DEF 14A 1 hpq3459341-def14a.htm DEFINITIVE PROXY STATEMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

      Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12


HP INC.

(Name of Registrant as Specified In Its Charter)

 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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2019
Proxy Statement

2



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“We welcome all our stockholders to join and participate in the meeting, regardless of location, by accessing the virtual meeting. We look forward to hearing from you and responding to your questions.”


To our Stockholders:

We are pleased to invite you to attend the annual meeting of stockholders of HP Inc. on Tuesday, April 23, 2019 at 2:00 p.m., Pacific Time. This year’s annual meeting will again be a virtual meeting of stockholders, conducted via live audio webcast. You will be able to attend the annual meeting of stockholders online and submit questions before and during the meeting by visiting www.hpannualmeeting.com or https://hp.onlineshareholdermeeting.com. You will also 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 are embracing the latest technology to provide expanded access, improved communication and cost savings for our stockholders and the Company. As we’ve learned, hosting a virtual meeting enables increased stockholder attendance and participation from locations around the world. In addition, the online format allows us to communicate more effectively via a pre-meeting forum that you can enter by visiting www.hpannualmeeting.com or www.proxyvote.com/HP.

Further details about how to attend the meeting online, submit questions before or during the meeting, and information on the business to be conducted at the annual meeting are included in the accompanying Notice of Annual Meeting and Proxy Statement.

We are again providing access to our proxy materials online under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to many of our stockholders a notice instead of a paper copy of this proxy statement and our 2018 Annual Report. The notice contains instructions on how to access documents online. The notice also contains instructions on how stockholders can receive a paper copy of our materials, including this proxy statement, our 2018 Annual Report, and a form of proxy card or voting instruction card. Those who do not receive a notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy by mail unless they have previously requested delivery of materials electronically. This distribution process is more resource- and cost-efficient.

Your vote is important. Regardless of whether you participate in the annual meeting, we hope you vote as soon as possible. You may vote by proxy online or by phone, or, if you received paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card or voting instruction card. Voting online or by phone, written proxy or voting instruction card ensures your representation at the annual meeting regardless of whether you attend the virtual meeting.

Thank you for your ongoing support of, and continued interest in, HP Inc.

Sincerely,

Charles “Chip” V. Bergh
Chairman of the Board


Join by internet at either
www.hpannualmeeting.com or
https://hp.onlineshareholdermeeting.com

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1501 Page Mill Road
Palo Alto, California 94304
(650) 857-1501
Notice of Annual Meeting of Stockholders
                            

This notice of annual meeting, proxy statement and form of proxy for HP Inc. (“HP” or the “Company”) are being distributed and made available on or about February 26, 2019.

Time and Date

2:00 p.m., Pacific Time,
on Tuesday, April 23, 2019
Place
Online at www.hpannualmeeting.com or
https://hp.onlineshareholdermeeting.com
Voting

Internet

www.hpannualmeeting.com or www.proxyvote.com/HP prior to the meeting. During the meeting please visit www.hpannualmeeting.com or https://hp.onlineshareholdermeeting.com

Telephone

1-800-690-6903


Mail

You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. Return the card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

Your vote is very important. Regardless of whether you plan to virtually attend the annual meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or via a toll-free telephone number. If you received a paper copy of a proxy or voting instruction card by mail, you may submit your proxy or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided. Stockholders of record and beneficial owners will be able to vote their shares electronically at the annual meeting (other than shares held through the HP Inc. 401(k) Plan, which must be voted prior to the meeting). For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers—Voting Information beginning on page 68 of the proxy statement.

Items of Business

Management Proposals

(1)     

To elect the 11 Directors named in this proxy statement

(2)

To ratify the appointment of the independent registered public accounting firm for the fiscal year ending October 31, 2019

(3)

To approve, on an advisory basis, the Company’s executive compensation (“say on pay” vote)


Stockholder Proposals

(4)     

To consider and vote on a stockholder proposal, if properly presented at the meeting

(5)

Such other business as may properly come before the meeting

Virtual Meeting Admission

Stockholders of record as of February 22, 2019, will be able to participate in the annual meeting by visiting our annual meeting website www.hpannualmeeting.com or https://hp.onlineshareholdermeeting.com. 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.

The annual meeting will begin promptly at 2:00 p.m., Pacific Time. Online check-in will begin at 1:30 p.m., Pacific Time, and you should allow ample time for the online check-in procedures.

Annual Meeting Website and Pre-Meeting Forum

The online format used by HP Inc. for the annual meeting also allows us to communicate more effectively with you. Stockholders can access our pre-meeting forum, where you can submit questions in advance of the annual meeting, by visiting our annual meeting website at www.hpannualmeeting.com or www.proxyvote.com/HP. Stockholders can also access copies of our proxy statement and annual report at the annual meeting website.

Adjournments and Postponements

Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.

Record Date

You are entitled to vote only if you were an HP Inc. stockholder as of the close of business on February 22, 2019.

By order of the Board of Directors,

Kim M. Rivera
President, Strategy and Business Management and
Chief Legal Officer, General Counsel and Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on April 23, 2019. The definitive proxy statement and HP Inc.’s 2018 Annual Report are available electronically at www.proxyvote.com/HP.



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Proxy Statement Summary
                            

The following is a summary of certain key disclosures in our proxy statement. This is only a summary, and it may not contain all of the information that is important to you. For more complete information, please review the proxy statement as well as our 2018 Annual Report, which includes our Annual Report on Form 10-K. References to “HP,” “the Company,” “we,” “us” or “our” refer to HP Inc. (formerly known as Hewlett-Packard Company (“HP Co.”)).

Management
Proposal No. 1
     
Election of Directors
The Board recommends a vote FOR each Director nominee
Our Board is committed to independent oversight of HP.
10 of our 11 Director nominees are independent.
Our Board is led by an independent Chairman.
Key information regarding all of our 11 Board nominees is summarized in the table below.
  Further information beginning on page 11.

Name
Principal Occupation
Age HP Director
Since
Committees Other Current Public Company/
Public Registrant Boards

Aida M. Alvarez  Independent 
Chair, Latino Community Foundation

   

69

   

2016

       

K12 Inc.

Shumeet Banerji  Independent 
Co-Founder and Partner, Condorcet, LP

59

2011

Reliance Industries Ltd.

Robert R. Bennett  Independent 
Managing Director, Hilltop Investments, LLC

60

2013

Discovery Communications, Inc. Liberty Media Corporation

Charles “Chip” V. Bergh  Independent 
President and Chief Executive Officer,
Levi Strauss & Co.

61

2015

Levi Strauss & Co.

Stacy Brown-Philpot  Independent 
Chief Executive Officer, TaskRabbit

43

2015

Nordstrom, Inc.

Stephanie A. Burns  Independent 
Former Chief Executive Officer and Chairman,
Dow Corning

64

2015

Corning Incorporated Kellogg Company

Mary Anne Citrino  Independent 
Senior Advisor and former Senior Managing Director,
The Blackstone Group

59

2015

Barclays plc Royal Ahold Delhaize Alcoa Corporation

Yoky Matsuoka  Independent 
Vice President, Healthcare
Google

46

2019

None

Stacey Mobley  Independent 
Former Senior Vice President,
Chief Administrative Officer and General Counsel,
E.I. du Pont de Nemours and Company

73

2015

None

Subra Suresh  Independent 
President, Nanyang Technological University

62

2015

Singapore Exchange Limited

Dion J. Weisler
President and Chief Executive Officer, HP Inc.

51

2015

Thermo Fisher Scientific Inc.

Audit Committee

  

Finance, Investment and Technology Committee

  

HR and Compensation Committee

  

Nominating, Governance and Social Responsibility Committee

   Chair

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Board Composition

Independence Gender Diversity Tenure (inc. HP Co. tenure)

Governance Highlights

Independent Board Leadership
Robust board oversight and leadership by an independent Chairman (more details beginning on page 26).
Our independent Chairman participates in a robust stockholder outreach program.
Our independent Chairman leads and coordinates the annual performance evaluation of the CEO.
Our independent Chairman oversees the Board and committee evaluations and recommends changes to improve Board, committee, and individual Director effectiveness.

Other Governance Best Practices
Our Bylaws provide our stockholders with a proxy access right.
All members of our committees are independent.
Our stockholders owning 15% or more of our common stock have a right to call special meetings. We lowered this right from 25% after engaging with our stockholders on how they would prefer to act outside of the annual meeting.
Directors are elected annually by majority vote in uncontested Director elections.
Each Director nominee has agreed to resign from the Board in the event that he or she fails to receive a majority vote.
We have a robust and ongoing stockholder outreach program.
Non-employee Directors are expected to own Company stock equal to at least five times their annual cash Board retainer within five years of joining the Board.

Management
Proposal No. 2
     
Ratification of Independent Registered Public Accounting Firm
The Board recommends a vote FOR this Proposal
The Audit Committee of the Board has selected Ernst & Young LLP to act as HP’s registered public accounting firm for the fiscal year ending October 31, 2019 and seeks ratification of the selection.
  Further information beginning on page 36.

Management
Proposal No. 3
     
Advisory Vote to Approve Executive Compensation (“Say on Pay” Vote)
The Board recommends a vote FOR this Proposal
Our Board and the HRC Committee are committed to excellence in corporate governance and to an executive compensation program that aligns the interests of our executives with those of our stockholders. To fulfill this mission, we have a pay-for-performance philosophy that forms the foundation for decisions regarding executive 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.
  Further information, including an overview of the compensation of our Named Executive Officers (“NEOs”), beginning on page 38.

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Stockholder
Proposal
     
Stockholder Proposal: Independent Board Chairman
The Board recommends a vote AGAINST this Proposal
This stockholder proposal, which would require HP to amend its governance documents to require an independent Chairman of the Board, if properly presented, will be voted on at the annual meeting.
  Further information beginning on page 65.

Business Overview and Performance

HP Inc. is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. We sell to individual consumers, small- and medium-sized businesses and large enterprises, including customers in the government, health and education sectors. HP is comprised of the following business segments: Personal Systems, Printing, and Corporate Investments. In fiscal 2018, HP delivered profitable growth in both Personal Systems and Printing segments while investing strategically to fuel growth and capture the future.

Our continued efforts resulted in the following accomplishments:

Delivered revenue growth and margin expansion in Personal Systems, driven by innovation and focus on strategic growth areas such as Device as a Service.
Executed effectively in Printing with consistent revenue and profit growth combined with progress in strategic growth areas including Graphics and A3 printing.
Continued the integration of Samsung Electronics Co., Ltd.’s printer business expanding our A3 product portfolio and acquired Apogee Corporation, which enhanced our ability to deliver value-added services while accelerating the deployment of our superior technology into the growing A3 contractual market.
Strengthened our leadership position in 3D printing by extending our product portfolio with the addition of full color and metals, expanding our application ecosystem, and increasing the number of repeat orders and larger scale customer deployments.
Returned over $3.5 billion of capital to stockholders in the form of dividends and share repurchases.

The global-macroeconomic and foreign-currency environment was challenging in fiscal 2018. Nevertheless, as illustrated below for the three key financial measures used to fund our annual pay-for-performance incentive awards, we exceeded rigorous goals that reflected our business plan. In the three years since we separated from Hewlett Packard Enterprise “HPE,” ending in fiscal 2018, our relative total shareholder return (“TSR”) performance has been in the top-quartile of the S&P 500, which attests to the rigor of our goals:

Corporate Revenue       Corporate Net Earnings      

Corporate Free Cash Flow

$58.5 $3.5 7.1%
billion billion
(as defined on page 43) compared to a target goal of $54.7 billion under our annual incentive plan. (as defined on page 43) compared to a target goal of $3.2 billion under our annual incentive plan. (as a percentage of revenue; as defined on page 43) compared to a target goal of 5.85% under our annual incentive plan.

As a company, we are delivering on our commitments to our stockholders and optimizing the business to consistently deliver long-term, sustainable and profitable growth. We are continuing to grow with profitable market share in our core expansion efforts, to advance our position in our growth segments, and to invest in future categories where we can disrupt with innovation and new business models. At the same time, we are focused on increasing productivity and taking cost out of the business. We have an incredible channel network, passionate employees and a culture committed to keep reinventing. And just as importantly, we are winning the right way with a sustainable impact framework focused on people, planet and the communities in which we operate.


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Executive Compensation Philosophy

Alignment with Stockholders and Compensation Best Practices

Pay-for-Performance         Corporate Governance
The majority of target total direct compensation for executives is performance-based as well as equity-based to align executives’ rewards with stockholder value. We do not utilize executive employment contracts for senior officers.
Total direct compensation is targeted at or near the market median. We devote significant time to management succession planning and leadership development efforts.
Actual realized total direct compensation and pay positioning are designed to fluctuate with, and be commensurate with, actual annual and long-term performance recognizing company-wide, business, and individual results. We maintain a market-aligned severance policy for executives and a conservative change in control policy which requires a double trigger for execution.
Incentive awards are heavily dependent upon our stock performance and are measured against objective financial metrics that we believe link either directly or indirectly to 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 engages an independent compensation consultant.
Our compensation programs are designed to mitigate compensation-related risk (both financial and reputational) and promote long-term growth for the organization by determining award payouts based on a wide range of performance goals.
We maintain strong stock ownership guidelines for executive officers and non-employee Directors.
We balance growth, cash flow, revenue and profit objectives, as well as short- and long-term objectives to reward for overall performance that does not over-emphasize a singular focus. We prohibit executive officers and Directors from engaging in any form of hedging transaction, holding HP securities in margin accounts and pledging stock as collateral for loans in a manner that could create compensation-related risk for the Company.
A significant portion of our long-term incentives are delivered in the form of performance-adjusted restricted stock units, referred to as “PARSUs,” which vest only upon the achievement of relative TSR and EPS objectives. We conduct a robust stockholder outreach program throughout the year.
We validate our pay-for-performance relationship on an annual basis and our HRC Committee is actively involved in the review and approval of performance goals under our incentive plans. We disclose our corporate performance goals and achievements relative to these goals.
The compensation of peer companies is considered in order to ensure that pay levels for the NEOs are appropriate and competitive. We do not provide excessive perquisites to our employees including our executive officers.
The maximum payouts under annual incentive awards and under long-term incentives (“PARSUs”) are capped. We do not allow our executives to participate in the determination of their own compensation.

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Components of 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. The percentages are based on the average percentage among the NEOs including the CEO.

Pay Component       Role       Determination Factors
Base Salary
Provides a 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., Pay-for-Results (“PfR”))
Provides a variable and performance-based portion of annual cash income
Focuses executives on annual objectives that support the long-term strategy and creation of value
Target awards based on competitive marketplace, level of position, skills and performance of executive
Actual awards based on achievement against annual corporate, business unit, and individual goals as set and approved by the HRC
Payments to executives for annual PfR incentive purposes are made under the Stock Incentive Plan (the “Plan”)
Long-term Incentives
Supports need for long-term sustained performance
Aligns interests of executives and stockholders, reflecting the time-horizon and risk to investors
Encourages equity ownership and stockholder alignment
Retains key employees
Target awards based on competitive marketplace, level of position, skills and performance of the executive
Actual values based on performance against corporate goals and total stockholder return (“TSR”) performance
Restricted Stock Units (“RSUs”)
Performance-Adjusted Restricted Stock Units (“PARSUs”)
All others:
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 governance
Benefits
Perquisites
Severance protection

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HP’s Board considers the appropriate format of the meeting on an annual basis. HP’s current virtual format allows stockholders to submit questions and comments in our stockholder forum both before and during the meeting. We respond to all stockholder submissions received through the forum in writing on our investor relations website. The virtual meeting format allows our stockholders to engage with us no matter where they live in the world, and is accessible and available on any internet-connected device, be it a phone, a tablet, or a computer. We’re able to reach a base of stockholders that is broader than just those who can afford to travel to an in-person meeting. The virtual meeting gives us the opportunity to respond in thoughtful detail to every question all of our stockholders may have, rather than just the limited number of questions stockholders are able to ask at in-person meetings, which are answered on the fly. All of these benefits of a virtual meeting allow our stockholders to have truly robust engagement with HP.

Previous Virtual Meeting Highlights
Questions answered during the virtual annual meeting Total questions asked and answered before and during the annual meeting Meeting attendance year over year



HP commits to answering every question received, in writing, within one week of the annual meeting.

Please visit our HP investor events page at https://investor.hp.com to read previously answered questions.
 

Please join us for our Virtual Annual Meeting at www.hpannualmeeting.com or https://hp.onlineshareholdermeeting.com
 
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.
 
Stockholders can access our pre-meeting forum, where you can submit questions in advance of the annual meeting, by visiting our annual meeting website. All questions received, both during and prior to the meeting, are presented as submitted, uncensored and unedited with the exception of certain personal details for data protection purposes. If we receive substantially similar questions, we will group such questions together and provided a single response to avoid repetition.

