Stock-Based Compensation (Table)

12 Months Ended

Oct. 31, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Stock-Based Compensation Expense and the Resulting Tax Benefits

Stock-based compensation expense and the resulting tax benefits for operations were as follows:

	For the fiscal years ended October 31
	2019			2018			2017
	In millions
Stock-based compensation expense	$	297		$	268		$	224
Income tax benefit	(47		)	(59		)	(71		)
Stock-based compensation expense, net of tax	$	250		$	209		$	153

Weighted-Average Fair Value and Assumptions Used to Measure Fair Value of Restricted Stock Units

HP uses the closing stock price on the grant date to estimate the fair value of service-based restricted stock units. HP estimates the fair value of restricted stock units subject to performance-adjusted vesting conditions using a combination of the closing stock price on the grant date and the Monte Carlo simulation model. The weighted-average fair value and the assumptions used to measure the fair value of restricted stock units subject to performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows:

	For the fiscal years ended October 31
	2019			2018			2017
Weighted-average fair value(1)	$	27		$	24		$	20
Expected volatility(2)	26.5		%	29.5		%	30.5		%
Risk-free interest rate(3)	2.7		%	1.9		%	1.4		%
Expected performance period in years(4)	2.9			2.9			2.9

⁽¹⁾  The weighted-average fair value was based on performance-adjusted restricted stock units granted during the period.

⁽²⁾  The expected volatility was estimated using the historical volatility derived from HP’s common stock.

⁽³⁾  The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues.

⁽⁴⁾ 

The expected performance period was estimated based on the length of the remaining performance period from the grant date.

Summary of Restricted Stock Awards Activity

A summary of restricted stock units activity is as follows:

	As of October 31
	2019				2018				2017
	Shares		Weighted- Average Grant Date Fair Value Per Share		Shares		Weighted- Average Grant Date Fair Value Per Share		Shares		Weighted- Average Grant Date Fair Value Per Share
	In thousands				In thousands				In thousands
Outstanding at beginning of year	30,784		$	18	31,822		$	14	28,710		$	13
Granted	17,216		$	22	16,364		$	21	15,858		$	16
Vested	(16,934	)	$	16	(15,339	)	$	15	(11,915	)	$	14
Forfeited	(1,106	)	$	20	(2,063	)	$	17	(831	)	$	14
Outstanding at end of year	29,960		$	21	30,784		$	18	31,822		$	14

Weighted-Average Fair Value and Assumptions Used to Measure Fair Value of Stock Options

HP utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. HP estimates the fair value of stock options subject to performance-contingent vesting conditions using a combination of a Monte Carlo simulation model and a lattice model as these awards contain market conditions. The weighted-average fair value and the assumptions used to measure fair value were as follows:

	For the fiscal years ended October 31
	2019			2018			2017
Weighted-average fair value(1)	$	3		$	5		$	4
Expected volatility(2)	29.8		%	29.4		%	28.0		%
Risk-free interest rate(3)	1.7		%	2.5		%	1.9		%
Expected dividend yield(4)	3.7		%	2.6		%	2.8		%
Expected term in years(5)	6.0			5.0			5.5

⁽¹⁾  The weighted-average fair value was based on stock options granted during the period.

⁽²⁾  For all awards granted in fiscal year 2019 and 2018, expected volatility was estimated based on a blended volatility (50% historical volatility and 50% implied volatility from traded options on HP's common stock). For the awards granted in

fiscal year 2017, expected volatility was estimated using the leverage-adjusted average of the term-matching volatilities of peer companies due to the lack of volume of forward traded options, which precluded the use of implied volatility.

⁽³⁾  The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues.

⁽⁴⁾  The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the award.

⁽⁵⁾ 

For awards subject to service-based vesting, the expected term was estimated using a simplified method; and for performance-contingent awards, the expected term represents an output from the lattice model

Summary of Stock Options Activity

A summary of stock options activity is as follows:

	As of October 31
	2019							2018							2017
	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value		Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value		Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	In thousands				In years	In millions		In thousands				In years	In millions		In thousands				In years	In millions
Outstanding at beginning of year	7,086		$	14				18,067		$	13				28,218		$	12
Granted	2,451		$	17				54		$	21				104		$	19
Exercised	(2,429	)	$	13				(10,644	)	$	13				(9,407	)	$	11
Forfeited/cancelled/expired	(15	)	$	10				(391	)	$	16				(848	)	$	17
Outstanding at end of year	7,093		$	16	5.7	$	15	7,086		$	14	4.2	$	73	18,067		$	13	4.2	$	152
Vested and expected to vest	7,093		$	16	5.7	$	15	7,084		$	14	4.2	$	73	17,692		$	13	4.1	$	149
Exercisable	4,707		$	14	3.6	$	15	4,707		$	14	3.7	$	49	10,898		$	12	3.1	$	102

Schedule of Shares Available for Future Grant and Shares Reserved for Future Issuance

Shares available for future grant and shares reserved for future issuance under the stock-based incentive compensation plans and the 2011 ESPP were as follows:

	As of October 31
	2019	2018	2017
	In thousands
Shares available for future grant	265,135	305,767	419,071
Shares reserved for future issuance	301,608	343,076	468,531