DEFC14A 1 hpq3726931-defc14a.htm DEFINITIVE PROXY STATEMENT IN CONNECTION WITH CONTESTED SOLICITATIONS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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 Under Rule 14a-12


HP INC.

(Name of Registrant as Specified In Its Charter)

 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
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Message from the Chairman

To our Stockholders:

We are pleased to invite you to attend the annual
meeting of stockholders of HP Inc. on Tuesday, May 12,
2020 at 2:00 p.m., Pacific Time.

    

In connection with the annual meeting, please find the accompanying Notice of Annual Meeting and 2020 proxy statement, which describe the matters stockholders will consider and vote on.

Importantly, at this annual meeting, you are being asked to vote FOR the 12 world-class director nominees proposed by your Board of Directors, who bring diverse

     
All of our director nominees are independent, other than Enrique Lores, HP Inc.’s Chief Executive Officer and President.
All of us have, and will continue to, serve the interests of all HP stockholders and pursue the most value-creating path forward during our tenure.
     

the way HP works, and we are confident that he will build on HP’s progress and capitalize on new opportunities.

Your vote will be especially important at this annual meeting. As you may have heard, Xerox Holdings Corporation has announced its intent to nominate 12 director candidates to stand for election to the Board at the annual meeting in opposition to the director nominees recommended by your Board. Xerox had previously submitted an unsolicited proposal to acquire HP, which your Board unanimously rejected, and subsequently launched an exchange offer to acquire all outstanding shares of HP common stock. We believe these nominations and related actions are a self-serving tactic by Xerox to advance its proposal that meaningfully undervalues HP and would create significant risk and compromise HP’s future.

“We see significant opportunities to create stockholder value at HP by advancing our leadership, disrupting industries and aggressively transforming the way HP works.”

perspectives, skills and proven experience in advancing HP Inc.’s strategy across Personal Systems, Printing and 3D, and driving sustainable, profitable growth and value creation. Specifically:

Our director nominees have experience in finance and accounting; leading strategic transactions; allocating capital resources across large, complex enterprises; government and public affairs; scientific research, product development and issues management; corporate governance; and international business in key regions where HP operates around the world.

Additional information regarding HP’s director nominees can be found under the heading “Board of Directors” starting on page 8.

The past year was a notable one, marked by a number of transitions, including the appointment of our new Chief Executive Officer, Enrique Lores. The planning and execution of a rigorous and seamless CEO transition is one of the Board’s most important functions. We, as a Board, are extremely proud of the process that was undertaken. Through this rigorous process, Enrique emerged as the Board’s unanimous choice as successor. We see significant opportunities to create stockholder value at HP by advancing our leadership, disrupting industries and aggressively transforming


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Message from the Chairman

Your Board does NOT endorse any Xerox nominee and unanimously recommends that you vote “FOR” the election of all of the nominees proposed by the Board and named in the accompanying proxy statement and AGAINST the proposal submitted by Xerox to repeal certain provisions of, or amendments to, the Company’s Bylaws adopted after February 7, 2019. Your Board strongly urges you not to vote using any blue proxy card sent to you by Xerox. If you have previously voted using a blue proxy card sent to you by Xerox, you can revoke that proxy and vote “FOR” your Board’s nominees and on the other matters to be voted on at the meeting by following the easy instructions provided on the enclosed WHITE proxy card.

    

Whether or not you will attend the meeting, we hope that your shares are represented and voted. Even if you plan to attend the annual meeting, we recommend that you vote your shares promptly by Internet or telephone by following the easy instructions provided on the enclosed WHITE proxy card, so that your vote will be counted if you later decide not to attend the meeting.

     

If you have any questions, please contact Innisfree M&A Incorporated, the firm assisting us in connection with the annual meeting. Stockholders may call (877) 750-5838 (toll-free from the U.S. or Canada) or +1 (412) 232-3651 (from other countries). Banks and brokers may call collect at (212) 750-5833.

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

Sincerely,

Charles “Chip” V. Bergh
Chairman of the Board


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This notice of annual meeting and proxy statement for HP Inc. (“HP” or the “Company”) and the accompanying WHITE proxy card are being first mailed to our stockholders on or about March 26, 2020.