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)

 

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CORPORATE GOVERNANCE 11
Management Proposal No. 1 Election of Directors 11
Vote Required 11
Director Election Voting Standard and Resignation Policy 11
Stockholder Outreach 21
Response to 2018 Written Consent Proposal 22
Recent Corporate Governance Updates 23
Director Independence 24
Board Leadership Structure 26
Board Risk Oversight 26
Executive Sessions 32
Communications with the Board 32
Code of Conduct 32
Director Compensation and Stock Ownership Guidelines 32
Non-Employee Director Stock Ownership Guidelines 34
Related-Person Transactions Policies and Procedures 35
Fiscal 2018 Related-Person Transactions 35
 
AUDIT MATTERS 36
Management Proposal No. 2 Ratification of Independent Registered Public Accounting Firm 36
Vote Required 36
Report of the Audit Committee of the Board of Directors 36
Principal Accountant Fees and Services 37
Pre-Approval of Audit and Non-Audit Services Policy 37
 
EXECUTIVE COMPENSATION 38
Management Proposal No. 3 Advisory Vote to Approve Executive Compensation 38
Vote Required 38
Compensation Discussion and Analysis 38
Long-term Incentive Compensation 45
Fiscal 2018 Long-term Incentive Compensation at Target 46
Fiscal 2019 Compensation Program 47
Succession Planning 49
Accounting and Tax Effects 49
Policy for Recoupment of Performance-Based Incentives 50
 
OWNERSHIP OF OUR STOCK 63
Common Stock Ownership of Certain Beneficial Owners and Management 63
Section 16(a) Beneficial Ownership Reporting Compliance 64
 
STOCKHOLDER PROPOSALS 65
Stockholder Proposal: Independent Board Chairman 65
Proposal 4 – Independent Board Chairman 65
Statement in Opposition 66
Board Recommendation 67
Vote Required 67
 
OTHER MATTERS 68
Proxy Materials 68

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Management
Proposal No. 1
     
Election of Directors
The Board recommends a vote FOR each Director nominee

The Board of Directors of HP Inc. (the “Board”) currently consists of eleven (11) Directors. On the recommendation of the Nominating, Governance and Social Responsibility (“NGSR”) Committee, the Board has nominated the 11 persons named below for election as Directors this year, each to serve for a one-year term and until the Director’s successor is elected and qualified or, if earlier, until his or her resignation or removal.

Vote Required

Each Director nominee who receives more “FOR” votes than “AGAINST” votes representing shares of HP common stock present in person or represented by proxy and entitled to be voted at the annual meeting will be elected.

If you sign your proxy or voting instruction card but do not give instructions with respect to voting for Directors, your shares will be voted by Dion J. Weisler, Steven J. Fieler and Kim M. Rivera, as proxy holders. If you wish to give specific instructions with respect to voting for Directors, you may do so by indicating your instructions on your proxy or voting instruction card.

Director Election Voting Standard and Resignation Policy

We have adopted a policy whereby any incumbent Director nominee who receives a greater number of votes “AGAINST” his or her election than votes “FOR” such election will tender his or her offer of resignation for consideration by the NGSR Committee. The NGSR Committee will then make a recommendation to the Board regarding the appropriate response to such an offer of resignation.

Identifying and Evaluating Candidates for Directors

The NGSR Committee uses a variety of methods for identifying and evaluating nominees for Director. The NGSR Committee, in consultation with the Chairman, regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the NGSR Committee considers various potential candidates for Director. Candidates may come to the attention of the NGSR Committee through current Board members, professional search firms, stockholders or other persons. Identified candidates are evaluated at regular or special meetings of the NGSR Committee and may be considered at any point during the year. As described above, the NGSR Committee considers properly submitted stockholder recommendations of candidates for the Board to be included in our proxy statement. Following verification of the stockholder status of individuals proposing candidates, recommendations are considered collectively by the NGSR Committee at a regularly scheduled meeting, which is generally the first or second meeting prior to the issuance of the proxy statement for our annual meeting. If any materials are provided by a stockholder in connection with the nomination of a Director candidate, such materials are forwarded to the NGSR Committee. The NGSR Committee also reviews materials provided by professional search firms and other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, the NGSR Committee seeks to achieve a balance of diverse knowledge, experience and capability on the Board. The NGSR Committee evaluates nominees recommended by stockholders using the same criteria it uses to evaluate all other candidates. In the case of Ms. Matsuoka, a third-party professional search firm identified her as a potential director nominee.

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Corporate Governance  
 

Stockholder Recommendations

The policy of the NGSR Committee is to consider properly submitted stockholder recommendations of candidates for membership on the Board as described above under “Identifying and Evaluating Candidates for Directors.” In evaluating such recommendations, the NGSR Committee seeks to achieve a balance of diverse knowledge, experience and capability on the Board and to address the membership criteria set forth below. Any stockholder recommendations submitted for consideration by the NGSR Committee should include verification of the stockholder status of the person submitting the recommendation and the recommended candidate’s name and qualifications for Board membership and should be addressed to:

 

Corporate Secretary
HP Inc.
1501 Page Mill Road
Palo Alto, California 94304
Fax: 650-275-9138

 

Stockholder Nominations

In addition, our Bylaws permit stockholders to nominate Directors for consideration at an annual stockholder meeting and, under certain circumstances, to include their nominees in the HP proxy statement. For a description of the process for nominating Directors in accordance with our Bylaws, see “Questions and Answers—Voting Information.”

Director Nominees and Director Nominees’ Experience and Qualifications

The Board annually reviews the appropriate skills and characteristics required of Directors in the context of the current composition of the Board, our operating requirements and the long-term interests of our stockholders. The Board believes that its members should possess a variety of skills, professional experience, and backgrounds in order to effectively oversee our business. In addition, the Board believes that each Director should possess certain attributes, as reflected in the Board membership criteria described below.

Our Corporate Governance Guidelines contain the current Board membership criteria that apply to nominees recommended for a position on the Board. Under those criteria, members of the Board should:

have the highest professional and personal ethics and values, consistent with our long-standing values and standards;
have broad experience at the policy-making level in business, government, education, technology or public service;
be committed to enhancing stockholder value and represent the interests of all of our stockholders; and
have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience (which means that Directors’ service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all Director duties).

In addition, the NGSR Committee takes into account a potential Director’s ability to contribute to the diversity of background (such as race, gender, and cultural background) and experience represented on the Board, and it reviews its effectiveness in balancing these considerations when assessing the composition of the Board. Although the Board uses these and other criteria as appropriate to evaluate potential nominees, it has no stated minimum criteria for nominees. Our Corporate Governance Guidelines can be found on our website at https://investor.hp.com/governance/ governance-documents/default.aspx.

All members of the HP Board are provided with opportunities for in-person and remote Director education on an ongoing basis, covering a variety on subjects relevant to HP. Recent topics have included strategy, innovation, people and culture development, best-practices in governance and leadership, industry updates and technology trends.

The Board believes that all the nominees named below are highly qualified, and have the skills and experience required for effective service on the Board. The biographies describe each Director’s qualifications and relevant experience in more detail. The biographies include key qualifications, skills, and attributes most relevant to the decision to nominate candidates to serve on the Board.

All of the nominees have indicated to us that they will be available to serve as Directors. In the event that any nominee should become unavailable, the proxy holders, Dion J. Weisler, Steven J. Fieler and Kim M. Rivera, will vote for a nominee or nominees designated by the Board, or the Board may choose to decrease the size of the Board or leave a vacancy on the Board.

There are no family relationships among our executive officers and Directors.

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  Corporate Governance
 

HP’s Philosophy on Director Skills and Background

Academics
HP benefits from having leading academics in relevant fields sharing their expertise and providing valuable guidance on research trends and emerging areas of innovation.
Disruptive Innovation
At HP we continually seek to reinvent the Print and PC industries to deliver amazing innovative experiences to our customers - having disruptive innovators on our Board helps inform our strategy and drive us forward.
Finance
As a Fortune 100 company with a vast financial footprint, it’s essential that we have Directors with strong financial acumen and experience to provide sound oversight and guide our investment strategies.
Government
Substantive government experience on our Board offers us insight into the regulatory environment of the many jurisdictions in which we operate, their legislative and administrative priorities, and the potential implications for our business.
International Business
HP operates in 180 countries worldwide, making international business experience a vital perspective on our Board and enabling us to succeed in the many markets in which we operate.
Sustainability
Sustainability fuels HP’s innovation and growth while strengthening our business for the long term. Directors with a background and interest in cutting-edge sustainability initiatives offer important leadership as we pursue a more sustainable future.
Technology
With our deep history of innovation, we know that design, technology and user experience add valuable and vital components to our Board dialogue.
Operations
HP operates one of the world’s largest supply chains, spanning a diverse mix of geographies, suppliers, contractors and partners – we benefit from Directors who have successfully led complex operations and can help us to optimize our business model.
Robust Business Experience
As a large global company serving a diverse set of customer segments, HP requires a Board well-versed in navigating complexity and capitalizing on business opportunities to further our innovation and growth.
Science
Cutting edge R&D, science and engineering have been core to HP’s success for decades – Directors with scientific backgrounds can provide technical advice and bring a deep understanding of the innovative core of our company.
Strategy
The dynamic and fast-moving markets in which HP operates globally require a Board with strong strategic insights gained through multi-faceted and challenging prior experiences.
Engagement
Engagement with our stockholders and customers provides HP’s Directors with a unique understanding of the Company and the individuals and institutions we serve worldwide.

Our Directors bring an extraordinary wealth of skills and backgrounds to the Board. From Subra Suresh, an acclaimed scientist whose background in microfluidics gives him key understanding into the future of technologies including 3D printing, to Stacy Brown-Philpot, CEO of TaskRabbit, a company at the forefront of today’s personal services-oriented disruptive technology boom, our Board members are advising us based on real world experiences. MacArthur Fellow Yoky Matsuoka brings her leadership and research and development experiences from acclaimed academic institutions and industry leading companies. Their skills are complementary. Chip Bergh’s experience at Procter & Gamble and now Levi’s means he can instantly grasp the complexities of our supply chain while Shumeet Banerji and Mary Anne Citrino both come from financial industry careers, lending keen eyes to our financial management, risk oversight and investment strategy. Former public company CEOs Stephanie Burns and Robert Bennett lend the benefit of their experience at the helms of companies and Aida Alvarez and Stacey Mobley provide perspectives from the fields of government and corporate law, respectively. Together, these Directors and their skills help us to keep reinventing.

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Corporate Governance  
 

International Experience of our Directors
 
North America Europe Asia       Australia
           

Collective Skills of the Director Nominees

Aida
Alvarez
Shumeet
Banerji
Robert R.
Bennett
Charles V.
Bergh
Stacy Brown-
Philpot
Stephanie
A. Burns
 Mary Anne
Citrino
Yoky
Matsuoka
Stacey
Mobley
Subra
Suresh
Dion J.
Weisler
Academics
Disruptive
Innovation
Engagement
Finance
Government
International
Business
Operations
Robust Business
Experience
Science
Strategy
Sustainability
Technology
Independent
Diversity
Tenure
(including HP Co.)
3 years 8 years 6 years 4 years 4 years 4 years 4 years <1 year 4 years 4 years 4 years

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  Corporate Governance
 

Aida M. Alvarez
Current Role
Chair, Latino Community Foundation (since 2003)
Current Public Company Boards
HP
K12 Inc.
Prior Public Company Boards
MUFG Americas Holdings Corporation
Wal-Mart Stores, Inc.
Qualifications:
Prior Business and Other Experience
Administrator, U.S. Small Business Administration (1997–2001)
Director, Office of Federal Housing Enterprise Oversight (1993–1997)
Vice President, First Boston Corporation and Bear Stearns & Co. (prior to 1993)

Independent Director
Age 69
Director since 2016
HP Board Committees:
HRC
NGSR
Other Key Qualifications
The Honorable Aida Alvarez brings to the Board a wealth of expertise in media, public affairs, finance, and government. She led important financial and government agencies and served in the Cabinet of U.S. President William J. Clinton. She has also been a public finance executive, has chaired a prominent philanthropic organization and was an award-winning journalist. The Board also benefits from Ms. Alvarez’s knowledge of investment banking and finance.
 

Engagement
 

Finance
 

Government
 

Shumeet Banerji
Current Role
Co-founder and Partner of Condorcet, LP, an advisory and investment firm that specializes in developing early stage companies (since 2013)
Current Public Company Boards
HP
Reliance Industries Limited
Prior Public Company Boards
Innocoll AG
Qualifications:
Prior Business and Other Experience
Senior Partner, Booz & Company, a consulting company (May 2012–March 2013)
Chief Executive Officer, Booz & Company (July 2008–May 2012)
President of the Worldwide Commercial Business, Booz Allen Hamilton (February 2008–July 2008)
Managing Director, Europe, Booz Allen Hamilton (2007–2008)
Managing Director, United Kingdom, Booz Allen Hamilton (2003–2007)
Faculty, University of Chicago Graduate School of Business

Independent Director
Age 59
Director since 2011
HP Board Committees:
HRC
NGSR, Chair
Other Key Qualifications
Mr. Banerji brings to the Board a robust understanding of the issues facing companies and governments in both mature and emerging markets around the world through his two decades of work with Booz & Company. In particular, Mr. Banerji has valuable experience in addressing a variety of complex issues ranging from corporate strategy, organizational structure, governance, transformational change, operational performance improvement, and merger integration.
 

Academics
 

Finance
 

International
Business

Robust Business
Experience 

Strategy
 

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Corporate Governance  
 

Robert R. Bennett
Current Role
Managing Director, Hilltop Investments, LLC, a private investment company (since 2005)
Current Public Company Boards
HP
Discovery Communications, Inc.
Liberty Media Corporation
Prior Public Company Boards
Sprint Corporation
Demand Media, Inc.
Discovery Holding Company
Liberty Interactive Corporation
Sprint Nextel Corporation
Qualifications:
Prior Business and Other Experience
President, Discovery Holding Company (2005–2008)
President and Chief Executive Officer, Liberty Media Corporation (now Liberty Interactive Corporation) (prior to 2005)

Independent Director
Age 60
Director since 2013
HP Board Committees:
Audit
FIT, Chair
Other Key Qualifications
Mr. Bennett brings to the Board in-depth knowledge of the media and telecommunications industry and his knowledge of the capital markets and other financial and operational matters from his experience as the president and chief executive officer of another public company, which allows him to provide an important perspective to the Board’s discussions on financial and operational issues. Mr. Bennett also has an in-depth understanding of finance and has held various financial management positions during the course of his career. He also contributes valuable insight to the Board due to his experience serving on the boards of both public and private companies.
 

Finance
 

Operations
 

Robust Business
Experience 

Strategy
 


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  Corporate Governance
 

Charles “Chip” V. Bergh
Current Role
President, Chief Executive Officer, and Director of Levi Strauss & Co., an apparel/ retail company (since September 2011)
Current Public Company and Public Registrant Boards
HP
Levi Strauss & Co.
Prior Public Company Boards
VF Corporation
Qualifications:
Prior Business and Other Experience
Group President, Global Male Grooming, Procter & Gamble Co. (2009–September 2011)
In 28 years at Procter & Gamble, Mr. Bergh served in a variety of executive roles, including managing business in multiple regions worldwide

Independent Chairman of the Board
Age 61
Director since 2015
Chairman since 2017
HP Board Committees:
HRC
NGSR
Other Key Qualifications
Mr. Bergh brings to the Board extensive experience in executive leadership at large global companies and international business management. From his more than 30 years at Levi Strauss and Procter & Gamble, Mr. Bergh has a strong operational and strategic background with significant experience in brand management. He also brings public company governance experience as a board member and chair of boards and board committees of other public and private companies.
 

International
Business 

Operations
 

Robust Business
Experience 

Strategy
 

Stacy Brown-Philpot
Current Role
Chief Executive Officer, TaskRabbit, an online labor interface company (since April 2016)
Current Public Company Boards
HP
Nordstrom, Inc.
Prior Public Company Boards
None
Qualifications:
Prior Business and Other Experience
Chief Operating Officer, TaskRabbit (January 2013-April 2016)
Entrepreneur-in-Residence, Google Ventures, the venture capital investment arm of Google, Inc., a technology company (“Google”) (May 2012–December 2012)
Senior Director of Global Consumer Operations, Google (2010–May 2012)
Prior to 2010, Ms. Brown-Philpot served in a variety of Director-level positions at Google
Prior to joining Google in 2003, Ms. Brown-Philpot served as a senior analyst and senior associate at the financial firms Goldman Sachs and PwC

Independent Director
Age 43
Director since 2015
HP Board Committees:
Audit
NGSR
Other Key Qualifications
Ms. Brown-Philpot brings to the Board extensive operational, analytical, financial, and strategic experience. In addition to her current role as CEO of TaskRabbit, Ms. Brown-Philpot’s decade of experience leading various operations at Google and her prior financial experience from her roles at Goldman Sachs and PwC provide unique operational and financial expertise to the Board.
 

Disruptive 
Innovation  

Finance
 

Operations
 

Robust Business
Experience 

Strategy
 

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Corporate Governance  
 

Stephanie A. Burns
Current Role
Director
Current Public Company Boards
HP
Corning Incorporated
Kellogg Company
Prior Public Company Boards
Dow Corning Corporation
GlaxoSmithKline plc
Manpower, Inc.
Qualifications:
Prior Business and Other Experience
Chief Executive Officer, Dow Corning Corp., a silicon-based manufacturing company (2004–May 2011)
President, Dow Corning (2003–November 2010)
Executive Vice President, Dow Corning (2000–2003)

Independent Director
Age 64
Director since 2015
HP Board Committees:
FIT
HRC, Chair
Other Key Qualifications
Dr. Burns has more than 30 years of global innovation and business leadership experience and brings significant expertise in scientific research, product development, issues management, science and technology leadership, and business management to the Board. Dr. Burns also brings public company governance experience to the Board as a member of boards and board committees of other public companies.
 

