the NEOs) that provides for payments, grants or awards following the death of the officer in the form of unearned salary or unearned annual incentives, accelerated vesting or the continuation in force of unvested equity grants, perquisites, and other payments or awards made in lieu of compensation, except to the extent that such payments, grants or awards are provided or made available to our employees generally.
Broad-based Changes to Equity Provisions
In fiscal 2015, the HP HRC Committee approved three changes to equity provisions for all employees generally:
Effective August 1, 2015, employees will generally have up to three months to exercise vested stock options following termination. Employees previously generally had to exercise their vested options by termination date. This change was made considering market practice and to enable employees subject to insider trading restrictions sufficient time to reach the next open trading window.Limited Perquisites
Effective January 1, 2016, employees will fully vest in RSUs and PARSUs upon termination due to death or complete, permanent disability. PARSUs will vest at target. Previously, employees were entitled to prorated vesting upon death and full vesting upon disability for RSUs, and prorated vesting upon either death or disability for PARSUs. These changes were made to align with market practice and the existing treatment of options, and to enable attraction and retention of talent.Also effective January 1, 2016 for US employees, the definition of retirement with respect to treatment of equity to: 55 years of age and age plus years of service of at least 70 at termination. Previously, the definition was: at least 55 years of age and 15 years of service. Employees who meet the retirement definition are entitled to full vesting in equity upon termination, except that vesting in PARSUs occurs at the end of the applicable performance period subject to performance and vesting in PCSOs will only occur if performance conditions are met. This change will not affect any of our current NEOs in fiscal 2016 and was made to enable healthy turnover.
Perquisites
Consistent with the practices of many of our peer group companies, weWe provide a small number of perquisites to our senior executives, including the NEOs, as discussed below.
We provideNEOs. For a list of all perquisites provided to our NEOs with financial counseling servicesfor fiscal 2023, please refer to assist them in obtaining professional financial advice, which is a common benefit among our peer group companies, for convenience and to increase the understanding and effectiveness of our executive compensation program.
Due“Fiscal 2023 All Other Compensation Table” on page 69.
HP maintains one corporate aircraft due to our global presence, we maintain a certain number ofpresence. For security, safety, effectiveness and efficiency purposes, the Company allows executives to use the corporate aircraft. Personal use of these aircraft by the CEO and some of her direct reports, including all of the NEOs, is permitted, subject to availability. The CEO may use HP aircraft for personal purposes in her own discretion and, at times,reasons. The CEO is advisedrequired by the Board to use HPcorporate aircraft for all travel, including personal travel for security reasons. Executive Council members maytravel. For any such personal use, HP aircraft for personal purposes, if available and approved by the CEO. The CEO and Executive Council members areNEO is taxed on the value of this usage according to IRS rules. Therethe relevant rules of the Internal Revenue Code, including, in the event an NEO is noaccompanied on business travel by a guest or family member on the aircraft for personal reasons (if approved by the CEO or CLO), the value of the guest’s or family member’s usage. We do not provide tax gross-up paid ongross-ups for the imputed income attributable to this value. In fiscal 2012, Ms. Whitman entered into a “time-sharing agreement” with HP, under which she reimburses uspersonal use. Among our NEOs, Mr. Lores is the only executive who used the corporate aircraft for costs incurred in connection with certain personal travel on corporate aircraft above aduring fiscal 2023.
In addition, we cover the costs of financial counseling, tax preparation and estate planning services for certain
amount.Following a global risk management review commissioned by the Audit Committee, security systems were installed at the personal residences of some of our executives. These services provide these executives includingwith a better understanding of their compensation and benefits and allow them to focus their attention on our future success.
We consider specific personal security measures (for example, security personnel or the NEOs. These protections are provided due to the rangeinstallation and maintenance of security issuesmeasures in and around an executive’s residence) to be appropriate expenses that may be encountered by keyarise out of the executive’s employment responsibilities and that are necessary to his or her job performance and to ensure the safety of the covered executive and his or her family. The Board and the HRC Committee periodically review and approve the amount and nature of executive officers’ security expenses.
Termination and Change in Control Protections
The HRC Committee is focused on ensuring that the severance and change of control protections available to our executives
of any large, multinational corporation.Priorare consistent with market practice, provide clarity to October 2015, Mr. Weisler’s home location was Singaporeprospective and he was on international assignment in Palo Alto, California. In connectioncurrent executives, and will help attract and retain talent. Consistent with his appointment as CEO of HP Inc. effective at the separation, Mr. Weisler relocated to Palo Alto in October 2015. While on international assignment, Mr. Weisler had been receiving certain benefits, including tax equalization benefits, under the executive mobility program. In lieu of relocation benefits under the executive mobility program, Mr. Weisler received a relocation bonus of $2.4 million in fiscal 2015 in connection with his permanent move to Palo Alto, which along with immigration and tax services benefits of up to $60,000 in fiscal 2016, was intended to cover all costs incurred by Mr. Weisler related to the relocation.
Severance Plan for Executive Officers
In fiscal 2015this approach, our Section 16 officers (including all of the NEOs) wereare covered by the HPAmended and Restated Severance and Long-Term Incentive Change in Control Plan for Executive Officers (“SPEO”(the “SPEO”), whichas subsequently amended. The SPEO is intended to protect HPour executives and itsour stockholders and provide a level of transition assistance in the event of an involuntary termination of employment. We have not entered into individual employment agreements or any severance or change in control agreements with our current NEOs.
Severance and Long-Term Incentive Change in Control Plan for Executive Officers
Under the SPEO, participants who incur an involuntary termination
(i.e., a termination not for
cause,Cause, as defined in the SPEO), and who execute a full
and effective release of claims following such termination,
which release has not been revoked or attempted to be revoked, are eligible to receive severance benefits in an amount determined as a multiple of base pay, plus the average of
either the actual annual incentives paid for the preceding three
years.years or target bonus if the executive has received less than three full fiscal year annual cash bonuses at his or her seniority level as of immediately prior to such termination. In the case of the NEOs
other than the CEO, the multiplier is 1.5. In the case of the CEO, the multiplier
would have been 2.0 under the terms of the SPEO, but Ms. Whitman elected to be eligible for the same multiplier as the other NEOs.is 2.0. In all cases, this benefit will not exceed 2.99 times the sum of the executive’s base pay plus target annual incentive as in effect immediately prior to the termination of employment.
Although
most of the
majority of compensation for our executives is performance-based and largely contingent upon
the achievement of financial goals, the HRC Committee continues to believe that the SPEO
provides important protection to the Section 16 officers and is appropriate for the attraction and retention of executive talent. In addition, we find it more equitable to offer severance benefits based on a standard formula for the Section 16 officers
(including all of the NEOs) because severance often serves as a bridge when employment is involuntarily terminated and should therefore not be affected by other longer-term accumulations. As a result, and consistent with the practice of our peer group companies, other compensation decisions are not generally
based ontied to the existence of this severance protection.
In addition to the cash benefit, SPEO participants are eligible to receive (1) a pro-rata annual incentive for the year of termination based on actual performance results, at the discretion of the HRC Committee, (2) pro-rata vesting of unvested equity awards if the executive has worked at least 25% of the applicable service vesting period and(and for performance-based equity awards, only if any applicable performance conditions have been satisfied as of the end of the applicable performance period), and (3) for payment of a lump-sum health-benefit stipend ofin an amount equal to 18 months’ COBRA premiums for continued group medical coverage for the executive and his or her eligible dependents, to the extent those premiums exceed 18 times the monthly premiums for active employees in the same plan with the same level of coverage as of the date of termination. Consistent with general market practice, the HRC Committee amended the SPEO, effective November 1, 2015, to provide that for purposes of pro-rata equity vesting, there is no longer a requirement that the executive has worked at least 25% of the applicable service vesting period. This avoids situations that might be affected by the “cliff nature” of the previous design. In addition, the pro-rated vesting provision by itself acknowledges situations where termination occurs shortly after an award.
dependents.
Severance Benefits in the Event of a Change in Control
Until November 1, 2015, we did not provide specific Under the SPEO
The SPEO also includes change in control
terms for participants (including our NEOs). The benefits
to our executive officers. Whileprovided for involuntary terminations under the
Board orSPEO are also provided in connection with a voluntary termination for Good Reason (as defined in the
HRC Committee had broad discretion to accelerate vesting of all stock and stock option awards uponSPEO) that occurs within 24 months after a change in control
accelerated vesting was not automatic. This approach allowed the Board or the HRC Committee to decide whether to vest equity after taking into consideration the facts and circumstances of a given transaction. As a result, the NEOs could become fully vested in their outstanding equity awards upon a change in control only if the Board or the HRC Committee affirmatively acts to accelerate vesting.Effective November 1, 2015, HRC Committee approved the Severance and Long-term Incentive Change in Control Plan for Executive Officers (the “Change in Control Plan”(“double trigger”). Absent change in control, the new plan provides for the same benefits as the SPEO. In addition, the Change in Control PlanSPEO provides for full vesting of outstanding stock options, RSUs, PCSOs and PARSUs upon involuntary termination not for causeCause or voluntary termination for good reason (as defined in the plan)Good Reason within 24 months after a change in control, (“double trigger”), and in situations where equity awards are not assumed by the surviving corporation (a “modified double trigger”). The Change in Control PlanSPEO further provides that under either a double trigger PARSUs will vest based on target performance, whereas under aor modified double trigger, PARSUs and PCSOs will vest based upon the greater of the number of PARSUs that would vest based on actual performance with respect to the awards for which the applicable performance period has ended or target performance with respect to the awards for which the applicable performance period has not ended (with vested PCSOs remaining exercisable for one year following the termination date). In addition, in the event of any dispute under the SPEO relating to a participant’s termination of employment within 24 months following a change in control, the Company will reimburse all related legal fees and expenses reasonably incurred by the numberparticipant if claims are brought in good faith. We do not provide tax gross ups in connection with terminations, including terminations in the event of PARSUs that would vest pro-rata based upon target performance.
The HRC approved the Changea change in Control Plan as it determined that providing for double trigger and modified double trigger equity acceleration is consistent with market practice, will provide clarity to prospective and current executives and help attract and retain talent.
control.
Other Compensation-Related Matters
Among the HRC Committee’s responsibilities described in its charter is to oversee succession planning and leadership development. TheIn addition, the full Board plans for succession of the CEO and annually reviews senior management selection, development and succession planning that is undertaken by the HRC Committee.planning. As part of this process, the independent directorsDirectors annually review the HRC Committee’s recommended candidates for senior management positions to see that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and qualifications of the candidates.
The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic vision and leadership, operational excellence, financial management, executive officer leadership development, ability to motivate employees, and an ability to develop an effective working relationship with the Board.
We also host a Board Buddy program through which each executive officer is aligned to a board member as a mentor to aid the executive’s development while giving Board members a deeper understanding of the day-to-day operations of the Company.In fiscal 2015, with the separation in focus, the HRC Committee conducted a full2023, an executive talent review was conducted along with succession plans for each of all proposed candidates forthe executive leadership positions. The focus was on ensuring that both companies were set up for success withleaders. Successors having the necessary level of public company leadership experience and potential for the future needs of the organization.
In addition, as part of the organization design and talent selection process to staff both companies, management reviewed selection recommendations below the senior leadership level, considering skill sets, performance, potential, and diversity.
Finally,diversity were identified. Development plans for successors were also established to ensure readiness and those will be managed throughout the Boardcoming year. In addition to the annual succession planning process, the HRC Committee participates in an in-depth performance discussion of each executive officer at the time of the annual compensation review. Further, the HRC Committee receives regular People Updates at HRC Committee meetings throughout the year, which includes a review of key people processes and Chief Human Resources Officer conducted a rigorousdevelopments for that quarter.
In addition, the executive team participated in team and individual development discussions throughout the year. New external executive team members also completed an assessment and onboarding process to
recruitensure their full integration into the team and
select highly qualified board directors for each company, and helped create two of the most diverse boards in the technology industry.maximize their effectiveness.
Stock Ownership Guidelines
and Prohibition on Hedging and Pledging
Our stock ownership guidelines are designed to align executives’ interests more closely with those of our stockholders and mitigate compensation-related risk for HP.risk. The current guidelines provide that, within five years of assuming a designated position, the CEO should attain an investment position in our stock equal to seven times herhis base salary and all other EVPsSection 16 officers reporting directly to the CEO should attain an investment position equal to five times their base salaries. Our NEOs who have been in their current position for more than five years have met our stock ownership guidelines and our NEOs who have been in their current position for less than five years are on pace to meet the stock ownership guidelines within the allotted time frame.
Shares counted toward these guidelines include any shares held by the executive directly or through a broker, shares held through the HP 401(k) Plan, shares held as restricted stock
and shares underlying time-vested
RSUs, and shares underlying vested but unexercisedRSUs. Beginning in fiscal 2021, we no longer count stock options
(50% of the in-the-money value of such options is used for this calculation). Ms. Lesjak is the only NEO who has been in a role covered by our stock ownership guidelines for over five years and she is in compliance with thetoward stock ownership guidelines.
In addition, our other NEOs were on track for compliance within the required time or held the required investment positionWe also do not include shares in
our stock as of the end of fiscal 2015.ongoing PARSU cycles.
The HRC Committee has adopted a policy prohibiting
ourall employees, including executive officers,
and Directors from engaging in any form of hedging transaction (derivatives, equity swaps, forwards, etc.)
involving Company securities, including, among other things, short sales and transactions involving publicly traded options. In addition, with limited exceptions, our executive officers are prohibited from holding
HPour securities in margin accounts and from pledging
HPour securities as collateral for loans. We believe that these policies further align our executives’ interests with those of our stockholders.
Policies for Recoupment of Compensation
Effective October 2, 2023, HP implemented the “Mandatory Recovery Policy” and the “Clawback Policy”.
Mandatory Covered Compensation Recovery Policy
The Mandatory Covered Compensation Recovery Policy (the “Mandatory Recovery Policy”) applies to current and former Section 16 officers (“Covered Executives”). The policy was adopted in compliance with the rules implemented by the SEC under Dodd-Frank and corresponding NYSE listing standards.
If HP is required to prepare an accounting restatement (including a “Big R” or a “little r” restatement) due to material noncompliance with any federal securities laws, any Erroneously Awarded Compensation Received by a Covered Executive during the applicable three-year lookback period must be forfeited or paid back to HP reasonably promptly.
•“Erroneously Awarded Compensation” is limited to certain Section 16 officer compensation that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure, such as PARSUs, PSCOs and annual incentive plan pay outs.
•Compensation must be “Received” (as defined by the NYSE listing standards) on or after the effective date of the applicable NYSE listing standards to be subject to recovery, among other limitations. Compensation is deemed “Received” in HP’s fiscal period during which the financial reporting measure specified in or otherwise relating to the applicable award is attained.
•Amounts of Erroneously Awarded Compensation are recoverable to the extent they exceed the amount that otherwise would have been granted, vested or paid had such amount been determined based on the applicable restatement, computed on a pre-tax basis.
•The HRC Committee (the “Administrator” of the Mandatory Recovery Policy) is generally required to pursue (and does not have discretion to waive) recovery in the event of an accounting restatement, except if it determines that recovery is impracticable in accordance with narrow exceptions described in the Mandatory Recovery Policy in accordance with the SEC clawback rule and corresponding NYSE listing standards. Accordingly, whether recovery is sought under the Mandatory Recovery Policy is not dependent on a Covered Executive’s commission of fraud or misconduct or consideration of any other mitigating circumstances, including the relative culpability, if any, of any Covered Executive in the events that gave rise to the triggering accounting restatement.
Applicable Compensation Clawback Policy
The Applicable Compensation Clawback Policy (the “Clawback Policy”) applies to current and former Section 16 officers and Executive Leadership Team members (collectively, “Covered Persons”). This policy is in addition to the Mandatory Recovery Policy and allows for the clawback of compensation for a Covered Person’s misconduct, regardless of whether a financial restatement has occurred.
If the HRC Committee (the “Administrator” of the Clawback Policy) determines that any Covered Person committed Misconduct (as defined below), the Administrator has discretion to seek recovery and forfeiture of all or a portion of any Applicable Compensation (as defined below) awarded to the Covered Person in, for, or in respect of the fiscal year or performance period in which the act, or failure to act, constituting Misconduct occurred, to the extent such Applicable Compensation vested or was paid or settled in the three years preceding the Administrator’s initial efforts to seek such recovery or to the extent such Applicable Compensation remained unpaid or unvested, regardless of whether the Misconduct resulted in an award or payment greater than what would have been awarded absent Misconduct.
•The Misconduct definition is based on the Cause definition in the 2004 Stock Incentive Plan.
•“Applicable Compensation” means compensation received by a Covered Person, whether cash- or equity-based, which may be discretionary, time-based or performance-based, including, without limitation, any cash bonuses or equity-based compensation awarded under the 2004 Stock Incentive Plan, incentive-based compensation, amounts paid or payable under the SPEO, and amounts paid or payable under any other cash bonus or incentive compensation plans determined by the Administrator to be covered by the Clawback Policy, but not including salary or employee retirement or welfare benefits.
Accounting and Tax Effects
The
HRC Committee considers all factors that may have an impact
of accounting treatment is considered in developing and implementingon our financial performance when approving our compensation programs, including
the accounting treatment as it applies to amounts awarded or paid to our executives.The impact of federal tax laws on our compensation programs is also considered, including the deductibility of compensation paid to the NEOs, as limited by(including Section 162(m) of the Code. Our compensation program is designed with the intention thatCode) and accounting rules and regulations. Section 162(m) generally limits our ability to deduct compensation paid in various forms may be eligible to qualify for deductibility under Section 162(m), but there may be exceptions for administrative or other reasons with a strong business justification.
Policy on Recovery of Annual Incentive in Event of Financial Restatement
In fiscal 2006, the Board adopted a “clawback” policy that permits the Board to recover certain annual incentives from senior executives whose fraud or misconduct resulted in a significant restatement of financial results. The policy allows for the recovery of annual incentives paid at or above target from those senior executives whose fraud or misconduct resulted“covered employees” (as defined in the restatement where the annual incentives would have been lower absent the fraud or misconduct,Code) to the extent permittedsuch compensation exceeds $1 million to such employee in any fiscal year. Although our compensation programs may take into consideration Section 162(m) as a factor, these considerations will not necessarily limit compensation to only amounts that are deductible by applicable law. Additionally, our incentive plan document allows for the recoupment of performance-based annual incentivesus under Section 162(m).
HR and
long-term incentives consistent with applicable law and the clawback policy. Also, in fiscal 2014, we added a provision to our equity grant agreements to clarify that they are subject to the clawback policy. HRCCompensation Committee Report on Executive Compensation
The HRC Committee of the Board of HP has reviewed and discussed with management this Compensation Discussion and Analysis. Based on this review and discussion, it has recommended to the Board that
thethis Compensation Discussion and Analysis be included in this proxy statement and in the Annual Report on Form 10-K of HP filed for the fiscal year ended October 31,
2015.HRC2023.
HR and Compensation Committee of the Board of Directors
Charles V.
Stephanie A. Burns, Chair
Aida Alvarez
Shumeet Banerji
Chip Bergh
Carl Bass
Rajiv L. Gupta, Chair
Stacey Mobley
Executive Compensation Tables
Fiscal 2023 Summary Compensation Table The following table sets forth information concerning the compensation of our NEOs for fiscal 2023, 2022, and 2021, as applicable. Per SEC reporting guidelines, our NEOs for fiscal 2023 include our CEO (Mr. Lores), our chief financial officer, ourCFO (Ms. Myers), and the next three other most highly compensated individuals serving as executive officers servingas of the last day of the fiscal year, October 31, 2023 (Mr. Tran, Mr. Cho and Ms. Jacobs).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal
Position | Year | Salary(2)
($) | Bonus(3)
($) | Stock
Awards(4)
($) | Option
Awards(5)
($) | Non-Equity
Incentive Plan
Compensation
(6)
($) | Change in Pension
Value and Nonqualified
Deferred
Compensation
Earnings(7)
($) | All Other
Compensation(8)
($) | Total
($) |
Enrique J. Lores President and CEO | 2023 | 1,300,000 | | — | | 10,148,835 | | 5,714,757 | | 1,989,000 | | — | | 305,839 | | 19,458,431 | |
| 2022 | 1,250,000 | | — | | 12,844,359 | | 5,341,057 | | 1,445,564 | | — | | 198,946 | | 21,079,926 | |
| 2021 | 1,200,000 | | — | | 10,558,022 | | 4,107,368 | | 4,440,000 | | — | | 428,416 | | 20,733,806 | |
Marie Myers Chief Financial Officer | 2023 | 820,000 | | — | | 3,929,488 | | 1,718,724 | | 846,855 | | — | | 70,575 | | 7,385,642 | |
| 2022 | 780,000 | | | 3,670,097 | | 1,739,653 | | 608,871 | | — | | 90,256 | | 6,888,877 | |
| 2021 | 664,445 | | 250,000 | | 3,185,034 | | 1,216,998 | | 1,794,000 | | — | | 111,091 | | 7,221,568 | |
Tuan Tran President, Imaging, Printing & Solutions | 2023 | 820,000 | | — | | 4,113,779 | | 1,733,045 | | 846,855 | | — | | 50,536 | | 7,564,215 | |
| 2022 | 780,000 | | — | | 5,503,615 | | 1,754,919 | | 608,871 | | — | | 44,153 | | 8,691,558 | |
| 2021 | 715,000 | | — | | 4,066,688 | | 1,673,373 | | 1,785,712 | | 5,418 | | 78,876 | | 8,325,067 | |
Alex Cho President, Personal
Systems | 2023 | 803,500 | | — | | 4,046,599 | | 1,696,667 | | 829,815 | | — | | 41,820 | | 7,418,401 | |
| 2022 | 780,000 | | — | | 5,610,175 | | 1,754,919 | | 582,546 | | — | | 42,670 | | 8,770,310 | |
| 2021 | 740,000 | | — | | 4,552,967 | | 1,673,373 | | 1,998,002 | | 15 | | 43,426 | | 9,007,783 | |
Julie Jacobs(1) Chief Legal Officer &
General Counsel | 2023 | 700,000 | | 2,000,000 | 1,851,494 | | 1,002,586 | | 570,500 | | — | | 28,496 | | 6,153,076 | |
| 2022 | 58,333 | | — | | 9,000,011 | | — | | 32,271 | | — | | — | | 9,090,615 | |
| | | | | | | | |
(1)Ms. Jacobs was hired on October 3, 2022 as the Company’s Chief Legal Officer & General Counsel.
(2)Amounts shown represent base salary earned or paid during the applicable fiscal 2015. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary(1)
($) | | | Bonus(2)
($) | | | Stock
Awards(3)(4)
($) | | | Option
Awards(5)
($) | | | Non-Equity
Incentive Plan
Compensation(6)
($) | | | Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(8)
($) | | | All Other
Compensation(9)
($) | | | Total
($) | |
Margaret C. Whitman | | | 2015 | | | | 1,500,058 | | | | — | | | | 7,771,200 | | | | 5,113,585 | | | | 2,453,262 | | | | — | | | | 297,441 | | | | 17,135,546 | |
President and Chief Executive Officer | | | 2014 | | | | 1,500,058 | | | | — | | | | 8,147,637 | | | | 5,355,075 | | | | 4,314,000 | | | | — | | | | 295,394 | | | | 19,612,164 | |
| | | 2013 | | | | 1 | | | | — | | | | 4,394,475 | | | | 12,713,433 | | | | 260,000 | (7) | | | — | | | | 275,334 | | | | 17,643,243 | |
| | | | | | | | | |
Catherine A. Lesjak | | | 2015 | | | | 850,033 | | | | — | | | | 3,287,819 | | | | 2,163,437 | | | | 868,864 | | | | 95,650 | | | | 51,862 | | | | 7,317,665 | |
Executive Vice President and Chief Financial Officer | | | 2014 | | | | 850,033 | | | | — | | | | 3,447,082 | | | | 2,265,610 | | | | 1,421,392 | | | | 356,262 | | | | 33,137 | | | | 8,373,516 | |
| | | 2013 | | | | 835,032 | | | | — | | | | 1,500,002 | | | | 4,460,404 | | | | 1,380,469 | | | | — | | | | 40,600 | | | | 8,216,507 | |
| | | | | | | | | |
Dion J. Weisler | | | 2015 | | | | 774,999 | | | | — | | | | 3,286,543 | | | | 2,163,437 | | | | 386,719 | | | | — | | | | 12,116,370 | | | | 18,728,068 | |
Executive Vice President, Printing and Personal Systems Group | | | 2014 | | | | 831,251 | | | | — | | | | 3,133,726 | | | | 2,059,650 | | | | 1,722,400 | | | | — | | | | 5,765,765 | | | | 13,512,792 | |
| | | 2013 | | | | 647,478 | | | | 2,302,598 | | | | 1,603,213 | | | | 3,473,722 | | | | 33,208 | | | | — | | | | 1,089,993 | | | | 9,150,212 | |
| | | | | | | | | |
Antonio F. Neri | | | 2015 | | | | 725,028 | | | | 1,500,000 | | | | 1,999,993 | | | | 1,264,048 | | | | 831,709 | | | | 8,338 | | | | 262,489 | | | | 6,591,605 | |
| Executive Vice President and General Manager, Enterprise Group | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Tracy S. Keogh | | | 2015 | | | | 700,027 | | | | — | | | | 3,793,332 | | | | 1,180,059 | | | | 715,535 | | | | — | | | | 55,847 | | | | 6,444,800 | |
Executive Vice President, Human Resources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Amounts shown represent base salary earned or paid during the fiscal year, as described under “Compensation Discussion and Analysis—Analysis of Elements of Fiscal 2015 Executive Compensation—Base Pay.” The fiscal 2015 salary amount for Mr. Weisler above reflects the conversion of Mr. Weisler’s salary from Singaporean dollars to U.S. dollars using the currency exchange rate in effect at the time of each payment to Mr. Weisler. |
(2) | The fiscal 2015 bonus amount for Mr. Neri represents a signing bonus for an internal employment offer he received in fiscal 2014. Mr. Neri became a Section 16 Officer on August 1, 2015. The fiscal 2013 bonus amount for Mr. Weisler represents the second installment of a signing bonus of $1,552,869 paid under the terms of his employment offer letter, a retention bonus of $85,557 and a guaranteed portion of $664,172 of his annual incentive bonus payable under the PfR Plan. |
year, as described under the heading “Executive Compensation—Compensation Discussion and Analysis—Determination of Fiscal 2023 Executive Compensation—2023 Base Salary.” (3)In fiscal 2021 Ms. Myers received a one-time lump sum cash payment of $250,000 in connection with her appointment as Acting Chief Financial Officer, while continuing to lead our Transformation and IT organization. Ms. Jacobs received a one-time $2,000,000 payment in fiscal 2023 in recognition of foregone compensation at her previous employer.
(4)The grant date fair value of all stock awards has been calculated in accordance with applicable accounting standards, excluding the effect of estimated forfeitures. In the case of RSUs, the value is determined by multiplying the number of units granted by the closing price of our stock on the grant date. For PARSUs awarded in fiscal 2023, they include both internal (EPS) goals and the market-related (TSR) performance modifier as described under the heading “Executive Compensation—Compensation Discussion and Analysis—Determination of Fiscal 2023 Executive Compensation—Long-Term Incentive Compensation—Fiscal Awards 2023.” Amounts shown reflect the grant date fair value of the first tranche of the 2023 PARSUs for which the EPS goal has been established (i.e., for fiscal 2023) based on the probable outcome of performance conditions related to these PARSUs at the grant date. Consistent with the applicable accounting standards, the grant date fair value of the market-related TSR modifier has been determined using a Monte Carlo simulation model. Further, consistent with accounting standards, grant date fair value reflects the EPS portion of the award for Year 1 only, for which goals were approved in January 2023. This value also reflects the grant date fair value of the EPS portion of the 2022 PARSU award for Year 2 (fiscal 2023 EPS) and the EPS portion of the 2021 PARSU award for Year 3 (fiscal 2023 EPS), for which goals were approved in January 2023. The table below sets forth the grant date fair value for the fiscal 2023 EPS portion of the 2023 PARSUs granted on December 8, 2022, the fiscal 2023 EPS portion of the 2022 PARSUs granted on December 7, 2021, and the fiscal 2023 EPS portion of the 2021 PARSUs granted on December 7, 2020:
| (3) | | | | |
| 2024 PROXY STATEMENT | The grant date fair value of all stock awards has been calculated in accordance with applicable accounting standards. In the case of RSUs, the value is determined by multiplying the number of units granted by the closing price of our stock on the grant date. For PARSUs awarded in fiscal 2015, amounts shown reflect the grant date fair value of the PARSUs for the two- and three-year performance periods beginning with fiscal 2015 based on the probable outcome of performance conditions related to these PARSUs at the grant date. For PARSUs awarded in fiscal 2014, amounts shown reflect the grant date fair value of the PARSUs for the two- and three-year performance periods beginning with fiscal 2014 based on the probable outcome of performance conditions related to these PARSUs at the grant date. The 2014 and 2015 PARSUs include both market-related (TSR) and internal (ROIC) performance goals as described under the “Compensation Discussion and Analysis–Fiscal 2015 Long-term Incentive Compensation.” Consistent with the applicable accounting standards, the grant date fair value of the market-related TSR component has been determined using a Monte Carlo simulation model. The table below sets forth the grant date fair value for the PARSUs granted in fiscal 2015:67 |
| | | | | | | | | | | | |
Name | | Probable Outcome of
Performance Conditions
Grant Date Fair Value
($) * | | | Maximum Outcome of
Performance Conditions
Grant Date Fair Value
($) | | | Market-related
Component Grant Date
Fair Value
($) ** | |
Margaret C. Whitman | | | 1,703,056 | | | | 3,406,111 | | | | 2,134,973 | |
Catherine A. Lesjak | | | 720,525 | | | | 1,441,050 | | | | 903,260 | |
Dion J. Weisler | | | 720,525 | | | | 1,441,050 | | | | 903,260 | |
Antonio F. Neri | | | — | | | | — | | | | — | |
Tracy S. Keogh | | | 393,027 | | | | 786,054 | | | | 492,657 | |
* | Amounts shown represent the grant date fair value of the PARSUs subject to the internal ROIC performance goal (i) based on the probable or target outcome as of the date the goals were set and (ii) based on achieving the maximum level of performance for the two- and three-year performance periods beginning in fiscal 2015. The grant date fair value of the ROIC goal component of the PARSUs awarded on December 10, 2014 was $37.36 per unit, which was the closing share price of our common stock on December 10, 2014. |
** | Amounts shown represent the grant date fair value of PARSUs subject to the market-related TSR goal component of the PARSUs, for which expense recognition is not subject to probable or maximum outcome assumptions. The weighted-average grant date fair value of the market-related TSR goal component of the PARSUs awarded on December 10, 2014 was $46.84 per unit, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 33.59%, a risk-free interest rate of 0.97%, and a dividend yield rate of 1.7%. |
| (4) | In connection with the separation of Hewlett Packard Enterprise from HP Inc., Segment 1 of fiscal year 2014 PARSUs were vested and settled during fiscal year 2015 (based on relative TSR and ROIC performance as of July 31, 2015). Please see sectionSeparation-Related Equity Award Amendmentsof the Compensation Discussion and Analysis for additional information, including rationale. This settlement resulted in incremental compensation cost that is reflected in this column and is shown in the table below. The incremental cost of $1.0171 per TSR Segment 1 target unit was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation were a volatility rate of 24.82%, a risk-free interest rate of 0.43% and a dividend yield rate of 2.32%
| | | | |
Name
Executive Compensation | | Incremental
Compensation Cost
($) | |
| Margaret C. Whitman
| | 33,161 | |
Catherine A. Lesjak
| | | 14,030 | |
Dion J. Weisler
| | | 12,754 | |
Antonio F. Neri
| | | — | |
Tracy S. Keogh
| | | 7,653 | |
(5) | | | | | | | | | | | | | | | | | Name | Date of
Original
PARSU
Grant | Probable
Outcome of
Performance
Conditions
Grant Date
Fair Value
($)* | Maximum
Outcome of
Performance
Conditions
Grant Date Fair
Value
($)* | Market-related
Component Grant
Date Fair Value
($)** | | Enrique J. Lores | 12/8/2022 | 1,738,215 | | 5,214,644 | | 835,356 | | | 12/7/2021 | 1,051,516 | | 3,154,549 | | | | 12/7/2020 | 1,393,760 | | 4,181,280 | | | | Marie Myers | 12/8/2022 | 522,776 | | 1,568,329 | | 251,235 | | | 12/7/2021 | 342,506 | | 1,027,517 | | | | 12/7/2020 | 412,961 | | 1,238,883 | | | | Tuan Tran | 12/8/2022 | 527,110 | | 1,581,330 | | 253,327 | | | 12/7/2021 | 345,502 | | 1,036,506 | | | | 12/7/2020 | 567,837 | | 1,703,510 | | | | Alex Cho | 12/8/2022 | 516,057 | | 1,548,170 | | 248,010 | | | 12/7/2021 | 345,502 | | 1,036,506 | | | | 12/7/2020 | 567,837 | | 1,703,510 | | | | Julie Jacobs | 12/8/2022 | 304,950 | | 914,851 | | 146,552 | |
* Amounts shown represent the grant date fair value of the PARSUs subject to the internal EPS performance goal (i) based on the probable outcome as of the date the goals were set and (ii) based on achieving the maximum level of performance for the performance period beginning in fiscal 2023. The grant date fair value of the 2023 PARSUs Year 1 EPS units awarded on December 8, 2022, 2022 PARSUs Year 2 EPS units awarded on December 7, 2021 and 2021 PARSUs Year 3 EPS units awarded on December 7, 2020 was $29.09 per unit, which was the closing share price of our common stock on January 10, 2023 when the EPS goal was approved. The values of the 2023 PARSUs Year 2 and Year 3 EPS units will not be available until January 2024 and January 2025, respectively, and therefore are not included for fiscal 2023, but will be included for their respective fiscal years. ** Amounts shown represent the grant date fair value of PARSUs subject to the market-related TSR modifier of the PARSUs, for which expense recognition is not subject to probable or maximum outcome assumptions. The grant date fair value of the market-related TSR modifier of the PARSUs granted December 8, 2022 was $4.66 per unit, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 44.43%, a risk-free interest rate of 3.97%, and a simulation period of 2.9 years. For information on the assumptions used to calculate the grant date fair value of the awards, refer to Note 5 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, as filed with the SEC on December 18, 2023. (5) The grant date fair value of PCSO awards has been calculated in accordance with applicable accounting standards, excluding the effect of estimated forfeitures, using a combination of a Monte Carlo simulation model and a lattice model, as these awards contain market conditions. For information on the assumptions used to calculate the grant date fair value of the awards, refer to Note 5 of our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, as filed with the SEC on December 18, 2023. (6)Amounts shown represent payouts under the annual incentive plan (amounts earned during the applicable fiscal year but paid after the end of that fiscal year), as described under the heading “Executive Compensation—Compensation, Discussion and Analysis-Determination of PCSO awards is calculated using a combination of a Monte Carlo simulation model and a lattice model as these awards contain market conditions. For information on the assumptions used to calculate the fair value of the awards, refer to Note 5 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015, as filed with the SEC on December 16, 2015. |
(6) | Amounts shown represent payouts under the PfR Plan (amounts earned during the applicable fiscal year but paid after the end of that fiscal year). |
(7) | Based on the previously established fiscal 2013 financial metrics and MBOs under the PfR Plan, the independent directors of the Board determined that Ms. Whitman’s bonus for fiscal 2013 was approximately $3,970,000, or 132.3% of target, reflecting outstanding performance for the year. This reflected the Board’s recognition of Ms. Whitman’s performance on behalf of HP, and the members’ assessment that her performance in fiscal 2013 was above target. In 2013, the HRC established a target compensation level for Ms. Whitman aligned with the market median. This amount included a target LTI award of $13.4 million. Due to timing delays with the grant that were necessary to accommodate stock plan share limits and the associated stock price changes during those delays, and higher-than-planned financial valuations of the grant, the aggregate grant date fair value of the LTI award was $17.11 million or $3.71 million higher than the established target LTI. Accordingly, the independent directors determined it was in the best interest of HP and its stockholders to offset this higher financial LTI valuation by the cash bonus otherwise payable to Ms. Whitman under the PfR Plan, resulting in Ms. Whitman receiving $3,710,000 of her $3,970,000 bonus through LTI grant value, and $260,000 in cash payment. This is reflected in the amount above. |
(8) | Amounts shown represent the increase in the actuarial present value of NEO pension benefits during the applicable fiscal year. There is no amount shown for NEOs in a year where there has been a decrease in the actuarial present value of pension benefits, which occurred for Ms. Lesjak due to an increase in the discount rates used to determine these present values as of October 31, 2013 compared to those used as of October 31, 2012. As described in more detail under “Narrative to the Fiscal 2015 Pension Benefits Table” below, pension accruals have ceased for all NEOs, and NEOs hired after the dates that pension accruals ceased are not eligible to participate in any such pension plan. Although due to his current participation in the International Retirement Guarantee, Mr. Neri could accrue additional benefits if he were
|
| transferred at HPE’s request to another country, since this has not happened, there are no additional pension accruals for any NEOs. Accordingly, the amounts reported for the NEOs do not reflect additional accruals but reflect the passage of one more year from the prior present value calculation and changes in other actuarial assumptions. The assumptions used in calculating the changes in pension benefits are described in footnote (2) to the “Fiscal 2015 Pension Benefits Table” below. No HP Inc. or Hewlett Packard Enterprise plan provides for above-market earnings on deferred compensation amounts, so the amounts reported in this column do not reflect any such earnings. |
(9) | The amounts shown are detailed in the “All Other Compensation Table” below. |
Fiscal 20152023 Executive Compensation—2023 Annual Incentives.”
(7)Amounts shown represent the increase in the actuarial present value of NEO pension benefits during the applicable fiscal year. The values are reflected as “$0” for Mr. Tran and Mr. Cho for 2022 and 2023 because of the declines in pension values of $123,602 and $264,237 from 2021 to 2022, and $6,341 and $13,938 from 2022 to 2023, respectively, due to the significant increases in discount rates from 2021 to 2022 and the lesser increases in discount rates from 2022 to 2023. As described in more detail under the heading “Narrative to the Fiscal 2023 Pension Benefits Table” below, pension accruals have generally ceased for all NEOs, and NEOs hired after the dates that pension accruals ceased are not eligible to participate in any U.S. defined benefit pension plan. The only exception for the NEOs listed above is Mr. Cho who participates in the International Retirement Guarantee (IRG), which is provided to a small, closed group of employees who have transferred between countries with pension/retirement indemnity plans. Mr. Cho will not accrue additional benefits under the IRG unless he transfers outside of the U.S. with HP for an extended period of time. Accordingly, the amounts reported for the NEOs do not reflect additional accruals but reflect the passage of one more year from the prior present value calculation, Deferred Profit-Sharing Plan returns, and changes in other actuarial assumptions. The assumptions used in calculating the changes in pension benefits are described in footnote (2) to the “Fiscal 2023 Pension Benefits Table.” No HP plan provides for above-market earnings on deferred compensation amounts, so the amounts reported in this column do not reflect any such earnings.
(8)The amounts shown are detailed in the “Fiscal 2023 All Other Compensation Table” below.
Fiscal 2023 All Other Compensation Table The following table provides additional information about the amounts that appear in the “All Other Compensation” column in the “Summary Compensation Table”
above: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | 401(k)
Company
Match(1)
($) | | | NQDC
Company
Match(2)
($) | | | Mobility
Program(3)
($) | | | Security
Services/
Systems(4)
($) | | | Legal
Fees
($) | | | Severance
Payments
($) | | | Personal
Aircraft
Usage(5)
($) | | | Tax
Benefit(6)
($) | | | Miscellaneous(7)
($) | | | Total
AOC
($) | |
Margaret C. Whitman | | | 10,600 | | | | — | | | | — | | | | 719 | | | | — | | | | — | | | | 268,122 | | | | — | | | | 18,000 | | | | 297,441 | |
Catherine A. Lesjak | | | 10,600 | | | | 9,600 | | | | — | | | | 12,662 | | | | — | | | | — | | | | — | | | | — | | | | 19,000 | | | | 51,862 | |
Dion J. Weisler | | | 1,227 | | | | — | | | | 2,957,219 | | | | 24,476 | | | | — | | | | — | | | | 1,464 | | | | 9,104,044 | | | | 27,940 | | | | 12,116,370 | |
Antonio F. Neri | | | 7,950 | | | | — | | | | 140,057 | | | | — | | | | — | | | | — | | | | 1,729 | | | | 101,100 | | | | 11,653 | | | | 262,489 | |
Tracy S. Keogh | | | 10,267 | | | | 10,400 | | | | 10,693 | | | | 1,285 | | | | — | | | | — | | | | 5,202 | | | | — | | | | 18,000 | | | | 55,847 | |
(1) | Represents matching contributions made under the HP 401(k) Plan. |
(2) | Represents matching contributions credited during fiscal 2015above. | | | | | | | | | | | | | | | | | | | | | | | | | Name | 401(k) Company
Match(1)
($) | NQDC Company
Match(2)
($) | Mobility
Program(3)
($) | Security Services/
Systems(4)
($) | Personal Aircraft
Usage(5)
($) | Miscellaneous(6)
($) | Total
AOC
($) | | Enrique J. Lores | 13,200 | | 12,200 | | 19,315 | | 31,356 | | 182,299 | | 47,469 | | 305,839 | | | Marie Myers | 13,200 | | 12,200 | | — | | 27,175 | | — | | 18,000 | | 70,575 | | | Tuan Tran | 13,200 | | 10,925 | | 8,411 | | — | | — | | 18,000 | | 50,536 | | | Alex Cho | 13,200 | | 12,200 | | — | | — | | — | | 16,420 | | 41,820 | | | Julie Jacobs | 13,200 | | — | | — | | 945 | | — | | 14,351 | | 28,496 | |
(1)Represents matching contributions made under the HP 401(k) Plan that were earned for 2023. (2)Represents matching contributions credited during fiscal 2023 under the HP Executive Deferred Compensation Plan with respect to the 2014 calendar year of that plan. |
(3) | For Mr. Neri and Ms. Keogh represents benefits provided under our domestic executive mobility program. Mr. Neri relocated from Houston, Texas to Palo Alto, California in November 2014 and Ms. Keogh relocated from Deerfield, Illinois to Palo Alto, California in April 2011. For Mr. Weisler, represents benefits provided under our executive mobility program related to his international assignment of $557,219, and a relocation bonus in lieu of mobility program benefits in the amount of $2.4 million for his permanent relocation from Singapore to Palo Alto, California. Until October 2015, Mr. Weisler’s home location was Singapore and Mr. Weisler was on assignment in Palo Alto, California. In October 2015, Mr. Weisler permanently moved to Palo Alto. |
(4) | Represents home security services provided to the NEOs. Although security systems were installed at our request, consistent with SEC guidance, the expense is reported here as a perquisite due to the fact that there is an incidental personal benefit. |
(5) | Represents the value of personal usage of HP corporate aircraft. For purposes of reporting the value of such personal usage in this table, we use data provided by an outside firm to calculate the hourly cost of operating each type of aircraft. These costs include the cost of fuel, maintenance, landing and parking fees, crew, catering and supplies. For trips by NEOs that involve mixed personal and business usage, we include the incremental cost of such personal usage (i.e., the excess of the cost of the actual trip over the cost of a hypothetical trip without the personal usage). For income tax purposes, the amounts included in NEO income are calculated based on the standard industry fare level valuation method. No tax gross-ups are provided for this imputed income. |
(6) | In connection with his international assignment from Singapore to Palo Alto, Mr. Weisler was eligible for a tax equalization benefit under our executive mobility program. This benefit is
|
| designed to equalize the income and social taxes paid by Mr. Weisler so that his total income and social tax costs related to any earnings from HP while on international assignment was no more than the amount he would have paid had all of the earnings been taxable solely pursuant to Singapore income and social tax laws. After fiscal 2015, Mr. Weisler is not eligible for additional tax equalization benefits, but due to timing there may be an assignment related trailing tax impact in fiscal 2016. For Mr. Neri the amount represents tax assistance benefits provided under the domestic executive mobility program. |
(7) | Includes amounts paid either directly to the executives or on their behalf for financial counseling, as follows: Ms. Whitman: $18,000; Ms. Lesjak: $18,000; Mr. Weisler: $18,000; Ms. Keogh: $18,000; and Mr. Neri: $10,125. In addition, includes the following: an employer charitable donation match of $1,000 for Ms. Lesjak, $1,528 of imputed income with respect to attendance at an HP event by a personal guest for Mr. Neri, and $9,940 of required contributions to Singapore’s Central Provident Fund, a social security savings plan, for Mr. Weisler. |
Narrative to the Summary Compensation Table
2022 calendar year of that plan.
(3)For Mr. Lores and Mr. Tran, represents tax preparation, filing, equalization and compliance services paid under HP’s tax assistance due to business travel in Korea. Due to the taxation impact on US taxpayers who travel to Korea on business and the increase in business travel to Korea due to our acquisition of Samsung’s Print business, the HRC Committee approved a Tax Assistance Program during its July 2017 meeting that covers our Section 16 officers. The program has the same characteristics as the existing tax equalization program for all other employees. Both programs together ensure a tax neutral scenario for all HP employees who must comply with Korean tax requirements due to business travel to Korea.
(4)Represents home security services provided to the NEOs and, consistent with SEC guidance, the aggregate incremental cost associated with these services is reported here as a perquisite. For the CEO and CFO, we provided a home security evaluation and residential security systems. At times, we may provide security for the NEOs as needed to address security concerns arising out of our business, which during fiscal 2023 included personal security services provided during business-related travel and at business facilities. We consider personal security measures to be appropriate expenses that arise out of the executive’s employment responsibilities and that are necessary to his or her job performance and to ensure the safety of the covered executive and his or her family. We believe that all Company-incurred security costs are reasonable and necessary and for the Company’s benefit. The Board and the HRC Committee periodically review and approve the amount and nature of executive officers’ security expenses.
(5)Represents the value of personal usage of HP corporate aircraft. For purposes of reporting the aggregate incremental cost to HP of such personal usage in this table, we use data provided by an outside firm to calculate the hourly cost of operating the Company’s aircraft. These costs include the cost of fuel, maintenance, landing and parking fees, crew, security for crew, as needed, catering and supplies. For trips by NEOs that involve mixed personal and business usage, we include the aggregate incremental cost of such personal usage (i.e., the excess of the cost of the actual trip over the cost of a hypothetical trip without the personal usage). For income tax purposes, the amounts reportedincluded in NEO income are calculated based on the “Summary Compensation Table,”standard industry fare level valuation method. No tax gross ups are provided for this imputed income.
(6)Includes other amounts paid either directly to the executives or on their behalf, including base pay, annualfinancial counseling, tax preparation and LTI award amounts, benefits and perquisites, are described more fully underestate planning services, as discussed further in “Compensation Discussion and Analysis.”The amounts reported For Mr. Lores, the amount includes $27,697 for personal ground transportation expenses incurred while on business trips, $18,000 for financial counseling services, and $1,772 in “Non-Equity Incentive Plan Compensation” column include amounts earned in fiscal 2015 by eachrespect of a tax equalization payment and corresponding gross up, under HP’s Tax Assistance Program for Korea business travel. For Ms. Myers, the NEOs underamount includes $18,000 for financial counseling services. For Mr. Tran, the PfR Plan. The narrative description ofamount includes $18,000 for financial counseling services. For Mr. Cho, the remaining information inamount includes $16,400 for financial counseling services and a $20 wellness incentive. All U.S. employees are eligible to receive the “Summary Compensation Table” is provided inwellness incentive. For Ms. Jacobs, the narrative to the other compensation tables.
amount includes $14,351 for financial counseling services.
Grants of Plan-Based Awards in Fiscal
20152023
The following table provides information on
annual incentive awards
granted under the PfR Plan for fiscal
20152023 and awards of RSUs, PCSOs and PARSUs granted
during fiscal 2023 as
a part of
fiscal 2015our long-term incentive
compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1) | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)(3) | | | All
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units(4)(5)
(#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options(6)
(#) | | | All
Other
Option
Awards:
Exercise
or Base
Price of
Option
Awards
($) | | | Grant-
Date Fair
Value of
Stock and
Option
Awards(7)
($) | |
Name | | Grant
Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | | |
Margaret C. Whitman | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PfR | | | | | | | 30,000 | | | | 3,000,000 | | | | 7,500,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
RSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 104,390 | | | | — | | | | — | | | | 3,900,010 | |
PCSO | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | 605,158 | | | | — | | | | — | | | | — | | | | 37.36 | | | | 5,113,585 | |
PARSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | 45,585 | | | | 91,170 | | | | 182,340 | | | | — | | | | — | | | | — | | | | 3,838,028 | |
PARSU Modification | | | 12/11/2013 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 32,603 | | | | — | | | | — | | | | 33,161 | |
Catherine A. Lesjak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PfR | | | | | | | 10,625 | | | | 1,062,500 | | | | 2,656,250 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
RSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 44,165 | | | | — | | | | — | | | | 1,650,004 | |
PCSO | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | 256,028 | | | | — | | | | — | | | | — | | | | 37.36 | | | | 2,163,437 | |
PARSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | 19,286 | | | | 38,572 | | | | 77,144 | | | | — | | | | — | | | | — | | | | 1,623,785 | |
PARSU Modification | | | 12/11/2013 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 13,794 | | | | — | | | | — | | | | 14,030 | |
Dion J. Weisler | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PfR | | | | | | | 10,313 | | | | 1,031,250 | | | | 2,578,125 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
RSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 44,165 | | | | — | | | | — | | | | 1,650,004 | |
PCSO | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | 256,028 | | | | — | | | | — | | | | — | | | | 37.36 | | | | 2,163,437 | |
PARSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | 19,286 | | | | 38,572 | | | | 77,144 | | | | — | | | | — | | | | — | | | | 1,623,785 | |
PARSU Modification | | | 12/11/2013 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,540 | | | | — | | | | — | | | | 12,754 | |
Antonio F. Neri | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PfR | | | | | | | 9,063 | | | | 906,250 | | | | 2,265,625 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
RSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 53,533 | | | | — | | | | — | | | | 1,999,993 | |
Stock Options | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 160,616 | | | | 37.36 | | | | 1,264,048 | |
Tracy S. Keogh | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PfR | | | | | | | 8,750 | | | | 875,000 | | | | 2,187,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
RSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 53,533 | | | | — | | | | — | | | | 1,999,993 | |
RSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 24,090 | | | | — | | | | — | | | | 900,002 | |
PCSO | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | — | | | | 139,652 | | | | — | | | | — | | | | — | | | | 37.36 | | | | 1,180,059 | |
PARSU | | | 12/10/2014 | | | | — | | | | — | | | | — | | | | 10,520 | | | | 21,039 | | | | 42,078 | | | | — | | | | — | | | | — | | | | 885,684 | |
PARSU Modification | | | 12/11/2013 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,524 | | | | — | | | | — | | | | 7,653 | |
(1) | Amounts represent the range of possible cash payouts for fiscal 2015 awards under the PfR Plan. |
(2) | PCSO awards vest as follows: one third of the PCSO award will vest upon continued service of one year and our closing stock price is at least 10% over the grant date stock price for at least 20 consecutive trading days within two years from the date of grant; one third will vest upon continued service for two years and our closing stock price is at least 20% over the grant date stock price for at least 20 consecutive trading days within three years from the date of grant; and one third will vest upon continued service of three years and our closing stock price is at least 30% over the grant date stock price for at least 20 consecutive trading days within four years from the date of grant. All PCSO awards have an eight-year term. |
(3) | PARSU award amounts represent the range of shares that may be released at the end of the two- and three-year performance periods applicable to the PARSU award assuming achievement of threshold, target and maximum performance. PARSUs vest as follows: 50% of the PARSUs are eligible for vesting based on performance over two years with continued service, and 50% of the PARSUs are eligible for vesting based on performance over three years with continued service. The awards eligible
|
program: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Grant
Date | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1) | | Estimated Future Payouts
Under Equity
Incentive Plan Awards(2) | All Other
Stock
Awards:
Number of
Shares of Stock or
Units(3)
(#) | All Other
Option
Awards:
Number of
Securities
Underlying
Options(4)
(#) | Exercise
or Base
Price of
Option
Awards
($/Sh) | Grant-
Date Fair
Value of
Stock
and Option
Awards(2)
($) |
Threshold
($) | Target
($) | Maximum
($) | | Threshold
(#) | Target
(#) | Maximum
(#) |
| Enrique J. Lores | | | | | | | | | | | | |
| Annual Incentive | | 26,000 | | 2,600,000 | | 5,200,000 | | | | | | | | | |
| RSU | 12/8/2022 | | | | | | | | 180,126 | | | | 5,129,988 | |
| PCSO | 12/8/2022 | | | | | | | | | 634,503 | | 28.48 | 5,714,757 | |
| PARSU | 12/8/2022 | | | | | 29,877 | | 59,753 | | 179,259 | | | | | 2,573,571 | |
| PARSU | 12/7/2021 | | | | | 18,074 | | 36,147 | | 108,441 | | | | | 1,051,516 | |
| PARSU | 12/7/2020 | | | | | 23,956 | | 47,912 | | 143,736 | | | | | 1,393,760 | |
| Marie Myers | | | | | | | | | | | | |
| Annual Incentive | | 11,070 | | 1,107,000 | | 2,214,000 | | | | | | | | | |
| RSU | 12/8/2022 | | | | | | | | 84,270 | | | | 2,400,010 | |
| PCSO | 12/8/2022 | | | | | | | | | 190,828 | | 28.48 | 1,718,724 | |
| PARSU | 12/8/2022 | | | | | 8,986 | | 17,971 | | 53,913 | | | | | 774,011 | |
| PARSU | 12/7/2021 | | | | | 5,887 | | 11,774 | | 35,322 | | | | | 342,506 | |
| PARSU | 12/7/2020 | | | | | 7,098 | | 14,196 | | 42,588 | | | | | 412,961 | |
| Tuan Tran | | | | | | | | | | | | |
| Annual Incentive | | 11,070 | | 1,107,000 | | 2,214,000 | | | | | | | | | |
| RSU | 12/8/2022 | | | | | | | | 84,972 | | | | 2,420,003 | |
| PCSO | 12/8/2022 | | | | | | | | | 192,418 | | 28.48 | 1,733,045 | |
| PARSU | 12/8/2022 | | | | | 9,060 | | 18,120 | | 54,360 | | | | | 780,437 | |
| PARSU | 12/7/2021 | | | | | 5,939 | | 11,877 | | 35,631 | | | | | 345,502 | |
| PARSU | 12/7/2020 | | | | | 9,760 | | 19,520 | | 58,560 | | | | | 567,837 | |
| Alex Cho | | | | | | | | | | | | |
| Annual Incentive | | 10,847 | | 1,084,725 | | 2,169,450 | | | | | | | | | |
| RSU | 12/8/2022 | | | | | | | | 83,188 | | | | 2,369,194 | |
| PCSO | 12/8/2022 | | | | | | | | | 188,379 | | 28.48 | 1,696,667 | |
| PARSU | 12/8/2022 | | | | | 8,870 | | 17,740 | | 53,220 | | | | | 764,066 | |
| PARSU | 12/7/2021 | | | | | 5,939 | | 11,877 | | 35,631 | | | | | 345,502 | |
| PARSU | 12/7/2020 | | | | | 9,760 | | 19,520 | | 58,560 | | | | | 567,837 | |
| Julie Jacobs | | | | | | | | | | | | |
| Annual Incentive | | 7,000 | | 700,000 | | 1,400,000 | | | | | | | | | |
| RSU | 12/8/2022 | | | | | | | | 49,157 | | | | 1,399,991 | |
| PCSO | 12/8/2022 | | | | | | | | | 111,316 | | 28.48 | 1,002,586 | |
| PARSU | 12/8/2022 | | | | | 5,242 | | 10,483 | | 31,449 | | | | | 451,503 | |
(1)Amounts represent the range of possible cash payouts for fiscal 2023 annual incentive awards under the 2004 Stock Incentive Plan based upon annual salary, as described under the heading “Executive Compensation—Compensation Discussion and Analysis-Determination of Fiscal 2023 Executive Compensation—2023 Annual Incentives.”
(2)For the fiscal 2021, 2022 and 2023 PARSUs, amounts represent the range of shares that may be released at the end of the three-year vesting period applicable to the PARSUs assuming achievement of threshold, target, or maximum performance. For the 2023 PARSUs year 1, 2022 PARSUs year 2, and 2021 PARSUs year 3, fiscal 2023 EPS units are reflected in this table, including the grant date fair value of the market-related TSR goal modifier of the 2023 PARSUs, for which expense recognition is not subject to probable or maximum outcome assumptions. If our average three-year performance for EPS, modified by relative TSR performance, as applicable, is below threshold for the performance period, no shares will be released based on the terms of the program. For additional details, see the discussion of PARSUs under the heading “Executive Compensation—Compensation Discussion and Analysis—Determination of Fiscal 2023 Executive Compensation—Long-Term Incentive Compensation—Fiscal 2023 Awards—2023 PARSUs.”
(3)RSUs vest as to one-third of the units on each of the first three anniversaries of the grant date, subject to continued service through the applicable vesting date.
| | | | | |
| 70 | for two-year vesting are 50% contingent upon our two-year RTSR and 50% contingent on our ROIC performance, and similarly, the awards eligible for three-year vesting are 50% contingent upon our three-year RTSR and 50% contingent on our ROIC performance. If our RTSR and ROIC performance is below threshold for the performance period, no shares will be released for the applicable segment. For additional details, see the discussion of PARSU awards under “Compensation Discussion and Analysis—Determination of Fiscal 2015 Executive Compensation—Fiscal 2015 Long-Term Incentive Compensation—2015 Performance-Adjusted Restricted Stock Units.” |
| (4) | RSUs vest as to one-third of the units on each of the first three anniversaries of the grant date, subject to continued service, except Ms. Keogh’s RSU grant valued at $1,999,993 vests as to one-fourth of the units on each of the first four anniversaries of the grant date, subject to continued service. | | | |
| Executive Compensation |
| (5) | In connection with the separation of Hewlett Packard Enterprise from HP Inc., the HRC committee approved amendments to certain outstanding long-term incentive awards including the PARSUs that were granted on December 11, 2013 (fiscal 2014) and labeled PARSU Modification in this table. For PARSU Modification, these values represent the number of target units associated with the incremental compensation cost of accelerating vesting of Segment 1, fiscal 2014 PARSUs to September 17, 2015. For additional information, see section “Separation-Related Equity Award Amendments”of the Compensation Discussion and Analysis.
(6) | Stock option awards vest as to one-third of the shares on each of the first, second and third anniversaries of the date of grant. |
(7) | See footnote (3) to the “Summary Compensation Table” for a description of the method used to determine the grant date fair value of stock awards. For PARSU Modification, values represent the incremental compensation cost of accelerating Segment 1, fiscal 2014 PARSUs to September 17, 2015. |
(4)PCSOs will vest as follows: (i) one-third of the PCSO award will vest upon continued service of one year and achievement of a closing stock price that is at least 15% over the grant date stock price for at least 20 consecutive trading days within three years from the date of grant; (ii) one-third of the PCSO award will vest upon continued service for two years and achievement of a closing stock price that is at least 20% over the grant date stock price for at least 20 consecutive trading days within four years from the date of grant; and (iii) one-third of the PCSO award will vest upon continued service of three years and achievement of a closing stock price that is at least 30% over the grant date stock price for at least 20 consecutive trading days within five years from the date of grant. For additional details, see the discussion of PCSOs under the heading “Executive Compensation—Compensation Discussion and Analysis—Determination of Fiscal 2023 Executive Compensation—Long-Term Incentive Compensation—Fiscal 2023 Awards—2023 PCSOs.”