Finance
 

International
Business 

Operations
 

Robust Business
Experience

Science
 

Strategy
 


Mary Anne Citrino
Current Role
Senior Advisor and former Senior Managing Director, The Blackstone Group, an investment firm (since 2004)
Current Public Company Boards
HP
Royal Ahold Delhaize
Alcoa Corporation
Barclays
Prior Public Company Boards
Health Net, Inc.
Dollar Tree Inc.
Qualifications:
Prior Business and Other Experience
Managing Director, Global Head of Consumer Products Investment Banking Group, and Co-head of Health Care Services Investment Banking, Morgan Stanley (1986–2004)

Independent Director
Age 59
Director since 2015
HP Board Committees:
Audit, Chair
FIT
Other Key Qualifications
Ms. Citrino’s more than 30-year career as an investment banker provides the Board with substantial knowledge regarding business operations strategy, as well as valuable financial and investment expertise. She also brings public company governance experience as a member of boards and board committees of other public companies.
 

Finance
 

International
Business

Strategy
 

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  Corporate Governance
 

Yoky Matsuoka
Current Role
Vice President, Healthcare at Google, a subsidiary of Alphabet Inc. (“Alphabet”), a technology company (since 2018)
Current Public Company Boards
None
Prior Public Company Boards
None
Qualifications:
Prior Business and Other Experience
Chief Technology Officer, Nest, Alphabet (2010-2015; 2017-2018)
Executive experience in healthcare, Apple Inc., a technology company (May 2016-December 2016)
Chief Executive Officer, Quanttus, a technology company (2015-2016)
Head of Innovation and Co-Founder, Google [X], Alphabet (2009-2010)
Academic experience including professorships at Carnegie Mellon University and the University of Washington (2000-2011)
MacArthur Fellow (2007)

Independent Director
Age 46
Director since 2019
HP Board Committees:
Audit
FIT
Other Key Qualifications
Yoky Matsuoka is an accomplished executive and technologist who brings more than two decades of leadership experience to the HP Board. Throughout her career, she has held innovation-centric roles in both Silicon Valley and in academia and brings her strong background in management, strategy and research & development to the Board.
 

Academics
 

Disruptive
Innovation 

Finance
 

Robust Business
Experience

Science
 

Technology
 


Stacey Mobley
Current Role
Director
Current Public Company Boards
HP
Prior Public Company Boards
International Paper Company
Qualifications:
Prior Business and Other Experience
Senior Counsel and Advisor, Dickstein Shapiro, LLP, a law firm (2008–2016)
Senior Vice President, Chief Administrative Officer and General Counsel, E.I. du Pont de Nemours and Company (“DuPont”), a chemical company (1999–2008)
35 years of experience at DuPont (1973–2008) serving in a variety of leadership roles

Independent Director
Age 73
Director since 2015
HP Board Committees:
HRC
NGSR
Other Key Qualifications
Mr. Mobley’s more than 35 years of legal and senior management experience at DuPont brings a deep understanding of governance, regulations and risk management. He also brings public company governance experience as a member of boards and board committees of other public and private companies.
 

International
Business 

Operations
 

Robust Business
Experience 

Technology



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Corporate Governance  
 

Subra Suresh
Current Role
President, Nanyang Technological University, autonomous university in Singapore (since January 2018)
Current Public Company Boards
HP
Singapore Exchange Limited
Prior Public Company Boards
None
Qualifications:
Prior Business and Other Experience
Senior Advisor, Temasek International Private Ltd., an investment company headquartered in Singapore (since September 2017)
President, Carnegie Mellon University, a global research university (July 2013–June 2017)
Director, National Science Foundation, a federal agency charged with advancing science and engineering research and education (October 2010–March 2013)
Dean, School of Engineering, and the Vannevar Bush Professor of Engineering, Massachusetts Institute of Technology (2007–2010)

Independent Director
Age 62
Director since 2015
HP Board Committees:
Audit
FIT
Other Key Qualifications
Mr. Suresh’s experience as the president of a prominent research university and his experience leading new entrepreneurship, innovations, and creativity efforts bring the Board valuable insights with respect to strategic opportunities and a robust understanding of the organizational, scientific, and technological requirements of ongoing innovation.
 


Academics
 


Disruptive
Innovation 

Finance
 

Government


Science
 

Strategy
 

Technology
 


Dion J. Weisler
Current Role
President and Chief Executive Officer, HP (since November 2015)
Current Public Company Boards
HP
Thermo Fisher Scientific Inc.
Prior Public Company Boards
None
Qualifications:
Prior Business and Other Experience
Executive Vice President, the Printing and Personal Systems Group, Hewlett-Packard Company (June 2013–November 2015)
Senior Vice President and Managing Director, Printing and Personal Systems, Asia Pacific and Japan, Hewlett-Packard Company (January 2012–June 2013)
Vice President and Chief Operating Officer, the Product and Mobile Internet Digital Home Groups, Lenovo Group Ltd. (January 2008–December 2011)

President, Chief Executive
Officer and Director
Age 51
Director since 2015
HP Board Committees:
N/A
Other Key Qualifications
Mr. Weisler’s international business and leadership experience provide the Board with an enhanced global perspective. Mr. Weisler’s more than 25 years of experience in the information & technology industry and his position as HP’s Chief Executive Officer provide the Board with valuable industry insight and expertise.
 

Disruptive
Innovation 

International
Business 

Operations
 

Robust Business
Experience

Strategy
 

Technology
 


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  Corporate Governance
 

Stockholder Outreach

We believe that effective corporate governance should include regular, constructive conversations with our stockholders. Over the past year, the Board has continued to engage with stockholders, including seeking and encouraging feedback from stockholders about our corporate governance practices by conducting stockholder outreach and engagement throughout the year. Our annual corporate governance investor outreach cycle, in which the Chair of the Board, Chair of the HRC and other Directors typically participate, is outlined below.

Our Investor Outreach Calendar

November 2017
Q4 2017 HP Inc. Earnings Conference Call
Credit Suisse Technology, Media & Telecom Conference
December 2017
2017 Wells Fargo Tech Summit
Global Mizuho Investor Conference (MIC) 2017
Barclays Global Technology, Media & Telecommunications Conference
January 2018
CES 2018
Citi 2018 Global TMT West Conference
2018 HP Inc. Sustainability Webcast

Annual Stockholder outreach conducted*

February 2018
Q1 2018 HP Inc. Earnings Conference Call
Morgan Stanley Technology, Media & Telecom Conference, San Francisco
April 2018
HP Inc. Annual Stockholder Meeting
May 2018
Q2 2018 HP Inc. Earnings Conference Call
Bernstein’s 34th Annual Strategic Decisions Conference (SDC)
June 2018
2018 Bank of America Merrill Lynch Global Technology Conference
August 2018
Q3 2018 HP Inc. Earnings Conference Call

Ongoing governance Stockholder outreach conducted

September 2018
Citi 2018 Global Technology Conference
HPQ 3D Printing Metal Jet Technology Briefing
Deutsche Bank’s Technology Conference
October 2018
HP Securities Analyst Meeting*
HP Inc. Announces Fiscal 2019 Financial Outlook
*

Event attended by member(s) of the HP Board.

In fiscal 2018, we conducted two outreach programs: the first in early 2018, as part of our annual investor outreach cycle, and the second in September and October 2018, as part of our outreach regarding our governance profile and the 2018 written consent proposal, described below. Through these two programs, we met or spoke with institutional investors representing more than 50% of our outstanding stock during fiscal 2018 as well as with proxy advisor firms.

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Corporate Governance  
 

Response to 2018 Written Consent Proposal

HP values input from stockholders throughout the year. We currently afford stockholders the opportunity to act between annual meetings through the combination of a special meeting right as well as a robust stockholder outreach program that demonstrates our openness to direct stockholder engagement. At our 2018 Annual Meeting, holders of 37.5% of our outstanding shares expressed support for an advisory proposal to provide stockholders with the ability to act by written consent without a meeting of stockholders. Of the votes cast, 50.4% supported the proposal while 49.2% voted against it, with 0.3% abstaining.

In 2018, the Board recommended voting against this proposal for the following key reasons:

HP’s commitment to good corporate governance;

the existing right of HP stockholders to call a special meeting of stockholders; and

the Board’s belief that the proposal would circumvent the protections, procedural safeguards and advantages provided to all stockholders by stockholder meetings.

The Board remains concerned about the disruptive effect a stockholder written consent solicitation could have on the Board’s and stockholders’ ability to thoroughly consider significant corporate actions and possible alternatives. The Board also is mindful of the closeness of the written consent proposal vote at the 2018 Annual Meeting and the significant lack of consensus reflected in the vote, as well as the importance of respecting the perspectives expressed by all stockholders. The Board determined that, in light of these and other concerns raised regarding written consent, the appropriate approach would be to conduct further engagement with our stockholders to better understand the vote results and incorporate stockholder feedback into any actions we might take.

We view our relationships with stockholders and other stakeholders as fundamental to good corporate governance practices, and we have a strong record of stockholder engagement and responsiveness to stockholder concerns. We believe that effective corporate governance should include regular, constructive conversations with our stockholders. The Board and management have continued to seek out and encourage feedback from stockholders about our corporate governance practices by conducting annual stockholder outreach and engagement in January 2019. In addition, consistent with our commitment to soliciting and considering feedback from stockholders, during September and October 2018, and again in January 2019, we solicited specific feedback from our stockholders related to the written consent proposal to better understand how stockholders think about responsiveness in light of the closeness of the vote for the proposal. We also sought to assess from stockholders whether support for the proposal in fact represents a desire for written consent or was intended to convey other preferences or priorities (for example, a view that our original 25% threshold for calling a special meeting was higher than that particular stockholder preferred).

On this particular issue, HP representatives engaged with our 75 largest stockholders in September and October of 2018 and again in January of 2019, representing over 68% of our outstanding shares as of September 2018. We received feedback from stockholders that represented over 50% of our outstanding shares. Of those that provided feedback, approximately 60% (representing almost 30% of our outstanding shares at the time) voted against the proposal and almost 40% (representing over 20% of our outstanding shares at the time) voted for the proposal. Senior management and three members of the Board, including the Chair of the Board and the Chair of the HRC and a member of the NGSRC, then invited our top 20 stockholders, representing an aggregate of over 46% of our outstanding shares at the time, to engage in further discussions during our annual stockholder outreach program in January 2019.

During these interactions, we discussed HP’s record of strong governance practices and responsiveness to stockholder concerns. We specifically focused on the 2018 written consent proposal with our stockholders, explaining the Board’s reasons for opposing the proposal and asking the stockholders to provide their perspectives on the rationale underlying their particular vote decisions and on potential next steps for HP. Our stockholders were pleased to be consulted and overall expressed their appreciation of our current corporate governance profile, long record of engagement with and responsiveness to stockholders, commitment to transparency, and openness to addressing stockholders’ desires through a more accessible opportunity to act between annual meetings. Not one of the stockholders with whom we spoke raised any concerns or issues with the approach we took with respect to seeking additional feedback and conducting further engagement rather than unilaterally acting without the benefit of such additional outreach.

We heard the following key perspectives from our stockholders. First, a large majority of the stockholders we consulted prefer the right to call a special meeting over the right to act by written consent, expressing the views that the former is more protective of stockholders, accessible and inclusive, among other reasons. Nearly 76% of the stockholders we conversed with during our engagement (representing over 38% of our outstanding shares at the time) preferred that we consider lowering our special meeting threshold instead of implementing written consent. Many of those with whom we spoke volunteered that they had voted against the written consent proposal specifically because HP already afforded stockholders the right to call a special meeting. Many of these stockholders further noted they prefer the right to call a special meeting over the right to act by written consent because, while both provide stockholders an avenue to be heard outside the annual meeting cycle, special meetings better facilitate participation of all stockholders to discuss the topic under consideration through an orderly process.

Regardless of their views on the right to act by written consent, stockholders believed it was important that the Board appropriately respond to the various views expressed in the vote outcome regarding the written consent proposal, including through engagement. Before taking action, however, the Board wanted to understand how our stockholders would view the Board unilaterally amending our Bylaws to lower the special meeting threshold in lieu of adopting written consent, and whether they would consider this approach responsive to the close vote outcome on the written consent proposal.

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In addition to stockholder feedback, the Board considered the following factors when considering implementation of the proposal:

the slim margin by which the proposal passed (50.4% of the votes cast, representing 37.5% of the outstanding shares), and the significant number of stockholders that opposed the proposal (49.2% of the votes cast);

the lack of consensus among our stockholders regarding whether written consent would in fact be a desirable feature if included in our governance profile;

a nearly identical written consent stockholder proposal having failed at our 2015 Annual Meeting, with support of only 43.3% of votes cast;

our special meeting threshold of 25% was appropriate at the time Hewlett-Packard Company adopted the right in 2007, and it continues to be the median threshold for stockholders to call a special meeting among S&P 500 companies;

evolving voting policies and guidelines of investors and third-party advisory firms regarding the ability to act in between annual meetings;

the rights we already provide our stockholders, which include the right to call a special meeting and nominate Directors to the Board through proxy access; and

our current stockholder base and the relatively constant presence of at least one stockholder that has owned or controlled the vote of more than ten percent of our outstanding shares over the past few years, which led the Board to believe a 15% threshold was appropriate for the right to call a special meeting.

During our engagement, all stockholders we conversed with approved of or did not express an adverse view on the Board’s process in responding to the stockholder proposal and thoughtful approach to gathering feedback. Many stockholders even expressed the view that HP’s then-current governance regime, including the right for stockholders to call a special meeting at a 25% threshold, provides appropriate stockholder rights and that the Board did not need to take any action to provide additional stockholder rights. The Board and management, however, are mindful of some stockholders’ desires for accessible rights, and therefore concluded that non-action would not be necessarily responsive to stockholders’ concerns in our particular circumstances.

Accordingly, the Board determined it would be consistent with the wishes of the broadest group of our stockholders and responsive to the vote on the written consent proposal to facilitate the ability of stockholders to act in between annual meetings. Specifically, the Board determined, taking into account the feedback received from stockholders among other factors, to amend the existing stockholder right to call special meetings in our Bylaws to lower the threshold requirement to call a special meeting from 25% to 15% of our outstanding shares in lieu of adopting the right to act by written consent. This amendment was made effective as of February 7, 2019. We will continue to welcome stockholder feedback on these and other matters of importance to our investors and will incorporate such feedback appropriately into our decision-making actions and approach to engagement and governance.

Recent Corporate Governance Updates

HP’s corporate governance policies and practices are continuously evolving – from our time as Hewlett-Packard Company to our new identity as HP Inc., we’ve always led by example, adopting changes in line with our commitment to the highest standards of governance. Stockholder input has been key to our progression and as we continue to evolve our corporate governance policies and practices, we will continue to solicit feedback from our stockholders regarding our governance profile. The following examples highlight some of the key features of our corporate governance policies and practices, including updates we have recently made to strengthen our policies and practices:

Our Board continues to believe that it is in the current best interests of our stockholders and the Company to have an independent Chairman. Accordingly, Chip Bergh has served as our independent Chairman since July 2017.

We continue to engage in a robust and ongoing stockholder engagement program. In fiscal 2018, in addition to our CEO and independent Chairman, the Chair of our HRC Committee also met with stockholders during our stockholder engagement program. In particular, as described in detail above, we also conducted robust outreach to stockholders in the fall of 2018 focused specifically on our governance profile and engaged in substantive discussions regarding desired responses to the 2018 stockholder proposal on stockholder action by written consent.

Since 2016, our NGSR Committee has reviewed and discussed our environmental, sustainability, diversity and social impact strategy at every regular meeting of the Committee, providing valuable advice and insights. As a result, in 2018 HP was awarded the highest possible score during ISS’s first-ever Environmental & Social (E&S) Disclosure QualityScore review process. For more information on our efforts in this space including our Sustainable Impact Report please visit https://www8.hp.com/us/en/hp-information/global-citizenship/index.html.

As described above, effective as of January 22, 2019, we have amended the stockholder right to call special meetings in our Bylaws to lower the threshold requirement to call such a meeting from 25% to 15% of our outstanding shares. We decided to amend this right after extensive outreach to our top 75 stockholders regarding their desired response to the 2018 stockholder proposal on stockholder action by written consent.

As part of our commitment to the highest standards of governance, in 2018 we became a signatory to the Commonsense Principles of Corporate Governance 2.0, a set of corporate governance principles we and the other signatories believe serve the best interests of U.S. corporations and financial markets.


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Corporate Governance  
 

We have evaluated our governance practices against the Corporate Governance Principles for U.S. Listed Companies published by the Investor Stewardship Group (“ISG”), a collective of some of the largest U.S.-based institutional investors and global asset managers, and we believe that our governance policies and practices are consistent with the ISG principles. The following table shows how certain of our key governance practices align with the ISG principles:

ISG Principle        HP Governance Policy or Practice

Principle 1:

Boards are accountable to stockholders.

Annual election of each Director, for a one-year term
Proxy access that allows stockholder to nominate Directors
Each Director has agreed to tender his or her resignation if they fail to receive a majority of votes cast
Annual stockholder outreach program that typically includes the Chair of the Board, the Chair of the HRC and other Directors
No poison pill
Extensive disclosure of our corporate governance and Board practices

Principle 2:

Stockholders should be entitled to voting rights in proportion to their economic interest.

One share, one vote

Principle 3:

Boards should be responsive to stockholders and be proactive in order to understand their perspectives.

Directors participate in our stockholder outreach programs, including in our outreach regarding the 2018 written consent proposal
Directors are available for stockholder engagement outside our engagement programs
Many Directors participate in and attend our annual meeting, at which management and those Directors present respond to each stockholder question

Principle 4:

Boards should have a strong, independent leadership structure.

Independent Chair of the Board, with clearly defined responsibilities
Structure for a Lead Independent Director if the Chair is not independent
Robust independent key committees and other structures for facilitating contribution of independent Directors

Principle 5:

Boards should adopt structures and practices that enhance their effectiveness.

Ten of our eleven Director nominees are independent, with our Director nominees representing diverse backgrounds, skills and experiences
Each Board committee is fully independent
Track record of open dialogue between the Board and management
Robust annual self-evaluation program

Principle 6: 

Boards should develop management incentive structures that are aligned with the long-term strategy of the company.

Performance-oriented LTI mix with metrics that support our long-term strategy
Combination of short- and long-term performance goals
Executive and Director share ownership requirements

Director Independence

Our Corporate Governance Guidelines, which are available on our website at https://investor.hp.com/governance/governance-documents/default.aspx, provide that a substantial majority of the Board will consist of independent Directors and that the Board can include no more than three Directors who are not independent Directors. The independence standards can be found as Exhibit A to our Corporate Governance Guidelines. Our Director independence standards are consistent with, and in some respects more stringent than, the New York Stock Exchange (“NYSE”) Director independence standards. In addition, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the applicable listing and the U.S. Securities and Exchange Commission (the “SEC”) standards and each member of the HRC Committee meets the heightened independence standards required for compensation committee members under the applicable listing standards and SEC standards.

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  Corporate Governance
 

Under our Corporate Governance Guidelines, a Director will not be considered independent in the following circumstances:

The Director is, or has been within the last three years, an employee of HP, or an immediate family member of the Director is, or has been within the last three years, an executive officer of HP.
The Director has been employed as an executive officer of HP, its subsidiaries or affiliates within the last five years.
The Director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from HP, other than compensation for Board service, compensation received by a Director’s immediate family member for service as a non-executive employee of HP, and pension or other forms of deferred compensation for prior service with HP that is not contingent on continued service.
(A) The Director or an immediate family member is a current partner of the firm that is HP’s internal or external auditor; (B) the Director is a current employee of such a firm; (C) the Director has an immediate family member who is a current employee of such a firm and who personally worked on HP’s audit; or (D) the Director or an immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on HP’s audit within that time.
The Director or an immediate family member is, or has been in the past three years, employed as an executive officer of another company where any of HP’s present executive officers at the same time serves or has served on that company’s compensation committee.
The Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, HP for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.
The Director is affiliated with a charitable organization that receives significant contributions from HP.
The Director has a personal services contract with HP or an executive officer of HP.

For these purposes, an “immediate family” member includes a person’s spouse, parents, step-parents, children, step-children, siblings, mother and father-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the Director’s home.

In determining independence, the Board reviews whether Directors have any material relationship with HP. An independent Director must not have any material relationship with HP, either directly or as a partner, stockholder or officer of an organization that has a relationship with HP, nor any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director. In assessing the materiality of a Director’s relationship to HP, the Board considers all relevant facts and circumstances, including consideration of the issues from the Director’s standpoint and from the perspective of the persons or organizations with which the Director has an affiliation, and is guided by the standards set forth above.

In making its independence determinations, the Board considered transactions occurring since the beginning of fiscal 2016 between HP and entities associated with the independent Directors or their immediate family members. In addition to the transactions described below under “Fiscal 2018 Related-Person Transactions,” if any, the Board’s independence determinations included consideration of the following transactions:

Current Directors:

Mr. Bergh has served as President and Chief Executive Officer and a Director of Levi Strauss & Co. since September 2011. HP has entered into transactions for the purchase and sale of goods and services in the ordinary course of its business during the past three fiscal years with Levi Strauss & Co. The amount that HP paid in each of the last three fiscal years to Levi Strauss & Co., and the amount received in each fiscal year by HP from Levi Strauss & Co., did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of either company’s consolidated gross revenues.
Mr. Suresh has served as President of Nanyang Technological University since January 2018. HP has entered into transactions for the purchase and sale of goods and services in the ordinary course of its business during the past three fiscal years with Nanyang Technological University. The amount that HP paid in each of the last three fiscal years to Nanyang Technological University, and the amount received in each fiscal year by HP from Nanyang Technological University, did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of either entity’s consolidated gross revenues.
Ms. Matsuoka has served as Vice President, Healthcare at Google, a subsidiary of Alphabet, since 2018. HP has entered into transactions for the purchase and sale of goods and services in the ordinary course of its business during the past three fiscal years with Google and Alphabet. The amount that HP paid in each of the last three fiscal years to Google and Alphabet, and the amount received in each fiscal year by HP from Google and Alphabet, did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of either company’s consolidated gross revenues.
Each of Mr. Banerji, Mr. Bennett, Ms. Brown-Philpot, Ms. Burns, Ms. Citrino, Ms. Matsuoka, and Mr. Mobley, or one of their immediate family members, is a non-employee Director, trustee or advisory board member of another company that did business with HP at some time during the past three fiscal years. These business relationships were as a supplier or purchaser of goods or services in the ordinary course of business.

As a result of this review, the Board has determined the transactions described above and below under “Fiscal 2018 Related-Person Transactions,” if any, would not interfere with the Director’s exercise of independent judgment in carrying out the responsibilities of a Director. The Board has also determined that, with the exception of Mr. Weisler, (i) each of HP’s independent Directors, including Ms. Alvarez, Mr. Banerji, Mr. Bennett, Mr. Bergh, Ms. Brown-Philpot, Ms. Burns, Ms. Citrino, Ms. Matsuoka, Mr. Mobley and Mr. Suresh, and (ii) each of the members of the Audit Committee, the HRC Committee and the NGSR Committee, has (or had) no material relationship with HP (either directly or as a partner, stockholder or officer of an organization that has a relationship with HP) and is (or was) independent within the meaning of the NYSE and our Director independence standards. The Board has determined that Mr. Weisler is not independent because of his status as our current President and CEO.

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Board Leadership Structure

The HP Board continuously evaluates its leadership structure. Our Board continues to believe that it is in the best interests of the Company and its stockholders to separate the Chairman of the Board and Chief Executive Officer roles and for our Chairman to be independent. Currently, Mr. Bergh serves as our independent Chairman of the Board. Our Board believes that our current structure, with an independent Chairman, who is well-versed in the needs of a complex business and has strong, well-defined governance duties, gives our Board a strong leadership and corporate governance structure that best serves the needs of HP and its stockholders. The Board will continue to evaluate its leadership structure on an ongoing basis and may make changes as appropriate to HP and its future needs. For additional information regarding HP’s board leadership structure please read the Board’s Opposition Statement to the Stockholder Proposal, beginning on page 66.

Independent Chairman

oversees the planning of the annual Board of Directors calendar
in consultation with the CEO and the other Directors, schedules, approves and sets the agenda for meetings of the Board and chairs and leads the discussion at such meetings
chairs HP’s annual meeting of stockholders
is available in appropriate circumstances to speak on behalf of the Board and for consultation and direct communication with major stockholders upon request
provides guidance and oversight to management
helps with the formulation and implementation of HP’s strategic plan
serves as the Board liaison to management
has the authority to call meetings of the independent Directors and schedules, sets the agenda for, and presides at executive sessions of the independent Directors
approves information sent to the Board of Directors
assists the Chairs of the Board committees in preparing agendas for the respective committee meetings
works with the HRC Committee to coordinate the annual performance evaluation of the CEO
works with the NGSR Committee to oversee the Board and committee evaluations and recommends changes to improve the Board, the committees, and individual Director effectiveness
performs such other functions and responsibilities as set forth in the Corporate Governance Guidelines or as requested by the Board from time to time

Board Risk Oversight

The Board, with the assistance of committees of the Board as discussed below, reviews and oversees our enterprise risk management (“ERM”) program. This enterprise-wide program is designed to enable effective and efficient identification of, and management’s visibility into, critical enterprise risks. It also facilitates the incorporation of risk considerations into decision making. The ERM program was established to clearly define risk management roles and responsibilities, bring together senior management to discuss risk, promote visibility and constructive dialogue around risk at the senior management and Board levels and facilitate appropriate risk response strategies. Under the ERM program, management develops a holistic portfolio of our enterprise risks by facilitating business and function risk assessments, performing targeted risk assessments and incorporating information regarding specific categories of risk gathered from various internal HP organizations. Management then develops risk response plans for risks categorized as needing management focus and response and monitors other identified risk focus areas. Management provides regular reports on the risk portfolio and risk response efforts to senior management and to the Audit Committee.

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The Board oversees management’s implementation of the ERM program, including reviewing our enterprise risk portfolio and evaluating management’s approach to addressing identified risks. Various Board committees also have responsibilities for oversight of risk management that supplement the ERM program as follows:

Compensation Risk Assessment

During fiscal 2018, Frederic W. Cook and Co., Inc. (“FW Cook”), independent compensation consultants to the HRC Committee, conducted a risk assessment of our executive compensation programs, policies and processes for all employees, reviewing our practices relative to market “best practice” and considering risk mitigation factors. FW Cook concluded that our compensation programs and practices do not create risks that are reasonably likely to have a material adverse effect on HP.

Overall, we believe that our compensation programs contain an appropriate balance of fixed and variable features and short- and long-term incentives, as well as complementary metrics with reasonable, performance-based goals and linear payout curves under most plans. We believe that these factors, combined with effective Board and management oversight, operate to mitigate risk and reduce the likelihood of employees engaging in excessive risk-taking behavior with respect to the compensation-related aspects of their jobs.

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Current Committee Memberships

Name       Audit       Finance, Investment
and Technology
      HR and Compensation       Nominating,
Governance and
Social Responsibility
Independent Directors
Aida M. Alvarez
Shumeet Banerji Chair
Robert R. Bennett Chair
Charles “Chip” V. Bergh
Stacy Brown-Philpot
Stephanie A. Burns Chair
Mary Anne Citrino Chair
Yoky Matsuoka
Stacey Mobley
Subra Suresh
Other Directors
Dion J. Weisler

— Member
— Audit Committee “financial expert”

During fiscal 2018, the Board held 7 meetings, all of which included executive sessions. Each incumbent Director serving during fiscal 2018 attended at least 75% of the aggregate of all Board and applicable committee meetings held during the period that he or she served as a Director. During fiscal 2018, we had the following four standing committees, which held the number of meetings indicated in parentheses during fiscal 2018: Audit Committee (13); FIT Committee (7); HRC Committee (5); and NGSR Committee (5). All of the committee charters are available on our investor relations website at https://investor.hp.com/governance/governance-documents/default.aspx.

Directors are encouraged to participate in our annual meeting of stockholders. At our last annual meeting on April 24, 2018, 6 of our 10 then-Directors, all 10 of whom are standing for re-election this year, attended the meeting.

Audit Committee

We have an Audit Committee established in accordance with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee represents and assists the Board in fulfilling its responsibilities for overseeing our financial reporting processes and the audit of our financial statements. Specific duties and responsibilities of the Audit Committee include, among other things:

Independent Registered Public
Accounting Firm
     
appointing, overseeing the work of, evaluating, compensating and retaining the independent registered public accounting firm;
discussing with the independent registered public accounting firm its relationships with HP and its independence, and periodically considering whether there should be a regular rotation of the accounting firm in order to assure continuing independence;
overseeing the rotation of the independent registered public accounting firm’s lead audit and concurring partners at least once every five years and the rotation of other audit partners at least once every seven years in accordance with SEC regulations, with the Audit Committee directly involved in the selection of the accounting firm’s lead partner; and
determining whether to retain or, if appropriate, terminate the independent registered public accounting firm.
Audit & Non-Audit Services;
Financial Statements;
Audit Report
reviewing and approving the scope of the annual independent audit, the audit fee, other audit services, and the financial statements;
preparing the Audit Committee report for inclusion in the annual proxy statement; and
overseeing our financial reporting processes and the audit of our financial statements, including the integrity of our financial statements.

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Disclosure Controls; Internal Controls & Procedures; Legal Compliance      
reviewing our disclosure controls and procedures, internal controls, information security policies, internal audit function, and corporate policies with respect to financial information and earnings guidance; and
overseeing compliance with legal and regulatory requirements.
Risk Oversight
reviewing risks facing HP and management’s approach to addressing these risks, including significant risks or exposures relating to litigation and other proceedings and regulatory matters that may have a significant impact on our financial statements; and
discussing policies with respect to risk assessment and risk management.
Related Party Transactions
overseeing relevant related party transactions governed by applicable accounting standards (other than related-person transactions addressed by the NGSR Committee).
Annual Review/Evaluation
annually reviewing the Audit Committee’s charter and performance.

The Board determined that each of Ms. Citrino, chair of the Audit Committee, and the other Audit Committee members (Mr. Bennett, Ms. Brown-Philpot, Ms. Matsuoka and Mr. Suresh) is independent within the meaning of the NYSE and SEC standards of independence for Directors and audit committee members, and has satisfied the NYSE financial literacy requirements. The Board also determined that each of Mr. Bennett, Ms. Brown-Philpot, Ms. Citrino and Mr. Suresh is an “audit committee financial expert” as defined by the SEC rules.

The report of the Audit Committee is included on page 36.

Finance, Investment and Technology Committee

The FIT Committee provides oversight of the finance and investment functions of HP. The FIT Committee’s responsibilities and duties include, among other things:

Treasury Matters      
reviewing or overseeing significant treasury matters such as capital structure and allocation strategy, derivative policy, global liquidity, fixed income investments, borrowings, currency exposure, dividend policy, share issuances and repurchases, and capital spending.
M&A Transactions & Strategic Alliances
assisting the Board in evaluating investment, acquisition, enterprise services, joint venture and divestiture transactions in which we engage as part of our business strategy from time to time and reporting and making recommendations to the Board as to scope, direction, quality, investment levels and execution of such transactions;
evaluating and revising our approval policies with respect to such transactions;
overseeing our integration planning and execution and the financial results of such transactions after integration;
evaluating the execution, financial results and integration of our completed transactions; and
overseeing and approving our strategic alliances.
Capitalization; Debt & Obligations; Swaps
reviewing or overseeing our capital structure and allocation strategy;
overseeing our loans and loan guarantees of third-party debt and obligations; and
annually reviewing and approving certain swaps and other derivative transactions.
Technology Strategies & Guidance
making recommendations to the Board as to scope, direction, quality, investment levels, and execution of our technology strategies;
overseeing the execution of technology strategies formulated by management; and
providing guidance on technology as it may pertain to, among other things, market entry and exit, investments, mergers, acquisitions and divestitures, new business divisions and spin-offs, research and development investments, and key competitor and partnership strategies.

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Nominating, Governance and Social Responsibility Committee

The NGSR Committee oversees, and represents and assists the Board (and management, as applicable) in fulfilling its responsibilities relating to, our corporate governance, Director nominations and elections, HP’s policies and programs relating to global citizenship and other legal, regulatory and compliance matters relating to current and emerging political, environmental, global citizenship and public policy trends. Specific duties and responsibilities of the NGSR Committee include, among other things:

Board Matters      
developing and recommending to the Board the criteria for identifying and evaluating Director candidates and periodically reviewing these criteria;
identifying and recommending candidates to be nominated for election as Directors at our annual meeting, consistent with criteria approved by the Board;
annually assessing the size, structure, functioning, and composition of the Board and recommending assignments of Directors to Board committees and chairs of Board committees;
identifying and recruiting new Directors, establishing procedures for the consideration of Director candidates recommended by stockholders and considering candidates proposed by stockholders;
assessing the contributions and independence of Directors in determining whether to recommend them for election or reelection to the Board; and
periodically reviewing the Board’s leadership structure, recommending changes to the Board as appropriate and, if the Chairman of the Board is not independent, making a recommendation to the independent Directors regarding the appointment of the Lead Independent Director.
HP Governing Documents & Corporate Governance Guidelines & Other Policies
conducting a preliminary review of Director independence and the financial literacy and expertise of Audit Committee members, and making recommendations to the Board related to such matters;
developing and regularly reviewing corporate governance principles, including our Corporate Governance Guidelines;
reviewing proposed changes to our Certificate of Incorporation, Bylaws and Board committee charters; and
establishing policies and procedures for the review and approval of related-person transactions and conflicts of interest, including the reviewing and approving all potential “related-person transactions” as defined under SEC rules.
Stockholder Rights
assessing and making recommendations regarding stockholder rights plans or other stockholder protections, as appropriate; and
reviewing stockholder proposals in conjunction with the CEO and recommending Board responses.
Public Policy Trends & Issues
reviewing emerging corporate governance issues and practices;
identifying, evaluating, and monitoring social, political, and environmental trends, issues, concerns, legislative proposals, and regulatory developments that could significantly affect the public affairs of HP; and
reviewing, assessing, reporting, and providing guidance to management and the full Board relating to activities, policies, and programs with respect to public policy matters and policies and programs relating to global citizenship, as applicable.
Annual Review/Evaluation
overseeing the policies relating to, and the manner in which HP conducts, its government relations activities;
annually reviewing the NGSR Committee’s charter and performance; and
overseeing the annual self-evaluation of the Board and its committees.