Outstanding Equity Awards at
20152023 Fiscal Year-End
The following table provides information on stock and option awards held by the NEOs as of October 31,
2015: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(1) | | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options(2)
(#) | | | Option
Exercise
Price(3)
($) | | | Option
Expiration
Date(4) | | | Number of
Shares or
Units of
Stock That
Have Not
Vested(5)(6)
(#) | | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested(7)
($) | | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(8)
(#) | | | Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(7)
($) | |
Margaret C. Whitman | | | 1,900,000 | | | | — | | | | — | | | | 23.59 | | | | 9/27/2019 | | | | 184,928 | | | | 4,985,659 | | | | 93,117 | | | | 2,510,434 | |
| | | 636,847 | | | | — | | | | — | | | | 26.38 | | | | 12/14/2019 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,500,000 | | | | — | | | | — | | | | 13.83 | | | | 12/6/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,212,943 | | | | — | | | | — | | | | 15.02 | | | | 1/2/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 393,996 | | | | — | | | | 196,998 | | | | 26.99 | | | | 12/11/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | 605,158 | | | | 37.36 | | | | 12/10/2022 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | |
Catherine A. Lesjak | | | — | | | | — | | | | 109,730 | | | | 27.34 | | | | 12/12/2019 | | | | 152,524 | | | | 4,112,047 | | | | 39,396 | | | | 1,062,116 | |
| | | 306,147 | | | | — | | | | — | | | | 13.83 | | | | 12/6/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 83,345 | | | | — | | | | 83,346 | | | | 26.99 | | | | 12/11/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | 256,028 | | | | 37.36 | | | | 12/10/2022 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | |
Dion J. Weisler | | | — | | | | 12,500 | | | | — | | | | 27.15 | | | | 1/19/2020 | | | | 87,341 | | | | 2,354,713 | | | | 39,396 | | | | 1,062,116 | |
| | | 186,809 | | | | — | | | | 186,809 | | | | 26.23 | | | | 8/1/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 75,769 | | | | — | | | | 75,769 | | | | 26.99 | | | | 12/11/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | 256,028 | | | | 37.36 | | | | 12/10/2022 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | |
Antonio F. Neri | | | 5,000 | | | | — | | | | — | | | | 48.45 | | | | 4/21/2016 | | | | 64,026 | | | | 1,726,141 | | | | — | | | | — | |
| | | 2,500 | | | | — | | | | — | | | | 33.44 | | | | 12/1/2016 | | | | — | | | | — | | | | — | | | | — | |
| | | 16,300 | | | | — | | | | — | | | | 23.59 | | | | 9/27/2019 | | | | — | | | | — | | | | — | | | | — | |
| | | 16,500 | | | | — | | | | — | | | | 28.41 | | | | 12/7/2019 | | | | — | | | | — | | | | — | | | | — | |
| | | 107,142 | | | | — | | | | — | | | | 13.83 | | | | 12/6/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 38,826 | | | | 19,413 | | | | — | | | | 26.99 | | | | 12/11/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 53,538 | | | | 107,078 | | | | — | | | | 37.36 | | | | 12/10/2022 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | |
Tracy S. Keogh | | | — | | | | — | | | | 54,865 | | | | 27.34 | | | | 12/12/2019 | | | | 83,383 | | | | 2,248,006 | | | | 21,488 | | | | 579,316 | |
| | | 263,196 | | | | — | | | | — | | | | 13.83 | | | | 12/6/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 45,461 | | | | — | | | | 45,462 | | | | 26.99 | | | | 12/11/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | 139,652 | | | | 37.36 | | | | 12/10/2022 | | | | — | | | | — | | | | — | | | | — | |
(1) | 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | Stock Awards | | Name | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | Equity Incentive Plan Awards: Number of
Securities
Underlying
Unexercised Unearned
Options (#) | Option
Exercise
Price(3)
($) | Option
Expiration
Date(4) | | Number of
Shares or
Units of Stock
That Have Not
Vested(5)
(#) | Market Value
of Shares or
Units of Stock
That Have
Not Vested(6)
($) | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested(7)
(#) | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested(6)
($) | Enrique J.
Lores | 424,973 | | 212,487 | | (1) | | 23.68 | 12/6/2030 | | 356,019 | | 9,373,986 | | 95,900 | | 2,525,047 | | | | | | 498,543 | | 37.29 | 12/6/2031 | | | | | | | | | | 634,503 | | 28.48 | 12/7/2032 | | | | | | | Marie Myers | 125,918 | | 62,959 | | (1) | | 23.68 | 12/6/2030 | | 169,408 | | 4,460,501 | | 29,745 | | 783,186 | | | | | | 162,382 | | 37.29 | 12/6/2031 | | | | | | | | | | 190,828 | | 28.48 | | 12/7/2032 | | | | | | | Tuan Tran | 173,137 | | 86,569 | | (1) | | 23.68 | 12/6/2030 | | 165,975 | | 4,370,112 | | 29,997 | | 789,821 | | | | | | 163,807 | | 37.29 | 12/6/2031 | | | | | | | | | | 192,418 | | 28.48 | 12/7/2032 | | | | | | | Alex Cho | 173,137 | | 86,569 | | (2) | | 23.68 | 12/6/2030 | | 164,124 | | 4,321,392 | | 29,617 | | 779,816 | | | | | | 163,807 | | 37.29 | 12/6/2031 | | | | | | | | | | 188,379 | | 28.48 | 12/7/2032 | | | | | | | Julie Jacobs | | | | 111,316 | | 28.48 | | 12/7/2032 | | 291,358 | | 7,671,460 | | 10,483 | | 276,017 | |
(1)The option awards vest in three tranches, provided: (i) the performance hurdle for the first tranche has been met within two years from the grant date, (ii) the performance hurdle for the second tranche has been met within four years from the grant date, and (iii) the performance hurdle for the third tranche has been met within five years from the grant date. The 12,500 share option held by Mr. Weisler fully vests with continued service as to 12,500 of the shares on the fourth anniversary of January 19, 2012, the date of the grant. The 19,413 share option held by Mr. Neri fully vests with continued service as to 19,413 of the shares on the third anniversary of December 11, 2013, the date of the grant. The 107,078 share option held by Mr. Neri vests with continued service as to 53,539 of the shares on each of the second and third anniversaries of December 10, 2014, the date of the grant. |
(2) | Option awards in this column vest upon satisfaction of certain stock price performance conditions of the FY12 annual PCSOs granted on December 12, 2011, and subject to continued service or as to one-third of the shares on each of the first, second, and third anniversaries of December 11, 2013 and December 10, 2014, the date of grant, or upon later satisfaction of certain stock price performance conditions, and subject to continued service in each case except for the following: |
the 109,730 share option held by Mr. Lores, Ms. Lesjak will vest upon satisfaction of certain stock price performance conditions priorMyers and Mr. Tran fully vested as to the fourth anniversaryremaining one-third of December 12, 2011, the date of grant, and continued serviceoptions on the third anniversary of December 7, 2020, the date of grant. The option award would continue to vest in accordance with this schedule in the event Mr. Lores, Ms. Myers or Mr. Tran retired from HP. Mr. Lores, Ms. Myers and Mr. Tran are retirement eligible.
(2)The option awards vest in three tranches, provided: (i) the performance hurdle for the first tranche has been met within two years from the grant date, (ii) the performance hurdle for the second tranche has been met within four years from the grant date, and (iii) the performance hurdle for the third tranche has been met within five years from the grant date. If Ms. Lesjak retires
| prior to the achievement of the stock price performance conditions, the share option will vest pro-rata based on the number of months served during the first 36 months following the grant date;
|
The performance hurdles applicable to this option award were achieved by the 186,809 shareend of fiscal 2023. Such option held by Mr. Weisler vestsaward vested as to one-halfthe remaining one-third of the sharesoptions on the third anniversary of August 1, 2013,December 7, 2020, the date of grant.
(3)Option exercise prices are the fair market value of our stock on the grant subjectdate.
(4)All options have a ten-year term.
(5)The amounts in this column include shares underlying dividend equivalent units credited with respect to theoutstanding stock awards through October 31, 2023. The release dates and release amounts for all unvested stock awards are as follows, assuming continued service and satisfaction of certain stock priceany applicable financial performance conditions, and continued service until the stock price conditions are met.conditions:
(3) | Option exercise prices are the fair market value of our stock on the grant date. |
(4) | All options have an eight-year term. |
(5) | The amounts in this column include shares underlying dividend equivalent units granted with respect to outstanding stock awards through October 31, 2015. The release dates and release amounts for all unvested stock awards are as follows, assuming continued employment and satisfaction of any applicable financial performance conditions: |
Ms. Whitman: March 20, 2016 (1,206 shares plus accrued dividend equivalent shares),• Mr. Lores: December 10, 2016 (34,7977, 2023 (176,281 shares plus accrued dividend equivalent shares); December 11, 2016 (48,166 shares plus accrued dividend equivalent shares); and December 10, 2017 (34,797 shares plus accrued dividend equivalent shares)
Ms. Lesjak: December 6, 2015 (36,1547, 2024 (100,268 shares plus accrued dividend equivalent shares); December 10, 2015 (14,7217, 2025 (60,042 shares plus accrued dividend equivalent shares).
•Ms. Myers: December 7, 2023 (70,994 shares plus accrued dividend equivalent shares); February 17, 2024 (12,684 shares plus accrued dividend equivalent shares); December 11, 2015 (20,3787, 2024 (48,471 shares plus accrued dividend equivalent shares); December 10, 2016 (14,7227, 2025 (28,090 shares plus accrued dividend equivalent shares).
•Mr. Tran: December 7, 2023 (79,853) shares plus accrued dividend equivalent shares); December 11, 2016 (20,378 shares plus accrued dividend equivalent shares); and December 10, 2017 (14,722 shares plus accrued dividend equivalent shares)
Mr. Weisler: August 1, 2016 (13,3447, 2024 (48,884 shares plus accrued dividend equivalent shares); December 10, 2016 (14,7227, 2025 (28,324 shares plus accrued dividend equivalent shares).
•Mr. Cho: December 7, 2023 (79,258 shares plus accrued dividend equivalent shares); December 11 2016 (18,526 shares plus accrued dividend equivalent shares) and December 10, 2017 (14,722 shares plus accrued dividend equivalent shares);
Mr. Neri: June 16, 2016 (10,1637, 2024 (48,289 shares plus accrued dividend equivalent shares); December 10, 2016 (17,8447, 2025 (27,730 shares plus accrued dividend equivalent shares).
•Ms. Jacobs: December 7, 2023 (16,385 shares plus accrued dividend equivalent shares); October 3, 2024 (115,875 shares plus accrued dividend equivalent shares); December 11, 2016 (6,4717, 2024 (16,386 shares plus accrued dividend equivalent shares); June 16, 2017 (10,164 shares plus accrued dividend equivalent shares); and December 10, 2016 (17,844 shares plus accrued dividend equivalent shares); and
Ms. Keogh: December 10, 2016 (21,413October 3, 2025 (115,875 shares plus accrued dividend equivalent shares); December 11, 2016 (11,1167, 2025 (16,386 shares plus accrued dividend equivalent shares); December 10, 2017 (21,413 shares plus accrued dividend equivalent shares); and December 10, 2018 (13,384 shares plus accrued dividend equivalent shares).
| (6) | | | | |
| 2024 PROXY STATEMENT | The amounts in this column also include fiscal year 2014 PARSUs that were scheduled to vest in October 2016 and were converted to RSUs (see section “Separation-Related Equity Award Amendments” of the Compensation Discussion and Analysis for more information). The release date and release amounts are as follows, assuming continued employment and satisfaction of any applicable financial performance conditions:71 |
(6)Value calculated based on the $26.33 closing price of our stock on October 31, 2016 (60,043 shares plus accrued dividend equivalent shares)2023.
Ms. Lesjak: October 31, 2016 (25,403 shares plus accrued dividend equivalent shares)(7)The amounts in this column include the amounts of PARSUs granted in fiscal 2022 (Year 1 and Year 2 EPS units) and fiscal 2023 (Year 1 EPS units). The EPS units for PARSUs granted in fiscal 2022 and 2023 are reported based on threshold (50%) and target (100%) performance, respectively. Actual payout will be based on achievement of performance goals at the end of the three-year vesting period. For additional details, see the discussion of PARSUs under the heading “Executive Compensation—Compensation Discussion and Analysis—Determination of Fiscal 2023 Executive Compensation—Long-Term Incentive Compensation—Fiscal 2023 Awards—2023 PARSUs.”
Mr. Weisler: October 31, 2016 (23,094 shares plus accrued dividend equivalent shares)
Ms. Keogh: October 31, 2016 (13,856 shares plus accrued dividend equivalent shares)
(7) | Value calculated based on the $26.96 closing price of our stock on October 31, 2015. |
(8) | The amounts in this column include the amounts of PARSUs granted in fiscal 2015 plus accrued dividend equivalent shares. The shares are reported at target, but actual payout will be on achievement of performance goals at the end of the two- and three-year performance periods. |
Option Exercises and Stock Vested in Fiscal 2015
2023
The following table provides information about options exercised and stock awards vested for the NEOs during the fiscal year ended October 31,
2015: | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards(1) | |
Name | | Number of
Shares Acquired
on Exercise
(#) | | | Value Realized
on Exercise(2)
($) | | | Number of
Shares Acquired
on Vesting
(#) | | | Value Realized
on Vesting(3)
($) | |
Margaret C. Whitman | | | — | | | | — | | | | 454,376 | | | | 14,852,119 | |
Catherine A. Lesjak | | | 899,220 | | | | 17,213,726 | | | | 197,554 | | | | 6,547,833 | |
Dion J. Weisler | | | 168,268 | | | | 2,430,193 | | | | 136,693 | | | | 4,374,697 | |
Antonio F. Neri | | | 53,571 | | | | 1,320,525 | | | | 83,262 | | | | 2,680,328 | |
Tracy S. Keogh | | | 363,522 | | | | 6,668,699 | | | | 130,836 | | | | 4,303,765 | |
(1) | Includes PARSUs, RSUs and accrued dividend equivalent shares. |
(2) | Represents the amounts realized based on the difference between the market price of HP stock on the date of grant and the exercise price. |
(3) | Represents the amounts realized based on the fair market value of our stock on the vesting date for PARSUs, RSUs and accrued dividend equivalent shares. Fair market value is determined based on the closing price of our stock on the applicable vesting date. |
2023: | | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards(1) |
| Name | Number of
Shares
Acquired
on Exercise
(#) | Value
Realized on
Exercise(2)
($) | | Number of
Shares Acquired
on Vesting
(#) | Value
Realized on
Vesting(3)
($) |
| Enrique J. Lores | 156,976 | | 2,860,667 | | | 397,722 | 10,772,705 |
| Marie Myers | — | | — | | | 152,289 | 4,219,896 |
| Tuan Tran | — | | — | | | 166,468 | 4,512,252 |
| Alex Cho | — | | — | | | 168,611 | | 4,571,892 | |
| Julie Jacobs | — | | — | | | 119,019 | 3,109,966 |
(1)Includes PARSUs, RSUs, and accrued dividend equivalent shares.
(2)Represents the amounts realized based on the difference between the market price of HP common stock on the date of exercise and the exercise price.
(3)Represents the amounts realized based on the fair market value of our stock on the performance period end date for PARSUs (October 31, 2023) and on the vesting date for RSUs and accrued dividend equivalent shares. Fair market value is determined based on the closing price of our stock on the applicable performance period end/ vesting date.
Fiscal
20152023 Pension Benefits Table
The following table provides information about the present value of accumulated pension benefits payable to each NEO:
| | | | | | | | | | | | | | |
Name | | Plan Name(1) | | Number of
Years of
Credited
Service
(#) | | | Present Value of
Accumulated
Benefit(2)
($) | | | Payments During
Last Fiscal Year
($) | |
| | | | |
Margaret C. Whitman(3) | | — | | | — | | | | — | | | | — | |
| | | | |
Catherine A. Lesjak | | RP | | | 21.3 | | | | 336,721 | | | | — | |
| | EBP | | | 21.3 | | | | 2,316,067 | | | | — | |
| | | | |
Dion J. Weisler(3) | | — | | | — | | | | — | | | | — | |
| | | | |
Antonio F. Neri | | Nederland Plan | | | 3.2 | | | | 52,923 | | | | — | |
| | RP | | | 6.8 | | | | 69,802 | | | | — | |
| | EBP | | | 6.8 | | | | 20,138 | | | | — | |
| | IRG | | | 19.5 | | | | 81,039 | | | | — | |
| | | | |
Tracy S. Keogh(3) | | — | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | |
| Name | Plan
Name(1) | Number
of Years of
Credited
Service
(#) | Present Value
of Accumulated
Benefit(2)
($) | Payments
During
Last
Fiscal
Year
($) |
Enrique J. Lores(3) | — | — | — | — |
Marie Myers(4) | — | — | — | — |
| Tuan Tran | RP | 14.6 | 225,552 | — |
| EBP | 14.6 | 136,258 | — |
| Alex Cho | RP | 7.6 | 53,288 | — |
| EBP | 7.6 | 6 | — |
| IRG | 28.3 | 96,209 | — |
Julie Jacobs(3) | — | — | — | — |
(1)The “RP” and the “EBP” are the qualified HP Retirement Plan and the non-qualified HP Excess Benefit Plan, respectively. All benefits are frozen under these plans. The RP has been merged into the HP Inc. Pension Plan (formerly known as the Hewlett-Packard Company Retirement Plan). The “IRG” is the International Retirement Guarantee which is a nonqualified plan covering certain highly compensated international transfers.
(2)The present value of accumulated benefits is shown at the age 65 unreduced retirement age for the RP, the EBP and the IRG using the assumptions under Accounting Standards Codification (ASC) Topic 715-30 Defined Benefit Plans—Pension for the fiscal 2023 year-end measurement (as of October 31, 2023) (“ASC Topic 715-30”). The present value is based on a discount rate of 6.18% for the RP, 5.80% for the EBP and 5.79% for the IRG, lump sum interest rates of 5.80% for the first five years, 6.30% for the next 15 years and 6.25% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years. As of October 31, 2022 (the prior measurement date), the ASC Topic 715-30 assumptions included a discount rate of 5.70% for the RP, 5.35% for the EBP, and 5.32% for the IRG, lump sum interest rates of 5.25% for the first five years, 5.85% for the next 15 years and 5.85% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years.
| (1) | | | | |
| 72 | The “RP” and the “EBP” are the qualified HP Retirement Plan and the nonqualified HP Excess Benefit Plan, respectively. All benefits are frozen under these plans. The RP has been merged into the HP Inc. Pension Plan (formerly known as the Hewlett-Packard Company Pension Plan). Mr. Neri also participates in Stichting Pensioenfonds HP Nederland (Nederland Plan) and International Retirement Guarantee (IRG). |
| (2) | The present value of accumulated benefits is shown at the age 65 unreduced retirement age for the RP and the EBP using the assumptions under Accounting Standards Codification (ASC) Topic715-30 Defined Benefit Plans—Pension for the 2015 fiscal year-end measurement (as of October 31, 2015). The present value is based on a discount rate of 4.43% for the RP and 3.32% for the EBP, lump sum interest rates of 1.69% for the first five years, 4.11% for the next 15 years and 5.07% thereafter, and applicable mortality for lump sums and the RP-2014 White-Collar Table Projected Generationally with MP-2015 for annuity payment forms. As of October 31, 2014 (the prior measurement date), the ASC Topic715-30 assumptions included a discount rate of 4.39% for the RP and 3.34% for the EBP, lump sum interest rates of 1.40% for the first five years, 3.98% for the next 15 years and 5.04% thereafter, and applicable mortality and the RP-2014 White-Collar Table Projected Generationally with MP-2014 for annuity payment forms. Mr. Neri participated in a Hewlett-Packard pension plan while employed in the Netherlands. The present value for this plan is based on a discount rate of 2.47% and mortality in accordance with the AG forecast table 2014. As of October 31, 2014, the assumptions included a discount rate of 2.77% and mortality in accordance with the AG forecast table 2014. The earliest unreduced retirement age in the Dutch pension plan is age 67. Due to his company requested transfer from the Netherlands to the US, Mr. Neri is also covered under the International Retirement Guarantee or IRG. The present value of IRG benefits is based on a discount rate of 3.55%, lump sum interest rates of 1.69% for the first five years, 4.11% for the next 15 years and 5.07% thereafter, and applicable mortality. As of October 31, 2014, the assumptions included a discount rate of 3.47%, lump sum interest rates of 1.40% for the first five years, 3.98% for the next 15 years and 5.04% thereafter, and applicable mortality. The earliest unreduced retirement age for the IRG based on Mr. Neri’s employment history is age 65. | | | |
| Executive Compensation |
| (3) | Ms. Whitman, Mr. Weisler and Ms. Keogh are not eligible to receive benefits under any defined benefit pension plan because we ceased benefit accruals under all of ourU.S.-qualified defined benefit pension plans prior to the commencement of their employment with HP.
(3)Mr. Lores and Ms. Jacobs are not eligible to receive benefits under any defined benefit pension plan because we ceased benefit accruals under all of our U.S.-qualified defined benefit pension plans prior to the commencement of their employment with HP in the U. S.
(4)Ms. Myers was a participant in the RP and EBP, but when she previously left the Company, she was paid her RP and EBP benefits in fiscal 2019.
Narrative to the Fiscal
20152023 Pension Benefits Table
No NEO currently accrues a benefit under any qualified or
non-qualified defined benefit pension plan because we ceased benefit accruals in all
of our
U.S.-qualified defined benefit pension plans (and their
non-qualified plan counterparts) in prior years.
In the case of Mr. Cho, his IRG benefit is based on the U.S. retirement program and since the U.S. pension plans are frozen there is no accrual under that plan. Benefits previously accrued by
Mr. Cho under the
NEOsRP, EBP and IRG and by Mr. Tran under
HP pension plansthe RP and EBP are payable to them following termination of employment, subject to the terms of the applicable
plan.As a result of the separation of Hewlett Packard Enterprise from HP Inc. as of November 1, 2015, all employees of both companies have been considered in the pension table for the period ending October 31, 2015. Additionally, pension plans that have become Hewlett Packard Enterprise plans as of November 1, 2015 which cover the NEOs also are considered. In future years, only employees of HP Inc. with benefits under plans maintained by HP Inc. will be considered in this disclosure. The RP, EBP, EDS RP and Restoration Plan are remaining with HP Inc. Mr. Neri is an Hewlett Packard Enterprise employee so will not appear in future pension benefit disclosures for HP Inc. Mr. Neri will be considered a terminated vested participant in the RP and EBP, but since the separation of the companies is not deemed a separation from service, his EBP benefit will not become payable until he terminates employment with Hewlett Packard Enterprise. Ms. Lesjak, Mr. Weisler, and Ms. Keogh are HP Inc. employees.
plans.
Terms of the HP Retirement Plan
Ms. Lesjak (RP) and HP Excess Benefit Plan (EBP)
Mr. Cho and Mr.
NeriTran earned benefits under the RP and the EBP based on pay and service prior to
2008.2006. The RP is a traditional defined benefit plan that provided a benefit based on years of service and the participant’s “highest average pay rate,” reduced by a portion of Social Security earnings. “Highest average pay rate” was determined based on the 20 consecutive fiscal quarters when pay was the highest. Pay for this purpose included base pay and bonus, subject to applicable IRS limits. Benefits under the RP may be taken in one of several different annuity forms or in an actuarially equivalent lump sum.
Mr. Tran was a participant in the RP before November 1, 1993 so he has an HP Deferred Profit Sharing Plan (“DPSP”) balance which is integrated with the RP. Benefits calculated under the RP are offset by the value of benefits earned under the
HP Deferred Profit Sharing Plan (the “DPSP”)DPSP before November 1, 1993. Together, the RP and the DPSP constitute a
“floor-offset” “floor-offset” arrangement for periods before November 1, 1993.
Benefits not payable from the RP and the DPSP due to IRS limits are paid from the nonqualified EBP under which benefits are unfunded and unsecured. When an EBP participant terminates employment, the benefit liability is transferred to the EDCP, where an account is established for the participant. That account is then credited with hypothetical investment earnings (gains or losses) based upon the investment election made by participants from among investment options similar to those offered under the HP 401(k) Plan. There is no formula that would result inabove-market earnings or payment of a preferential interest rate on this benefit.
At the time of distribution, amounts representing EBP benefits are paid from the EDCP in a lump sum or installment form, according topre-existing elections made by those participants, except that participants with a small benefit or who have not qualified for retirement status (age(generally, age 55 or older with at least 15 years of continuous service since the last hire date; but for deferrals made during 2023 and in future years, age 55 or older with attainment of at least 70 points (with “points” generally defined as the sum of the participant’s age plus total years of service)) are paid their EBP benefit in January of the year following their termination, subject to any delay required by Section 409A of the Code.
Since Mr. Cho became a participant in the RP after November 1, 1993, he has no DPSP balance to be integrated with the RP.
Terms of the
Nederland PlanMr. Neri earned a pension benefit based on his final pay and years of service while employed by Hewlett-Packard in the Netherlands. The pension plan considers a pensionable base which is salary less an offset; the offset reflects the Social Security benefits which do not vary with pay levels and for 2015 was €12,642. The annual accrual that was provided when Mr. Neri participated was 1.75% of his final pensionable base. There is also a 70% spouse’s benefit provided upon his death while receiving retirement payments. The benefit under the Dutch pension plan is subject to an annual conditional indexation. In 2014, with Dutch law changes to extend unreduced retirement ages, all previously accrued benefits were converted to a pension commencing at age 67.
International Retirement Guarantee (IRG)Terms of the IRG
Employees who transferred internationally at the Company’s request prior to 2000 were put into an international umbrella plan. This plan determines the country of guarantee which is generally the country in which an employee has spent the longest portion of his Hewlett-PackardHP career. For Mr. Neri,Cho, the country of guarantee is currently the US.U.S. The IRG determines the present value of a full career benefit for Mr. NeriCho under the US plan termsHP sponsored retirement benefit plans that applied to employees working in the U.S., and USU.S. Social Security (since the USU.S. is his country of guarantee) then offsets the present value of the retirement benefits from plans and Socialsocial insurance systems in the countries in which he earned retirement benefits (France and the U.S.) for his total period of Hewlett-PackardHP employment. The net benefit value is payable as a single lump sum amount as soon as practicable after termination or retirement.retirement, subject to any delay required by Section 409A of the Code. This is a nonqualified retirement plan.
We do not sponsor any other supplemental defined benefit pension plans or special retiree medical benefit plans for executive officers.
Fiscal 2015 Non-qualified2023 Non-Qualified Deferred Compensation Table
The following table provides information about contributions, earnings, withdrawals, distributions, and balances under the EDCP:
| | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in Last FY(1)
($) | | | Registrant
Contributions
in Last
FY(2)
($) | | | Aggregate
Earnings in
Last FY
($) | | | Aggregate
Withdrawals/
Distributions(3)
($) | | | Aggregate
Balance at
FY End(4)
($) | |
Margaret C. Whitman | | | — | | | | — | | | | — | | | | — | | | | — | |
Catherine A. Lesjak | | | 14,100 | | | | 9,600 | | | | 163,142 | | | | (2,594,438 | ) | | | 3,361,662 | |
Dion J. Weisler(5) | | | — | | | | — | | | | — | | | | — | | | | — | |
Antonio F. Neri | | | — | | | | — | | | | — | | | | — | | | | — | |
Tracy S. Keogh | | | 587,225 | | | | 10,400 | | | | 26,728 | | | | — | | | | 1,603,218 | |
| | | | | | | | | | | | | | | | | |
| Name | Executive
Contributions
in Last FY(1)
($) | Registrant
Contributions
in Last FY(1)(2)
($) | Aggregate
Earnings
in Last FY
($) | Aggregate
Withdrawals/
Distributions(3)
($) | Aggregate
Balance at
Last FYE(4)
($) |
| Enrique J. Lores | 601,391 | | 12,200 | | 408,054 | | 47,318 | | 5,964,147 | |
| Marie Myers | 115,331 | | 12,200 | | 7,912 | | — | | 477,378 | |
| Tuan Tran | 544,251 | | 10,925 | | 240,029 | | — | | 3,977,832 | |
| Alex Cho | 13,100 | | 12,200 | | (623) | | — | | 119,139 | |
| Julie Jacobs | 11,000 | | — | | (88) | | — | | 10,912 | |
(1)The amounts reported here as “Executive Contributions” are reported as compensation to such NEO in the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the “Summary Compensation Table” above.
(2)The amounts reported here as “Registrant Contributions” are reported as compensation to such NEO in the “All Other Compensation” column in the “Summary Compensation Table.” The contributions reported here as “Registrant Contributions” were made in fiscal 2023 with respect to calendar year 2022 participant base pay deferrals. During fiscal 2023, the NEOs were eligible to receive a 4% matching contribution on base pay deferrals that exceeded the IRS limit that applies to the qualified HP 401(k) Plan up to a maximum of two times that limit.
(3)The distributions reported here were made pursuant to participant elections made prior to the time that the amounts were deferred in accordance with plan rules.
| (1) | | | | |
| 2024 PROXY STATEMENT | The amounts reported here as “Executive Contributions” and “Registrant Contributions” are reported as compensation to such NEO in the “Summary Compensation Table” above.73 |
| (2) | | | | |
| Executive Compensation | | The contributions reported here as “Registrant Contributions” were made in fiscal 2015 with respect to calendar year 2014 participant base-pay deferrals. During fiscal 2015, the NEOs were eligible to receive a 4% matching contribution on base-pay deferrals that exceeded the IRS limit that applies to the qualified HP 401(k) Plan up to a maximum of two times that limit.
| |
(3) | The distributions reported here were made pursuant to participant elections made prior to the time that the amounts were deferred in accordance with plan rules. |
(4) | Of these balances, the following amounts were reported as compensation to such NEO in the Summary Compensation Table in prior proxy statements: Ms. Lesjak $2,594,438. The information reported in this footnote is provided to clarify the extent to which amounts payable as deferred compensation represent compensation reported in our prior proxy statements, rather than additional earned compensation. |
(5) | Mr. Weisler was paid through our payroll in Singapore and thus, was not eligible to participate until his permanent move to Palo Alto in October 2015. |
(4)Of these balances, the following amount was reported as compensation to such NEO in the Summary Compensation Table in prior proxy statements: Mr. Lores $4,190,260, Ms. Myers $323,001, Mr. Tran $2,493,900, Mr. Cho $85,240, and Ms. Jacobs $0. The information reported in this footnote is provided to clarify the extent to which amounts payable as deferred compensation represent compensation reported in our prior proxy statements, rather than additional earned compensation.
Narrative to the Fiscal
2015 Non-qualified2023 Non-Qualified Deferred Compensation Table
HP sponsors the EDCP, a non-qualified deferred compensation plan that permits eligible U.S. employees to defer base pay in excess of the amount taken into account under the qualified HP 401(k) Plan and bonus amounts of up to 95% of the annual incentive bonus payable under the
PfR Plan.annual incentive plan. In addition, a matching contribution is available under the plan to eligible employees. The matching contribution applies to
base-paybase pay deferrals
onof compensation above the IRS limit that applies to the qualified HP 401(k) Plan, up to a maximum of two times that compensation limit
(for(matching contributions made in fiscal
2015 matching contributions, on calendar year 20142023 pertained to base pay from
$260,000$305,000 to
$520,000)$610,000 during calendar year 2022). During fiscal
2015,2023, participants in the EDCP, including the NEOs, were eligible for a matching contribution of up to 4% on base pay contributions in excess of the IRS limit, up to a maximum of two times that
limit.limit as noted above.
Upon becoming eligible for participation
or during the annual enrollment period, employees must specify the amount of base pay and/or the percentage of bonus to be deferred, as well as the time and form of payment. If termination of employment occurs before retirement (defined as at least age 55
withand 15 years of
continuous service for deferral elections made prior to the January 2023 plan year, or defined as at least age 55 with the attainment of at least 70 points (with “points” generally defined as the sum of the participant’s age plus total years of service)
, for deferral elections made during the January 2023 plan year and thereafter), distribution is made in the form of a lump sum in January of the year following the year of termination, subject to any delay required under Section 409A of the Code. At retirement (or earlier, if properly elected), benefits are paid according to the distribution election made by the participant at the time of the deferral election, subject to any delay required under Section 409A of the Code.
No withdrawals are permitted priorAs of the end of fiscal 2023, Mr. Lores, Ms. Myers and Mr. Tran were the only NEOs who were retirement eligible. In the event of death, the remaining vested EDCP account balance will be paid to the
previously elected distribution date, other than “hardship” withdrawals as permitted by applicable law.designated beneficiary, or otherwise in accordance with the EDCP provisions, in a single lump-sum payment in the month following the month of death.Amounts deferred or credited under the EDCP are credited with hypothetical investment earnings based on participant investment elections made from among the investment options available under the HP 401(k) Plan. Accounts maintained for participants under the EDCP are not held in trust, and all such accounts are subject to the claims of general creditors of HP. No amounts are credited with above-market earnings.