The Board determined that each of Mr. Banerji, who serves as chair of the NGSR Committee, and the other NGSR Committee members (Ms. Alvarez, Mr. Bergh, Ms. Brown-Philpot and Mr. Mobley) is independent within the meaning of the NYSE Director independence standards.

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HR and Compensation Committee

The HRC Committee discharges the Board’s responsibilities related 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:

Executive Compensation, Stock Ownership & Performance Reviews      
recommending all elements of the CEO’s compensation to the independent members of the Board for their review and approval;
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;
conducting annual performance evaluation of CEO; soliciting 360 feedback across organization;
reviewing performance feedback on executive team members;
approving severance arrangements and other applicable agreements and policies for executive officers; and
adopting and monitoring compliance with stock ownership guidelines for executive officers.
Non-Equity Compensation Plans, Incentive Plans & Other Employee Benefit Plans
overseeing and 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.
Director Compensation & Stock Ownership
establishing compensation policies and practices for service on the Board and its committees, including annually reviewing the appropriate level of Director compensation and recommending to the Board any changes to that compensation; and
adopting and monitoring compliance with stock ownership guidelines for Directors.
Executive Succession Planning & Leadership Development
reviewing senior management selection and overseeing succession planning, leadership development, diversity and pay equity; and
driving CEO succession planning process in partnership with chairman and full board.
Compensation Consultants
engaging compensation consultants on various topics to understand market perspectives;
engaging compensation consultant for independent perspective on compensation programs; and
assessing the independence of all advisors (whether retained by the HRC Committee or management) that provide advice to the HRC Committee, in accordance with applicable listing standards.
Risk Assessment; Other Disclosure
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;
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
reviewing the results of stockholder advisory votes on HP’s executive compensation program and recommending to the Board or the NGSR Committee how to respond to such votes.
Annual Review/Evaluation
overseeing the annual evaluation of the CEO with input from all non-employee Board members; and
annually evaluating the HRC Committee’s performance and charter.
People Processes & Culture
reviewing employee engagement and cultural initiatives including key training and development programs (executive and manager training, unconscious bias), diversity and inclusion programs and results of the employee engagement survey; and
monitoring the key health metrics to evaluate the workforce including workforce diversity, key hires, turnover and restructuring.

The Board determined that each of Ms. Burns, who serves as chair of the HRC Committee, and the other HRC Committee members (Ms. Alvarez, Mr. Banerji, Mr. Bergh and Mr. Mobley) is independent within the meaning of the NYSE standards of independence for Directors and compensation committee members.

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Executive Sessions

During fiscal 2018, the Directors regularly met in executive session, including executive sessions of only the independent Directors. In fiscal 2019, HP plans to hold additional executive sessions of only the independent Directors. Throughout fiscal 2018, Mr. Bergh served as independent Chairman. As such, Mr. Bergh scheduled and chaired each executive session held during fiscal 2018. Any independent Director may request that an additional executive session be scheduled.

Communications with the Board

Stockholders and other interested parties can contact the HP Board by email at bod@hp.com or by mail at:

The HP Board of Directors
1501 Page Mill Road
Palo Alto, California 94304

All Directors 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, as appropriate. Our independent Directors 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 Chairman of the Board, other independent Directors, or the non-employee Directors should be sent to the e-mail address or street address noted above, to the attention of the Chairman of the Board.

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 website at https://investor.hp.com/governance/integrity-at-hp/default.aspx. If the Board grants any waivers from our Standards of Business Conduct to any of our Directors or executive officers, or if we amend our Standards of Business Conduct, we will, if required, disclose these matters via updates to our website on a timely basis.

Director Compensation and Stock Ownership Guidelines

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. Mr. Weisler, as an employee of the Company, does not receive any separate compensation for his HP Board activities.

For the 2018 Board year, which began March 1, 2018, each non-employee Director was entitled to receive an annual cash retainer of $105,000, an increase of $5,000 from the previous Board year. For fiscal 2018, this therefore equaled an aggregate annual retainer of $103,267, as our board and fiscal years end in February and October, respectively. Non-employee Directors may elect to defer up to 50% of their annual cash retainer. Additionally, in lieu of the annual cash retainer, non-employee Directors may elect to receive an equivalent value of equity either entirely in fully vested shares or in equal values of shares and stock options. For fiscal 2018, one non-employee Director elected to receive an equivalent value of equity in shares and stock options, and two non-employee Directors elected to defer their annual cash retainer.

Each non-employee Director also received an annual equity retainer of $205,000 for service during the 2018 Board year. Under special circumstances, the annual equity retainer may be paid in cash. No annual equity retainer was paid in cash during fiscal 2018. Typically, the annual equity retainer is paid at the election of the Director either entirely in fully vested shares or in equal values of shares and stock options. The number of shares subject to the equity 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. Equity grants to outside Directors are primarily intended to strengthen alignment with shareholder interests and to reinforce a long-term ownership view of the company and its value. Retention is not the focus of equity grants for outside Directors and could cause entrenchment, which is why the HRC Committee eliminated service-related vesting on equity awards in July 2017. Non-employee Directors may elect to defer the settlement of shares received as part of the Director compensation program until either (a) upon the first to occur of the Director’s death, disability (as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) or when the Director no longer serves as a member of the HP Board (a “Separation From Service” as defined in Section 409A of the Code) or (b) April 1 of a given year; however, non-employee Directors may not defer the settlement of any stock options received.

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The Chairman of the Board receives an additional $200,000 annual Chairman retainer in recognition of the greater duties that his position requires. In addition to the regular annual cash and equity retainers, and the Chairman retainer described above, the non-employee Directors who served as chairs of standing committees during fiscal 2018 received cash retainers for such service. The Board approved annual cash retainers for committee chairs as follows for chair service during fiscal 2018:

$25,000 for the Audit Committee Chair from November 1, 2017-March 1, 2018 - effective March 1, 2018, the committee approved an increase of $5,000 to the Audit Committee Chair fee, raising it to $30,000;
$20,000 for the HRC Committee Chair; and
$15,000 for Chairs of other Board standing committees.

Each non-employee Director also receives $2,000 for Board meetings attended in excess of ten meetings per Board year (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 year.

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.

Fiscal 2018 Director Compensation

Name(3)       Fees Earned or
Paid in Cash(1)
($)
      Stock
Awards(2)
($)
      Option
Awards(2)
($)
      All Other
Compensation
($)
      Total
($)
Aida Alvarez       $ 103,267 $ 205,004 $ $— $ 308,271
Shumeet Banerji $ 118,257 $ 205,004 $ $— $ 323,261
Robert R. Bennett $ 122,257 $ 205,004 $ $— $ 327,261
Charles “Chip” V. Bergh $ 233,083 $ 155,014 $ 155,005 $— $ 543,102
Stacy Brown-Philpot $ 107,267 $ 205,004 $ $— $ 312,271
Stephanie A. Burns $ 123,253 $ 205,004 $ $— $ 328,257
Mary Anne Citrino $ 135,586 $ 102,502 $ 102,502 $— $ 340,590
Stacey Mobley $ 103,267 $ 205,004 $ $— $ 308,271
Subra Suresh $ 105,267 $ 205,004 $ $— $ 310,271
Dion J. Weisler(4) $ $ $ $— $
(1)       

For purposes of determining Director compensation, the board year 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 and committee chair fees earned with respect to service during fiscal 2018, as well as any additional meeting fees paid during fiscal 2018. See “Additional Information about Fees Earned or Paid in Cash in Fiscal 2018” below.

(2)

Represents the grant date fair value of stock awards and option awards granted in fiscal 2018 calculated in accordance with applicable accounting standards relating to share-based payment awards. For awards of shares, that amount is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of shares awarded. For elective options, 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, 2018, as filed with the SEC on December 13, 2018. See “Additional Information about Non-Employee Director Equity Awards” below.

(3)

Ms. Matsuoka was appointed to our Board during our Fiscal 2019 year. Accordingly, she did not receive any compensation during Fiscal 2018.

(4)

Mr. Weisler has served as President and CEO of HP since November 1, 2015. Accordingly, he does not receive compensation for his Board service.


Additional Information about Fees Earned or Paid in Cash in Fiscal 2018

Name       Annual
Retainers(1)
($)
      Committee Chair and
Chairman Fees(2)
($)
      Additional
Meeting Fees(3)
($)
      Total
($)
Aida Alvarez   $ 103,267              $            $ $ 103,267
Shumeet Banerji $ 103,267 $ 14,990 $ $ 118,257
Robert R. Bennett $ 103,267 $ 14,990 $ 4,000 $ 122,257
Charles “Chip” V. Bergh $ 33,219 $ 199,863 $ $ 233,082
Stacy Brown-Philpot $ 103,267 $ $ 4,000 $ 107,267
Stephanie A. Burns $ 103,267 $ 19,986 $ $ 123,253
Mary Anne Citrino $ 103,267 $ 28,318 $ 4,000 $ 135,585
Stacey Mobley $ 103,267 $ $ $ 103,267
Subra Suresh $ 103,267 $ $ 2,000 $ 105,267

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(1)         The board year 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 2017 through February 2018 Board year and cash annual retainers earned for service during the first eight months of the March 2018 through February 2019 Board year. This also includes cash earned in the period described that was deferred by Director election into the 2005 Executive Deferred Compensation Plan, which provides that Directors may elect when to receive their deferred cash annual retainer. Directors may not receive their deferred cash annual retainer earlier than January 2021. In the case of a termination of service, Directors can elect to receive the deferred money in the January following the termination of the service if the date occurs prior to the specified distribution year elected.
(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 2017 through February 2018 Board term and fees earned for service during the first eight months of the March 2018 through February 2019 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 any additional meeting fees paid during fiscal 2018 for service in the 2017 Board term ending February 2018. Additional meeting fees for the 2018 Board term, if any, will be paid during fiscal 2019.

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 elective options made to non-employee Directors during fiscal 2018, 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 2018:

Name       Stock Awards
Granted During
Fiscal 2018
(#)
      Option Awards
Granted During
Fiscal 2018
(#)
      Grant Date
Fair Value of
Stock and
Option Awards
Granted During
Fiscal 2018(1)
($)
      Stock Awards
Outstanding
at Fiscal
Year End(2)
(#)
      Option Awards
Outstanding at
Fiscal Year End
(#)
Aida Alvarez 9,670 0        $ 205,004 11,061
Shumeet Banerji 9,670 0 $ 205,004
Robert R. Bennett 9,670 0 $ 205,004
Charles “Chip” V. Bergh 7,312 32,564 $ 310,019 22,295 107,218
Stacy Brown-Philpot 9,670 0 $ 205,004 39,577
Stephanie A. Burns 9,670 0 $ 205,004 9,781
Mary Anne Citrino 4,835 21,534 $ 205,004 27,238 133,515
Stacey Mobley 9,670 0 $ 205,004 39,577
Subra Suresh 9,670 0 $ 205,004 18,736
(1)         Represents the grant date fair value of stock awards and elective options granted in fiscal 2018 calculated in accordance with applicable accounting standards. For stock awards, that number is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of shares awarded. For elective options, 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, 2018, as filed with the SEC on December 13, 2018.
(2) Includes dividend equivalent units accrued with respect to share awards granted in fiscal 2018 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 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” on page 63 of this proxy statement.

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  Corporate Governance
 

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:

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 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:

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;

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 Director; and

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 2018 Related-Person Transactions

We enter into commercial transactions with many entities for which our executive officers or Directors serve as Directors and/or employees in the ordinary course of our business. All of those transactions were pre-approved transactions as defined above. There have otherwise been no related-person transactions (actual or proposed) since the beginning of HP’s last completed fiscal year.

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Management
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 2019 fiscal year.

The Audit Committee has appointed, and as a matter of good corporate governance, is requesting ratification by the stockholders of Ernst & Young LLP as the independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending October 31, 2019. During fiscal 2018, 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” 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.

Vote Required

Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2019 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 at the annual meeting. If the appointment is not ratified, the Board will consider whether it should select another independent registered public accounting firm. 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

The Audit Committee represents and assists the Board in fulfilling its responsibilities for general oversight of the integrity 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 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, 2018, 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
Subra Suresh

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  Audit Matters
 

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 2018 and 2017.

2018 2017
In Millions
Audit Fees(1)          $ 15.9          $ 15.3
Audit-Related Fees(2) $ 3.3 $ 1.7
Tax Fees(3) $ 4 $ 3.3
All Other Fees(4) $ 0.2 $ 0.3
Total $ 23.4 $ 20.6
(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 2018 consisted primarily of accounting consultations, employee benefit plan audits and other attestation services. Audit-related fees for fiscal 2017 consisted primarily of accounting consultations, employee benefit plan audits, and other attestation services.
(3) Tax fees consisted primarily of tax advice and tax planning fees of $1.6 million and $3 million for fiscal 2018 and fiscal 2017, respectively. For fiscal 2018 and fiscal 2017, tax fees also included tax compliance fees of $2.3 million and $0.2 million, respectively.
(4) For fiscal 2018 and fiscal 2017, all other fees included primarily advisory service fees.

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 chair shall report any decisions to pre-approve services and fees to the full Audit Committee at its next regular meeting.

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Management
Proposal No. 3
     
Advisory Vote to Approve Executive Compensation
Our Board recommends a vote FOR the approval of the compensation of our NEOs, 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.

In accordance with SEC rules, our stockholders are being asked to approve, on an advisory or non-binding basis, the compensation of our NEOs as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K — a detailed description of our compensation program is available in the “Compensation Discussion and Analysis.”

Our Board and the HRC Committee believe that we have created 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 NEOs 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, the Board and the HRC Committee value the views of our stockholders and will 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 expect to conduct the next advisory vote at our next annual meeting of stockholders in 2020.

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 advisory approval of this proposal.

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis describes our executive compensation philosophy and programs, the compensation decisions the HRC Committee has made under the program, and the considerations in making those decisions in fiscal 2018.

Named Executive Officers
Our NEOs for fiscal 2018 are:

Dion J. Weisler, President and CEO;

Steven J. Fieler, Chief Financial Officer;

Catherine A. Lesjak, former Chief Financial Officer and Interim Chief Operating Officer¹;

Enrique J. Lores, President, Imaging, Printing and Solutions;

Kim M. Rivera, President, Strategy and Business Management and Chief Legal Officer and General Counsel;

Tracy S. Keogh, Chief Human Resources Officer;

Ron V. Coughlin, former President, Personal Systems²; and

Jon E. Flaxman, former Chief Operating Officer³.

(1)         Ms. Lesjak served as Chief Financial Officer from the beginning of our fiscal year until June 30, 2018 when she was succeeded by Mr. Fieler. She served as Interim Chief Operating Officer from July 1, 2018 until January 1, 2019, when she was succeeded by Ms. Rivera who was appointed to the role of President, Strategy and Business Management.
(2) Mr. Coughlin resigned from this role effective June 13, 2018.
(3)

Mr. Flaxman served as Chief Operating Officer until he passed away on March 28, 2018.


Executive Summary

The HRC Committee continues to review and refine our compensation programs to support our evolving business strategy and attract high caliber executive talent. The HRC Committee’s assessment includes regular stockholder engagement and consideration of stockholder feedback. HP’s fiscal 2018 executive compensation structure remained the same as its fiscal 2017 program.

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  Executive Compensation
 

Below are brief highlights of key compensation decisions with respect to NEOs:

Fiscal 2018 NEO Pay Action         HRC Committee Decision         HRC Committee Rationale
Adjusted base salaries Salary changes for NEOs ranged from 0% to 7.7% based on market competitiveness and performance. Reflect peer group market positioning, individual experience, performance, advancement potential, and internal equity.
Determined earned annual incentives for fiscal 2018 performance Annual incentives for fiscal 2018 were earned, ranging from 165.5% to 180.5% of target, with the CEO at 178% of target and the average payout of other NEOs at 170.2%.(1)

At the beginning of the year, the HRC Committee set target award opportunities at competitive levels versus peers and subject to rigorous threshold-to-maximum performance goals.

Earned awards reflected performance against applicable enterprise-wide, business, and individual goals. The HRC and management ensured that U.S. tax reform’s effects during fiscal 2018 did not result in any windfalls on earned awards. Goals were set for the overall Company and businesses against internal budgets for revenues, net earnings/profits, and free cash flow as a percentage of revenue. Non-financial individual performance goals under the Management by Objectives program (“MBOs”) were set for individuals. The Company delivered strong results in fiscal 2018, achieving above-target results with respect to each financial goal. Further, NEOs successfully delivered against their MBOs as further detailed on pages 43-44.
Determined long-term incentive grants Fiscal 2018 long-term incentives were granted using a mix of 60% PARSUs and 40% time-based RSUs. Grant values for all our NEOs were set at competitive levels versus peers with appropriate incumbent-specific variability for performance, experience, and internal equity. PARSUs are based on relative TSR compared to the S&P 500 and Earnings Per Share (“EPS”) during the three year performance period. The intent was to align pay delivery with stockholder returns. RSUs vest based on continued service to encourage stockholder alignment and to support executive retention.
(1)         Excluding Mr. Coughlin, who did not receive a performance bonus in fiscal 2018 as he left the company prior to the end of the fiscal year.

Oversight and Authority over Executive Compensation

Role of the HRC Committee and its Advisors
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, including our NEOs. Each HRC Committee member is an independent non-employee Director with significant experience in executive compensation matters.

The HRC Committee continually considers feedback from stockholders and the potential executive compensation implications of evolving business and strategic objectives. Based on these considerations, the HRC determined that it would be appropriate to maintain the same overall program structure for 2019. We believe that our current compensation structure incents and rewards achievement of specific goals, reinforces year-over-year results and provides an attractive pay-for-performance opportunity that encourages retention and leadership engagement.

During fiscal 2018, the HRC Committee continued to engage Frederic W. Cook and Co., Inc. (“FW Cook”) as its independent compensation consultant. FW Cook provides analyses and recommendations that inform the HRC Committee’s decisions; identifies peer group companies for competitive market comparisons; evaluates market pay data and competitive-position benchmarking; provides analyses and inputs on program structure, performance measures, and goals; provides updates on market trends and the regulatory environment as it relates to executive compensation; reviews various management proposals presented to the HRC Committee related to executive and director compensation; and works with the HRC Committee to validate and strengthen the pay-for-performance relationship and alignment with stockholder interests. FW Cook does not perform other services for HP, and will not do so without the prior consent of the HRC Committee chair. FW Cook meets with the HRC Committee chair and the HRC Committee outside the presence of management while in executive session.

The HRC Committee met five times in fiscal 2018, and all five of these meetings included an executive session. FW Cook participated in all 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
The Board works with an outside consultant and management in evaluating and defining pay programs. The Board considered market competitiveness, business results, experience, and individual performance in evaluating fiscal 2018 NEO compensation and the overall compensation structure. The Chief Human Resources Officer and other members of our executive compensation team, together with members of our finance and legal organizations, work with the CEO to design and develop the compensation program, to recommend changes to existing program provisions applicable to NEOs and other senior executives, as well as 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.

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Executive Compensation  
 

During fiscal 2018, management continued to engage Meridian Compensation Partners, LLC (“Meridian”) as its 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 independently reviewed by FW Cook, as applicable, on the HRC Committee’s behalf.

During fiscal 2018, Mr. Weisler provided input to the HRC Committee regarding performance metrics and the setting of appropriate performance targets for his direct reports. Mr. Weisler also recommended MBOs for the NEOs (other than himself) and the other senior executives who report directly to him. Mr. Weisler is subject to the same financial performance goals as the executives who lead global functions, and Mr. Weisler’s MBOs and compensation are established by the HRC Committee and recommended to the independent members of the Board for approval.

Use of Comparative Compensation Data and Compensation Philosophy

The HRC Committee reviews the compensation of our Section 16 officers in comparison to that of executives in similar positions at 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 takes size differentiations into consideration when reviewing the results of market data analysis. The HRC Committee uses this information to evaluate how our pay levels and practices compare to market practices.

When determining the peer group, the following characteristics were considered:

Companies that are U.S.-based, listed on a major U.S. exchange, and with executives primarily living in the United States
Companies in the information technology industry sector, as well as non-technology peers in industrial, consumer discretionary, consumer staples, and telecommunications services
Technology companies with 1/5x to 5x HP’s revenue and non-technology companies with 1/2x to 3x HP’s revenue
Companies with non-U.S. revenue greater than or equal to 40% of total revenue
Companies with market capitalizations that are within a reasonable range of HP’s market capitalization
Companies with comparable organizational complexity (i.e.,at least two operating segments and products and services components)
Companies with R&D greater than or equal to 2.5% of total revenue
Companies with primarily B2B, or business-to-business, focus

We believe the resulting peer group provides HP and the HRC Committee with a valid comparison and benchmark for the Company’s executive compensation program and governance practices. For fiscal 2018, the HRC Committee removed EMC from the peer group due to its merger with Dell Inc. The peer group for fiscal 2018 consisted of the following companies:

Fiscal 2018 Peer Group

*         Represents fiscal 2018 reported revenue, except fiscal 2017 reported revenue is provided for Amazon, Verizon, General Electric, IBM, PepsiCo, Intel, Honeywell, Texas Instruments and Xerox.

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  Executive Compensation
 

Process for Setting and Awarding Executive Compensation

A broad range of facts and circumstances is considered in setting our overall executive compensation levels. In fiscal 2018, the HRC Committee continued to set target compensation levels within a competitive range of the market median, although in some cases lower or higher based on each executive’s situation (e.g., attraction and retention of critical talent). The Board maintains a total CEO target compensation package that approximates the median of our competitive market and is consistent with our pay positioning strategy and pay-for-performance philosophy.

The primary factors considered when determining pay opportunities for our NEOs are market competitiveness, internal equity, and individual performance. The weight given to each factor is not formulaic and may differ from year to year or by individual NEO. For example, when we recruit externally, market competitiveness, experience, and the candidate-specific circumstances may weigh more heavily in the compensation decision process. In contrast, when determining year-over-year compensation changes for current NEOs, internal equity and individual performance may factor more heavily in the decision.

The HRC Committee spends significant time determining the appropriate goals for our annual and long-term incentive plans, which make up the majority of NEO compensation. Management makes an initial recommendation of the goals, which is then assessed by 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, budgets and strategic plans, macroeconomic factors, guidance and analyst expectations, industry performance, conditions or goals specific to a particular business segment, and strategic initiatives. MBOs are set based on major shared and individual strategic, operating, and tactical initiatives.

Following the close of the fiscal year, the HRC Committee reviews actual financial results and MBO performance against the goals that it had set for the applicable plans for that year, with payouts under the plans determined based on performance against the established goals. The HRC Committee meets in executive session to review the MBO performance of the CEO and to determine a recommendation for his annual PfR incentive award to be approved by the independent members of the Board. See “2018 Annual Incentives” below for a further description of our results and corresponding incentive payouts.

Listening to our Stockholders on Compensation

HP believes in aligning our compensation with our stockholders’ interests. We regularly engage with our stockholders on a variety of issues, including their views on best practices in executive compensation. Some changes during the last few years to our executive compensation program, shown here, have reflected those conversations with stockholders.

Increased focus on enterprise-wide corporate revenue and corporate net earnings/profit in our annual PfR incentive plan to encourage greater collaboration and teamwork among business leaders.
Replaced Return on Invested Capital (“ROIC”) with EPS in our PARSU grants for stronger alignment with stockholder interests and because it is a more appropriate measure for HP after the separation of HPE.
At the Company’s 2018 annual meeting, the Company’s executive compensation proposal received the support of over 92% of the votes cast. As part of its 2018 executive compensation discussions, the Compensation Committee reviewed the advisory vote result and considered it to be supportive of the Company’s compensation practices.

Determination of Fiscal 2018 Executive Compensation

Under our Total Rewards Program, executive compensation consists of: base salary, annual incentives, long-term incentives, benefits, and perquisites.

The HRC Committee regularly explores ways to improve our executive compensation program by considering stockholder feedback, our current business needs and strategy, and peer group practices. For 2018 the Committee decided to maintain a consistent compensation structure for executives since it supports the business strategy and aligns pay with stockholder interests.

2018 Base Salary
Our executives receive a small percentage of their overall compensation in the form of base salary, which is consistent with our philosophy of tying the majority of 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 have executive base salaries set at or near the market median for comparable positions. In fiscal 2018, salaries comprise on average 11% of our NEOs’ overall compensation, which is consistent with the practice of our peers. To decide the CEO’s salary, the HRC Committee reviews analyses and recommendations provided by FW Cook.

For fiscal 2018, Mr. Weisler’s salary was increased from $1.3 million to $1.4 million, to better align with the market median. The HRC Committee did not change Ms. Lesjak’s base salary. Based on market competitiveness and performance, both Mr. Coughlin’s and Mr. Lores’ base salaries were increased from $725,000 to $750,000, Mr. Flaxman’s base salary was increased from $700,000 to $715,000, Ms. Rivera’s base salary was increased from $645,000 to $675,000 and Ms. Keogh’s base salary was increased from $600,000 to $630,000. Mr. Fieler’s base salary was increased from $480,000 to $690,000 in conjunction with his promotion to CFO on July 1, 2018.

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Executive Compensation  
 

2018 Annual Incentives
The fiscal 2018 annual PfR incentive plan consisted of the following three core financial metrics: revenue, net earnings/profit, and corporate free cash flow as a percentage of revenue. A fourth metric, MBOs, was used to further drive individual performance and achievement of key strategic goals. Each metric was weighted at 25% of the target award value. Each individual metric may fund up to 250% of target; however, the maximum annual PfR incentive for each executive is capped at 200% of target.

The target annual PfR incentive awards for fiscal 2018 were set at 200% of salary for the CEO and 125% of salary for the other NEOs.

The HRC and management ensured that U.S. tax reform’s effects during fiscal 2018 did not result in any windfalls on earned awards.

For fiscal 2018, the HRC Committee again established an “umbrella” formula governing the maximum bonus and then exercised negative discretion in setting actual bonuses. Under 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 PfR incentive award, subject to a maximum bonus of 200% of the NEO’s target bonus, and the maximum $15 million individual cap under the Stock Incentive Plan. Below this umbrella funding structure, actual payouts were determined based upon financial metrics and MBOs established and evaluated by the HRC Committee for Section 16 officers and by the independent members of the Board for the CEO.

Fiscal 2018 Annual Incentive Plan
Corporate Goals  
Key Design Elements Revenue
($ in billions)
Net
Earnings/Profit
($ in billions)
Free Cash Flow as a
% of Revenue(1)
(%)
MBOs % Payout
Metric(2)
(%)
Weight     25 %     25 %     25 %     25 %    
Linkage
Global Functions Executives(3) Corporate Corporate Corporate Individual
Business Unit (“BU”) Executives(4) Corporate/BU Corporate/BU Corporate Individual
Corporate Performance Goals
Maximum Various 250
Target $54.7 $3.2 5.85 % Various 100
Threshold Various 0
(1)         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/profit achievement was above target, the maximum funding level is 250% for this metric. Maximum and threshold information are not disclosed on the basis of competitive harm. However, goals are set at levels we believe to be achievable in connection with strong performance.
(2)         Interpolate for performance between discrete points. Each individual metric may fund up to 250% of target; however, the maximum annual PfR incentive for each executive is capped at 200% of target. As a general administrative discretionary guideline, the HRC Committee may decide that financial funding for Global Functions Executives, including the CEO, cannot exceed the highest funding for a Business Unit Executive.
(3)         The Global Functions Executives include Mr. Weisler, Mr. Fieler, Ms. Lesjak, Mr. Flaxman, Ms. Rivera, and Ms. Keogh.
(4)         The Business Unit Executives include Mr. Coughlin and Mr. Lores. Specific Business Unit goals are excluded on the basis of competitive harm. However, goals are set at levels we believe to be achievable in connection with strong performance.

The specific metrics, their linkage to corporate results, and the weighting that was placed on each were chosen because the HRC Committee believed that:

performance against these metrics, in combination, enhances value for stockholders, capturing both the top and bottom line, as well as cash and capital efficiency;
a balanced weighting of metrics limits the likelihood of rewarding executives for excessive risk-taking;
different measures avoid paying for the same performance twice; and
MBOs enhance focus on business objectives, such as operational objectives, strategic initiatives, succession planning, and people development, which are important to the long-term success of the Company.

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  Executive Compensation
 

The following chart sets forth the definition of and rationale for each of the financial performance metrics that was used for the Fiscal 2018 Annual Incentive Plan:

Financial Performance Metrics(1)         Definition         Rationale for Metric
Corporate Revenue Net revenue as reported in our Annual Report on Form 10-K for fiscal 2018 Reflects top line financial performance, which is a strong indicator of our long-term ability to drive stockholder value
Business Revenue Segment net revenue as reported in our Annual Report on Form 10-K for fiscal 2018
Corporate Net Earnings Non-GAAP net earnings, as defined and reported in our fourth quarter fiscal 2018 earnings press release, excluding bonus net of income tax(2) Reflects bottom line financial performance, which is directly tied to stockholder value on a short-term basis
Business Net Profit (“BNP”) Business net profit, excluding bonus net of income tax
Corporate Free Cash Flow Cash flow from operations less net capital expenditures (gross purchases less retirements) divided by net revenue (expressed as a percentage of revenue) Reflects efficiency of cash management practices, including working capital and capital expenditures
(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 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)         Fiscal 2018 non-GAAP net earnings of $3.5 billion excludes after-tax costs of $2 billion related to the amortization of intangible assets, restructuring charges, and acquisition-related charges. Management uses non-GAAP net earnings 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 net earnings 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 diluted net earnings.

Following fiscal 2018, the HRC Committee reviewed performance against the financial metrics and certified the results as follows:

Fiscal 2018 Annual PfR Incentive Performance Against Financial Metrics(1,2)

Metric Weight(3) Target
($ in billions)
Result
($ in billions)
Percentage of Target
Annual Incentive Funded
Corporate Revenue 25.0 %       $54.7       $58.5       40.5 %
Corporate Net Earnings 25.0 % $  3.2 $  3.5 37.5 %
Corporate Free Cash Flow (% of revenue) 25.0 % 5.85 % 7.1 % 62.5 %
Total 75.0 % 140.5 %
(1)         Mr. Weisler, Mr. Fieler, Ms. Lesjak, Ms. Rivera, Ms. Keogh and Mr. Flaxman received annual PfR incentive payments based on corporate financial metrics. Mr. Lores received an annual PfR incentive payment based on corporate and business financial metrics. Mr. Coughlin’s annual PfR Incentive goals were based on corporate and business financial metrics. However, Mr. Coughlin didn’t receive an annual PfR incentive payment since he left the company on June 13, 2018, prior to the end of the fiscal year.
(2)         As a general administrative discretionary guideline, the HRC Committee may decide that financial funding for Global Functions Executives, including the CEO, cannot exceed the highest funding for a Business Unit Executive.
(3)         The financial metrics were equally weighted to account for 75% of the target annual PfR incentive.

Mr. Weisler. At the end of the fiscal year, the independent members of the Board evaluated Mr. Weisler’s performance against all of his MBOs, which included, but were not limited to: set strategic direction for the company based on optimizing shareholder value, maintain supplies stabilization, fully integrate Samsung printing business, grow profitable share in Personal Systems, accelerate adoption of multi-jet fusion to extend leadership in 3D printed plastics and announce technology for metals, engage with all major constituents including financial analysts, media, key governmental figures, partners and customers to execute the HP strategy, and ensure HP has a robust evaluation and talent program. After conducting a thorough review of Mr. Weisler’s performance, the independent members of the Board determined that his MBO performance had been achieved above target. Mr. Weisler’s accomplishments included:

Added $2.2B in market cap over the fiscal year 2018 and out-paced the S&P 500 by 7 points for the year.
Beat external expectations on all key metrics: revenue, non-GAAP EPS and free cash flow, despite several critical challenges through the year.

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In Print, maintained supplies stabilization growing +7% versus prior year. Integrated Samsung Printing business. Gained share in A3 printer market and grew the Managed Print Services business double-digits. In Graphics, entered corrugated post-print market.

In Personal Systems business, delivered profitable share growth in the core business while expanding Device as a Service offering. Further, supported the successful transition of Mr. Cho as new leader of the business.

In 3D print business, achieved #1 position for thermoplastic solutions above $100k. Introduced HP Metal Jet to take metal 3D printing from specialized to mass production. Mr. Weisler has also supported the successful transition of Mr. Schell as leader of the 3D business.

Mr. Weisler worked to maintain market access and competitive pricing in the face of 301 tariffs and non-tariff barriers.

Mr. Weisler continued his emphasis on talent and assignment planning which helped the successful transition of leaders into executive leadership positions.

As CEO, Mr. Weisler evaluated the performance of each of the other Section 16 officers and presented the results of those evaluations to the HRC Committee at its November 2018 meeting. The evaluations included an analysis of the officers’ performance against all of their MBOs. The HRC Committee reviewed the CEO’s assessment of the degree of attainment of the MBOs of the other Section 16 officers and set their MBO scores. The results of these evaluations for the other NEOs are summarized below.

Mr. Fieler. Mr. Fieler was eligible for and participated in two different bonus programs during fiscal 2018 on a pro-rata basis. Prior to his promotion to CFO, from November 1 to June 30, he participated in the annual PfR incentive plan for the non-Executive Leadership Team (“ELT”). In conjunction with his promotion to CFO on July 1, Mr. Fieler began participating in the annual PfR incentive plan for the ELT. His MBOs as CFO were approved by the HRC Committee at their June meeting.

The HRC Committee determined that Mr. Fieler’s MBOs performance had been achieved at target. Mr. Fieler made a very strong transition into his new role as CFO. He brought strong operational perspective and excellent experience in areas such as cash flow. Mr. Fieler is a thoughtful, strategic and engaged leader and was critical in delivering against financial expectations.

Ms. Lesjak. Ms. Lesjak served in two important capacities at HP this year, serving as CFO from November 1 to June 30 and as interim Chief Operating Officer after July 1. The HRC Committee determined that Ms. Lesjak’s MBOs performance in both capacities had been achieved above target. She drove efficiencies in the Finance organization and was critical in the successful transition of Mr. Fieler as CFO. Further, Ms. Lesjak was vital in stabilizing the COO organization after Mr. Flaxman’s passing, leading a complex portfolio of critical business areas while reenergizing the organization.

Mr. Lores. The HRC Committee determined that Mr. Lores’s MBOs performance had been achieved above target. Mr. Lores did a great job in delivering profitable growth in supplies, Graphics Solutions Business, Managed Print Services and Instant Ink. He significantly over-performed on Print transformation goals to substantially improve Print’s cost position. Mr. Lores also did an excellent job leading Samsung integration and delivering on the first-year plan.