Potential Payments Upon Termination or Change in Control
The amounts in the following table estimate potential payments due if
ana NEO had terminated employment with HP effective October 31,
20152023 under each of the circumstances specified below. These amounts are in addition to benefits generally available to U.S. employees upon termination of employment, such as distributions from the retirement plans and the HP 401(k) Plan and payment of accrued vacation where required.
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Long-Term Incentive Programs(3) | |
Name | | Termination Scenario | | Total(1)
($) | | | Severance(2)
($) | | | Stock
Options
($) | | | RSUs
($) | | | PARSUs
($) | |
Margaret C. Whitman | | Voluntary/For Cause | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Disability | | | 6,031,724 | | | | — | | | | — | | | | 4,985,676 | | | | 1,046,048 | |
| | Retirement | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Death | | | 2,203,242 | | | | — | | | | — | | | | 1,157,194 | | | | 1,046,048 | |
| | Not for Cause | | | 7,966,873 | | | | 5,763,631 | | | | — | | | | 1,157,194 | | | | 1,046,048 | |
| | Change in Control | | | 13,259,769 | | | | 5,763,631 | | | | — | | | | 4,985,676 | | | | 2,510,462 | |
| | | | | | |
Catherine A. Lesjak(4) | | Voluntary/For Cause | | | 4,554,614 | | | | — | | | | — | | | | 4,112,065 | | | | 442,549 | |
| | Disability | | | 4,554,614 | | | | — | | | | — | | | | 4,112,065 | | | | 442,549 | |
| | Retirement | | | 4,554,614 | | | | — | | | | — | | | | 4,112,065 | | | | 442,549 | |
| | Death | | | 2,772,801 | | | | — | | | | — | | | | 2,330,252 | | | | 442,549 | |
| | Not for Cause | | | 7,689,180 | | | | 3,134,566 | | | | — | | | | 4,112,065 | | | | 442,549 | |
| | Change in Control | | | 8,308,748 | | | | 3,134,566 | | | | — | | | | 4,112,065 | | | | 1,062,117 | |
| | | | | | |
Dion J. Weisler | | Voluntary/For Cause | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Disability | | | 2,933,640 | | | | — | | | | 136,371 | | | | 2,354,720 | | | | 442,549 | |
| | Retirement | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Death | | | 1,112,276 | | | | — | | | | 136,371 | | | | 533,357 | | | | 442,549 | |
| | Not for Cause | | | 3,708,074 | | | | 2,663,983 | | | | 68,185 | | | | 533,357 | | | | 442,549 | |
| | Change in Control | | | 6,217,191 | | | | 2,663,983 | | | | 136,371 | | | | 2,354,720 | | | | 1,062,117 | |
| | | | | | |
Antonio F. Neri | | Voluntary/For Cause | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Disability | | | 1,726,137 | | | | — | | | | — | | | | 1,726,137 | | | | — | |
| | Retirement | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Death | | | 121,235 | | | | — | | | | — | | | | 121,235 | | | | — | |
| | Not for Cause | | | 2,355,043 | | | | 2,233,808 | | | | — | | | | 121,235 | | | | — | |
| | Change in Control | | | 3,959,945 | | | | 2,233,808 | | | | — | | | | 1,726,137 | | | | — | |
| | | | | | |
Tracy S. Keogh | | Voluntary/For Cause | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Disability | | | 2,489,461 | | | | — | | | | — | | | | 2,248,034 | | | | 241,427 | |
| | Retirement | | | — | | | | — | | | | — | | | | — | | | | — | |
| | Death | | | 504,234 | | | | — | | | | — | | | | 262,807 | | | | 241,427 | |
| | Not for Cause | | | 3,203,392 | | | | 2,700,244 | | | | — | | | | 261,721 | | | | 241,427 | |
| | Change in Control | | | 5,527,649 | | | | 2,700,244 | | | | — | | | | 2,248,034 | | | | 579,371 | |
(1) | Total does not include amounts earned or benefits accumulated due to continued service by the NEO through October 31, 2015, including vested stock options, PCSOs, RSUs, PARSUs, accrued retirement benefits, and vested balances in the EDCP, as those amounts are detailed in the preceding tables. Total also does not include amounts the NEO was eligible to receive under the annual PfR Plan with respect to fiscal 2015 performance. |
Ms. Myers voluntarily resigned as Chief Financial Officer, effective December 31, 2023, and left the Company on January 12, 2024. Ms. Myers did not receive any cash severance in connection with her voluntary resignation and, because she was retirement eligible at the time of her resignation, her outstanding equity became vested consistent with the retirement treatment described in the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Long Term Incentive Programs(3) |
| Name | | Termination
Scenario | | Total(1) | Severance(2) | Stock
Options | Restricted
Stock Units | PARSU |
| Enrique J. Lores | | Voluntary | | $ | 12,779,480 | | | $ | — | | | $ | 563,091 | | | $ | 9,373,986 | | | $ | 2,842,403 | |
| Disability | | $ | 16,560,625 | | | $ | — | | | $ | 563,091 | | | $ | 9,373,986 | | | $ | 6,623,548 | |
| Retirement | | $ | 12,779,480 | | | $ | — | | | $ | 563,091 | | | $ | 9,373,986 | | | $ | 2,842,403 | |
| Death | | $ | 16,560,625 | | | $ | — | | | $ | 563,091 | | | $ | 9,373,986 | | | $ | 6,623,548 | |
| Not for Cause | | $ | 20,660,258 | | | $ | 7,880,778 | | | $ | 563,091 | | | $ | 9,373,986 | | | $ | 2,842,403 | |
| Change in Control | | $ | 24,441,403 | | | $ | 7,880,778 | | | $ | 563,091 | | | $ | 9,373,986 | | | $ | 6,623,548 | |
| Marie Myers | | Voluntary | | $ | 5,150,713 | | | $ | — | | | $ | 166,841 | | | $ | 4,097,315 | | | $ | 886,557 | |
| Disability | | $ | 6,666,916 | | | $ | — | | | $ | 166,841 | | | $ | 4,460,501 | | | $ | 2,039,574 | |
| Retirement | | $ | 5,150,713 | | | $ | — | | | $ | 166,841 | | | $ | 4,097,315 | | | $ | 886,557 | |
| Death | | $ | 6,666,916 | | | $ | — | | | $ | 166,841 | | | $ | 4,460,501 | | | $ | 2,039,574 | |
| Not for Cause | | $ | 8,309,881 | | | $ | 2,884,282 | | | $ | 166,841 | | | $ | 4,372,201 | | | $ | 886,557 | |
| Change in Control | | $ | 9,551,198 | | | $ | 2,884,282 | | | $ | 166,841 | | | $ | 4,460,501 | | | $ | 2,039,574 | |
| Tuan Tran | | Voluntary | | $ | 5,493,634 | | | $ | — | | | $ | 229,408 | | | $ | 4,370,112 | | | $ | 894,114 | |
| Disability | | $ | 6,656,341 | | | $ | — | | | $ | 229,408 | | | $ | 4,370,112 | | | $ | 2,056,821 | |
| Retirement | | $ | 5,493,634 | | | $ | — | | | $ | 229,408 | | | $ | 4,370,112 | | | $ | 894,114 | |
| Death | | $ | 6,656,341 | | | $ | — | | | $ | 229,408 | | | $ | 4,370,112 | | | $ | 2,056,821 | |
| Not for Cause | | $ | 8,375,835 | | | $ | 2,882,201 | | | $ | 229,408 | | | $ | 4,370,112 | | | $ | 894,114 | |
| Change in Control | | $ | 9,538,542 | | | $ | 2,882,201 | | | $ | 229,408 | | | $ | 4,370,112 | | | $ | 2,056,821 | |
| Alex Cho | | Voluntary/For Cause | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Disability | | $ | 6,577,578 | | | $ | — | | | $ | 229,408 | | | $ | 4,321,392 | | | $ | 2,026,778 | |
| Retirement | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Death | | $ | 6,577,578 | | | $ | — | | | $ | 229,408 | | | $ | 4,321,392 | | | $ | 2,026,778 | |
| Not for Cause | | $ | 6,088,740 | | | $ | 2,941,702 | | | $ | 210,291 | | | $ | 2,052,638 | | | $ | 884,109 | |
| Change in Control | | $ | 9,519,280 | | | $ | 2,941,702 | | | $ | 229,408 | | | $ | 4,321,392 | | | $ | 2,026,778 | |
| Julie Jacobs | | Voluntary/For Cause | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Disability | | $ | 8,499,512 | | | $ | — | | | $ | — | | | $ | 7,671,460 | | | $ | 828,052 | |
| Retirement | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | |
| Death | | $ | 8,499,512 | | | $ | — | | | $ | — | | | $ | 7,671,460 | | | $ | 828,052 | |
| Not for Cause | | $ | 3,100,671 | | | $ | 2,131,069 | | | $ | — | | | $ | 693,585 | | | $ | 276,017 | |
| Change in Control | | $ | 10,630,581 | | | $ | 2,131,069 | | | $ | — | | | $ | 7,671,460 | | | $ | 828,052 | |
(1)Total does not include amounts earned or benefits accumulated due to continued service by the NEO through October 31, 2023, including vested stock options, PCSOs, RSUs, PARSUs, accrued retirement benefits, and vested balances in the EDCP, as those amounts are detailed in the preceding tables.
(2)The amounts reported are the cash benefits payable in the event of a qualifying termination under the SPEO: for the CEO, 2x multiple of base pay plus either the average of the actual annual incentives paid for the preceding three years, or target bonus if the CEO has received an annual incentive for less than three full years at the CEO level by the end of the fiscal year; for other NEOs, 1.5x multiple of base pay plus either the average of the actual annual incentives paid for the preceding three years, or target bonus if the NEO has received an annual incentive for less than three full years at his or her current seniority level by the end of the fiscal year; and includes 18 months’ COBRA premiums for continued group medical coverage for the NEOs and their eligible dependents, based on the cost of premiums under our group health plans as of October 31, 2023. In addition, each NEO would be eligible to receive a pro-rata cash bonus based on actual performance (in the event of a qualifying termination outside of the context of a change in control) or based on target performance (in the event of a qualifying termination within 24 months of a change in control); such amounts have not been included in this column.
(3)Upon an involuntary termination not for cause, covered executives receive pro-rata vesting on unvested equity awards as discussed under the heading “Executive Compensation—Compensation Discussion and Analysis—Termination and Change in Control Protections—Severance and Long-term Incentive Change in Control Plan for Executive Officers.” Full vesting of PARSUs based on performance at target levels (to the extent that the actual performance period has not been completed) applies in the event of a termination due to death or disability for all grant recipients. Pro-rata vesting of PARSUs based on actual performance applies in the event of a termination due to retirement for all grant recipients. To calculate the value of unvested PARSUs for purposes of this table, target performance is used unless the performance period has been completed and the results have been recorded as of October 31, 2023. No TSR modifier was applied to such values. Full vesting of
| (2) | | | | |
| 2024 PROXY STATEMENT | For Ms. Whitman, the amounts reported represent the cash benefits payable under the SPEO pursuant to Ms. Whitman’s employment offer letter, which provides that Ms. Whitman is entitled to receive severance benefits payable under the SPEO at the rate applicable to an EVP rather than the rate applicable to the CEO (that is, using a 1.5x multiple of base pay plus annual incentive, rather than the 2.0x multiplier otherwise applicable to the CEO under the SPEO). For the other NEOs, the amounts reported are the cash benefits payable in the event of a qualifying termination under the SPEO.75 |
| (3) | | | | |
| Executive Compensation | | On an involuntary termination not for cause, covered executives receive pro-rata vesting on unvested equity awards, so long as they have worked at least 25% of the longer of the applicable vesting or performance period, as discussed under “Executive Compensation—Compensation Discussion and Analysis—Severance Plan for Executive Officers.” Pro-rata vesting of PARSUs based on actual performance also applies in the event of a termination due to retirement, death or disability for all grant recipients. To calculate the value of unvested PARSUs for purposes of this table, target performance is used since results will not be certified until the end of the two- and three-year performance periods. Full vesting of unvested PCSOs applies in the event of a termination due to death or disability for all grant recipients. PCSOs vest pro-rata in the event of a termination due to retirement. With respect to the treatment of equity in the event of a change in control of HP, the information reported assumes that the Board or the HRC Committee would exercise its discretion to accelerate vesting of equity awards in the case of “not for cause” terminations.
| |
(4) | As of the end of fiscal 2015, Ms. Lesjak is retirement eligible (after age 55 with at least 15 years of qualifying service). In the event that Ms. Lesjak retires, she would receive retirement equity treatment under the long-term incentive programs. |
unvested PCSOs applies in the event of a termination due to death or disability for all grant recipients. With respect to the treatment of equity in the event of a change in control of HP, the information reported reflects the SPEO-approved change in control terms. As of the end of fiscal 2023, only Mr. Lores, Ms. Myers and Mr. Tran are retirement eligible. Since Mr. Lores, Ms. Myers and Mr. Tran are retirement eligible, amounts included in the event of their voluntary termination include the values of equity awards they would receive on retirement. Values are calculated based on the $26.33 closing price of our stock on October 31, 2023, and for stock options, amounts are based on the difference between such closing price and the exercise price.
Narrative to the Potential Payments Upon Termination or Change in Control Table
HP Severance Plan for Executive Officers
An executive will be deemed to have incurred a qualifying termination for purposes of the SPEO if he or she is involuntarily terminated without
causeCause and executes a full release of claims in a form satisfactory to HP promptly following termination. For purposes of the SPEO,
“cause”“Cause” means an
executive’s material neglect (other than asexecutive’s: (1) conviction of, or plea of guilty or nolo contendere to, a
resultfelony under federal law or the law of
illness or disability) of his or her duties or responsibilities to HP or conduct (includingthe state in which such action
oroccurred; (2) willful and deliberate failure
to act) that is not in the
best interestperformance of
the executive’s duties in any material respect; (3) willful misconduct that results in material harm to HP; or
is injurious to,(4) material violation of HP’s ethics and compliance program, code of conduct or other material policy of HP. The material terms of the SPEO are described under
the heading “Executive Compensation—Compensation Discussion and Analysis—
Termination and Change in Control Protections—Severance
and Long-term Incentive Change in Control Plan for Executive Officers.”
Narrative to the Potential Payments Upon Termination We have not entered into individual fixed-term employment agreements or Changeany severance or change in Control Table
This narrative reflects plans and provisions in effect as of October 31, 2015. Please see the Compensation Discussion and Analysis for changes effective after fiscal 2015.
control agreements with our current NEOs.
Voluntary or “For Cause” Termination
In general, an NEO who remained employed through October 31,
20152023 (the last day of the fiscal year) but voluntarily terminated employment immediately thereafter, or was terminated immediately thereafter
asin a “for
cause”Cause” termination, would be eligible
to (1)
to receive his or her annual incentive amount earned for fiscal
20152023 under the
PfR Planannual incentive plan (subject to any discretionary downward adjustment or elimination by the HRC Committee prior to actual payment, and to any applicable clawback policy), (2)
to exercise his or her vested stock options up to three months following
a voluntary termination,
and up to the date of termination in the case of termination “for cause,” (3)
to receive a distribution of vested amounts deferred or credited under the EDCP, and (4)
to receive a distribution of his or her vested benefits, if any, under the HP 401(k) and pension plans. An NEO who terminated employment before October 31,
2015,2023, either voluntarily or in a “for cause” termination, would generally not have been eligible to receive any amount under the
PfR Planannual incentive plan with respect to the fiscal year in which
the termination occurred, except that the HRC Committee has the discretion to make payment ofpay prorated bonus amounts to individuals on leave of absence or in non-pay status, as well as in connection with certain voluntary severance incentives, workforce reductions, and similar programs.
“Not for Cause” Termination
A “not for
cause”Cause” termination of an NEO who remained employed through October 31,
20152023 and was terminated immediately thereafter would qualify the NEO for the amounts described above under a “voluntary” termination in addition to benefits under the SPEO if the NEO signs the required release of claims in favor of HP.
In addition to the cash severance benefits and pro-rata equity awards
payablevesting under the SPEO, the NEO would be eligible to exercise vested stock options up to one year after termination and receive distributions of vested, accrued benefits from HP deferred compensation and pension plans.
Termination Following a Change in Control
In the event of a change in control of HP,
the Board is authorized (but not required) to accelerate the vesting ofRSUs, PARSUs, stock options, and
to release restrictions onPCSOs will vest in full if the successor does not assume such awards
issued under HP stock plans. For the purposesor if an individual is terminated without Cause or terminates with Good Reason within 24 months of
this table, the amounts reported for each NEO in the rows marked “Change in Control” assume that the Board would exercise its discretion in this manner, resulting in fully accelerated vesting of stock options and a release of all restrictions on all stock-based awards. In addition, an executive terminated on October 31, 2015 following a change in
control would be eligiblecontrol. Under each scenario, outstanding PARSUs and PCSOs will vest in full with vesting based on actual performance with respect to awards for
benefits underwhich the
SPEO,performance period has ended and target performance level with respect to awards for which the performance period has not ended (with vested PCSOs remaining exercisable for one year from the termination date), as
described above.determined by the HRC Committee within 30 days of a change in control.
Death or Disability Terminations
An NEO who continued in employment through October 31,
20152023 whose employment is terminated immediately thereafter due to death or disability would be eligible
(1) to receive
(1) his or her full annual incentive amount earned for fiscal
20152023 under the
PfR Planannual incentive plan as determined by HP in its sole discretion, (2)
to receive a distribution of vested amounts deferred or credited under the EDCP, and (3)
to receive a distribution of his or her vested benefits under the HP 401(k) and pension plans.
Upon termination due to death or disability, equity awards held by the NEO may vest in
full or in part.full. If termination is due to disability,
RSUs, stock options,
RSUs, and PCSOs will vest in full, subject to satisfaction of applicable performance conditions, and,
in the case of stock options and PCSOs, must be exercised within three years of termination or by the original expiration date, if earlier;
PARSUs will vest at the endall unvested portions of the
applicable performance period as to a prorated number of sharesPARSUs, including any amounts for dividend equivalent payments, shall vest based on
the number of whole calendar months worked during the performance
period and subject to actual performance.at target levels. If termination is due to the NEO’s death,
RSUs, stock options, and PCSOs will vest in full and,
in the case of stock options and PCSOs, must be exercised within one year of termination or by the original expiration date, if earlier;
RSUs willall unvested portions of the PARSUs, including any amounts for dividend equivalent payments, shall vest
as to a prorated number of shares based on
the number of whole calendar months worked during the total vesting period and PARSUs will vestperformance at
the end of the applicable performance period as to a prorated number of shares based on the number of whole calendar months worked during the performance period and subject to actual performance. Please see section“Broad-based Changes to Equity Provisions”of the Compensation Discussion and Analysis for changes made for fiscal 2016.target levels.
HP Severance Policy for Senior Executives
Under the HP Severance Policy for Senior Executives adopted by the Board in July 2003 (the “HP Severance Policy”), HP will seek stockholder approval for future severance agreements, if any, with certain senior executives that provide specified benefits in an amount exceeding 2.99 times the sum of the executive’s current annual base salary plus annual target cash bonus, in each case as in effect immediately prior to the time of such executive’s termination. Individuals subject to this policy consist of the Section 16 officers designated by the Board. In implementing this policy, the Board may elect to seek stockholder approval after the material terms of the relevant severance agreement are agreed upon.
For purposes of determining the amounts subject to the HP Severance Policy, benefits subject to the limit generally include cash separation payments that directly relate to extraordinary benefits that are not available to groups of employees other than the Section 16 officers upon termination of employment. Benefits that have been earned or accrued, as well as prorated bonuses, accelerated stock or option vesting, and other benefits that are consistent with our practices applicable to employees other than the Section 16 officers, are not counted against the limit. Specifically, benefits subject to the HP Severance Policy include: (a)(1) separation payments based on a multiplier of salary plus target bonus, or cash amounts payable for the uncompleted portion of employment agreements; (b) any gross-up payments made in connection with severance, retirement or similar payments, including any gross-up payments with respect to excess parachute payments under Section 280G of the Code; (c)(2) the value of any service period credited to a Section 16 officer in excess of the period of service actually provided by such Section 16 officer for purposes of any employee benefit plan; (d)(3) the value of benefits and perquisites that are inconsistent with our practices applicable to one or more groups of employees in addition to, or other than, the Section 16 officers (“Company Practices”); and (e)(4) the value of any accelerated vesting of any stock options, stock appreciation rights, restricted stock, RSUs, or long-term cash incentives that is inconsistent with Company Practices. The following benefits are not subject to the HP Severance Policy, either because they have been previously earned or accrued by the employee or because they are consistent with Company Practices: (i) compensation and benefits earned, accrued, deferred or otherwise provided for employment services rendered on or prior to the date of termination of employment pursuant to bonus, retirement, deferred compensation, or other benefit plans (e.g.(e.g., HP 401(k) Plan distributions, payments pursuant to retirement plans, distributions under deferred compensation plans or payments for accrued benefits such as unused vacation days), and any amounts earned with respect to such compensation and benefits in accordance with the terms of the applicable plan; (ii) payments of prorated portions of bonuses or prorated long-term incentive payments that are consistent with Company Practices; (iii) acceleration of the vesting of stock options, stock appreciation rights, restricted stock, RSUs or long-term cash incentives that is consistent with Company Practices; (iv) payments or benefits required to be provided by law; and (v) benefits and perquisites provided in accordance with the terms of any benefit plan, program, or arrangement sponsored by HP or its affiliates that are consistent with Company Practices.
For purposes of the HP Severance Policy, future severance agreements include any severance agreements or employment agreements containing severance provisions that we may enter into after the adoption of the HP Severance Policy by the Board, as well as agreements renewing, modifying, or extending such agreements. Future severance agreements do not include retirement plans, deferred compensation plans, early retirement plans, workforce restructuring plans, retention plans in connection with extraordinary transactions, or similar plans or agreements entered into in connection with any of the foregoing, provided that such plans or agreements are applicable to one or more groups of employees in addition to the Section 16 officers.
HP Retirement Arrangements
Upon retirement immediately after October 31, 2015, on or after2023 with a minimum age of 55 with at least 15and years of qualifyingcombined age and service equal to or greater than 70, HP employees in the United StatesU.S. receive full vesting of time-based options (other than options granted under a retention agreement on or after June 25, 2019) granted under our stock plans with a three-year post-termination exercise period. PCSOs will receive proratedperiod of up to three years or the original expiration date, whichever comes first, as well as full vesting if the stock price appreciation conditions are met and may vest on a prorated basis post-termination to the end of the performance period, subject to stock price appreciation conditions and certain post-employment restrictions. Restricted stock andRSUs (other than RSUs granted prior to November 1, 2011under a retention agreement on or after June 25, 2019).
Awards under the PCSO program, if any, will continue to vest in accordanceand become exercisable once the share price and time component have been satisfied. Such an individual will vest at the same time as other participants with their normal vesting schedule, subjecta post-termination exercise period of up to certain post-employment restrictions, and all restrictions on restricted stock and RSUs granted onfive years or after November 1, 2011 lapse upon retirement.the original expiration date, whichever comes first. Awards under the PARSU and PRU programs,program, if any, are paid on a prorated basis to participants at the end of the performance period based on actual results, and bonuses,results. Bonuses, if any, under the PfR Planannual incentive plan may be paid in prorated amounts at the discretion of management based on actual results. results and at the same time as other participants.
accordance with Section 409A of the Code, certain amounts payable upon retirement (or other termination) of the NEOs and other key employees will not be paid out for at least six months following termination of employment.
As of the end of fiscal 2023, Mr. Lores, Ms. Myers, and Mr. Tran were the only NEOs who were retirement eligible.
We sponsor two retiree medical programs in the
United States,U.S., one of which provides subsidized coverage for eligible participants based on years of service. Eligibility for this program requires that participants
have been employed by HP before January 1, 2003 and have met othermeet specific continuous employment, age and service requirements. None of
ourthe NEOs are eligible
or can become eligible for this program.
The other U.S. retiree medical program we sponsor provides eligible retirees with access to coverage at group rates only, with no direct subsidy provided by HP.
As ofAll the
end of fiscal 2015, Ms. Lesjak is eligible to retire under this program. All of the other NEOs could be eligible for this program if they retire from HP on or after age 55 with at least ten years of qualifying service or
80if they retire at any age with combined age plus service
points.equal to 80 or more years. In addition, beginning at age 45, eligible U.S. employees may participate in the HP Retirement Medical Savings Account Plan (the “RMSA”), under which certain participants are eligible to receive HP matching credits of up to $1,200 per year,
beginning at age 45, up to a lifetime maximum of $12,000, which can be used to cover the cost of such retiree medical coverage (or other qualifying medical expenses) if the employee
retires frommeets the eligibility requirements for HP
on or after age 55 with at least ten yearsretiree medical benefits. None of
qualifying service or 80 age plus service points. Ms. Lesjak and Mr. Nerithe NEOs are
the only NEOs eligible forcurrently receiving the HP matching credits under the RMSA.
Please see section“Broad-based Changes to
Equity
Provisions”of the Compensation
Discussion and Analysis for changes made for fiscal 2016.Plan InformationEQUITY COMPENSATION PLAN INFORMATION
The following table summarizes our equity compensation plan information as of October 31,
2015. | | | | | | | | | | | | |
Plan Category | | Common shares
to be issued
upon exercise of
outstanding
options, warrants
and rights(1) | | | Weighted-
average exercise
price of
outstanding
options, warrants
and rights(2) | | | Common shares
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a)) | |
| | | (a) | | | (b) | | | (c) | |
Equity compensation plans approved by HP stockholders | | | 58,283,938 | (3) | | $ | 26.5614 | | | | 215,948,945 | (4) |
Equity compensation plans not approved by HP stockholders | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Total | | | 58,283,938 | | | $ | 26.5614 | | | | 215,948,945 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | Common shares to be issued upon exercise of outstanding options, warrants and rights(1) (a) | Weighted-average exercise price of outstanding options, warrants and rights(2) (b) | Common shares
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c) |
| Equity compensation plans approved by HP stockholders | 35,299,466 | (3) | | $ | 26.5805 | | 131,874,229 | (4) |
| Equity compensation plans not approved by HP stockholders | 986,726 | | | — | | 1,158,377 | |
| Total | 36,286,192 | (3) | | $ | 26.5805 | | 133,032,606 | (4) |
(1)This column does not reflect awards of options and RSUs assumed in acquisitions where the plans governing the awards were not available for future awards as of October 31, 2023.
(2)This column does not reflect the purchase price of shares to be purchased pursuant to the HP Inc. 2021 Employee Stock Purchase Plan (the “2021 ESPP”) or the legacy HP Employee Stock Purchase Plan (the “Legacy ESPP”). In addition, the weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding awards of RSUs and PARSUs, which have no exercise price.
(3)Includes awards of options and RSUs outstanding under the 2004 Stock Incentive Plan and the 2021 ESPP. Also includes awards of PARSUs representing 1,331,662 shares that may be issued under the 2004 Stock Incentive Plan. Each PARSU award reflects a target number of shares that may be issued to the award recipient. HP determines the actual number of shares the recipient receives at the end of a three-year performance period based on results achieved compared with Company performance goals and stockholder return relative to the market. The actual number of shares that a grant recipient receives at the end of the period may range from 0% to 300% of the target number of shares.
(4)Includes (i) 80,669,438 shares available for future issuance under the 2004 Stock Incentive Plan; (ii) 47,082,800 shares available for future issuance under the 2021 ESPP; (iii) 2,725,611 shares available for future issuance under the Legacy ESPP, a plan under which employee stock purchases are no longer made; (iv) 1,366,380 shares reserved for issuance under our Service Anniversary Stock Plan, a plan under which awards are no longer granted; and (v) 1,158,377 shares reserved for issuance under the Plantronics, Inc. 2003 Stock Plan. Taking into account the enumerated unavailable shares from the Legacy ESPP and the Service Anniversary Stock Plan, a total of 133,002,606 shares were available for future grants as of October 31, 2023.
CEO Pay Ratio Disclosure
| (1) | This column does not reflect awards of options and RSUs assumed in acquisitions where the plans governing the awards were not available for future awards as of October 31, 2015. As of October 31, 2015, individual awards of options and RSUs to purchase a total of 2,248,305 shares were outstanding pursuant to awards assumed in connection with acquisitions and granted under such plans at a weighted-average exercise price of options of $16.2281. |
|
As set forth in the Summary Compensation Table, our CEO’s annual total compensation for fiscal 2023 was $19,458,431. Our median employee’s annual total compensation was $67,816, resulting in a CEO pay ratio of 287:1.
In calculating the CEO pay ratio, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore, our reported CEO pay ratio may not be comparable to CEO pay ratios reported by other companies due to differences in industries and geographical dispersion, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their CEO pay ratios.
Our CEO pay ratio is based on the following methodology:
•We used a measurement date that is as close as possible to the end of our fiscal year and identified our employee population as of September 1, 2023, including employees who joined HP as part of acquisitions and excluding employees on furlough or a leave of absence, consistent with SEC rules.
•We utilized annualized base salary as the consistently applied compensation measure as of September 1, 2023 to identify the median employee.
•We calculated the median employee’s actual annual total compensation for fiscal 2023 using the same methodology that was used for our named executive officers, as set forth in the Summary Compensation Table.
Pay Versus Performance
| (2) | This column does not reflect the exercise price of shares underlying the assumed options referred to in footnote (1) to this table or the purchase price of shares to be purchased pursuant to the ESPP or the legacy HP Employee Stock Purchase Plan (the “Legacy ESPP”). In addition, the weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding awards of RSUs, PRUs and PARSUs, which have no exercise price. |
|
(3) | Includes awards of options and RSUs outstanding under the ESPP, the 2004 Plan and the HP 2000 Stock Plan. Also includes awards of RSUs representing 5,808,722 shares that may be issued under the 2004 Plan. Each PRU award reflects a target number of shares that may be issued to the award recipient. HP determines the actual number of shares the recipient receives at the end of a three-year performance period based on results achieved versus company performance goals and stockholder return relative to the market. The actual number of shares that a grant recipient receives at the end of the period may range from 0% to 200% of the target number of shares. |
(4) | Includes (i) 129,885,124 shares available for future issuance under the 2004 Plan; (ii) 81,971,830 shares available for future issuance under the ESPP; (iii) 2,725,611 shares available for future issuances under the Legacy ESPP, a plan under which employee stock purchases are no longer made; and (iv) 1,366,380 shares are reserved for issuance under our Service Anniversary Stock Plan, a plan under which awards are no longer granted. Taking into account these adjustments, 211,856,954 shares were available for future grants as of October 31, 2015. |
PRINCIPAL ACCOUNTING FEES AND SERVICES
Fees IncurredThis disclosure has been prepared in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended, and does not necessarily reflect the value of compensation realized by HP for Ernst & Young LLP
our NEOs or how the HRC Committee evaluates compensation decisions. Amounts included as “compensation actually paid”, or “CAP”, do not represent the value of cash compensation and equity awards received by our NEOs, but rather are amounts calculated under SEC rules. For discussion of how the HRC Committee seeks to align pay with performance when making compensation decisions, please review the Compensation Discussion and Analysis beginning on page 50.
The following table shows the feesinformation for the past three fiscal years of: (i) the Summary Compensation Table total compensation (see page 67) for our principal executive officer (“PEO”) and, on an average basis, our NEOs other than the PEO (“Non-PEO NEOs”), (ii) the “compensation actually paid” to our PEO and, on an average basis, our Non-PEO NEOs (in each case, as determined in accordance with SEC rules), (iii) our total shareholder return, (iv) our peer group total shareholder return, (v) our net income, and (vi) our company selected measure, PARSU EPS (as defined below).
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| | | | | Value of initial fixed $100 investment based on: | | |
| Fiscal Year | Summary Compensation Total for PEO1,2 | Compensation Actually Paid to PEO 1,3 | Average Summary Compensation Table Total for Non-PEO NEOs1,4 | Average Compensation Actually Paid to Non-PEO NEOs1,3 | Total Shareholder Return5 | Peer Group Total Shareholder Return6 | Net Income ($ millions)7 | PARSU EPS (Non-GAAP)8,9 |
| 2023 | $ | 19,458,431 | | $ | 12,858,597 | | $ | 7,130,334 | | $ | 5,326,216 | | $ | 160.80 | | $ | 153.29 | | $ | 3,263 | | $ | 3.21 | |
| 2022 | $ | 21,079,926 | | $ | 11,845,017 | | $ | 8,502,188 | | $ | (177,698) | | $ | 162.73 | | $ | 117.16 | | $ | 3,132 | | $ | 3.91 | |
| 2021 | $ | 20,733,806 | | $ | 39,088,555 | | $ | 8,703,097 | | $ | 17,988,299 | | $ | 173.59 | | $ | 146.93 | | $ | 6,541 | | $ | 4.12 | |
(1)NEOs included in these columns reflect the following individuals:
| | | | | | | | |
| Fiscal Year | PEO | Non-PEO NEOs |
| 2023 | Enrique Lores | Marie Myers, Tuan Tran, Alex Cho, Julie Jacobs |
| 2022 | Enrique Lores | Marie Myers, Christoph Schell, Tuan Tran, Alex Cho, Julie Jacobs |
| 2021 | Enrique Lores | Marie Myers, Christoph Schell, Tuan Tran, Alex Cho |
(2)Amounts in this column reflect the Summary Compensation Table total compensation for our PEO for each corresponding fiscal year.
(3)The following tables illustrate the adjustments to the Summary Compensation Table total compensation for our PEO, as well as the average as a group for our Non-PEO NEOs, to determine compensation actually paid, as computed in accordance with Item 402(v). Amounts do not reflect actual compensation earned by or accruedpaid to our NEOs during the applicable fiscal year.
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| Reconciliation of Summary Compensation Table Total to Compensation Actually Paid for PEO | Fiscal Year 2023 ($) | Fiscal Year 2022 ($) | Fiscal Year 2021 ($) |
| Summary Compensation Table Total | $ | 19,458,431 | | $ | 21,079,926 | | $ | 20,733,806 | |
Minus: Grant Date Fair Value Amounts of “Option Awards” and “Stock Awards” Granted in Fiscal Year as Reported in the Summary Compensation Table | $ | (15,863,592) | | $ | (18,185,416) | | $ | (14,665,390) | |
Plus: Fair Value at Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Fiscal Year | $ | 10,888,050 | | $ | 6,312,993 | | $ | 25,242,448 | |
Plus: Change in Fair Value from Prior Fiscal Year-End to Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Prior Fiscal Years | $ | (2,250,588) | | $ | (1,010,176) | | $ | 3,749,546 | |
Plus: Fair Value at Vesting of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $ | 958,757 | | $ | 692,033 | | $ | 1,373,949 | |
Plus: Change in Fair Value From Prior Fiscal Year-End to Vesting Date of Option and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $ | (948,316) | | $ | 2,100,033 | | $ | 1,255,124 | |
Plus: Value of Dividends or other Earnings Paid on Option or Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $ | 615,855 | | $ | 855,624 | | $ | 1,399,072 | |
| Compensation Actually Paid | $ | 12,858,597 | | $ | 11,845,017 | | $ | 39,088,555 | |
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| Reconciliation of Average Summary Compensation Table Total to Average Compensation Actually Paid for Non-PEO NEOs | Fiscal Year 2023 ($) | Fiscal Year 2022 ($) | Fiscal Year 2021 ($) |
| Average Summary Compensation Table Total | $ | 7,130,334 | | $8,502,188 | $ | 8,703,097 | |
Minus: Average Grant Date Fair Value of “Option Awards” and “Stock Awards” Granted in Fiscal Year as reported in the Summary Compensation Table | $ | (5,023,096) | | $ | (7,553,788) | | $ | (5,943,351) | |
Minus: Average Amount in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of Summary Compensation Table | $ | — | | $ | — | | $ | (1,358) | |
Plus: Average Fair Value at Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Fiscal Year | $ | 3,618,979 | | $ | 3,534,097 | | $ | 9,975,013 | |
Plus: Average Change in Fair Value from Prior Fiscal Year-End to Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Prior Fiscal Years | $ | (664,130) | | $ | (245,654) | | $ | 2,997,885 | |
Plus: Average Fair Value at Vesting of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $ | 266,324 | | $ | 117,016 | | $ | 547,138 | |
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Plus: Average Change in Fair Value from Prior Fiscal Year-End to Vesting Date of Option and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $ | (288,182) | | $ | 773,224 | | $ | 957,362 | |
Minus: Average Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $ | — | | $ | (5,464,664) | | $ | — | |
Plus: Average Value of Dividends or other Earnings Paid on Option or Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $ | 285,989 | | $ | 159,883 | | $ | 752,513 | |
| Average Compensation Actually Paid | $ | 5,326,216 | | $ | (177,698) | | $ | 17,988,299 | |
For purposes of the above adjustments, the fair values of equity awards on the applicable date were determined in accordance with FASB’s ASC Topic 718, using valuation methodologies that are generally consistent with those used to determine the grant date fair value for accounting purposes and valuation assumptions that did not materially differ from those disclosed as of the grant date. For more information, please see Note 5 to our financial statements in our Annual Report on Form 10-K and the footnotes to the Summary Compensation Table of this proxy statement.
(4)Amounts in this column reflect the average as a group of the Summary Compensation Table total compensation for our Non-PEO NEOs for each corresponding fiscal year.
(5) Total Shareholder Return (“TSR”) represents the cumulative return on a fixed investment of $100 in the common stock of HP Inc., for the period beginning on the last trading day of the fiscal year ending October 31, 2020 and ending on October 31 of the applicable fiscal year, assuming reinvestment of dividends.
(6)Peer Group TSR represents the cumulative return on a fixed investment of $100 in the S&P 500 Information Technology Sector index for the period beginning on the last trading day of the fiscal year ending October 31, 2020 and ending on October 31 of the applicable fiscal year, assuming reinvestment of dividends.
(7)The dollar amounts reported in this column represent the net income reflected in the Company’s audited financial statements for the applicable fiscal year.
(8)The Company has determined that the EPS the Company uses for PARSU measurement, which we refer to as “PARSU EPS”, is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs for the most recently completed fiscal year to Company performance. PARSU EPS is a non-GAAP financial measure, which is calculated as described in “Compensation Discussion and Analysis—Determination of Fiscal 2023 Executive Compensation—Long-Term Incentive Compensation—Fiscal 2023 Awards.”
(9)The actual EPS performance achievement results were adjusted from $4.08 to $4.12 for fiscal 2021 and $4.01 to $3.91 in fiscal 2022 in connection with the revision of financial statements described in HP’s Form 10-Q for the quarter ended July 31, 2023.
Relationship between CAP vs. Cumulative TSR of Company and the Peer Group
The following chart illustrates the relationship between CAP for our PEO and the average CAP for our Non-PEO NEOs against our TSR, as well as the relationship between our TSR and the TSR of our peer group:
CAP vs. Company and Peer TSR
| | | | | | | | | | | |
| Compensation Actually Paid (PEO) | | Avg. Compensation Actually Paid (Non-PEO NEOs) |
| Company TSR | | Peer Group TSR |
Relationship between CAP vs. Net Income
The following chart illustrates the relationship between CAP for our PEO and the average CAP for our Non-PEO NEOs against our net income:
CAP vs. Net Income
| | | | | | | | | | | | | | | | | |
| Compensation Actually Paid (PEO) | | Avg. Compensation Actually Paid (Non-PEO NEOs) | | Net Income (millions) |
Relationship between CAP vs. PARSU EPS
The following chart illustrates the relationship between CAP for our PEO and the average CAP for our Non-PEO NEOs against our PARSU EPS.
CAP vs. Company-Selected Measure (PARSU EPS)
| | | | | | | | | | | |
| Compensation Actually Paid (PEO) | | Avg. Compensation Actually Paid (Non-PEO NEOs) |
| Company Selected Measure (PARSU EPS) | | |
Most Important Performance Measures
The following is an unranked list of the financial performance measures we consider most important in linking company performance and
CAP for our NEOs for the most recently completed fiscal year:
•PARSU EPS
•Revenue
•Operating Profit
•Free Cash Flow
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| Board proposal no. 4 | |
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| Approval of the Fourth Amended and Restated HP Inc. 2004 Stock Incentive Plan | |
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| | The Board recommends a vote for the approval of the Fourth Amended and Restated HP Inc. 2004 Stock Incentive Plan. | |
On February 6, 2024, the Board approved the adoption of the Fourth Amended and Restated HP Inc. 2004 Stock Incentive Plan (the “Amended 2004 Plan”), which amends and restates our Third Amended and Restated HP Inc. 2004 Stock Incentive Plan (the “Existing 2004 Plan”), subject to approval by our stockholders. We are asking stockholders to consider and vote upon a proposal to approve the Amended 2004 Plan. HP anticipates that its equity incentive compensation needs will soon exceed the remaining shares available under the Existing 2004 Plan. Therefore, upon the recommendation of the HRC Committee, the Board on February 6, 2024 approved the Amended 2004 Plan, subject to the receipt of stockholder approval at our annual meeting.
Vote Required
The affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted on the proposal at the annual meeting is required for auditapproval of this proposal.
Summary of Fourth Amended and Restated HP Inc. Stock Incentive Plan
The Amended 2004 Plan provides for the grant of shares, stock units, stock appreciation rights, stock options and cash awards. The primary change to the Amended 2004 Plan is to increase the share reserve under the Amended 2004 Plan by 46,000,000 shares of our common stock. In addition to this amendment, the Amended 2004 Plan includes a handful of housekeeping amendments intended to facilitate administration of the Amended 2004 Plan and to implement best practice changes. The following summary highlights the proposed material changes and other
services provided by Ernst & Young LLP (“EY”) for fiscal 2015 and 2014. | | | | | | | | |
| | | 2015 | | | 2014 | |
| | | In millions | |
Audit Fees(1) | | $ | 65.7 | | | $ | 30.0 | |
Audit-Related Fees(2) | | | 21.9 | | | | 15.1 | |
Tax Fees(3) | | | 21.0 | | | | 6.0 | |
All Other Fees(4) | | | 4.1 | | | | 0.1 | |
| | | | | | | | |
Total | | $ | 112.7 | | | $ | 51.2 | |
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(1) | Audit fees represent fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements and audit services provided in connection with other statutory or regulatory filings. Audit fees for fiscal 2015 included fees for audit services provided in connection with the separation of Hewlett-Packard Company into two independent publicly-traded companies, Hewlett Packard Enterprise Company and HP Inc. |
(2) | Audit-related fees consisted primarily of service organization control examinations and other attestation services of $9.0 million and $11.9 million for fiscal 2015 and fiscal 2014, respectively. For fiscal 2015 and fiscal 2014, audit-related fees also included accounting consultations, employee benefit plan audits and merger and acquisition due diligence of $12.9 million and $3.6 million, respectively. |
(3) | Tax fees consisted primarily of tax advice and tax planning fees of $18.8 million and $3.5 million for fiscal 2015 and fiscal 2014, respectively. For fiscal 2015 and fiscal 2014, tax fees also included tax compliance fees of $1.2 million and $1.4 million, respectively. |
(4) | For fiscal 2015 and 2014, all other fees included primarily advisory service fees. |
Pre-Approval of Audit and Non-Audit Services Policy
The Audit Committee has delegatedkey changes reflected in the Amended 2004 Plan:
•Increase to the chairShare Reserve. The maximum aggregate number of shares that may be issued under the Audit Committee the authority to pre-approve audit-related and non-audit services not prohibitedAmended 2004 Plan has been increased by law to be performed by our independent registered public accounting firm and associated fees up46,000,000 shares to a maximum aggregate number of 669,111,733 shares authorized for issuance, subject to adjustment for certain changes in capitalization. This change is intended to accommodate our equity-based compensation needs and is anticipated to provide a pool of shares adequate to cover, based on our historical and projected grant practices, the next two years, subject to currently unknown factors, such as the number of grant recipients, future grant practices and HP’s share price.
•Broadening of Administrator’s Delegation Authority to Reflect Changes in Corporate Law. The authority vested in the Administrator (as defined under the Amended 2004 Plan Summary, and as described in the Amended 2004 Plan Summary below) to delegate its administrative authority under the Amended 2004 Plan has been broadened to provide administrative flexibility to the Administrator in light of the expanded scope of delegation permitted under Delaware corporate law.
•Clarification of Incentive Stock Option Granting Period. The provision governing the grants of incentive stock options under the Amended 2004 Plan has been updated to clarify that incentive stock options may not be granted following the date that is more than 10 years after the date that is the later of the date the Board or the stockholders approve the Amended 2004 Plan, consistent with the requirements under applicable tax laws.
•Elimination of Default Stock Option and Stock Appreciation Right Leave of Absence Treatment. The provisions governing the treatment of outstanding stock options and stock appreciation rights held by participants taking a leave of absence have been revised to provide more flexibility for the Administrator by eliminating the default rules prohibiting exercises during a leave of absence and requiring continued vesting during an authorized leave of absence in favor of allowing the Administrator to determine at the time of grant the treatment that applies to these awards when a participant takes a leave of absence.
•Elimination of Default Repurchase Price. The provision specifying the repurchase price that applies to the repurchase of unvested restricted stock in connection with the restricted stock award recipient’s termination of employment has been amended to remove the requirement that such repurchase price be the original price paid by the restricted stock award recipient in favor of providing the Administrator with the flexibility to set the repurchase price.
•Elimination of Minimum Performance Period for Cash Awards. The one-year minimum performance period requirement that applies to cash awards has been eliminated to provide the Administrator with award-design flexibility.
The following table sets forth certain information about the Amended 2004 Plan, as well as HP’s Existing 2004 Plan:
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| Number of new shares being authorized under the Amended 2004 Plan | 46,000,000 |
| Number of shares available for future awards under the Existing 2004 Plan at December 31, 2023 | 54,036,648 |
Number of shares available for future awards under the Plantronics, Inc. 2003 Stock Plan at December 31, 2023(1) | 277,248 |
| Number of shares relating to outstanding stock options at December 31, 2023 | 6,420,066 |
| Number of shares outstanding at December 31, 2023 relating to awards of restricted stock and RSUs | 31,384,345 |
| Number of shares outstanding at December 31, 2023 relating to awards of PARSUs | 2,083,578 |
| Maximum option term | 10 years |
| Minimum exercise price (relative to the market value on date of grant) | 100 | % |
| Weighted average remaining term of outstanding options as of December 31, 2023 | 7.24 years |
| Weighted average exercise price of outstanding options as of December 31, 2023 | $26.12 |
| Total number of shares available for future awards after December 31, 2023 if this proposal is approved | 100,313,896 |
(1) The Plantronics, Inc. 2003 Stock Plan does not have a fungible pool.
If the Amended 2004 Plan is approved, HP’s total potential dilution from the shares available for issuance under its equity incentive plans would increase from 9.5% as of December 31, 2023, to 14.1%(1). Total potential dilution is the number of shares subject to equity awards outstanding but not exercised or settled plus the number of shares available to be granted, divided by the sum of the total number of shares of HP common stock outstanding as of the end of the year. The HRC Committee considered this potential dilution level in the context of competitive data from our peer group. The HRC Committee concluded that the resulting dilution levels would be within normal competitive ranges.
(1) This does not include the shares available for issuance under the HP Inc. 2021 Employee Stock Purchase Plan. It includes shares available for issuance under the Amended 2004 Plan and the Plantronics, Inc. 2003 Stock Plan. Total number of shares of HP common stock outstanding as of the end of the year (December 31, 2023) is 993,727,365.
HP manages its long-term dilution goal by monitoring the number of shares subject to equity awards that it grants annually, commonly referred to as its “burn rate”. The burn rate shows how rapidly a company is depleting its shares reserved for equity compensation plans, and is defined as the number of shares granted under HP’s equity incentive plans divided by the weighted average number of common shares outstanding at the end of the fiscal year, as calculated below. HP has calculated the burn rate under the Existing 2004 Plan for the past three years, as set forth in the following table:
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| Options Granted | | Full-Value Awards | | |
| Time-Based Granted | Performance- Based Granted | Performance- Based Earned(1) | | Time-Based Granted | Performance- Based Granted | Performance- Based Earned | Weighted Average Number of Common Shares Outstanding | Burn Rate |
| Fiscal 2021 | — | | 2,691,497 | — | | | 14,828,449 | 688,325 | 751,061 | 1,208,043,806 | 1.5 | % |
| Fiscal 2022 | — | | 1,866,542 | | 794,854 | | | 14,735,500 | | 601,512 | | 636,068 | | 1,038,281,760 | | 1.7 | % |
| Fiscal 2023 | — | | 2,180,305 | | 628,936 | | | 17,570,951 | | 929,013 | | 1,247,157 | | 991,708,334 | | 2.1 | % |
(1)None of the performance-contingent stock options vested in fiscal 2021.
The three-year average burn rate is 1.7%.
Based on a review of our historical and projected grant practices, we believe that the shares reserved for grant under the Amended 2004 Plan will meet HP’s equity grant needs for approximately two years. The shares reserved may, however, last for more or less than two years depending on currently unknown factors, such as the number of grant recipients, future grant practices and HP’s share price.
Why You Should Vote to Approve the Amended 2004 Plan
The Board recommends that our stockholders approve the Amended 2004 Plan because it believes that the Amended 2004 Plan promotes the success and enhances the value of HP by linking the individual interests of key personnel of HP to those of HP’s stockholders and provides such individuals with an incentive for outstanding performance to generate superior returns to HP’s stockholders. The Amended 2004 Plan is further intended to provide flexibility to HP in its ability to motivate, attract, and retain the services of such individuals upon whose judgment, interest, and special effort the successful conduct of HP’s operation is largely dependent. The approval of the Amended 2004 Plan will enable us to continue to provide such incentives.
Highlights of the Amended 2004 Plan. Specific features of the Amended 2004 Plan that are consistent with good corporate governance practices include, but are not limited to:
•There is no “evergreen” feature pursuant to which the shares authorized for issuance under the Amended 2004 Plan can be automatically replenished without stockholder approval.
•There can be no repricing of options or stock appreciation rights without stockholder approval, either by canceling the award in exchange for a replacement award at a lower price or by reducing the exercise price of the award (other than in connection with a change in our capitalization).
•The Amended 2004 Plan includes a $550,000 value limit to the annual equity retainer that can be granted to non-employee Directors in any Board Year.
•No liberal share recycling of stock options or full-value awards.
•The aggregate number of shares that can be granted in any calendar year to any one participant under the Amended 2004 Plan will be 4,000,000, except that the same participant may be granted up to 4,000,000 additional shares in connection with his or her initial service.
•The Amended 2004 Plan prohibits the current payment of dividends or dividend equivalent rights on unvested awards. The Amended 2004 Plan also prohibits the payment of dividends or dividend equivalents on options and SARs.
•If awards granted under the Amended 2004 Plan are assumed by the successor entity in connection with a change of control of the Company, such awards will not automatically vest and pay out upon the change of control.
Amended 2004 Plan Summary
The principal features of the Amended 2004 Plan are summarized below. The following summary of the Amended 2004 Plan does not purport to be a complete description of all of the provisions of the Amended 2004 Plan. It is qualified in its entirety by reference to the complete text of the Amended 2004 Plan, which has been filed as Annex A to this proxy statement. Any HP stockholder who wishes to obtain a copy of the Amended 2004 Plan may do so upon written request to HP’s Corporate Secretary at HP's principal executive offices.
General. The purpose of the Amended 2004 Plan is to encourage ownership in HP by key personnel whose long-term service is considered essential to HP's continued progress and thereby align participants' and stockholders' interests. Stock options, stock appreciation rights, stock awards (including stock units), and cash awards may be granted under the Amended 2004 Plan. Stock options granted under the Amended 2004 Plan may be either "incentive stock options," as defined in Section 422 of the Code, or non-statutory stock options.
Administration. The Amended 2004 Plan may be administered by the Board, a committee of members of the Board appointed by the Board or its delegate (as applicable, the "Administrator"). The Administrator is also specifically authorized to adopt sub-plans to facilitate compliance with non-US laws authorizing the grant of tax-favorable Awards to participants outside the United States.
Share Reserve. If the Amended 2004 Plan is approved, the maximum number of shares authorized for issuance under the Amended 2004 Plan is 669,111,733 shares (which includes shares that have already been issued or that are issuable pursuant to outstanding awards under the Existing 2004 Plan), subject to adjustments in the event of certain capitalization events. Of this maximum number (based on the approval of the Amended 2004 Plan), 100,036,648 shares would be available for the grant of new awards under the Amended 2004 Plan, determined as of December 31, 2023. The shares may be either shares reacquired by HP, including shares purchased on the open market, or authorized but unissued shares of common stock. Shares issued in respect of any full-value award granted under the Plan after March 20, 2013 are counted against the share limit set forth in the foregoing sentence as 2.32 shares for every single share actually issued in connection with such award.
If any shares subject to an award are forfeited or such award is settled in cash or otherwise terminates without the delivery of such shares, the shares subject to such award will again be available for grant under the Amended 2004 Plan. Any shares that become available for the grant of awards pursuant to the foregoing sentence will be added back in accordance with the following: (i) if the shares were subject to stock options or stock appreciation rights, shares will be added back as one (1) share for every share subject to such awards; (ii) if the shares were subject to full-value awards, shares will be added back as 2.32 shares for every single share subject to such award. Notwithstanding the foregoing, shares subject to an award may not again be made available for issuance under the Amended 2004 Plan if such shares are: (i) shares delivered to or withheld by the Company to pay the exercise price of an option, (ii) shares delivered to or withheld by the Company to pay the withholding taxes, or (iii) shares repurchased by the Company on the open market with the proceeds of an award paid to the Company by or on behalf of the participant. For the avoidance of doubt, when stock appreciation rights are exercised and settled in shares, the full number of shares exercised will no longer be available for issuance under the Amended 2004 Plan.
Eligibility. Awards may be granted under the Amended 2004 Plan to employees of HP and its affiliates and to non-employee Directors. Incentive stock options may be granted only to employees of HP or its subsidiaries. As of December 31, 2023, there were approximately 58,000 employees and thirteen non-employee Directors eligible to receive awards under the Amended 2004 Plan. The Administrator, in its discretion, selects the participants to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards.
Share Limitations. The Amended 2004 Plan provides that no participants may be granted more than 4,000,000 shares in any calendar year, except that a participant may be granted awards covering up to an additional 4,000,000 shares in connection with his or her initial employment with HP. The maximum number of shares that may be subject to incentive stock options granted under the Amended 2004 Plan may not exceed 669,111,733.
Terms and Conditions of Stock Options and Stock Appreciation Rights. Each stock option or stock appreciation right is evidenced by an award agreement between HP and the participant and is subject to the following additional terms and conditions:
•Exercise Price. The Administrator determines the exercise price of stock options and stock appreciation rights at the time the award is granted. The exercise price of a stock option or stock appreciation right may not be less than 100% of the fair market value of the common stock on the date such award is granted, although certain replacement awards with lower exercise prices may be granted to service providers of entities acquired by HP. Unless the Administrator determines otherwise, the fair market value of the common stock is determined as the closing sales price for the common stock on the date the award is granted (or if no sales were reported that day, the last preceding day a sale occurred). No stock option or stock appreciation right may be repriced to reduce the exercise price of such award without stockholder approval (except in connection with a change in HP's capitalization).
•Exercise of Stock Options and Stock Appreciation Rights; Form of Consideration. The Administrator determines when stock options or stock appreciation rights become exercisable and in its discretion may accelerate the vesting of any outstanding award. The means of payment for shares issued upon exercise of a stock option are determined by the Administrator, as specified in each option award agreement or at the time of exercise. The Amended 2004 Plan permits payment to be made by cash, check, wire transfer, the withholding of shares deliverable upon exercise (with some restrictions), broker assisted cashless exercises, any other form of consideration permitted by applicable law, or any combination thereof.
•Term of Stock Option or Stock Appreciation Right. The term of a stock option or stock appreciation right may be no more than ten years from the date of grant.
•Termination of Employment. If a participant’s employment terminates for any onereason, then all stock options and stock appreciation rights held by the participant under the Amended 2004 Plan generally will terminate immediately upon the participant’s termination unless determined otherwise by the Administrator.
•Other Provisions. The award agreement may contain other terms, provisions and conditions not inconsistent with the Amended 2004 Plan, as may be determined by the Administrator.
Terms and Conditions of Stock Awards.
•Each stock award agreement will contain provisions regarding (1) the number of shares subject to such stock award or a formula for determining such number, (2) the purchase price of the shares, if any, and the means of payment for the shares, (3) the performance criteria, if any, and level of achievement versus these criteria that will determine the number of shares granted, issued, retainable and vested, as applicable, (4) such terms and conditions on the grant, issuance, vesting and forfeiture of the shares, as applicable, as may be determined from time to time by the Administrator, (5) restrictions on the transferability of the stock award, and (6) such further terms and conditions, in each case not inconsistent with the Amended 2004 Plan, as may be determined from time to time by the Administrator.
•Termination of Employment. In the case of stock awards, including stock units, unless the Administrator determines otherwise, the restricted stock or restricted stock unit award agreement will provide that the unvested stock or stock units will be forfeited upon the participant's termination of employment for any reason, provided that to the extent the participant purchased any shares, HP will have a right to repurchase the unvested shares.
•Vesting. The vesting of a stock award may be subject to performance criteria, continued service of $250,000,the participant, or both.
Non-Employee Director Awards. Non-employee Directors are eligible only for annual retainer awards and are not eligible for any other type of award that is authorized under the Amended 2004 Plan. Annual retainer awards paid in the form of equity are granted in the form of non-statutory stock options or RSUs. The non-employee Directors can elect to receive the annual equity retainer in the form of stock options or RSUs, and the annual cash retainer in the form of RSUs, and may elect to defer the RSUs provided that such deferral election is made by December 31st of the calendar year immediately preceding the annual meeting at which they are elected. Individuals who become non-employee directors after the start of a calendar year generally are also permitted to elect to receive their annual equity retainer and annual cash retainer in the form of RSUs if the election is made during certain periods set forth in the Amended 2004 Plan and only with respect to compensation related to future services. The awards are granted automatically on the date of the annual meeting of stockholders. The exercise price of director stock options cannot be less than 100% of the fair market value of HP common stock on the grant date. The value of the annual equity retainer (not including cash compensation that may be payable in shares at the election of the non-employee Director) granted to a non-employee Director for any Board Year is limited to $550,000.
The number of shares subject to non-statutory stock option awards granted to non-employee Directors is determined as follows:
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| Amount of annual retainer to be paid as options | × Multiplier (defined below) = Number of Shares |
| Fair market value of a share of HP common stock on the grant date |
The Administrator determines the Multiplier prior to the grant date using a modified Black-Scholes option valuation method that takes into account the following factors: (1) the fair market value of HP common stock on the date the Multiplier is determined; (2) the average length of time that HP stock options are held by optionees prior to exercise; (3) the risk-free rate of return based on the term determined in clause (2) of this sentence and U.S. government securities rates; (4) the annual dividend yield for HP common stock; and (5) the volatility of HP common stock over the previous ten-year period.
The number of shares subject to restricted stock unit awards granted to non-employee directors is determined as follows:
| | | | | |
| Amount of annual retainer to be paid as RSUs | (Equals) Number of Shares (rounded up to the largest number of whole shares) |
| Fair market value of a share of HP common stock on the grant date |
Cash Awards. Each cash award agreement will contain provisions regarding (1) the target and maximum amount payable to the participant as a cash award, (2) the performance criteria and level of achievement versus the criteria that will determine the amount of such payment, (3) the period as to which performance will be measured for establishing the amount of any payment, (4) the timing of any payment earned by virtue of performance, (5) restrictions on the alienation or transfer of the cash award prior to actual payment, (6) forfeiture provisions, and (7) such further terms and conditions, in each case not inconsistent with the Amended 2004 Plan, as may be determined from time to time by the Administrator. The maximum amount payable as a cash award that is settled for cash may be a multiple of the target amount payable.
Nontransferability. Unless otherwise determined by the Administrator, awards granted under the Amended 2004 Plan are not transferable other than beneficiary designation (excluding with respect to options), by will or the laws of descent and distribution and, as applicable, may be exercised during the optionee's lifetime only by the optionee. The Administrator will have the sole discretion to permit the transfer of an award.
Performance Criteria. Performance criteria for purposes of awards granted under the Amended 2004 Plan means any performance criteria selected by the Administrator, including, but not limited to, one or more of the performance criteria listed below, either individually, alternatively or in combination, applied to either HP as a whole or to a business unit, affiliate or business segment, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis, or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Administrator in the award agreement. The performance criteria may be: (1) cash flow (including operating cash flow or free cash flow) or cash conversion cycle; (2) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings); (3) earnings per share; (4) growth in earnings or earnings per share, cash flow, revenue, gross margin, operating expense or operating expense as a percentage of revenue; (5) stock price; (6) return on equity or average stockholder equity; (7) total stockholder return; (8) return on capital; (9) return on assets or net assets; (10) return on investment; (11) revenue (on an absolute basis or adjusted for currency effects); (12) net profit or net profit before annual bonus; (13) income or net income; (14) operating income or net operating income; (15) operating profit, net operating profit or controllable operating profit; (16) operating margin, operating expense or operating expense as a percentage of revenue; (17) return on operating revenue; (18) market share or customer indicators; (19) contract awards or backlog; (20) overhead or other expense reduction; (21) growth in stockholder value relative to the moving average of the S&P 500 Index, a peer group index or another index; (22) credit rating; (23) strategic plan development and implementation, attainment of research and development milestones or new product invention or innovation; (24) succession plan development and implementation; (25) improvement in productivity or workforce diversity; (26) attainment of objective operating goals and employee metrics; (27) economic value added; and (28) any other environmental, social, and corporate governance goals and objectives.