Ms. Rivera. The HRC Committee determined that Ms. Rivera’s MBO performance had been achieved above target. Ms. Rivera worked closely with the businesses on critical matters such as supplies counterfeiting, IP protections and Samsung deal close and integration. She did an excellent job on tariffs, revamping government relations and internal programs such as Integrity@HP. Ms. Rivera is a well-respected leader who not only gives solid legal advice but also is a strong partner in business and technology matters.

Ms. Keogh. The HRC Committee determined that Ms. Keogh’s MBO performance had been achieved above target. Ms. Keogh’s strong focus on executive talent development and succession planning set a strong foundation to support the leadership changes in 2018. Ms. Keogh did a remarkable job in creating company culture, increasing employee engagement across the organization, reducing employee attrition and completing a successful year in outstanding talent acquisition.

Mr. Coughlin. Resigned from HP on June 13, 2018 and was not eligible to receive the bonus payout for fiscal 2018.

Mr. Flaxman. The HRC Committee determined that Mr. Flaxman’s MBOs performance had been achieved at target. Mr. Flaxman managed critical business areas while delivering on key critical projects such as Enterprise Resource Planning (ERP) and the consolidation of our robotics capabilities.

Based on the findings of these performance evaluations, the HRC Committee (and, in the case of the CEO, the independent members of the Board) evaluated performance against the non-financial metrics for the NEOs as follows:

Fiscal 2018 Annual PfR Incentive Performance Against Non-Financial Metrics (MBOs)

Named Executive Officer Weight
(%)
      Percentage of Target
Annual Incentive
Funded
(%)
Dion J. Weisler 25.0 37.5
Steven J. Fieler 25.0 25.0
Catherine A. Lesjak 25.0 30.0
Enrique J. Lores 25.0 40.0
Kim M. Rivera 25.0 30.0
Tracy S. Keogh 25.0 40.0
Ron V. Coughlin 25.0 n/a
Jon E. Flaxman 25.0 25.0

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Based on the level of performance described above on both the financial and non-financial metrics for fiscal 2018, the payouts to the NEOs under the annual PfR incentive were as follows:

Fiscal 2018 Annual PfR Incentive Payout

Percentage of Target
Annua
l Incentive Funded
Total Annual
Incenti
ve Payout
Named Executive Officer       Financial
Metrics
(%)
      Non-Financial
 Metrics
(%)
      As % of Target
Annual Incentive
(%)
      Payout
($)
Dion J. Weisler 140.5 % 37.5 % 178.0 % $ 4,984,348
Steven J. Fieler(1) 140.5 % 25.0 % 165.5 % $ 793,632
Catherine A. Lesjak 140.5 % 30.0 % 170.5 % $ 1,811,695
Enrique J. Lores 128.5 % 40.0 % 168.5 % $ 1,579,331
Kim M. Rivera 140.5 % 30.0 % 170.5 % $ 1,438,699
Tracy S. Keogh 140.5 % 40.0 % 180.5 % $ 1,421,536
Ron V. Coughlin 0.0 % 0.0 % 0.0 % $
Jon E. Flaxman(2) 140.5 % 25.0 % 165.5 % $ 857,821
(1)        Mr. Fieler’s annual PfR incentive target was 60% before his promotion to CFO. On July 1, 2018, Mr. Fieler’s annual PfR incentive target was increased to 125%. Total Annual Incentive Payout reflects the combined total value of his annual PFR incentive for both roles.
(2) Mr. Flaxman’s incentive payout is based upon the base salary received for the year (prior to his death) and is paid to his beneficiaries.

Long-term Incentive Compensation

The HRC Committee established a total long-term incentive target value for each NEO in early fiscal 2018 that was 60% weighted in the form of PARSUs and 40% weighted in the form of time-based RSUs. The high proportion of performance-based awards reflects our pay-for-performance philosophy. The time-based awards support retention and are linked to stockholder value and ownership, which are important goals of our executive compensation program.

2018 PARSUs
The fiscal 2018-2020 PARSUs have a two-and three-year vesting period, subject to one-, two-, and three-year performance periods that began at the start of fiscal 2018 and continue through the end of fiscal 2018, 2019 and 2020. Under this program, 50% of the PARSUs (including dividend equivalent units) are eligible for vesting based on EPS and 50% are eligible for vesting based on relative TSR performance. These PARSUs vest as follows: 16.6% of the units are eligible for vesting based on EPS performance of year one with continued service over two years, 16.6% of the units are eligible for vesting based on EPS performance of year two with continued service over three years, 16.6% of the units are eligible for vesting based on EPS performance of year three with continued service over three years, 25% of the units are eligible for vesting based on TSR performance over two years with continued service over two years, 25% of the units are eligible for vesting based on TSR performance over three years with continued service over three years. This structure is depicted in the chart below:

2018 PARSUs

Key Design Elements EPS vs. Internal Goals Relative TSR vs. S&P 500 Payout
Weight 16.6% 16.6% 16.6% 25% 25%
Performance Periods(1) Year 1       Year 2       Year 3       2 Years       3 Years       % of Target(3)
Vesting Periods(2) Year 2 Year 3 Year 3 Year 2 Year 3
Performance Levels:         
Max     > 90th percentile 200%
> Target     Target to be disclosed after the end of the three-year performance period 70th percentile 150%
Target     50th percentile 100%
Threshold     25th percentile 50%
< Threshold     < 25th percentile 0%
(1)        Performance measurement occurs at the end of the one-, two-, and three-year periods.
(2) Vesting occurs at the end of the two- and three-year periods, subject to continued service.
(3) Interpolate for performance between discrete points.
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EPS was chosen because it is a critical driver of long-term stockholder value and because of our focus on bottom-line profitability in the business transformation strategy. Year 1 (fiscal 2018) EPS 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 rewards for outperformance relative to the broader market.

EPS and Relative TSR will be weighted equally in determining earned PARSUs. The first segment (42% of total target units) will vest after the end of fiscal 2019, subject to Year 1 EPS performance and Relative TSR performance for the first two years. The second segment (58% of total target units) will vest after the end of fiscal 2020, subject to Year 2 EPS performance, Year 3 EPS performance, and Relative TSR performance for the three years.

For more information on grants of PARSUs to the NEOs during fiscal 2018, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2018.”

2018 RSUs
2018 RSUs and related dividend equivalent units vest ratably on an annual basis over three years from the grant date. Three-year vesting is common in our industry and supports executive retention and alignment with stockholder value.

Fiscal 2018 Long-term Incentive Compensation at Target

The following table shows combined total grant values for grants attributable to fiscal 2018. It is important to note that these values are target opportunities to earn future value-based compensation and are not actual earned amounts, which will be determined after three years based on continued employment and performance against the EPS and relative TSR goals.

Named Executive Officer       PARSUs       RSUs       Total Fiscal 2018
Long-term Incentive Grant
Dion J. Weisler $ 8,100,000 $ 5,400,000              $ 13,500,000
Steven J. Fieler $ 1,200,000 $ 1,550,000 $ 2,750,000
Catherine A. Lesjak $ 3,240,000 $ 2,160,000 $ 5,400,000
Enrique J. Lores $ 3,000,000 $ 2,000,000 $ 5,000,000
Kim M. Rivera $ 1,980,000 $ 1,320,000 $ 3,300,000
Tracy S. Keogh $ 1,971,000 $ 1,314,000 $ 3,285,000
Ron V. Coughlin $ 3,210,000 $ 2,140,000 $ 5,350,000
Jon E. Flaxman $ 2,595,000 $ 1,730,000 $ 4,325,000

Values in the Summary Compensation Table are different than the target values described in the table above. In the Summary Compensation Table, consistent with accounting standards, amounts reflect the grant date fair value for the full TSR component (two and three-year performance period), and the EPS component for Year 1 (2018), for which goals were approved in January 2018. Grant date fair values for the EPS component for Year 2 and Year 3 are not included in the grant date fair value reported in the Summary Compensation Table since EPS goals for those years are approved in their respective fiscal year. However, the Summary Compensation Table for fiscal 2018 also includes a portion of the fiscal 2017 PARSUs for which the Year 2 EPS goal was approved in fiscal 2018 – EPS component Year 2 (2018).

For more information on grants to the NEOs during fiscal 2018, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2018.”

2017 PARSUs
The fiscal 2017-2019 PARSUs have a two-and three-year vesting period, subject to one-, two-, and three-year performance periods that began at the start of fiscal 2017 and continue through the end of fiscal 2017, 2018 and 2019. Under this program, 50% of the PARSUs (including dividend equivalent units) are eligible for vesting based on EPS and 50% are eligible for vesting based on relative TSR performance. 2017 PARSUs have the same vesting structure as 2018 PARSUs (chart described above). The actual performance achievement for the one- and two-year periods (i.e., fiscal 2017 and fiscal 2017–2018) as a percentage of target for the PARSUs as of October 31, 2018 is summarized in the table below:

Actual Performance – Segment 1

EPS vs. Internal Goals Relative TSR vs. S&P 500(1)
Segment       Fiscal 2017 Result       Payout       Fiscal 2017-2018 Results       Payout
Segment 1 (42%) $1.65 141.7 % 86th percentile 191 %
Target: $1.60
(1)        Through October 2018, HP’s actual TSR performance was at the 86th percentile of the S&P 500 which corresponds to a payout of 191% of target.

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2016 PARSUs
The fiscal 2016-2018 PARSUs have a two- and three-year performance period that began at the start of fiscal 2016 and continued through the end of fiscal 2017 and 2018, respectively. Under this program, 50% of the PARSUs (including dividend equivalent units) are eligible for vesting based on performance over two years with continued service through such time, and 50% are eligible for vesting based on performance over three years with continued service through such time. The two- and three-year awards are equally weighted between ROIC and relative TSR. This structure is depicted in the chart below:

Key Design Elements HP ROIC vs. Internal Goals HP 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         > 90th percentile 200%
> Target         70th percentile 150%
Target         Target disclosed below 50th percentile 100%
Threshold         25th percentile 50%
< Threshold         < 25th percentile 0%
(1)        Performance measurement and vesting occur at the end of the two- and three-year periods, subject to continued service.
(2) Interpolate for performance between discrete points.

The actual performance achievement for the two-year period (i.e., fiscal 2016–2017), as a percentage of target for the HP PARSUs as of October 31, 2017, was summarized in our proxy statement for fiscal 2017. The actual performance achievement for the three-year period (i.e., fiscal 2016–2018) as a percentage of target for the HP PARSUs as of October 31, 2018 is summarized in the table below:

Actual Performance – Segment 2

ROIC vs. Internal Goals  Relative TSR vs. S&P 500(1) 
Segment 2016     2017(2)     2018(3)     Payout     Fiscal 2016-2018
Results
    Payout     Percent of
Target Vested
Segment 2 (50%) 106.1 % 108.1 % 80.4 % 85.2 % 87th percentile 193.0 % 139.1 %
Target: 114 % Target:120 % Target: 79 %
(1)        Through October 2018, HP’s actual TSR performance was at the 87th percentile of the S&P 500 which corresponds to a payout of 193% of target.
(2) For the final payout calculation of the fiscal 2017 portion of Segment 2 of the fiscal 2016 PARSU award, the Committee approved using the adjusted ROIC results of 108.1%, which excludes share repurchases funded by cash in that fiscal year.
(3) Due to the impact of extraordinary items (in particular U.S. tax reform), fiscal 2018 ROIC result was adjusted from ~88% to 80.4%.

Fiscal 2019 Compensation Program

The HRC Committee regularly identifies and evaluates ways to improve our executive compensation program. We believe that our current compensation structure effectively aligns real pay delivery with critical financial and strategic non-financial goals, reinforces year-over-year improvement and growth, offers a stable and consistent message to both stockholders and participants, and provides an attractive pay-for-performance opportunity to encourage retention and leadership engagement. As such, our fiscal 2019 incentive plan is consistent with our fiscal 2018 plan discussed in this CD&A.

In fiscal 2019, the HRC Committee plans to continue to carefully review our talent needs and compensation programs in order to:

support the current and long-term business strategy;

continue to align pay with stockholder interests; and

maintain best-in-class governance standards.


Benefits

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 Electronic Data Systems (“EDS”) Pension Plan ceased upon HP’s acquisition of EDS in 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 2018. The amounts reported 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.

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The NEOs, along with other executives who earn base pay or an annual incentive in excess of certain limits of the Code or greater than $150,000, are eligible to participate in the 2005 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 account under the qualified HP 401(k) Plan (the 401(k) deferral limit for calendar 2018 was $18,500) and up to 95% of the annual incentive payable under the Stock Incentive Plan, the PfR Plan and other eligible plans. In addition, we make a 4% matching contribution to the EDCP on base pay contributions in excess of IRS limits up to a maximum of two times that limit (maximum of $11,000 in calendar 2018). This is the same percentage of matching contributions those executives are eligible to receive under the 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 of the proprietary funds available to employees under the 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 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.

Perquisites

We provide a small number of perquisites to our senior executives, including the NEOs. For a list of all perquisites provided to our NEOs for fiscal 2018, please refer to the All Other Compensation Table on page 53.

We provide our NEOs with financial counseling services 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 to our global presence, we maintain one corporate aircraft. In the event an NEO is accompanied by a guest or family member on the aircraft for personal reasons, as approved by the CEO, the NEO is taxed on the value of this usage according to the relevant Code rules. There is no tax gross-up paid on the income attributable to this value. Among our NEOs, Mr. Weisler is the only executive that used the corporate aircraft for personal use during fiscal 2018.

Our Audit Committee periodically conducts global risk management reviews, which include reviewing home security services of NEOs. Services considered necessary by the Audit Committee may be paid for by HP, due to the range of security issues that may be encountered by key executives of any large, multinational corporation.

Severance and Long-term Incentive Change in Control Plan for Executive Officers
Our Section 16 officers (including all of the NEOs) are covered by the Severance and Long-term Incentive Change in Control Plan for Executive Officers (“SPEO”), which is intended to protect us and our stockholders, and provide a level of transition assistance in the event of an involuntary termination of employment. Under the SPEO, participants who incur an involuntary termination (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 the actual annual incentives paid for the preceding three years. In the case of the NEOs other than the CEO, the multiplier is 1.5. In the case of the CEO, the multiplier 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 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 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 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 on 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 (and for performance-based equity awards, only if any applicable performance conditions have been satisfied), and (3) payment of a lump-sum health-benefit stipend of an amount equal to 18 months’ COBRA premiums for continued group medical coverage for the executive and his or her eligible dependents.

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Benefits in the Event of a Change in Control
The SPEO also includes change in control terms for our NEOs. In addition to the benefits provided for involuntary terminations, the SPEO provides for full vesting of outstanding stock options, RSUs, Performance Contingent Stock Options (“PCSOs”), and PARSUs upon involuntary termination not for Cause or voluntary termination for Good Reason (as defined in the plan) 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 SPEO further provides that under a double trigger, PARSUs will vest based on target performance, whereas under a modified double trigger, PARSUs will vest based upon the greater of the number of PARSUs that would vest based on actual performance and the number of PARSUs that would vest pro-rata based upon target performance.

The HRC Committee approved the change of control provisions in the SPEO 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 will help attract and retain talent.

Other Compensation-Related Matters

Succession Planning

Among the HRC Committee’s responsibilities described in its charter is to oversee succession planning and leadership development. The Board plans for succession of the CEO and annually reviews senior management selection and succession planning that is undertaken by the HRC Committee. As part of this process, the independent Directors 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 2018, an executive talent review was conducted along with succession plans for each of the executive leaders. Successors were identified to reflect necessary skill sets, performance, potential, and diversity. Development plans for successors were also established to ensure readiness and will be managed throughout the 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, there is a People Update at each HRC Committee meeting, which includes a review of key people processes and developments for that quarter.

In addition, the executive team participated in a robust development process that included individual assessments, interviews with executive coaches, and an individualized development plan that can be leveraged throughout the year. Development themes for the entire executive team will be addressed during quarterly face-to-face meetings for full team development.

Stock Ownership Guidelines and Prohibition on Hedging

Our stock ownership guidelines are designed to align executives’ interests more closely with those of our stockholders and mitigate compensation-related 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 his base salary and all other Section 16 officers reporting directly to the CEO should attain an investment position equal to five times their base salaries. Shares counted toward these guidelines include any shares held by the executive directly or through a broker, shares held through the 401(k) Plan, shares held as restricted stock, shares underlying time-vested RSUs, and shares underlying vested but unexercised stock options (50% of the in-the-money value of such options is used for this calculation). Mr. Weisler, Ms. Lesjak and Ms. Keogh are the only NEOs who have served in roles covered by our stock ownership guidelines for over five years and their respective ownerships exceed the current guidelines. Our other NEOs are on pace to meet the stock ownership guidelines within the allotted time frame.

The HRC Committee has adopted a policy prohibiting our executive officers from engaging in any form of hedging transaction (derivatives, equity swaps, forwards, etc.) including, among other things, short sales and transactions involving publicly traded options. In addition, with limited exceptions, our executive officers are prohibited from holding our securities in margin accounts and from pledging our securities as collateral for loans. We believe that these policies further align our executives’ interests with those of our stockholders.

Accounting and Tax Effects

The impact of accounting treatment is considered in developing and implementing our compensation programs, including the accounting treatment as it applies to amounts awarded or paid to our executives.

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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 Section 162(m) of the Code. For fiscal year 2018 and prior fiscal years, Section 162(m) included an exception from the deductibility limitation for qualified “performance-based compensation.” This exception, however, has been repealed for tax years beginning in fiscal 2019 under the Tax Cuts and Jobs Act. As such, compensation paid to certain of our executive officers in excess of $1.0 million will not be deductible unless it qualifies for certain transition relief applicable for compensation paid pursuant to a written binding contract that was in effect as of November 2, 2017. In addition, the Tax Cuts and Jobs Act increased the scope of individuals subject to the deduction limitation. Thus, compensation originally intended to satisfy the requirements for exemption from Section 162(m) may not be fully deductible. Although our compensation program may take into consideration the Section 162(m) rules as a factor, these considerations will not necessarily limit compensation to amounts deductible under Section 162(m).

Policy for Recoupment of Performance-Based Incentives

In fiscal 2006, the Board adopted a “clawback” policy that provides Board discretion to recover certain annual incentives from senior executives whose fraud or misconduct resulted in a significant restatement of financial results. The policy specifically allows for the recovery of annual incentives paid at or above target from those senior executives whose fraud or misconduct resulted in the restatement where the annual incentives would have been lower absent the fraud or misconduct, to the extent permitted by applicable law. Additionally, our incentive plan document allows for the recoupment of performance-based annual incentives and long-term incentives consistent with applicable law and the clawback policy.

Also, in fiscal 2014, we added a provision to our grant agreements to clarify that equity awards are subject to the clawback policy. Award agreements also provide Board discretion to cause forfeiture of certain outstanding cash and equity awards for fraud or misconduct that results in reputational harm to HP even when such fraud or misconduct does not result in a significant restatement of financial results.

HR and Compensation 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 the 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, 2018.

HR and Compensation Committee of the Board of Directors

Stephanie A. Burns, Chair
Aida Alvarez
Shumeet Banerji
Charles “Chip” V. Bergh
Stacey Mobley

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Fiscal 2018 Summary Compensation Table

The following table sets forth information concerning the compensation of our NEOs for fiscal years 2018, 2017 and 2016, as applicable. Per SEC reporting guidelines, our NEOs for fiscal 2018 include our CEO, (Mr. Weisler), anyone who served as CFO during the year (Ms. Lesjak and Mr. Fieler), the next three most highly compensated individuals still serving as executive officers at year end (Mr. Lores, Ms. Rivera, Ms. Keogh), and up to two additional officers who would have been amongst our top three most highly compensated had they been employed by HP at year end (Mr. Flaxman and Mr. Coughlin).

Name and Principal
Position
  Year    Salary(5)
($)
   Bonus
($)
   Stock
Awards(6)
($)
   Option
Awards
($)
   Non-Equity
Incentive
Plan
Compensation(7)
($)
   Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(8)
($)
   All Other
Compensation(9)
($)
   Total
($)
Dion J. Weisler
President and CEO
2018 1,400,000 12,737,004 4,984,348 94,182 19,215,534
2017 1,300,033 9,841,200 3,511,560 77,232 14,730,025
2016 1,200,046 18,164,053 6,889,397 2,302,585 140,186 28,696,267
Steven J. Fieler(1)
Chief Financial Officer
2018 550,000 2,382,017 793,632 210 19,404 3,745,263
Catherine A. Lesjak(2)
Interim Chief
Operating Officer
2018 850,000 5,121,798 1,811,695 60,763 7,844,256
2017 850,022 4,100,494 1,435,012 159,279 39,781 6,584,588
2016 850,033 7,573,319 2,758,055 1,006,092 434,684 43,877 12,666,060
Enrique J. Lores
President, Imaging,
Printing and Solutions
2018 750,000 4,623,686 1,579,331 43,973 6,996,990
2017
 
725,019 3,075,370 1,219,035 23,786 5,043,210
Kim M. Rivera
Chief Legal Officer
2018 675,000 3,088,732 1,438,699 72,927 5,275,358
2017 645,016 2,255,264 1,088,921 193,081 4,182,282
2016 612,004 1,281,250 5,747,980 304,487 7,945,721
Tracy S. Keogh
Chief Human
Resources Officer
2018 630,000 3,096,651 1,421,536 39,800 5,187,987
2017 600,015 2,378,294 1,012,950 38,920 4,030,179
2016 600,023 4,379,891 1,593,592 710,182 38,920 7,322,608
Ron V. Coughlin(3)
(Former) President,
Personal Systems
2018 569,708 5,013,148 10,800 5,593,656
2017
 
725,019 3,690,450 1,224,612 17,986 5,658,067
Jon E. Flaxman(4)
(Former) Chief
Operating Officer
2018 414,626 4,067,821 857,821 19,680 5,359,948
2017 700,018 3,075,370 1,181,775 211,506 10,500 5,179,169
2016 700,027 3,295,365 84,496 839,484 557,485 10,500 5,487,357
(1) Mr. Fieler was appointed Chief Financial Officer effective July 1, 2018.
(2)         Ms. Lesjak served as Chief Financial Officer from the beginning of our fiscal year until June 30, 2018 when she was succeeded by Mr. Fieler. She was appointed Interim Chief Operating Officer effective July 1, 2018.
(3) Mr. Coughlin resigned from this role effective June 13, 2018.
(4) Mr. Flaxman served as Chief Operating Officer until he passed away on March 28, 2018.
(5) Amounts shown represent base salary earned or paid during the fiscal year, as described under “Compensation Discussion and Analysis—Determination of Fiscal 2018 Executive Compensation—2018 Base Salary.”

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(6)         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 2018, amounts shown reflect the grant date fair value of the PARSUs for the two- and three-year vesting periods beginning with fiscal 2018 based on the probable outcome of performance conditions related to these PARSUs at the grant date. The 2018 PARSUs include both internal (EPS) and market-related (TSR) performance goals as described under the “Compensation Discussion and Analysis—Determination of Fiscal 2018 Executive Compensation—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. 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 2018. This value also reflects grant date fair value of the EPS portion of the 2017 PARSU award for Year 2 (fiscal 2018 EPS), for which goals were approved in January 2018. The table below sets forth the grant date fair value for the 2018 PARSUs granted on December 7, 2017 and the fiscal 2018 EPS portion of the 2017 PARSUs granted on December 7, 2016:

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
($) **
           Dion J. Weisler 12/7/2017 1,437,505 2,875,010 4,279,984
12/7/2016 1,619,509 3,239,017
Steven J. Fieler 7/1/2018 177,572 355,144 654,449
Catherine A. Lesjak 12/7/2017 575,012 1,150,023 1,711,994
12/7/2016 674,799 1,349,598
Enrique J. Lores 12/7/2017 532,415 1,064,831 1,585,172
12/7/2016 506,105 1,012,211
Kim M. Rivera 12/7/2017 351,388 702,776 1,046,219
12/7/2016 371,126 742,253
Tracy S. Keogh 12/7/2017 349,793 699,585 1,041,469
12/7/2016 391,389 782,778
Ron V. Coughlin 12/7/2017 569,678 1,139,356 1,696,138
12/7/2016 607,322 1,214,643
Jon E. Flaxman 12/7/2017 460,533 921,066 1,371,179
12/7/2016 506,105 1,012,211
*         Amounts shown represent the grant date fair value of the PARSUs subject to the internal EPS 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 performance period beginning in fiscal 2018. The grant date fair value of the 2018 PARSUs Year 1 EPS units awarded on December 7, 2017 and of the 2017 PARSUs Year 2 EPS units awarded on December 7, 2016 was $23.81 per unit, which was the closing share price of our common stock on January 23, 2018 when the EPS goal was approved. The grant date fair value of the 2018 PARSUs Year 1 EPS units for Mr. Fieler’s grant on July 1, 2018 was $22.69, the closing stock price on June 29, 2018. The values of 2018 PARSUs Year 2 and Year 3 EPS units will not be available until January 2019 and January 2020 respectively, and therefore are not included for fiscal 2018, 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 goal component 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 goal component of the PARSUs granted December 7, 2018 was $23.63 per unit, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 29.8%, a risk-free interest rate of 1.9%, and a simulation period of 2.9 years. For Mr. Fieler’s grant on July 1, 2018 the weighted grant date fair value for the TSR component was $27.88 determined using a Monte Carlo simulation assuming volatility rate of 24.8%, risk-free interest rate of 2.5%, and simulation period of 2.3 years. 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, 2018, as filed with the SEC on December 13, 2018.
(7)         Amounts shown represent payouts under the annual PfR incentive (amounts earned during the applicable fiscal year but paid after the end of that fiscal year).
(8) Amounts shown represent the increase in the actuarial present value of NEO pension benefits during the applicable fiscal year. As described in more detail under “Narrative to the Fiscal 2018 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 U.S. defined benefit pension plan. 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 2018 Pension Benefits Table” below. 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.
(9) The amounts shown are detailed in the “Fiscal 2018 All Other Compensation Table” below.

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Fiscal 2018 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(5)
($)
    Personal
Aircraft
Usage(6)
($)
    Tax
Gross-Up(7)
($)
    Miscellaneous(8)
($)
    Total
AOC
($)
Dion J. Weisler 11,000 10,800 12,810 984 17,610 14,742 10,236 16,000 94,182
Steven J. Fieler 11,000 8,404 19,404
Catherine A. Lesjak 11,000 10,800 20,963 18,000 60,763
Enrique J. Lores 11,000 10,800 9,300 544 12,329 43,973
Kim M. Rivera 11,000 40,427 21,500 72,927
Tracy S. Keogh 11,000 10,800 18,000 39,800
Ron V. Coughlin 10,800 10,800
Jon E. Flaxman 6,710 12,970 19,680
(1)         Represents matching contributions made under the HP 401(k) Plan that were earned for fiscal year 2018.
(2) Represents matching contributions credited during fiscal 2018 under the HP Executive Deferred Compensation Plan with respect to the 2017 calendar year of that plan.
(3) For Ms. Rivera, represents benefits provided under our domestic executive mobility program. For Mr. Weisler and Mr. Lores, represents tax preparation, filing, equalization and compliance services paid under HP’s tax assistance due to Korea business travel. Due to the taxation impact on US taxpayers who travel to Korea on business and the increase in Korea travel due to the closing of our acquisition of Samsung’s Print business, the HRC 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 expense is reported here as a perquisite due to the fact that there is an incidental personal benefit.
(5) Represents legal fees paid on behalf of Mr. Weisler for immigration related expenses.
(6) 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.
(7) Represents tax gross up for Korean state and social taxes under HP’s Tax Assistance Program for Korea business travel.
(8) Includes amounts paid either directly to the executives or on their behalf for financial counseling, tax preparation and estate planning services. For Mr. Flaxman amounts represent company-paid airfare for his family related to his passing.

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Grants of Plan-Based Awards in Fiscal 2018

The following table provides information on annual PfR incentive awards for fiscal 2018 and awards of RSUs and PARSUs granted during fiscal 2018 as a part of our long-term incentive program:

Name    Grant
Date
   Estimated Future Payouts
Under Non-Equity
Inc
entive Plan Awards(1)
   Estimated Future Payouts
Under Equity
Ince
ntive Plan Awards(2)
   All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(3)
(#)
   Grant-Date
Fair Value
of Stock
and Option
Awards(2)
($)
Threshold
($)
   Target
($)
   Maximum
($)
Threshold
(#)
   Target
(#)
   Maximum
(#)
Dion J. Weisler
PfR 28,000 2,800,000 5,600,000
RSU 12/7/2017 257,511 5,400,006
PARSU 12/7/2017 120,750 241,499 482,998 5,717,489
PARSU 12/7/2016 34,009 68,018 136,036 1,619,509
Steven J. Fieler
PfR 4,795 479,500 1,055,000
RSU 7/1/2018 35,258 800,004
RSU 12/7/2017 35,765 749,992
PARSU 7/1/2018 15,652 31,304 62,608 832,021
Catherine A. Lesjak
PfR 10,625 1,062,500 2,125,000
RSU 12/7/2017 103,004 2,159,994
PARSU 12/7/2017 48,300 96,600 193,200 2,287,005
PARSU 12/7/2016 14,171 28,341 56,682 674,799
Enrique J. Lores
PfR 9,375 937,500 1,875,000
RSU 12/7/2017 95,374 1,999,993
PARSU 12/7/2017 44,722 89,444 178,888 2,117,587
PARSU 12/7/2016 10,628 21,256 42,512 506,105
Kim M. Rivera
PfR 8,438 843,750 1,687,500
RSU 12/7/2017 62,947 1,319,999
PARSU 12/7/2017 29,517 59,033 118,066 1,397,607
PARSU 12/7/2016 7,794 15,587 31,174 371,126
Tracy S. Keogh
PfR 7,875 787,500 1,575,000
RSU 12/7/2017 62,661 1,314,001
PARSU 12/7/2017 29,383 58,765 117,530 1,391,261
PARSU 12/7/2016 8,219 16,438 32,876 391,389
Ron V. Coughlin
PfR 9,375 937,500 1,875,000
RSU 12/7/2017 102,051 2,140,009
PARSU 12/7/2017 47,853 95,705 191,410 2,265,817
PARSU 12/7/2016 12,754 25,507 51,014 607,322
Jon E. Flaxman
PfR 8,938 893,750 1,787,500
RSU 12/7/2017 82,499 1,730,004
PARSU 12/7/2017 38,685 77,369 154,738 1,831,712
PARSU 12/7/2016 10,628 21,256 42,512 506,105
(1)       

Amounts represent the range of possible cash payouts for fiscal 2018 PfR incentive awards, under the Stock Incentive Plan based upon annual salary.

(2)

PARSU amounts represent the range of shares that may be released at the end of the two- and three-year vesting periods applicable to the PARSUs assuming achievement of threshold, target, or maximum performance. 50% of the PARSUs are eligible for vesting based on EPS performance and 50% are eligible for vesting based on TSR performance. PARSUs vest as follows: 16.6% of the units are eligible for vesting based on EPS performance on year one with continued


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service over two years, 16.6% of the units are eligible for vesting based on EPS performance of year two with continued service over three years, 16.6% of the units are eligible for vesting based on EPS performance of year three with continued service over three years, 25% of the units are eligible for vesting based on TSR performance over two years with continued service over two years, 25% of the units are eligible for vesting based on TSR performance over three years with continued service over three years. 2018 PARSU year 1 EPS units and all TSR units are reflected in this table. Further, the 2017 PARSU – fiscal 2018 EPS units are also included. If our EPS and relative TSR performance are below threshold for the performance period, no shares will be released for the applicable segment. For additional details, see the discussion of PARSUs under “Compensation Discussion and Analysis—Determination of Fiscal 2018 Executive Compensation—Long-Term Incentive Compensation—2018 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.


Outstanding Equity Awards at 2018 Fiscal Year-End

The following table provides information on stock and option awards held by the NEOs as of October 31, 2018:

Name   Option Awards   Stock Awards
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(1)
(#)
  Option
Exercise
Price(2)
($)
  Option
Expiration
Date(3)
Number of
Shares or
Units of
Stock That
Have Not
Vested(4)
(#)
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(5)
($)
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested(6)
(#)
  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(5)
($)
Dion J. Weisler 369,020 17.29 12/9/2022 788,653 19,038,083 550,882 13,298,291
525,719 13.83 11/1/2023
  
Steven J. Fieler 456,956 11,030,918 38,779 936,125
Catherine A. Lesjak 277,020 17.29 12/9/2022 318,715 7,693,780 224,452 5,418,271
202,200 13.83 11/1/2023
 
Enrique J. Lores 156,976 12.47 10/29/2023 205,166 4,952,707 189,793 4,581,603
 
Kim M. Rivera 230,429 5,562,556 130,899 3,159,902
 
Tracy S. Keogh 201,284 17.29 12/9/2022 220,105 5,313,335 133,636 3,225,973
117,276 13.83 11/1/2023
 
Ron V. Coughlin 0 0 0 0
 
Jon E. Flaxman 0 0 0 0
(1)      

Option awards in this column will fully vest as to one-third of the shares on the third anniversary of November 2, 2015, the respective date of the grant (if stock price performance conditions have been satisfied), and subject to continued service in each case.

(2)

Option exercise prices are the fair market value of our stock on the grant date. In connection with the separation of HPE and in accordance with the employee matters agreement, HP made certain adjustments to the exercise price and number of stock-based compensation awards with the intention of preserving the intrinsic value of the awards prior to the separation. Exercisable and non-exercisable stock options were converted to similar awards of the entity where the employee was working post-separation. RSUs and performance-contingent awards were adjusted to provide holders with RSUs and performance-contingent awards in the Company that employs such employee following the separation.

(3)

All options have an eight-year term.

(4)

The amounts in this column include shares underlying dividend equivalent units credited with respect to outstanding stock awards through October 31, 2018. The release dates and release amounts for all unvested stock awards are as follows, assuming continued service and satisfaction of any applicable financial performance conditions:

Mr. Weisler: November 2, 2018 (156,665 shares plus accrued dividend equivalent shares); December 7, 2018 (184,908 shares plus accrued dividend equivalent shares); December 9, 2018 (132,123 shares plus accrued dividend equivalent shares); December 7, 2019 (184,909 shares plus accrued dividend equivalent shares); December 7, 2020 (85,837 shares plus accrued dividend equivalent shares).

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Mr. Fieler: December 7, 2018 (11,921 shares plus accrued dividend equivalent shares); January 3, 2019 (168,350 shares plus accrued dividend equivalent shares); January 11, 2019 (15,618 shares plus accrued dividend equivalent shares); July 1, 201