Adjustments Upon Changes in Capitalization, Merger or Sale of Assets. Subject to any required action by HP's stockholders, (1) the number and kind of shares covered by each outstanding award, (2) the price per share subject to each outstanding award, and (3) the share limitations set forth in Section 3 of the Amended 2004 Plan will be proportionately adjusted for any increase or decrease in the number or kind of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of HP's stock, or any other increase or decrease in the number of issued shares of HP's stock effected without receipt of consideration by HP.
In the event of a liquidation or dissolution, any awards not previously exercised will terminate. The Administrator, in its discretion, may provide that any restrictions on an award will lapse prior to the transaction, provided that the
chair shall reportproposed liquidation or dissolution takes place at the time and in the manner contemplated. Additionally, the Administrator may provide at any
decisionstime for a stock option to
pre-approve servicesbe fully vested and
feesexercisable until the date ten days prior to the
full Audit Committee at its next regular meeting. REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
The Audit Committee represents and assists the Board in fulfilling its responsibilities for general oversightconsummation of the integrityliquidation or dissolution.
In the event of HP’s financial statements, HP’s compliance with legala “change of control” of HP, as defined in the Amended 2004 Plan and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, the performance of HP’s internal audit function and independent registered public accounting firm, and risk assessment and risk management. The Audit Committee manages HP’s relationship with its independent registered public accounting firm (which reports directly to the Audit Committee). The Audit Committee has the authority to obtain advice and assistance from outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties and receives appropriate funding, as determined by the Audit Committee,Board or a committee of the Board, the treatment of the award will depend on whether the awards are assumed, substituted or otherwise continued. Generally, in the event the awards are assumed, substituted or otherwise continued by the successor corporation, and the participant’s employment is terminated without cause (as defined in the Amended 2004 Plan or as otherwise defined in the applicable award) within 24 months following the change in control, awards that are not subject to performance-based vesting will fully vest and become fully exercisable, as applicable, and for awards that are subject to performance-based vesting, the awards will vest either at 100% of target level (if the termination occurs prior to the completion of the performance period) or based on actual attainment (if the termination occurs after the completion of the performance period). The vesting, settlement and exercise of such awards, as applicable, will occur in accordance with the timing provided in the Amended 2004 Plan. If the awards are not assumed, awards will vest as follows and will generally be replaced with a right to receive a cash payment (or other property) equal to the amount the participants would have received had the awards been exercised or settled, as applicable: awards that are not based on performance-based vesting will fully vest and become fully exercisable, as applicable, and for awards that are subject to performance-based vesting, the awards will vest either at 100% of target level (if the change in control occurs prior to the completion of the performance period) or based on actual attainment (if the change in control occurs after the completion of the performance period).
Clawback/Recovery. All awards granted under the Amended 2004 Plan will be subject to recoupment in accordance with any recovery, recoupment, clawback or similar policy adopted by HP providing for forfeiture, repayment or recovery of awards, shares, proceeds, or payments to participants in the event of fraud, misconduct, wrongdoing or violation of law or as required by applicable law, including, without limitation, pursuant to Rule 10D-1 promulgated under Section 10D of the Exchange Act and Section 303A.14 of the NYSE Listed Company Manual or for governance considerations or in other similar circumstances.
Amendment and Termination of the Plan. The Administrator may amend, alter, suspend or terminate the Amended 2004 Plan, or any part thereof, at any time and for any reason. However, HP will obtain stockholder approval for any amendment to the Amended 2004 Plan to the extent required by applicable laws or stock exchange rules. In addition, without limiting the foregoing, unless approved by HP stockholders, no such amendment will be made that would: (1) increase the maximum number of shares for which awards may be granted under the Amended 2004 Plan, other than an increase pursuant to a change in HP's capitalization; (2) reduce the minimum exercise price for options or stock appreciation rights granted under the Amended 2004 Plan; (3) reduce the exercise price of outstanding options or stock appreciation rights; or (4) materially expand the class of persons eligible to receive awards under the Amended 2004 Plan. No such action by the Board or stockholders may alter or impair any award previously granted under the Amended 2004 Plan without the written consent of the holder of the award, unless such amendments are necessary or desirable to facilitate compliance with applicable law. Unless terminated earlier, the Amended 2004 Plan will terminate ten years from the date of its approval by the stockholders; provided that no incentive stock options may be granted more than ten years after the later of the date the Board or the stockholders approved any amendment to add shares to the Amended 2004 Plan.
Federal Income Tax Consequences
The following summarizes the U.S. federal income tax consequences of awards that may be granted under the Amended 2004 Plan.
Incentive Stock Options. An option holder will not realize taxable income upon the grant of an incentive stock option under the Amended 2004 Plan. In addition, an option holder generally will not realize taxable income upon the exercise of an incentive stock option. An option holder’s alternative minimum taxable income, however, will be increased by the amount by which the aggregate fair market value of the shares underlying the option, which is generally determined as of the date of exercise, exceeds the aggregate exercise price of the option. Further, except in the case of an option holder’s death or disability, if an option is exercised more than three months after the option holder’s termination of employment, the option will cease to be treated as an incentive stock option and will be subject to taxation under the rules applicable to non-qualified stock options, as summarized below.
If an option holder sells the option shares acquired upon exercise of an incentive stock option, the tax consequences of the disposition will depend upon whether the disposition is “qualifying” or “disqualifying.” The disposition of the option shares will be a qualifying deposition if it is made at least two years after the date on which the incentive stock option was granted and at least one year after the date on which the incentive stock option was exercised. If the disposition of the option shares is qualifying, any excess of the sale price of the option shares over the exercise price of the option will be treated as long-term capital gain taxable to the option holder at the time of the sale. If the disposition is a disqualifying disposition, the excess of the fair market value of the option shares on the date of disposition over the exercise price will be taxable income to the option holder at the time of the disposition. Of that income, the amount up to the excess of the fair market value of the shares at the time the option was exercised over the exercise price will be ordinary income for income tax purposes and the balance, if any, will be long-term or short-term capital gain, depending upon whether or not the shares were sold more than one year after the option was exercised.
Unless an option holder engages in a disqualifying disposition, HP will not be entitled to a deduction with respect to an incentive stock option. If an option holder engages in a disqualifying disposition, HP will be entitled to a deduction equal to the amount of compensation income taxable to the option holder.
If an option holder pays the exercise price of an incentive stock option by tendering shares with a fair market value equal to part or all of the exercise price, the exchange of shares will be treated as a nontaxable exchange, except that this treatment will not apply if the option holder acquired the shares being tendered pursuant to the exercise of an incentive stock option and has not satisfied the special holding period requirements summarized above. The tax basis of the shares tendered to pay the exercise price will be treated as the substituted tax basis for an equivalent number of shares received, and the new shares will be treated as having been held for the same holding period as the holding period that expired with respect to the tendered shares.
Non-Qualified Stock Options. An option holder will not realize taxable income upon the grant of a non-qualified stock option. When an option holder exercises the option, however, the difference between the exercise price of the option and the fair market value of the shares subject to the option on the date of exercise will constitute compensation income taxable to the option holder. The Company will be entitled to a deduction equal to the amount of compensation income taxable to the option holder. If an option holder tenders shares in payment of part or all of the exercise price of a non-qualified stock option, no gain or loss will be recognized with respect to the shares tendered, even if the shares were acquired pursuant to the exercise of an incentive stock option. In such an event, the option holder will be treated as receiving an equivalent number of shares pursuant to the exercise of the option in a nontaxable exchange. The tax basis of the shares tendered will be treated as the substituted tax basis for an equivalent number of shares received, and the shares received will be treated as having been held for the same holding period as the holding period that expired with respect to the tendered shares. The difference between the aggregate exercise price and the aggregate fair market value of the shares received pursuant to the exercise of the option will be taxed as ordinary income, just as if the option holder had paid the exercise price in cash.
Restricted Stock. A grantee of restricted stock will not recognize any taxable income for federal income tax purposes in the year of the award if the common stock is subject to restrictions (that is, the restricted stock is nontransferable and subject to a substantial risk of forfeiture). The grantee, however, may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the shares on the date of the award, determined without regard to the restrictions. If the grantee does not make such a Section 83(b) election, the fair market value of the shares on the date on which the restrictions lapse will be treated as compensation income to the grantee and will be taxable in the year in which the restrictions lapse. The Company generally will be entitled to a deduction for compensation paid equal to the amount treated as compensation income to the grantee in the year in which the grantee is taxed on the income, if HP complies with applicable reporting requirements.
RSUs. A grantee of RSUs does not recognize any taxable income for federal income tax purposes in the year of the award if the award is subject to restrictions. However, when the RSUs vest, the grantee generally recognizes ordinary income in an amount equal to the fair market value of the shares that are issued upon settlement of the RSUs. The Company generally will be entitled to a deduction for compensation paid equal to the amount treated as compensation income to the grantee in the year in which the grantee is taxed on the income, if HP complies with applicable reporting requirements.
Performance Awards. A distribution of common stock or a payment of cash in satisfaction performance awards will be taxable as ordinary income when the distribution or payment is actually or constructively received by the recipient. The amount taxable as ordinary income is the aggregate fair market value of the common stock determined as of the date it is received or the amount of the cash payment. The Company will be entitled to deduct the amount of such payments when such payments are taxable as compensation to the recipient if HP complies with applicable reporting requirements.
Stock Appreciation Rights. The grant of stock appreciation rights will not result in taxable income to the participant or a deduction to HP. Upon exercise of a stock appreciation right, the holder will recognize ordinary income in an amount equal to the cash or the fair market value of the common stock received by the holder. The Company will be entitled to a deduction equal to the amount of any compensation income taxable to the grantee, and, as to stock appreciation rights that are settled in shares of common stock, if HP complies with applicable reporting requirements.
Plan Benefits
The following table sets forth information on stock options, restricted stock, RSUs and PARSUs granted under the Existing 2004 Plan since inception and includes awards subsequently forfeited, if any, as of December 31, 2023. Note that no stock appreciation rights are outstanding under the Existing 2004 Plan as of December 31, 2023.
| | | | | | | | | | | | | | | | | |
| Name and Position | Stock Options(1) | Restricted Stock(2) | RSUs(3) | PARSUs | Total |
Enrique J. Lores President and CEO | 2,876,513 | | — | | 4,731,399 | | 4,843,752 | | 12,451,664 | |
Marie Myers Chief Financial Officer | 670,790 | | 43,239 | | 1,383,561 | | 385,769 | | 2,483,359 | |
Julie Jacobs Chief Legal Officer | 111,316 | | — | | 1,067,922 | | 249,447 | | 1,428,685 | |
Alex Cho President, Personal Systems | 755,772 | | — | | 1,771,617 | | 1,554,244 | | 4,081,633 | |
Tuan Tran President, Print | 838,749 | | 9,728 | | 1,756,503 | | 1,146,581 | | 3,751,561 | |
| All Current Executive Officers as a Group | 5,782,233 | | 52,967 | | 13,881,468 | | 8,785,730 | | 28,502,398 | |
| Non-Employee Directors as a Group | 305,819 | | — | | 2,309,417 | | — | | 2,615,236 | |
| All Current and Former Employees (excluding Executive Officers as a Group) | 408,228,871 | | 16,663,579 | | 643,444,597 | | 103,042,672 | | 1,171,379,719 | |
(1)Includes all time-based and performance-contingent stock options granted under the Existing 2004 Plan and prior versions of the plan.
(2)Includes all restricted stock granted under the Existing 2004 Plan and prior versions of the plan.
(3)Includes all RSUs and deferred stock units granted under the Existing 2004 Plan and prior versions of the plan.
New Plan Benefits
Grants of awards under the Amended 2004 Plan will be in the discretion of the Administrator. Accordingly, it is not possible as of the date of this proxy statement to determine the nature or amount of any awards under the Amended 2004 Plan that may be subject to future grants to employees, consultants, and non-employee Directors of HP and its affiliates.
Amendment to Certificate of Incorporation
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| | |
| Board proposal no. 5 | |
| | |
| | |
| Approval of Amendment to Certificate of Incorporation to limit the liability of officers as permitted by law | |
| | |
| | The Board recommends a vote for the approval of an amendment to the Certificate of Incorporation to limit the liability of officers as permitted by law. | |
The Board has unanimously adopted and declared advisable, and resolved to recommend to HP’s stockholders that they approve and adopt, an amendment (the “Exculpation Amendment”) to the Certificate of Incorporation of HP, as amended (the “Certificate of Incorporation”), to provide for the elimination of monetary liability of certain officers of HP in certain limited circumstances in accordance with the General Corporation Law of the State of Delaware (the “DGCL”).
Vote Required
The affirmative vote of a majority of the outstanding shares of HP common stock entitled to be voted on the proposal at the annual meeting is required for approval of this proposal.
Summary of Amendment
Pursuant to and consistent with Section 102(b)(7) of the DGCL, Article X of the Certificate of Incorporation already eliminates the monetary liability of directors for breaches of the duty of care to the extent permitted by the DGCL. Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit Delaware corporations to include in their certificates of incorporation limitations of monetary liability for certain officers. In accordance with the DGCL, under the Exculpation Amendment, the officers that would be eligible for exculpation are: (i) HP’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer and chief accounting officer; (ii) individuals who are or were identified in our public filings as the most highly compensated officers of HP; and (iii) individuals who, by written agreement with HP, consented to be identified as officers for purposes of accepting service of process.
Consistent with Section 102(b)(7) of the DGCL, the Exculpation Amendment would only permit limiting the liability of such officers of HP for
breaches of the fiduciary duty of care for direct claims. Like the provision limiting the liability of directors, the Exculpation Amendment does not permit the elimination of liability of such
advice and assistance.HP’s management is primarily responsibleofficers for:
•any breach of the duty of loyalty to HP or its stockholders;
•any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; or
•any transaction from which the officer derived an improper personal benefit.
In addition, consistent with Section 102(b)(7) of the DGCL, the Exculpation Amendment would not permit the limitation of liability of such officers of HP in any derivative action.
Notwithstanding the foregoing, consistent with the language for HP’s internal control and financial reporting process. HP’s independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent auditexculpation of HP’s consolidated financial statements and issuing opinions ondirectors currently included in Article X of the conformityCertificate of those audited financial statements with United States generally accepted accounting principles andIncorporation, the Exculpation Amendment also provides that, if approved by the stockholders, at any time following the effectiveness of HP’s internal control over financial reporting. The Audit Committee monitors HP’s financial reporting process and reportsthe Exculpation Amendment, the DGCL is amended to authorize any further elimination or limitation of the personal liability of officers, then the liability of an officer of HP shall automatically be eliminated or limited to the Board onfullest extent permitted by the DGCL, as so amended.
The proposed amendment would amend and restate Section A of Article X as follows (additions are indicated by underlining):
ARTICLE X
“A. To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, no director or officer of the Corporation shall be personally liable to the Corporation or its findings.In this context, the Audit Committee hereby reportsstockholders for monetary damages for breach of fiduciary duty as follows:
a director or officer, as applicable.”
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| Approval of Amendment to Certificate of Incorporation |
| |
Reasons for Amendment
The Board believes that it is important to extend exculpation protection to officers, to the fullest extent permitted by DGCL, in order to better position HP to attract and retain qualified and experienced officers. In the absence of such protection, such individuals might be deterred from serving as officers due to exposure to personal liability and the risk of incurring substantial expense in defending lawsuits, regardless of merit. Aligning the protections available to our officers with those available to our directors to the extent such protections are available under the DGCL would empower officers to exercise their business judgment in furtherance of stockholder interests without the potential for distraction posed by the risk of personal liability.
Taking into account the narrow class and type of claims for which officers would be exculpated in accordance with the DGCL, and the benefits the Board believes would accrue to HP and its stockholders—enhancing our ability to attract and retain talented officers and potentially reducing future litigation costs associated with frivolous lawsuits—the Board determined that the Exculpation Amendment is in the best interests of HP and its stockholders.
Effectiveness of Amendment
HP’s officers will receive the protections from liability afforded by the Exculpation Amendment effective upon HP filing a Certificate of Amendment setting forth the Exculpation Amendment with the Secretary of State of the State of Delaware, which we anticipate doing as soon as practicable following stockholder approval of the Exculpation Amendment. In addition, if the stockholders approve the Exculpation Amendment and the Certificate of Amendment setting forth the Exculpation Amendment is filed with the Secretary of State of the State of Delaware, we intend to file a Restated Certificate of Incorporation to integrate the Certificate of Incorporation, the Exculpation Amendment (if approved) and the other previously adopted amendments to the Certificate of Incorporation into a single document. The Board reserves the right to abandon the Exculpation Amendment at any time before it becomes effective, even if it is approved by the stockholders. If our stockholders do not approve the Exculpation Amendment, Section A of Article X of the Certificate of Incorporation will remain unchanged, our officers will not be entitled to exculpation as permitted under the DGCL, and the Certificate of Amendment setting forth the Exculpation Amendment will not be filed with the Secretary of State of the State of Delaware.
Ownership of Our Stock
Common Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of December 31, 2023 (or as of the date otherwise indicated below) concerning beneficial ownership by:
•holders of more than 5% of HP’s outstanding shares of common stock;
•our Directors and nominees;
•each of the named executive officers listed in the Summary Compensation Table on page 67; and
•all of our Directors and executive officers as a group.
The information provided in the table is based on our records, information filed with the SEC and information provided to HP, except where otherwise noted.
The number of shares beneficially owned by each entity or individual is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the entity or individual has sole or shared voting or investment power and also any shares that the entity or individual has the right to acquire as of March 1, 2024 (60 days after December 31, 2023) through the exercise of any stock options, through the vesting/settlement of RSUs payable in shares, or upon the exercise of other rights. Beneficial ownership excludes options or other rights vesting after March 1, 2024 and any RSUs vesting/ settling, as applicable, on or before March 1, 2024 that may be payable in cash or shares at HP’s election. Unless otherwise indicated, each person has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table.
Beneficial Ownership Table
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| Name of Beneficial Owner | Shares of Common Stock
Beneficially Owned | Percent of Common
Stock Outstanding |
The Vanguard Group(1) | 104,625,445 | | 10.5 | % |
BlackRock, Inc.(2) | 96,713,356 | | 9.7 | % |
Dodge & Cox(3) | 52,451,225 | | 5.3 | % |
Berkshire Hathaway Inc.(4) | 51,503,537 | | 5.2 | % |
Aida M. Alvarez(5) | 88,069 | | * |
| Shumeet Banerji | 57,737 | | * |
Robert R. Bennett(6) | 176,462 | | * |
Chip Bergh(7) | 166,833 | | * |
| Bruce Broussard | 28,739 | | * |
Stacy Brown-Philpot(8) | 95,142 | | * |
Stephanie A. Burns(9) | 102,911 | | * |
Mary Anne Citrino(10) | 222,636 | | * |
Richard L. Clemmer(11) | 52,117 | | * |
| David Meline | 2,747 | | * |
| Judith (“Jami”) Miscik | 20,407 | | * |
Kim K.W. Rucker(12) | 17,797 | | * |
| Subra Suresh | 59,532 | | * |
Alex Cho(13) | 324,381 | | * |
| Julie Jacobs | 62,496 | | * |
Enrique J. Lores(14) | 1,526,371 | | * |
Marie Myers(15) | 306,235 | | * |
Tuan Tran(16) | 429,725 | | * |
All current Executive Officers and Directors as a Group (22 persons)(17) | 4,034,280 | | * |
* Represents holdings of less than 1% based on shares of our common stock outstanding as of December 31, 2023.
(1)Based on the most recently available Schedule 13G/A filed by the Vanguard Group on July 10, 2023. According to its Schedule 13G/A, the Vanguard Group reported having sole voting power over no shares, shared voting power over 1,190,743 shares, sole dispositive power over 100,781,985 shares, and shared dispositive power over 3,843,460 shares. The Schedule 13G/A contained information as of June 30, 2023 and may not reflect current holdings of HP’s stock. The address for the Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(2)Based on the most recently available Schedule 13G/A filed with the SEC on January 24, 2024 by BlackRock, Inc. According to its Schedule 13G/A, BlackRock, Inc. reported having sole voting power over 86,531,582 shares, shared voting power over no shares, sole dispositive power over 96,713,356 shares and shared dispositive power over no shares. The Schedule 13G/A contained information as of December 31, 2023 and may not reflect current holdings of HP’s stock. The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001.
(3)Based on the most recently available Schedule 13G/A filed with the SEC on February 14, 2023 by Dodge & Cox. According to its Schedule 13G/A, Dodge & Cox reported having sole voting power over 49,994,452 shares, shared voting power over no shares, sole dispositive power over 52,451,225 shares and shared dispositive power over no shares. The securities reported on the Schedule 13G/A are beneficially owned by clients of Dodge & Cox, which clients may include investment companies registered under the Investment Company Act of 1940 and other managed accounts, and which clients have the right to receive or the power to direct the receipt of dividends from, and the proceeds from the sale of, HP’s stock. The Schedule 13G/A contained information as of December 31, 2022 and may not reflect current holdings of HP’s stock. The address of Dodge & Cox is 555 California Street, 40th Floor, San Francisco, CA 94104.
(4)Based on the Schedule 13G/A filed by Berkshire Hathaway Inc. on December 11, 2023. According to the Schedule 13G/A, (i) Warren E. Buffett and Berkshire Hathaway Inc. have sole voting power over no shares, shared voting power over 51,503,537 shares, sole dispositive power over no shares, and shared dispositive power over 51,503,537 shares; and (ii) National Indemnity Company has sole voting power over no shares, shared voting power over 34,949,980 shares, sole dispositive power over no shares, and shared dispositive power over 34,949,980 shares. The Schedule 13G/A contained information as of November 30, 2023 and may not reflect current holdings of HP’s stock. The address for Berkshire Hathaway and Mr. Buffett is 3555 Farnam Street, Omaha, NE 68131. The address for National Indemnity Company is 1314 Douglas Street, Omaha, Nebraska 68102.
(5)Includes 28,961 shares that Ms. Alvarez has elected to defer receipt of until the termination of her service as a member of the Board.
(6)Includes 49,246 shares that Mr. Bennett has elected to defer receipt of until the termination of his service as a member of the Board.
(7)Includes 146,148 shares that Mr. Bergh has the right to acquire by exercise of stock options.
(8)Includes 95,142 shares that Ms. Brown-Philpot has elected to defer receipt of until the termination of her service as a member of the Board.
(9)Includes 60,644 shares that Ms. Burns has elected to defer receipt of until the termination of her service as a member of the Board.
(10)Includes 159,671 shares that Ms. Citrino has the right to acquire by exercise of stock options and 57,828 shares that Ms. Citrino has elected to defer receipt of until the termination of her service as a member of the Board.
(11)Includes 46,852 shares that Mr. Clemmer has elected to defer receipt of until the termination of his service as a member of the Board.
(12)Includes 15,769 shares that Ms. Rucker has elected to defer receipt of until the termination of her service as a member of the Board.
(13)Includes 259,706 shares that Mr. Cho has the right to acquire by exercise of stock options.
(14)Includes 637,460 shares that Mr. Lores has the right to acquire by exercise of stock options.
(15)Includes 188,877 shares that Ms. Myers has the right to acquire by exercise of stock options and 13,793 shares that Ms. Myers has the right to acquire upon the vesting of RSUs.
(16)Includes 259,706 shares that Mr. Tran has the right to acquire by exercise of stock options.
(17)Includes 1,737,932 shares that current executive officers and Directors have the right to acquire by exercise of stock options, 38,746 shares that current executive officers have the right to acquire upon the vesting of RSUs, and 354,441 shares for which Directors have elected to defer receipt until the termination of their service as a member of the Board.
Stockholder Proposal
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| Stockholder Proposal | |
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| Stockholder Ratification of Termination Pay | |
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| | The Audit Committee has reviewed and discussed the audited financial statements with HP’s management.Board Recommends a Vote Against this Proposal | |
| 2. | The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board (“PCAOB”). |
| 3. | The Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence. |
| 4. | Based on the review and discussions referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015, for filing with the Securities and Exchange Commission. |
This stockholder proposal has been submitted by John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278 (the beneficial owner of 200 shares of HP common stock). The undersigned membersproponent has requested we include the proposal and supporting statement in this proxy statement, and, if properly presented, the proposal will be voted on at the annual meeting.
This proposal and supporting statement are quoted verbatim below and HP is not responsible for any inaccuracies contained in them.
The Board recommends a vote AGAINST this proposal and its opposition statement can be found below the proposal.
Proposal 6 – Shareholder Opportunity to Vote on Excessive Golden Parachutes
Shareholders request that the Board adopt a policy to seek shareholder approval of senior managers' new or renewed pay package that provides for golden parachute payments with an estimated value exceeding 2.99 times the sum of the Audit Committeeexecutive's base salary plus target short term bonus. This proposal only applies to Section 16 Officers.
Golden parachute payments include cash, equity or other compensation that is paid out or vests due to a senior executive's termination for any reason. Payments include those provided under employment agreements, severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits, or deferred compensation earned and vested prior to termination.
"Estimated total value" includes: lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not vested under a plan generally available to management employees; post-employment consulting fees or office expense; and equity awards if vesting is accelerated, or a performance condition waived, due to termination.
The Board shall retain the option to seek shareholder approval at an annual meeting after material terms are agreed upon.
Generous performance-based pay can sometimes be justified but shareholder ratification of golden parachutes with a total cost exceeding 2.99 times base salary plus target short-term bonus better aligns management pay with shareholder interests.
This proposal is relevant even if there are current golden parachute limits. A limit on golden parachutes is like a speed limit. A speed limit by itself does not guarantee that the speed limit will never be exceeded. Like this proposal the rules associated with a speed limit provide consequences if the limit is exceeded. With this proposal the consequences are a non-binding shareholder vote is required for unreasonably high golden parachutes.
This proposal places no limit on long-term equity pay or any other type pay. This proposal thus has no impact on the ability to attract executive talent or discourage the use of long-term equity pay because it places no limit on golden parachutes. It simply requires that extra large golden parachutes be subject to a non-binding shareholder vote at a shareholder meeting already scheduled for other matters.
This proposal is relevant because the annual say on executive pay vote does not have submitteda separate section for approving or rejecting golden parachutes.
The topic of this Reportproposal received between 51% and 65% support at:
FedEx
Spirit AeroSystems
Alaska Air
Fiserv
Please vote yes:
Shareholder Opportunity to Vote on Excessive Golden Parachutes - Proposal 6
Board Response and Recommendation
Your Board reviewed this proposal and recommends a vote AGAINST it for the following reasons:
•HP already has a longstanding severance policy to seek stockholder approval for employment or severance agreements that provide for termination benefits for senior executives that exceed 2.99 times the sum of the executive’s base salary and bonus.
•HP’s existing severance plan limits cash severance to 2 times base salary and bonus for the CEO, and to 1.5 times base salary and bonus for other executive officers, which is well below the limit in the proposal.
•Including in the “estimated total value” the value of all equity that vests upon termination regardless of the circumstances is overly broad, not consistent with market practice, and would place HP at a significant disadvantage in terms of attracting and retaining executive talent.
•Our stockholders already have regular opportunities to provide their views on our executive compensation practices, including termination benefits, in our annual advisory vote on executive compensation and when asked to approve long-term incentive plans and amendments thereto.
HP already has robust policies in place to address the specific concerns set forth in the proposal.
In response to a similar stockholder proposal, HP adopted a severance policy in July 2003 requiring it to seek stockholder approval of any employment or severance agreements with senior executives that provide for termination benefits exceeding 2.99 times the sum of the executive’s current annual base salary plus annual target cash bonus, in each case as in effect immediately prior to the time of such executive’s termination. Individuals subject to this policy consist of the Section 16 officers designated by the Board. For purposes of the policy, termination benefits include, among other things, the value of the accelerated vesting of any equity awards that is inconsistent with company practices. See “Executive Compensation—Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Narrative to the Potential Payments Upon Termination or Change in Control Table—HP Severance Policy for Senior Executives” for additional information regarding the severance policy. Since the severance policy was adopted in 2003, no individual severance package for a senior executive has ever exceeded the limit set forth in the severance policy. We also note that currently none of our executive officers, including our CEO, have employment or severance agreements with the company.
In addition, HP adopted the Severance and Long-Term Incentive Change in Control Plan for Executive Officers (“severance plan”) in February 2020 that applies to Section 16 officers and executive team leadership members who are designated to participate in the severance plan. Under the terms of the severance plan, participants who are involuntarily terminated (i.e., a termination not for cause), and who execute a full and effective release of claims following such termination, are eligible to receive severance benefits in an amount determined as a multiple of base pay, plus the average of either the actual annual incentives paid for the preceding three years or target bonus if the executive has received less than three full fiscal year annual cash bonuses at his or her seniority level as of immediately prior to such termination. In the case of officers other than the CEO, the multiplier is 1.5. In the case of the CEO, the multiplier is 2.0. See “Executive Compensation—Compensation Discussion and Analysis—Termination and Change in Control Protections—Severance and Long-Term Incentive Change in Control Plan for Executive Officers” for additional information regarding the severance plan.
The Board believes that the existing severance policy and plan address the issues raised in the proposal and provide stockholders with a voice in limiting excessive severance packages.
The proposal is overly broad in seeking to include the value of
Directors.AUDIT COMMITTEE
Mary Anne Citrino, Chair
Robert R. Bennett
Stacy Brown-Philpot
Stephanie A. Burns
Subra Suresh
all equity awards that vest upon termination when determining whether the severance payments exceed the applicable cap and would put HP at a competitive disadvantage in attracting and retaining executive talent. QUESTIONS AND ANSWERS
The proposal suggests a cap that covers not only cash severance but also the value of all equity awards that vest upon termination, which is inconsistent with current market practice. As noted above, in accordance with HP’s current severance policy, the value of vested equity will be included in determining whether the 2.99x cap has been exceeded if the vesting is inconsistent with the company’s practices. Under HP’s severance plan, if an executive’s employment is terminated without cause, he or she will be entitled to pro rata vesting (and any performance-based equity vests based on actual performance). In connection with a change in control, the vesting of outstanding equity will be accelerated only if the awards are not assumed by the surviving company (a “modified double trigger”) or the executive terminates for good reason or without cause (a “double trigger”). Further, the HP Inc. 2004 Stock Incentive Plan, as amended and restated, which was approved by our stockholders with 91.5% of the vote at our 2022 annual meeting of stockholders, specifically provides for the accelerated vesting of equity in a change in control as outlined above.Consistent with our pay-for-performance philosophy, a significant portion of our executive officers’ compensation is in the form of performance-based equity awards. Equity awards are granted and accepted with the expectation that the executives will be given a fair opportunity to realize the full value of these awards. Our severance policy and plan are carefully tailored to support our overall compensation philosophy and align executive and stockholder interests. We believe this approach is essential to remain competitive in attracting and retaining top-tier executives. If the proposal were implemented, we believe it could have an adverse impact on our ability to attract and retain executive talent, as it would put us at a competitive disadvantage against other companies who do not face similar restrictions or uncertainty regarding their ability to offer termination protection for equity awards. Further, the uncertainty regarding treatment of outstanding equity awards in the event of a change-in-control transaction could disincentivize our management employees from exploring and implementing such transactions that could otherwise benefit our stockholders.
| | | | | |
Proxy Materials
2024 PROXY STATEMENT | 95 |
| 1. | | | | |
| Stockholder Proposal | | Why am I receiving these materials?
| |
HP engages regularly with stockholders who have the opportunity to express their views on HP’s executive compensation programs.
HP is committed to maintaining an open and constructive dialogue with stockholders. We conduct annual outreach through various channels, including one-on-one and group meetings, written communications, earnings calls, industry presentations, and company-hosted events. HP has a strong track record of stockholder support for our executive compensation practices, with over 95% approval at the 2023 annual meeting, marking the 9th consecutive year of "Say-on-Pay" approval with an average of over 92% over that time period.
Additionally, as described above, our stockholders strongly supported our 2004 Stock Incentive Plan, as amended and restated, at our 2022 annual meeting of stockholders, which expressly provides for accelerated vesting of equity awards upon certain circumstances.
For all the above reasons, the Board believes that this proposal is not in the best interest of our stockholders and recommends a vote AGAINST this proposal.
Vote Required
Approval of this stockholder proposal requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to vote on the proposal at the annual meeting.
Other matters
Questions and Answers
Proxy Materials
1.Why am I receiving these materials?
We have made these materials available to you or delivered paper copies to you by mail in connection with our annual meeting,
of stockholders, which will take place online on Monday, April
4, 2016.22, 2024. As a stockholder, you are invited to participate in the annual meeting via live
audio webcast and vote on the business items described in this proxy statement. This proxy statement includes information that we are required to provide to you under
U.S. Securities and Exchange Commission (the “SEC”)the SEC rules and that is designed to assist you in voting your shares.
The information in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, the Board and its committees, the compensation of our Directors and certain executive officers for fiscal 2023 and other required information. See Questions
1716 and
1817 below for information regarding how you can vote your shares at the annual meeting or by proxy (without attending the annual meeting).
2. | What is included in the proxy materials? |
2.What is included in the proxy materials?
The proxy materials include:
•our proxy statement for the 2024 annual meeting of stockholders;meeting; and
our 2015 Annual Report, which includes •our Annual Report on Form 10-K for the fiscal year ended October 31, 2015.2023.
If you received a paper copy of these materials by mail, the proxy materials also include a proxy card or a voting instruction card for the annual meeting. If you received a notice of the Internet availability of the proxy materials instead of a paper copy of the proxy materials, see Questions
1716 and
1817 below for information regarding how you can vote your shares.
3. | What information is contained in this proxy statement? |
The information
3.Why did I receive a notice in thisthe mail regarding the Internet availability of the proxy statement relates tomaterials instead of a paper copy of the proposals to be voted on at the annual meeting, the voting process, the Board and Board committees, the compensationfull set of our directors and certain executive officers for fiscal 2015 and other required information.4. | Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the full set of proxy materials? |
proxy materials?
This year, we
will again beare using the SEC rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to many of our stockholders a notice of the Internet availability of the proxy materials instead of a paper copy of the proxy materials. All stockholders receiving the notice will have the ability to access the proxy materials over the Internet and request to receive a paper copy of the proxy materials by
mail.mail, should they so desire. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the notice of the Internet availability of the proxy materials. In addition, the notice contains instructions on how you may request access to proxy materials in printed form by mail or electronically on an ongoing basis.
5. | Why didn’t I receive a notice in the mail about the Internet availability of the proxy materials? |
4.Why didn’t I receive a notice in the mail about the Internet availability of the proxy materials?
We are providing some of our stockholders, including stockholders who have previously requested to receive paper copies of the proxy materials and some of our stockholders who are living outside of the
United States,U.S., with paper copies of the proxy materials instead of a notice of the Internet availability of the proxy materials.
In addition, we are providing proxy materials or notice of the Internet availability of the proxy materials by e-mail to those stockholders who have previously elected delivery of the proxy materials or notice electronically. Those stockholders should receive an e-mail containing a link to the website where those materials are available and a link to the proxy voting website.
6. | How can I access the proxy materials over the Internet? |
5.How can I access the proxy materials over the Internet?
Your notice of the Internet availability of the proxy materials, proxy card, or voting instruction card will contain instructions on how to:
•view our proxy materials for the annual meeting on the Internet; and
•instruct us to send our future proxy materials to you electronically by e-mail.
Our proxy materials are
also available
on our website at
HP.onlineshareholdermeeting.com and our proxy materials will be www.proxyvote.com/HP. Please have your 16-digit control number available
during the voting period onwww.proxyvote.com.to access them.
Your notice of the Internet availability of the proxy materials, proxy card, or voting instruction card will contain instructions on how you may request access to proxy materials electronically on an ongoing basis. Choosing to access your future proxy materials electronically will help us conserve natural resources and reduce the costs of distributing our proxy materials. If you choose to access future proxy materials electronically, you will receive an e-mail with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to access proxy materials by e-mail will remain in effect until you terminate it.
| 7. | | | | |
| 2024 PROXY STATEMENT | How may I obtain a paper copy of the proxy materials?97 |
6.How may I obtain a paper copy of the proxy materials?
Stockholders receiving a notice of the Internet availability of the proxy materials will find instructions about how to obtain a paper copy of the proxy materials on their notice. Stockholders receiving notice of the Internet availability of the proxy materials by e-mail will find instructions about how to obtain a paper copy of the proxy materials as part of that e-mail. All stockholders who do not receive a notice or an e-mail will receive a paper copy of the proxy materials by mail.
8. | I share an address with another stockholder, and we received only one paper copy of the proxy materials or notice of the Internet availability of the proxy materials. How may I obtain an additional copy? |
7.I share an address with another stockholder, and we received only one paper copy of the proxy materials or notice of the Internet availability of the proxy materials. How may I obtain an additional copy?
If you share an address with another stockholder, you may receive only one paper copy of the proxy materials or notice of the Internet availability of the proxy materials, as applicable, unless you have provided contrary instructions. If you
are a beneficial owner and wish to receive a separate set of proxy materials or notice of the Internet availability of the proxy materials now, please request the additional copy by contacting your individual broker. If you wish to receive a separate set of the proxy materials or notice of the Internet availability of the proxy materials now, please request the additional copy by contacting Broadridge Financial Solutions, Inc. (“Broadridge”) at:
By Internet:www.proxyvote.comwww.proxyvote.com/HP
By telephone: 1-800-579-1639
By e-mail:sendmaterial@proxyvote.com
If you request a separate set of the proxy materials or notice of Internet availability of the proxy materials by e-mail, please be sure to include your control number in the subject line. A separate set of proxy materials or notice of the Internet availability of the proxy materials, as applicable, will be sent promptly following receipt of your request.
If you are a beneficial owner and wish to receive a separate set of proxy materials or notice of the Internet availability of the proxy materials now, please request the additional copy by contacting your individual broker.If you are a stockholder of record and wish to receive a separate set of proxy materials or notice of the Internet availability of the proxy materials, as applicable, in the future, please contact our transfer agent. See Question 2221 below.
If you are the beneficial owner of shares held through a broker, trustee, or other nominee and you wish to receive a separate set of proxy materials or notice of the Internet availability of the proxy materials, as applicable, in the future, please call Broadridge at:
All stockholders also may write to HP at the address below to request a separate set of proxy materials or notice of the Internet availability of the proxy materials, as
applicable:NASDAQ
Printapplicable, and Distribution Services
325 Donald Lynch Blvd, Suite 120
Marlborough, MA 01752-4724
9. | I share an address with another stockholder, and we received more than one paper copy of the proxy materials or notice of the Internet availability of the proxy materials. How do we obtain a single copy in the future? |
materials will be delivered promptly upon receiving your request:
HP Inc.
Investor Relations
1501 Page Mill Road
Palo Alto, CA 94304
8.I share an address with another stockholder, and we received more than one paper copy of the proxy materials or notice of the Internet availability of the proxy materials. How do we obtain a single copy in the future?
Stockholders of record sharing an address who are receiving multiple copies of the proxy materials or notice of the Internet availability of the proxy materials, as applicable, and who wish to receive a single copy of such materials in the future may contact our transfer agent. See Question
2221 below.
Beneficial owners of shares held through a broker, trustee, or other nominee sharing an address who are receiving multiple copies of the proxy materials or notice of the Internet availability of the proxy materials, as applicable, and who wish to receive a single copy of such materials in the future may contact Broadridge at:
1-866-540-7095
10. | What should I do if I receive more than one notice or e-mail about the Internet availability of the proxy materials or more than one paper copy of the proxy materials? |
9.What should I do if I receive more than one notice or e-mail about the Internet availability of the proxy materials or more than one paper copy of the proxy materials?
You may receive more than one notice, more than one e-mail, or more than one paper copy of the proxy materials, including multiple paper copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate notice, a separate e-mail, or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must
either vote by Internet or by telephone, or complete, sign, date, and return each proxy card and voting instruction card that you receive
andand/or vote over the Internet the shares represented by each notice and e-mail that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those notices or e-mails).
| 11. | | | | |
| 98 | How may I obtain a copy of HP’s 2015 Form 10-K and other financial information? |
10. How may I obtain a copy of HP’s 2023 Form 10-K and other financial information?
Stockholders may request a free copy of our
2015combined 2023 Annual Report
and 2024 Proxy Statement, which includes our
20152023 Form 10-K
from:NASDAQ
Print and Distribution Services
325 Donald Lynch Blvd, Suite 120
Marlborough, MA 01752-4724
www.hp.com/investor/informationrequest
Alternatively, stockholders can access the 2015 Annual Reportfinancial statements and the financial statement schedules for the last completed fiscal year, from:
HP Inc.
Investor Relations
1501 Page Mill Road
Palo Alto, CA 94304
investorrelations@hp.com
All of HP’s filings, including the 2023 Form 10-K are also available on HP’s Investor Relations
website at:www.hp.com/investor/home
site:
https://investor.hp.com
We also will furnish any exhibit to the
20152023 Form 10-K if specifically requested.
Voting Information
11.What proposals will be voted on at the meeting? How does the Board recommend that I vote and what is the voting requirement for each of the proposals? What effect will abstentions and broker non-votes have?
| | | | | | | | | | | | | | |
| Proposals | Board
Recommendation | Votes Required | Effect of
Abstentions | Effect of Broker
Non-Votes |
Voting Information
|
12. | What proposals will be voted at the meeting? How does the Board recommend that I vote and what is the voting requirement for each of the proposals? |
| | | | | | | | |
Proposals
| | Board
Recommendation
| | Votes Required
| | Effect of
Abstentions
| | Effect of
Broker Non-Votes
|
Election of Directors | | FOR EACH
NOMINEE
| | Majority of votes cast | None | None | | NoneNo effect |
Ratification of Independent Registered
Public Accounting Firm | FOR | FOR | | Majority of the shares present, in person or represented by proxy, and entitled to vote on the proposal | | Same as
“AGAINST”
| | NoN/A (No Broker Non-Votes (Routine (Expected to be Routine Matter)) |
Advisory Vote to Approve Executive
Compensation (“Say on Pay” Vote) | FOR | FOR | | Majority of the shares present, in person or represented by proxy, and entitled to vote | on the proposal | Same as “AGAINST”
“AGAINST” | | NoneNo effect |
Approval of the Fourth Amended and Restated HP Inc. 2004 Stock Incentive Plan | FOR | Majority of the shares present, in person or represented by proxy, and entitled to vote on the proposal | Same as
“AGAINST” | No effect |
Approval of Amendment to Certificate of Incorporation to Eliminate Cumulative Votinglimit the liability of officers as permitted by law | | FOR | | Majority of the outstanding shares entitled to vote | Same as
“AGAINST” | Same as “AGAINST”
“AGAINST” |
| Stockholder Proposal: Stockholder Ratification of Termination Pay | AGAINST | Majority of the shares present, in person or represented by proxy, and entitled to vote on the proposal | Same as “AGAINST”
“AGAINST” | No effect |
We also will consider any other business that properly comes before the annual meeting. See Question
2928 below.
13. | 12.What are broker non-votes? |
If you are the beneficial owner of shares held in the name ofbroker non-votes?
A broker non-vote occurs with respect to a proposal when a broker, trustee, or other nominee
and do not provide that broker, trusteehas discretionary authority to vote on one or
other nominee with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occurmore proposals to be voted on
at a
matter when a brokermeeting of stockholders but is not permitted to vote on
that matterother proposals without instructions from the beneficial
owner and instructions are not given.owner. Under the rules of the
New York Stock Exchange,NYSE, brokers, trustees, or other nominees may generally vote on routine matters
without instructions from a beneficial owner but cannot vote on non-routine matters.
Only Proposal No. 2 (ratifying the appointment of the independent registered public accounting firm) is considered a routine matter. The other proposals are not considered routine matters, and without your instructions, your broker cannot vote your shares. In tabulating the voting results for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal, but are considered “outstanding” for purposes of Proposal No.
4.5.
Note that whether a proposal is considered routine or non-routine is subject to NYSE rules and final determination by the stock exchange. Even with respect to routine matters, some brokers are choosing not to exercise discretionary voting authority. As a result, we urge you to direct your broker, trustee or other nominee how to vote your shares on all proposals to ensure that your vote is counted.
If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you vote by proxy card
or voting instruction card and sign the
proxy card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (FOR all of our nominees to the Board, FOR ratification of the appointment of our independent registered public accounting firm, FOR the approval of the compensation of our named executive officers
(“say on pay” vote), FOR the approval of the Fourth Amended and
Restated HP Inc. 2004 Stock Incentive Plan, FOR the approval of the amendment to the Certificate of Incorporation to
eliminate cumulative voting)limit the liability of officers as permitted by law, and AGAINST the stockholder proposal regarding stockholder ratification of termination pay).
For any shares you hold in the HP 401(k) Plan, if your voting instructions are not received by 11:59 p.m., Eastern Time, on
March 30, 2016,April 17, 2024, your shares will be voted in proportion to the way the shares held by the other HP 401(k) Plan participants are voted, except as may be otherwise required by law.
14. | Is cumulative voting permitted for the election of directors? |
Currently, in
Broker non-votes differ from abstentions. For the electioneffect of directors, you may choose to cumulate your vote. Cumulative voting applies only toabstentions on the election of directors and allows you to allocate among the director nominees, as you see fit, the total number of votes equal to the number of director positions to be filled multiplied by the number of shares you hold. For example, if you own 100 shares of stock and there are 13 directors to be elected at the annual meeting, you may allocate 1,300 “FOR” votes (13 times 100) among as few or as many of the 13 nomineesmatters to be voted on at the annual meeting, asplease refer to Question 11 above.
13.Is cumulative voting permitted for the election of Directors?
No, you
choose. You may not cumulate your votes
against a nominee. Note that at thisin the election of Directors. At the 2016 annual meeting,
we are seeking your approval of theour stockholders approved an amendment to the Certificate of Incorporation
to eliminateeliminating cumulative voting.
For details, see “Proposal No. 4—Approval of AmendmentTherefore, cumulative voting is no longer available to
Certificate of Incorporation to Eliminate Cumulative Voting.”If you areour stockholders.
14.What is the difference between holding shares as a stockholder of record and choose to cumulate your votes, you will need to submitas a proxy card and make an explicit statement of your intent to cumulate your votes by so indicating in writing on the proxy card. If you hold shares beneficially through a broker, trustee or other nominee and wish to cumulate votes, you should contact your broker, trustee or nominee. You will not be able to cumulate your votes if you vote electronically during the annual meeting; thus, if you wish to cumulate your votes, you should vote prior to the annual meeting.If you vote by proxy card or voting instruction card and sign your card with no further instructions, Dion J. Weisler, Catherine A. Lesjak and Kim M. Rivera, as proxy holders, may cumulate and cast your votes in favor of the election of some or all of the applicable nominees in their sole discretion, except that none of your votes will be cast for any nominee as to whom you vote against or abstain from voting.
15. | What is the difference between holding shares as a stockholder of record and as a beneficial owner? |
Most of our stockholders hold their shares through a broker, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
beneficial owner? •Stockholder of Record—Record—If your shares are registered directly in your name with our transfer agent, you are considered, with respect to those shares, the “stockholder of record.” As the stockholder of record, you have the right to grant your voting proxy directly to HP or to a third party, or to vote your shares during the annual meeting.
•Beneficial Owner—Owner—If your shares are held in a brokerage account, by a trustee, or by another nominee (that is, in “street name”), you are considered the “beneficial owner” of those shares. As the beneficial owner of those shares, you have the right to direct your broker, trustee, or nominee how to vote, or to vote your shares during the annual meeting (other than shares held in the HP’sHP 401(k) Plan, (the “HP 401(k) Plan”), which must be voted prior to the annual meeting).
16. | Who is entitled to vote and how many shares can I vote? |
Most of our stockholders hold their shares through a broker, trustee, or other nominee rather than directly in their own name.
15.Who is entitled to vote and how many shares can I vote?
Each holder of shares of HP common stock issued and outstanding as of the close of business on February
5, 2016,22, 2024, the record date for the annual meeting, is entitled to cast one vote per share on all items being voted upon at the annual meeting. You may vote all shares owned by you as of this time, including (1) shares held directly in your name as the stockholder of record, including shares purchased
through our dividend reinvestment program and employee stock purchase plans, and shares held through our Direct Registration Service; and (2) shares held for you as the beneficial owner through a broker, trustee, or other nominee.
On the record date, HP had approximately
1,726,657,616 shares of common stock issued and outstanding.
17. | How can I vote my shares during the annual meeting? |
16.How can I vote my shares during the annual meeting?
This year’s annual meeting will be held entirely online to allow greater participation. Stockholders may participate in the annual meeting by visiting the following website:
HP.onlineshareholdermeeting.com
www.virtualshareholdermeeting.com/HPQ2024
To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials.
If you have any questions about your control number, please contact the bank, broker or other nominee that holds your shares. Shares held in your name as the stockholder of record may be voted electronically during the annual meeting. Shares for which you are the beneficial owner but not the stockholder of record may also may be voted electronically during the annual meeting, exceptmeeting.
Please note that shares held in the HP 401(k) Plan cannot be voted electronically during the annual meeting. If you hold shares in the HP 401(k) Plan, your voting instructions must be received by 11:59 p.m., Eastern Time, on
March 30, 2016April 17, 2024 for the trustee to vote your shares. However, holders of shares in the HP 401(k) Plan will still be able to view the annual meeting webcast and ask questions during the annual meeting.
Note that you will not be able to cumulate your votes if you vote electronically during the annual meeting; thus, if you wish to cumulate your votes, you should vote prior to the annual meeting. See Question 14 above for additional information on cumulative voting.
Even if you plan to participate in the annual meeting online, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to participate in the annual meeting.
| 18. | | | | |
| 100 | How can I vote my shares without participating in the annual meeting? |
17.How can I vote my shares without participating in the annual meeting?
Whether you hold shares directly as the stockholder of record or through a broker, trustee, or other nominee as the beneficial owner, you may direct how your shares are voted without participating in the annual meeting. There are three ways to vote by proxy:
| | |
| | VIA THE INTERNET
Stockholders who have received a notice of the Internet availability of the proxy materials by
mail may submit proxies over the Internet by following the instructions on the notice.
Stockholders who have received notice of the Internet availability of the proxy materials by
e-mail may submit proxies over the Internet by following the instructions included in the
e-mail. Stockholders who have received a paper copy of a proxy card or voting instruction
card by mail may submit proxies over the Internet by following the instructions on the proxy
card or voting instruction card.
|
| | BY TELEPHONE
Stockholders of record who live in the United States or Canada may submit proxies by telephone by calling 1-800-690-6903 and following the instructions. Stockholders of record who have received a notice of the Internet availability of the proxy materials by mail must have the control number that appears on their notice available when voting. Stockholders of record who received notice of the Internet availability of the proxy materials by e-mail must
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| | have the control number included in the e-mail available when voting. Stockholders of record who have received a proxy card by mail must have the control number that appears on their proxy card available when voting. Most stockholders who are beneficial owners of their shares living in the United States or Canada and who have received a voting instruction card by mail may vote by phone by calling the number specified on the voting instruction card provided by their broker, trustee or nominee. Those stockholders should check the voting instruction card for telephone voting availability.
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| | BY MAIL
Stockholders who have received a paper copy of a proxy card or voting instruction card by mail may submit proxies by completing, signing and dating their proxy card or voting instruction card and mailing it in the accompanying pre-addressed envelope.
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19. | What is the deadline for voting my shares? |
•VIA THE INTERNET: Stockholders who have received a notice of the Internet availability of the proxy materials by mail may submit proxies over the Internet by following the instructions on the notice. Stockholders who have received notice of the Internet availability of the proxy materials by e-mail may submit proxies over the Internet by following the instructions included in the e-mail. Stockholders who have received a paper copy of a proxy card or voting instruction card by mail may submit proxies over the Internet by following the instructions on the proxy card or voting instruction card.
•VIA TELEPHONE: Stockholders of record who live in the U.S. or Canada may submit proxies by telephone by calling 1-800-690-6903 and following the instructions. Stockholders of record who have received a notice of the Internet availability of the proxy materials by mail must have the control number that appears on their notice available when voting. Stockholders of record who received notice of the Internet availability of the proxy materials by e-mail must have the control number included in the e-mail available when voting. Stockholders of record who have received a proxy card by mail must have the control number that appears on their proxy card available when voting. Most stockholders who are beneficial owners of their shares living in the U.S. or Canada and who have received a voting instruction card by mail may vote by phone by calling the number specified on the voting instruction card provided by their broker, trustee, or nominee. Those stockholders should check the voting instruction card for telephone voting availability.
•VIA MAIL: Stockholders who have received a paper copy of a proxy card or voting instruction card by mail may submit proxies by completing, signing and dating their proxy card or voting instruction card and mailing it in the accompanying pre-addressed envelope.
18.What is the deadline for voting my shares?
If you hold shares as the stockholder of record or
through HP’s 2011 Employee Stock Purchase Plan (the “ESPP”),as a beneficial owner, your vote by proxy must be received before the polls close during the annual meeting.
If you hold shares in the HP 401(k) Plan, your voting instructions must be received by 11:59 p.m., Eastern Time, on
March 30, 2016April 17, 2024 for the trustee to vote your shares.
If you are the beneficial owner of shares held through a broker, trustee, or other nominee (including any shares held as a result of your participation in the 2021 ESPP or the Legacy ESPP, please follow the voting instructions provided by your broker, trustee or nominee.
20. | May I change my vote or revoke my proxy? |
The deadline to provide voting instructions for shares you hold as a beneficial owner may be earlier than the deadline provided above.
19.May I change my vote or revoke my proxy?
You may change your vote or revoke your proxy at any time prior to the vote during the annual meeting, except that any change to your voting instructions for shares held in the HP 401(k) Plan must be provided by 11:59 p.m., Eastern Time, on
March 30, 2016April 17, 2024 as described above.
If you are the stockholder of record, you may change your vote by: (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy); (2) providing a written notice of revocation to the Corporate Secretary at the address below in Question 3332 prior to your shares being voted; or (3) participating in the annual meeting and voting your shares electronically during the annual meeting. Participation in the annual meeting will not cause your previously granted proxy to be revoked unless you specifically make that request. For sharesIf you hold beneficially in the name ofare a broker, trustee or other nominee,beneficial owner you may change your vote by submitting new voting instructions to your broker, trustee, or nominee, or by participating in the meeting and electronically voting your shares during the meeting (except that shares held in the HP 401(k) Plan cannot be voted electronically at the annual meeting).21. | Is my vote confidential? |
20.Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed, either within HP or to third parties, except: (1) as necessary to meet applicable legal requirements; (2) to allow for the tabulation of votes and certification of the votes; and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide on their proxy card written comments, which are then forwarded to management.
22. | What if I have questions for our transfer agent? |
21.What if I have questions for our transfer agent?
Please contact our transfer agent, at the phone number or address listed below, with questions concerning stock certificates, dividend checks, transfer of ownership, or other matters pertaining to your stock account.
Wells Fargo Bank, N.A.
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
1-800-286-5977 (U.S. and Canada)
1-651-453-2122
1-651-450-4064 (International)
A dividend reinvestment and stock purchase program is also available through our transfer agent. For information about this program, please contact our
EQ Shareowner Services transfer agent as follows:
Wells Fargo Bank, N.A.
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
1-800-286-5977 (U.S. and Canada)
1-651-453-2122
1-651-450-4064 (International)
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Annual Meeting Information
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23. | How can I attend the annual meeting? |
22.How can I attend the annual meeting?
This year’s annual meeting will be a completely virtual meeting of stockholders, which will be conducted
via livethrough an audio webcast. You are entitled to participate in the annual meeting only if you were an HP stockholder or joint holder as of the close of business on February
5, 201622, 2024 or if you hold a valid proxy for the annual meeting.
You will be able to attend the annual meeting
of stockholders online and submit your questions
before and during the meeting by visiting
HP.onlineshareholdermeeting.com. www.virtualshareholdermeeting.com/HPQ2024. You also will be able to vote your shares electronically at the annual meeting (other than shares held through the HP 401(k) Plan, which must be voted prior to the meeting).
To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials.
If you have any questions about your control number, please contact the bank, broker, or other nominee that holds your shares.
The meeting webcast will begin promptly at 2:00 p.m., Pacific Time. We encourage you to access the meeting prior to the start time. Online check-inaccess to the meeting will beginopen at 1:30 p.m., Pacific Time, and you should allow ample time to log in to the meeting webcast and test your computer audio system.
Information as to how to obtain the list of stockholders entitled to vote at the annual meeting will be available during the ten days preceding the annual meeting at the website for the
check-in procedures.24. | What is the pre-meeting forum and how can I access it? |
annual meeting: www.virtualshareholdermeeting.com/HPQ2024.
23.What is the pre-meeting forum and how can I access it?
The
new online format for the annual meeting
will allowallows us to communicate more effectively with
you via ayou. Our pre-meeting forum,
that you can enter by visitingwww.theinvestornetwork.com/forum/hpq.On our pre-meeting forum,where you can submit questions in advance of the annual meeting, and also access copies ofcan be entered by visiting www.proxyvote.com/HP. We respond to all stockholder submissions received through the forum in writing on our proxy statement and annual report.
investor relations website.25. | Why a virtual meeting? |
We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and the company. 24.Why a virtual meeting?
Hosting a virtual meeting
will enableenables increased stockholder attendance and participation since stockholders can participate from any location around the world.
You will be able to attend the annual meeting of stockholders online and submit your questions during the meeting by visitingHP.onlineshareholdermeeting.com. www.virtualshareholdermeeting.com/HPQ2024. You also will be able to vote your shares electronically at the annual meeting (other than shares held through the HP 401(k) Plan, which must be voted prior to the meeting).
26. | What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website? |
25.What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call:
1-855-449-0991 (Toll-free)
1-720-378-5962 (Toll line)
27. | How many shares must be present or represented to conduct business at the annual meeting? |
26.How many shares must be present or represented to conduct business at the annual meeting?
The quorum requirement for holding the annual meeting and transacting business is that holders of a majority of shares of HP common stock entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes described previously in Question
1312 above are counted for the purpose of determining the presence of a quorum.
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| 102 | What if a quorum is not present at the annual meeting? |
27.What constitutes a quorum for the annual meeting, and what happens if a quorum is not present at the annual meeting?
A quorum for the annual meeting is established if the holders of a majority in voting power of our stock issued and outstanding and entitled to vote at the annual meeting are present in person or by proxy. If a quorum is not present at the scheduled time of the annual meeting, then either the
chairmanchair of the annual meeting or the stockholders by vote of the holders of a majority of the stock present in person or represented by proxy at the annual meeting are authorized by our Bylaws to adjourn the annual meeting until a quorum is present or represented.
29. | What happens if additional matters are presented at the annual meeting? |
28.What happens if additional matters are presented at the annual meeting?
Other than the
foursix items of business described in this proxy statement, we are not aware of any other business to be acted upon at the annual meeting. If you grant a proxy, the persons named as proxy holders,
Dion J. Weisler, Catherine A. LesjakEnrique Lores, Julie Jacobs and
Kim M. Rivera,Rick Hansen, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.
IfIn the event that any nominee should become unavailable, the proxy holders, Enrique Lores, Julie Jacobs and Rick Hansen, will vote for
any reason anya substitute nominee or nominees designated by the Board, unless the Board decides to decrease the size of the
Board. If any substitute nominees
are so designated, we will file an amended proxy statement or additional soliciting material that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in
thisthe amended proxy statement
is not availableor additional soliciting material and to serve as
a candidate for director, the persons named as proxy holders will vote your proxy fordirectors if elected, and includes certain biographical and other information about such
other candidate or candidates as may be nominatednominees required by the
Board.30. | Who will serve as inspector of elections? |
applicable SEC rules.
29.Who will serve as inspector of elections?
The inspector of elections will be a representative from an independent firm, Broadridge.
31. | Where can I find the voting results of the annual meeting? |
30.Where can I find the voting results of the annual meeting?
We intend to announce preliminary voting results at the annual meeting and publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days of the annual meeting.
32. | Who will bear the cost of soliciting votes for the annual meeting? |
31.Who will bear the cost for the solicitation of proxies by HP?
HP is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing, and distributing the notices and these proxy materials and soliciting votes. In addition to the
mailing of the notices and these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or by electronic communication by certain of our directors,Directors, officers, and employees, who will not receive any additional compensation for such solicitation activities.
We
also have hired
Innisfree M&A IncorporatedAlliance Advisors LLC (“
Innisfree”Alliance”) to assist us in the solicitation of votes described above. We will pay
InnisfreeAlliance a base fee of
$20,000$59,000 plus customary costs and expenses for these services. We have agreed to indemnify
InnisfreeAlliance against certain liabilities arising out of or in connection with these services. We also will reimburse brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy and solicitation materials to stockholders.
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Stockholder Proposals, Director Nominations and Related Bylaw Provisions
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33. | What is the deadline to propose actions (other than director nominations) for consideration at next year’s annual meeting of stockholders? |
32.What is the deadline to propose actions (other than Director nominations) for consideration at next year’s annual meeting?
You may submit proposals for consideration at future
stockholderannual meetings. For a stockholder proposal to be considered for inclusion in our proxy statement for the annual meeting next year, the Corporate Secretary must receive the written proposal at our principal executive offices no later than October
, 2016.26, 2024. Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in
company-sponsoredCompany-sponsored proxy materials. Proposals should be addressed
to:to our Corporate Secretary
at HP Inc.
, 1501 Page Mill Road,
Palo Alto, California 94304
Fax: 650-275-9138
94304.
For a stockholder proposal that is not intended to be included in our proxy statement for next year’s annual meeting under Rule 14a-8, the stockholder must provide the information required by our Bylaws and give timely notice to the Corporate Secretary in accordance with our Bylaws, which, in general, require that the notice be received by the Corporate Secretary:
•not earlier than the close of business on December 5, 2016;23, 2024; and
•not later than the close of business on January 4, 2017.22, 2025.
If the date of the
stockholderannual meeting is moved more than 30 days before or 60 days after the anniversary of our annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in our proxy statement under Rule 14a-8 must be received no earlier than the close of business 120 days prior to the meeting and not later than the close of business on the later of the following two dates:
•90 days prior to the meeting; and
•10 days after public announcement of the meeting date.
Deadlines for the nomination of
directorDirector candidates are discussed in Question
3534 below.
34. | How may I recommend individuals to serve as directors and what is the deadline for a director recommendation? |
33.How may I recommend individuals to serve as Directors and what is the deadline for a Director recommendation?
You may recommend
directorDirector candidates for consideration by the NGSR Committee. Any such recommendations should include verification of the stockholder status of the person submitting the
recommendation and the nominee’s name and qualifications for Board membership and should be directed to the Corporate Secretary at the address of our principal executive offices set forth in Question 33 above.HP Inc., 1501 Page Mill Road, Palo Alto, California 94304. See “Proposal No. 1—Election of Directors—Director Nominees“Identifying and Director Nominees’ Experience and Qualifications”Evaluating Candidates for Directors” above for more information regarding our Board membership criteria.
A stockholder may send a recommended
directorDirector candidate’s name and information to the Board at any time. Generally, such proposed candidates are considered at the first or second Board meeting prior to the issuance of the proxy statement for our annual meeting.
35. | How may I nominate individuals to serve as directors and what are the deadlines for a director nomination? |
34.How may I nominate individuals to serve as Directors and what are the deadlines for a Director nomination?
Our Bylaws permit stockholders to nominate
directorsDirectors for consideration at an annual meeting. To nominate a
directorDirector for consideration at an annual meeting, a nominating stockholder must provide the information required by our Bylaws and give timely notice of the nomination to the Corporate Secretary in accordance with our Bylaws, and each nominee must meet the qualifications required by our Bylaws. To nominate a
directorDirector for consideration at next year’s annual meeting
(but not for inclusion in
generalour annual proxy statement), the notice must be received by the Corporate Secretary
at HP Inc., 1501 Page Mill Road, Palo Alto, California 94304, between the close of business on December
5, 201623, 2024 and the close of business on January
4, 2017,22, 2025, unless the annual meeting is moved by more than 30 days before or 60 days after the anniversary of the prior year’s annual meeting, in which case the deadline will be as described in Question
3332 above.
In addition, our Bylaws provide that under certain circumstances, a stockholder or group of stockholders may
seek to include
directorDirector candidates that they have nominated in our annual meeting proxy statement. These proxy access provisions of our Bylaws provide, among other things, that a stockholder or group of up to
twenty20 stockholders seeking to include
directorDirector candidates in our annual meeting proxy statement must own 3% or more of HP’s outstanding common stock continuously for at least the previous three years. The number of stockholder-nominated candidates appearing in any annual meeting proxy statement cannot exceed 20% of the number of
directors then servingDirectors in office as of the last day on
the Board.which a request to include a stockholder-nominated candidate may be delivered in accordance with our Bylaws. If 20% is not a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 20%.
Based on the current Board size of 12 directors, the maximum number of proxy access candidates that we would be required to include in our proxy materials for an annual meeting is two. Nominees submitted under the proxy access procedures that are later withdrawn or are included in the proxy materials as Board-nominated candidates will be counted in determining whether the 20% maximum has been reached. If the number of stockholder-nominated candidates exceeds 20%, each nominating stockholder or group of stockholders may select one nominee for inclusion in our proxy materials until the maximum number is reached. The order of selection would be determined by the amount (largest to smallest) of shares of HP common stock held by each nominating stockholder or group of stockholders. The nominating stockholder or group of stockholders also must deliver the information required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws. Requests to include stockholder-nominated candidates in our proxy materials for next year’s annual meeting must be received by the Corporate
Secretary:Secretary at HP Inc., 1501 Page Mill Road, Palo Alto, California 94304:•not earlier than the close of business on December 5, 2016;November 23, 2024; and
•not later than the close of business on January 4, 2017.December 23, 2024.
36. | How may I obtain a copy of the provisions of our Bylaws regarding stockholder proposals and director nominations? |
35.How may I obtain a copy of the provisions of our Bylaws regarding stockholder proposals and Director nominations?
You may contact the Corporate Secretary at our principal executive offices,
HP Inc., 1501 Page Mill Road, Palo Alto, California 94304, for a copy of the relevant Bylaws provisions regarding the requirements for making stockholder proposals and nominating
director Director candidates. Our Bylaws are also are available on our investor relations website athttp: https://h30261.www3.hp.com/governance/certificate-of-incorporation-and-bylaws.aspx.
37. | Who can help answer my questions? |
investor.hp.com.
36.Who can help answer my questions?
If you have any questions about the annual meeting or how to vote or revoke your proxy, you should contact our proxy
solicitor:Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
solicitors:
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Alliance Advisors LLC 200 Broadacres Drive, 3rd Floor Bloomfield, NJ 07003 (855) 796-2123 HPQ@allianceadvisors.com |
Forward-Looking Statements
This proxy statement contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, they could affect the business and results of operations of HP Inc. and its consolidated subsidiaries which may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, any statements regarding the impact of the COVID-19 pandemic; projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges, planned structural cost reductions and productivity initiatives; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our business model and transformation, our sustainability goals, our go-to-market strategy, the execution of restructuring plans and any resulting cost savings (including the fiscal 2023 plan), net revenue or profitability improvements or other financial impacts; any statements concerning the expected development, demand, performance, market share or competitive performance relating to products or services; any statements concerning potential supply constraints, component shortages, manufacturing disruptions or logistics challenges; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims, disputes or other litigation matters; any statements of expectation or belief as to the timing and expected benefits of acquisitions and other business combination and investment transactions (including the acquisition of Plantronics, Inc.); and any statements of assumptions underlying any of the foregoing. Forward-looking statements can also generally be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” and similar terms. Risks, uncertainties and assumptions include the factors discussed in “Risk Factors” in Item 1A of Part I of HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2023 and that are otherwise described or updated from time to time in HP’s other filings with the SEC.
Forward-looking and other statements in this report may also address our corporate sustainability or responsibility progress, plans, and goals (including environmental matters), and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in HP’s filings with the SEC. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
The forward-looking statements in this report are made as of the date of this filing and HP assumes no obligation and does not intend to update these forward-looking statements.
Reconciliation of GAAP Measures to
Non-GAAP Measures
In this proxy statement, HP discloses the following non-GAAP financial measures:
•Non-GAAP operating profit: Non-GAAP operating profit is a non-GAAP measure that is defined as GAAP operating profit, exclusive of amortization of intangible assets, costs related to restructuring and other charges, and acquisition and divestiture charges. Management uses non-GAAP operating profit to evaluate and forecast our performance before gains, losses, or other charges that are considered by management to be outside of our core business segment operating results. We believe that presenting non-GAAP operating profit provides investors with greater visibility with respect to the information used by management in its financial and operational decision making. We further believe that providing this additional non-GAAP information helps investors understand our operating performance and evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. This additional non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP operating profit.
•Non-GAAP free cash flow: Non-GAAP free cash flow is a non-GAAP measure that is defined as net cash provided by operating activities adjusted for net investments in leases and net investments in property, plant and equipment. HP’s management uses non-GAAP free cash flow for the purpose of determining the amount of cash available for investment in HP’s businesses, repurchasing stock and other purposes. HP’s management also uses non-GAAP free cash flow to evaluate HP’s historical and prospective liquidity. This additional non-GAAP information is not intended to be considered in isolation or as a substitute for net cash provided by operating activities.
| | | | | | | | |
| Twelve months ended |
| (in millions) | October 31, 2023 |
| GAAP operating profit | | $ | 3,456 | |
| Non-GAAP adjustments: | | |
| Amortization of intangible assets | | 350 | |
| Restructuring and other charges | | 527 | |
| Acquisition and divestiture charges | | 240 | |
| Non-GAAP operating profit | | $ | 4,573 | |
| | | | | | | | |
| Twelve months ended |
| (in millions) | October 31, 2023 |
| GAAP net cash provided by operating activities | | $ | 3,571 | |
| Non-GAAP adjustments: | | |
| Net investments in property, plant and equipment | | (593) | |
| Net investments in leases | | 110 | |
| Non-GAAP free cash flow | | $ | 3,088 | |
Annex A:
Fourth Amended and Restated HP Inc. 2004 Stock Incentive Plan
1.Purposes of the Plan.
The purpose of this Plan is to encourage ownership in the Company by key personnel whose long-term employment is considered essential to the Company’s continued progress and, thereby, encourage recipients to act in the shareholders’ interest and share in the Company’s success and to provide an opportunity for cash awards to incentivize or reward employees.
2.Definitions.
As used herein, the following definitions shall apply:
a.“Administrator” means the Board, any Committee or such delegates as shall be administering the Plan in accordance with Section 4 of the Plan.
b.“Affiliate” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant ownership interest as determined by the Administrator provided that the entity is one with respect to which Common Stock will qualify as “service recipient stock” under Section 409A of the Code to the extent necessary to exempt an Award from the application of Section 409A of the Code. For the sake of clarity, the term “Affiliate” shall include a Subsidiary.
c.“Annual Equity Retainer” shall mean the amount which a Non-Employee Director will be entitled to receive in the form of equity for serving as a director in a relevant Director Plan Year, but shall not include reimbursement for expenses, fees associated with service on any committee of the Board, any cash compensation (whether or not payable in Shares at the election of the Non-Employee Director), or fees with respect to any other services to be provided to HP or the Board, including but not limited to Board leadership services.
d.“Applicable Laws” means the requirements relating to the administration of equity compensation plans under U.S. federal and state laws, any stock exchange or quotation system on which the Company has listed or submitted for quotation the Common Stock to the extent provided under the terms of the Company’s agreement with such exchange or quotation system and, with respect to Awards subject to the laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such jurisdiction.
e.“Award” means a Cash Award, Stock Award, Stock Appreciation Right, or Option granted in accordance with the terms of the Plan.
f.“Awardee” means an individual who has been granted an Award under the Plan.
g.“Award Agreement” means a Cash Award Agreement, Stock Award Agreement, SAR Agreement and/or Option Agreement, which may be in written or electronic format, in such form and with such terms as may be specified by the Administrator, evidencing the terms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan. An Award Agreement may be in the form of either (i) an agreement to be either executed by both the Awardee and the Company or offered and accepted electronically as the Administrator shall determine or (ii) certificates, notices or similar instruments as approved by the Administrator.
h.“Board” means the Board of Directors of the Company.
i.“Cash Award” means a bonus opportunity awarded under Section 12 pursuant to which a Participant may become entitled to receive an amount based on the satisfaction of such Performance Criteria as are specified in the agreement or other documents evidencing the Award (the “Cash Award Agreement”).
j.“Cause” shall mean, unless otherwise defined in an agreement to which the Participant is a party with the Company or an Affiliate, the occurrence of any of the following: (i) the Participant’s conviction of, or plea of guilty or nolo contendere to, a felony under Applicable Law; (ii) the Participant’s willful and deliberate failure in the performance of the Participant’s duties in any material respect; (iii) the Participant’s willful misconduct that results in material harm to the Company or an Affiliate; or (iv) the Participant’s material violation of the Company’s ethics and compliance program, code of conduct or other material policy of the Company.
k.“Change in Control” means any of the following, unless the Administrator provides otherwise:
i.any merger or consolidation (other than a merger or consolidation in which 50% of the voting power of the voting securities of the surviving entity is controlled by the shareholders of the Company immediately prior to the transaction) in which the Company shall not be the surviving entity (or survives only as a subsidiary of another entity whose shareholders did not own all or substantially all of the Common Stock in substantially the same proportions as immediately prior to such transaction),
ii.the sale of all or substantially all of the Company’s assets to any other person or entity (other than a wholly-owned subsidiary),
iii.the acquisition of beneficial ownership of a controlling interest (including, without limitation, power to vote) the outstanding shares of Common Stock by any person or entity (including a “group” as defined by or under Section 13(d)(3) of the Exchange Act),
iv.the dissolution or liquidation of the Company, or
v.a contested election of Directors, as a result of which or in connection with which the persons who were Directors before such election or their nominees cease to constitute a majority of the Board.
A transaction shall not constitute a Change in Control if it is effected for the purpose of changing the place of incorporation or form of organization of the ultimate parent entity (including where the Company is succeeded by an issuer incorporated under the laws of another state, country or foreign government for such purpose and whether or not the Company remains in existence following such transaction) where all or substantially all of the persons or group that beneficially own all or substantially all of the combined voting power of the Company’s voting securities immediately prior to the transaction beneficially own all or substantially all of the combined voting power of the Company in substantially the same proportions of their ownership after the transaction.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or any portion of an Award) that provides for the deferral of compensation that is subject to Section 409A of the Code, to the extent required to avoid the imposition of additional taxes under Section 409A of the Code, the transaction or event described in this Section 2(j) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).
l.“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
m.“Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. The HR and Compensation Committee of the Board shall be deemed a “Committee” for purposes of the Plan.
n.“Common Stock” means the common stock of the Company.
o.“Company” or “HP” means HP Inc., a Delaware corporation, or its successor.
p.“Conversion Award” has the meaning set forth in Section 4(b)(xi) of the Plan.
q.“Director” means a member of the Board.
r.“Director Option Award” has the meaning set forth in Section 13(b) of the Plan.
s.“Director Plan Year” shall mean the year beginning the day after HP’s annual meeting and ending on the day of HP’s next annual meeting, as the case may be, for any relevant year.
t.“Director RSU Award” has the meaning set forth in Section 13(b) of the Plan.
u.“Dividend Equivalent Right” means a right to receive the equivalent value of dividends paid on the Common Stock with respect to the Shares underlying an Award that is a Full-Value Award prior to settlement of the Award in accordance with the provision of Section 14(c).
v.“Employee” means a regular, active employee of the Company or any Affiliate, including an Officer and/or Director. The Administrator shall determine whether or not the chairman of the Board qualifies as an “Employee.” The Administrator shall have the discretion to determine the effect upon an Award and upon an individual’s status as an Employee in the case of (i) any individual who is classified by the Company or an Affiliate as leased from or otherwise employed by a third party, including, for clarity, a professional employer organization, or as intermittent or temporary, even if any such classification is changed retroactively as a result of an audit, litigation or otherwise, (ii) any leave of absence approved by the Company or an Affiliate, (iii) any transfer between locations of employment with the Company or an Affiliate or between the Company and any Affiliate, or between any Affiliates, (iv) any change in the Awardee’s status from an employee to a consultant or Director, and (v) at the request of the Company or an Affiliate, an employee becomes employed by any partnership, joint venture or corporation not meeting the requirements of an Affiliate in which the Company or an Affiliate is a party.
w.“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
x.“Fair Market Value” means, unless the Administrator determines otherwise, as of any date, the closing sales price for such Common Stock on the New York New York 10022Stockholders: (877) 750-5838 (U.S.Stock Exchange (the “
NYSE”) as of such date (or if no sales were reported on such date, the closing sales price on the last preceding day on which a sale was made), as reported in such source as the Administrator shall determine. y.“Full-Value Award” means any Award under the Plan other than a Cash Award, an Option or a Stock Appreciation Right. For avoidance of doubt, Stock Awards settled in cash are not Full-Value Awards.
z.“Grant Date” means the date upon which an Award is granted to an Awardee pursuant to this Plan or such later date as specified in advance by the Administrator.
aa.“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
bb.“Non-Employee Director” shall mean each member of the Board who is not an employee of HP or any of its Subsidiaries or Affiliates and Canada)(412) 232-3651 (International)
Bankswho is eligible only for Awards granted pursuant to Section 13 of the Plan.
cc.“Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.
dd.“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and brokers (call collect):(212) 750-5833
the rules and regulations promulgated thereunder. OTHER MATTERS
We knowee.“Option” means a right granted under Section 8 to purchase a number of noShares at such exercise price, at such times, and on such other mattersterms and conditions as are specified in the agreement or other documents evidencing the Award (the “Option Agreement”). Both Options intended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be granted under the Plan.
ff.“Participant” means an individual who has been granted an Award or any person (including any estate) to whom an Award has been assigned or transferred as permitted hereunder.
gg.“Performance Criteria” shall have the meaning set forth in Section 14(b) of the Plan.
hh.“Plan” means this Fourth Amended and Restated HP Inc. 2004 Stock Incentive Plan, as may be amended from time to time.
ii.“Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan.
jj.“Stock Appreciation Right” or “SAR” means a right granted under Section 8 which entitles the recipient to receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right over the exercise price thereof on such terms and conditions as are specified in the agreement or other documents evidencing the Award (the “SAR Agreement”). The Administrator shall determine whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of cash and Shares. Stock Appreciation Rights may be granted in tandem with another Award or freestanding and unrelated to another Award.
kk.“Stock Award” means an award or issuance of Shares or Stock Units made under Section 11 of the Plan, the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as are expressed in the agreement or other documents evidencing the Award (the “Stock Award Agreement”).
ll.“Stock Unit” means a bookkeeping entry representing an amount equivalent to the value of one Share, payable in cash, property or Shares. Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Administrator.
mm.“Subsidiary” means any company (other than the Company) in an unbroken chain of companies beginning with the Company, provided each company in the unbroken chain (other than the Company) owns, at the time of determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other companies in such chain.
nn.“Tax-Related Items” means any U.S. federal, state, and/or local taxes and any taxes imposed by a jurisdiction outside of the U.S. (including, without limitation, income tax, social insurance and similar contributions, payroll tax, fringe benefits tax, payment on account, employment tax, stamp tax and any other taxes related to participation in the Plan and legally applicable to a Participant, including any employer liability for which the Participant is liable pursuant to Applicable Laws or the applicable Award Agreement).
oo.“Termination of Employment” shall mean ceasing to be submittedan Employee. However, for Incentive Stock Option purposes, Termination of Employment will occur when the Awardee ceases to be an employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company or one of its Subsidiaries. The Administrator shall determine whether any corporate transaction, such as a sale or spin-off of a division or business unit, or a joint venture, shall be deemed to result in a Termination of Employment.
pp.“Total and Permanent Disability” shall have the meaning set forth in Section 22(e)(3) of the Code.
3.Stock Subject to the stockholders atPlan.
a.Aggregate Limits. Subject to the annual meeting. Ifprovisions of Section 15 of the Plan, the aggregate number of Shares that may be issued pursuant to Awards granted under the Plan is 669,111,733 Shares1. The Shares subject to the Plan may be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares. Shares issued in respect of any other matters properly come beforeFull-Value Award granted under the stockholdersPlan after March 20, 2013 shall be counted against the share limit set forth in the foregoing sentence as 2.32 Shares for every single Share actually issued in connection with such Award.
1 180,000,000 shares originally approved at the annual meeting it isMarch 17, 2004; 65,000,000 additional shares approved at the intentionannual meeting March 17, 2010; 172,500,000 additional shares approved at the annual meeting in 2013; 30,000,000 additional shares approved at the annual meeting April 19, 2022; 46,000,000 additional shares approved at the annual meeting April 22, 2024. The Aggregate Limit also reflects an adjustment increasing the share reserve by 2.161989 shares for each share that was available for issuance as of the persons nameddate of the adjustment to give effect to the stock dividend that was issued by the Company on November 1, 2015 in connection with the proxyCompany’s spin-off of Hewlett Packard Enterprises. The Aggregate Limit was reduced by 80,000,000 shares, effective as of January 29, 2018.
b.Issuance of Shares. For purposes of Section 3(a), the aggregate number of Shares issued under the Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award. If any Shares subject to votean Award granted under the shares represented thereby onPlan are forfeited or such mattersAward is settled in cash or otherwise terminates without the delivery of such Shares, the Shares subject to such Award, to the extent of any such forfeiture, settlement or termination, shall again be available for grant under the Plan. Any Shares that become available for the grant of Awards pursuant to the foregoing sentence shall be added back in accordance with the following: (i) if the Shares were subject to Options or Stock Appreciation Rights, Shares will be added back as one (1) Share for every Share subject to the Options or Stock Appreciation Rights; (ii) if the Shares were subject to Stock Awards, Shares will be added back as 2.32 Shares for every single Share subject to the Stock Award. Notwithstanding the foregoing, Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (i) Shares delivered to or withheld by the Company to pay the exercise price of an Option, (ii) Shares delivered to or withheld by the Company to pay the withholding Tax-Related Items, or (iii) Shares repurchased by the Company on the open market with the proceeds of an Award paid to the Company by or on behalf of the Participant. For the avoidance of doubt, when SARs are exercised and settled in Shares the full number of Shares exercised will no longer be available for issuance under the Plan.
c.Share Limits. Subject to the provisions of Section 15 of the Plan, the aggregate number of Shares subject to Awards granted under this Plan during any calendar year to any one Awardee shall not exceed 4,000,000, except that in connection with the Participant’s initial service, an Awardee may be granted Awards covering up to an additional 4,000,000 Shares. Subject to the provisions of Section 15 of the Plan, the aggregate number of Shares that may be subject to all Incentive Stock Options granted under the Plan is 669,111,733 Shares. Notwithstanding anything to the contrary in the Plan, the limitations set forth in this Section 3(c) shall be subject to adjustment under Section 15(a) of the Plan only to the extent that such adjustment will not affect the ability to grant or the qualification of Incentive Stock Options under the Plan.
4.Administration of The Plan.
a.Procedure.
i.Multiple Administrative Bodies. The Plan shall be administered by the Board, one or more Committees and/or their best judgment.delegates. IMPORTANT INFORMATION CONCERNING THE HP ANNUAL MEETING
ii.Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”), Awards to Officers and Directors shall be made by the entire Board or a Committee of two or more “non-employee directors” within the meaning of Rule 16b-3.
iii.Other Administration. Subject to Applicable Law and the Company’s corporate governing rules and documents, the Board or a Committee may delegate to one or more persons or a body the power vested in the Board or the Committee under the Plan.
iv.Delegation of Authority for the Day-to-Day Administration of the Plan. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan. Such delegation may be revoked at any time.
b.Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee or delegates acting as the Administrator, subject to the specific duties delegated to such Committee or delegates, the Administrator shall have the authority, in its discretion:
i.to select the Awardees to whom Awards are to be granted hereunder;
ii.to determine the number of shares of Common Stock to be covered by each Award granted hereunder;
iii.to determine the type of Award to be granted to the selected Awardees;
iv.to approve forms of Award Agreements for use under the Plan;
v.to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise and/or purchase price, the time or times when an Award may be exercised or settled (which may or may not be based on Performance Criteria), the vesting schedule, any vesting and/or exercisability acceleration or waiver of forfeiture restrictions, the acceptable forms of consideration, the term, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine and may be established at the time an Award is granted or thereafter;
vi.to suspend the right to exercise Awards during any blackout period that is necessary or desirable to comply with the requirements of Applicable Laws and/or to extend the Award exercise period for an equal period of time in a manner consistent with Applicable Law;
vii.to correct defects and supply omissions in the Plan and any Award Agreement and to correct administrative errors;
viii.to construe and interpret the terms of the Plan (including sub-plans and Plan addenda) and Awards granted pursuant to the Plan;
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Online check-in begins: 1:30 p.m., Pacific Time110 | | Meeting begins: 2:00 p.m., Pacific Time |
ix.to establish, adopt or revise rules and regulations and procedures relating to the operation and administration of the Plan to facilitate compliance with non-U.S. laws and procedures, facilitate administration of the Plan and/or take advantage of tax-favorable treatment for Awards granted to Participants outside the U.S., in each case, as it may deem necessary or advisable by the Administrator. Without limiting the generality of the foregoing, the Administrator is specifically authorized (A) to adopt the rules and procedures regarding the conversion of local currency, withholding procedures and handling of stock certificates which vary with local requirements and (B) to adopt sub-plans and Plan addenda as the Administrator deems desirable, to accommodate the foregoing;
x.to prescribe, amend and rescind rules and regulations relating to the Plan, including joint holders,rules and regulations relating to sub-plans and Plan addenda;
xi.to modify or amend each Award, including, but not limited to, the acceleration of vesting and/or exercisability, provided, however, that any such amendment is subject to Section 15 of the Plan and may not materially impair any outstanding Award unless agreed to in writing by the Participant or if the Administrator deems such amendments are necessary or desirable to facilitate compliance with Applicable Laws;
xii.to allow Participants to satisfy withholding of Tax-Related Items by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or SAR, or vesting or settlement of a Stock Award that number of Shares. The value of the Shares to be withheld shall be determined in such manner and on such date that the Administrator shall determine or, in the absence of provision otherwise, on the date that the amount of Tax-Related Items to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may provide;
xiii.to authorize conversion or substitution under the Plan of any or all stock options, stock appreciation rights or other stock awards held by service providers of an entity acquired by the Company (the “Conversion Awards”). Any conversion or substitution shall be effective as of the close of businessthe merger or acquisition. The Conversion Awards may be Nonstatutory Stock Options or Incentive Stock Options, as determined by the Administrator, with respect to options granted by the acquired entity;
xiv.to authorize any person to execute on February 5, 2016,behalf of the recordCompany any instrument required to effect the grant of an Award previously granted by the Administrator;
xv.to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers;
xvi.to provide, either at the time an Award is granted or by subsequent action, that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of the Award; and
xvii.to make all other determinations deemed necessary or advisable for administering the Plan and any Award granted hereunder.
c.Effect of Administrator’s Decision. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and binding on all Participants or other persons claiming rights under the Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.
5.Eligibility.
Awards may be granted to Directors and/or Employees; provided that Non-Employee Directors are eligible only for awards granted under Section 13 of the Plan.
6.Term of Plan.
The Plan shall become effective upon its approval by shareholders of the Company. It shall continue in effect for a term of ten (10) years from the later of the date the Plan or any amendment to add shares to the Plan is approved by shareholders of the Company unless terminated earlier under Section 16 of the Plan; provided, however, that Incentive Stock Options shall not be granted following the date that is more than 10 years after the date that is the later of the date the Board or shareholders of the Company approve any amendment to add shares to the Plan.
7.Term of Award.
The term of each Award shall be determined by the Administrator and stated in the Award Agreement. In the case of an Option or SAR, the term shall be ten (10) years from the Grant Date or such shorter term as may be provided in the Award Agreement.
8.Options and Stock Appreciation Rights.
The Administrator may grant an Option or SAR, or provide for the annual meeting, are entitledgrant of an Option or SAR, either from time to participate in the annual meeting on April 4, 2016.
The annual meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast.
• | | You will be able to attend the annual meeting of stockholders online and submit your questions during the meeting by visitingHP.onlineshareholdermeeting.com. You also will be able to vote your shares electronically at the annual meeting (other than shares held through our 401(k) Plan, which must be voted prior to the meeting). |
We encourage you to access the meeting prior to the start time. Please allow ample time for online check-in, which will begin at 1:30 p.m., Pacific Time. The webcast starts at 2:00 p.m., Pacific Time.
To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials.
• | | Visit our pre-meeting stockholder forum atwww.theinvestornetwork.com/forum/hpq in advance of the annual meeting where you can submit questions to management and also access copies of our proxy statement and annual report. |
THANK YOU FOR YOUR INTEREST AND SUPPORT—YOUR VOTE IS IMPORTANT!
HELPFUL RESOURCES
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Annual Meeting
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Annual meeting online
| | HP.onlineshareholdermeeting.com |
Proxy materials
| | www.hp.com/investor/stockholdermeeting2016
|
Board of Directors
| | |
HP Board
| | http://h30261.www3.hp.com/governance/board-members.aspx |
Board committees
| | http://h30261.www3.hp.com/governance/hp-board-committee-composition.aspx |
Audit Committee Charter
| | http://h30261.www3.hp.com/~/media/Files/H/HP-IR/documents/others/hp-inc-audit-committee-charter.pdf |
Finance, Investment and Technology Committee Charter
| | http://h30261.www3.hp.com/~/media/Files/H/HP-IR/documents/others/hp-inc-finance-investment-and-technology-committee-charter.pdf |
HR and Compensation Committee Charter
| | http://h30261.www3.hp.com/~/media/Files/H/HP-IR/documents/others/hp-inc-hr-and-compensation-committee-charter.pdf |
Nominating, Governance and Social Responsibility Committee Charter
| | http://h30261.www3.hp.com/~/media/Files/H/HP-IR/documents/others/hp-inc-nominating-governance-and-social-responsibility-committee-charter.pdf |
Director independence
| | http://h30261.www3.hp.com/governance/director-independence.aspx
|
Governance Documents
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Bylaws
| | http://h30261.www3.hp.com/governance/certificate-of-incorporation-and-bylaws.aspx |
Certificate of Incorporation
| | http://h30261.www3.hp.com/governance/certificate-of-incorporation-and-bylaws.aspx |
Standards of Business Conduct
| | http://h30261.www3.hp.com/governance/standards-of-business-conduct.aspx |
Corporate Governance Guidelines
| | http://h30261.www3.hp.com/governance/corporate-governance-guidelines.aspx |
HP INC.
1501 PAGE MILL ROAD
PALO ALTO, CA 94304
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to HP.onlineshareholdermeeting.com
You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M81321-P58696
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
HP INC.
The Board of Directors recommends you vote FOR
the following proposals:
1. To elect the 13 directors named in this proxy statement
Nominees:
For Against Abstain
1a. Aida Alvarez
1b. Shumeet Banerji
For Against Abstain
1c. Carl Bass
1d. Robert R. Bennett
1e. Charles V. Bergh
1f. Stacy Brown-Philpot
1g. Stephanie Burns
1h. Mary Anne Citrino
1i. Rajiv L. Gupta
1j. Stacey Mobley
1k. Subra Suresh
1l. Dion Weisler
1m. Margaret C. Whitman
The Board of Directors recommends you vote FOR
the following proposals:
2. To ratify the appointment of the independent registered public accounting firm for the fiscal year ending October 31, 2016
3. To approve, on an advisory basis, the company’s
executive compensation
HP Inc.’s proxy holders reserve the right to cumulate
votes and cast such votes in favor of the election of some or all of the applicable director nominees in their sole discretion. If you want to cumulate your votes, please mark here and write in your instructions on the reverse side.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
4. To approve an amendment to the company’s
certificate of incorporation to eliminate cumulative voting
5. To consider such other business as may properly
come before the meeting
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 2016 Notice and Proxy Statement and 2015 Annual Report With Form 10-K are available at www.proxyvote.com.
M81322-P58696
HP INC.
Annual Meeting of Stockholders
April 4, 2016 2:00 PM Pacific Time
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Dion Weisler, Catherine A. Lesjak and Kim Rivera, and each of them, as proxies for the undersigned, with full power of substitution, to act and to vote all shares of common stock of HP Inc. held of record or in an applicable plan by the undersigned at the close of business on February 5, 2016, at the Annual Meeting of Stockholders to be held at 2:00 p.m., Pacific Time, on Monday, April 4, 2016, or any postponement or adjournment thereof.
This proxy, when properly executed and returned, will be voted in the manner directed herein by the undersigned stockholder. If this proxy is properly executed and returned but no direction is made, this proxy will be voted FOR all of the nominees for director in proposal 1, FOR proposals 2, 3 and 4. Whether or not direction is made, this proxy, when properly executed, will be voted in the discretion of the proxy holdersAdministrator or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition whether or not within the control of the Awardee.
– Chairperson
Independent