Time and Date
2:00 p.m., Pacific Time,
on Tuesday, May 12, 2020

Place
HP Inc. Customer Welcome Center
1501 Page Mill Road
Palo Alto, California 94304

Record Date
March 25, 2020

Voting
Internet
Visit the website provided on your WHITE proxy card or voting instruction form.

Telephone
Use the toll-free phone number listed on the WHITE proxy card or voting instruction form.

Mail
We are encouraging all stockholders to submit their proxies by Internet or by telephone, given the circumstances relating to the novel coronavirus (COVID-19). You may also sign, date and return the enclosed WHITE proxy card or voting instruction form to the address indicated on the card or form, but we strongly encourage you to use this option only if you do not have access to a touch-tone telephone or to the Internet.

Your vote is extremely important. In light of public health concerns relating to the novel coronavirus (COVID-19), we recommend that you vote your shares promptly by Internet or telephone by following the easy instructions provided on the enclosed WHITE proxy card or voting instruction form, as applicable.

If you have any questions, please contact Innisfree M&A Incorporated, the firm assisting us in connection with the annual meeting. Stockholders may call toll free at (877) 750-5838, if calling from the U.S. or Canada, or may call +1 (412) 232-3651, if calling from other countries. Banks and brokers may call collect at (212) 750-5833.
 
 
 

     
Items of Business
Management Proposals
(1)To elect 12 Directors
(2)To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2020
(3)To approve, on an advisory basis, the Company’s executive compensation (“say on pay” vote)
(4)To approve the Company’s 2021 Employee Stock Purchase Plan (the “ESPP”)

Stockholder Proposals
(5)To consider and vote on a stockholder proposal described in this proxy statement, if properly presented at the meeting
(6)To consider and vote on a stockholder proposal submitted by Xerox Holdings Corporation (“Xerox”) to repeal each provision of, or amendment to, the Bylaws adopted by the Board of Directors (the “Board”) without the approval of the Company’s stockholders subsequent to February 7, 2019 and up to and including the date of the annual meeting (the “Stockholder Bylaws Proposal”), if properly presented at the meeting
(7)Such other business as may properly come before the meeting

Please note that Xerox has provided notice to the Company of its intent to nominate a slate of 12 Director nominees (each, a “Xerox nominee” and, collectively, the “Xerox nominees”) for election as Directors at the annual meeting in opposition to the nominees proposed by our Board and present the Stockholder Bylaws Proposal. You may receive solicitation materials from Xerox, including a proxy statement and blue proxy card. We are not responsible for the accuracy of any information provided by or relating to Xerox or its nominees contained in solicitation materials filed or disseminated by or on behalf of Xerox or any other statements Xerox or its representatives may make.

The Board does NOT endorse any Xerox nominee and unanimously recommends that you vote FOR the election of all of the nominees proposed by the Board and named in this proxy statement and AGAINST the Stockholder Bylaws Proposal. Our Board strongly urges you not to vote using any blue proxy card sent to you by Xerox. If you have previously voted using a blue proxy card sent to you by Xerox, you can revoke that proxy and vote FOR our Board’s nominees, AGAINST the Stockholder Bylaws Proposal and on the other matters to be voted on at the meeting in accordance with the Board’s recommendations by voting via Internet or by telephone by following the easy instructions provided on the enclosed WHITE proxy card. You may also sign, date and return the enclosed WHITE proxy card to the address indicated on the card, but we strongly encourage you to use this option only if you do not have access to a touch-tone telephone or to the Internet.

Admission and Record Date

Only stockholders of record at the close of business on March 25, 2020 are entitled to receive notice of, to attend, and to vote at the meeting. While we have established a physical location for the annual meeting, we encourage all of our stockholders to vote their proxies in advance of the meeting, rather than attempting to attend in person.

1501 Page Mill Road
Palo Alto, California 94304
(650) 857-1501

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Notice of Annual Meeting of Stockholders

       

We are actively monitoring the public health concerns relating to the novel coronavirus (COVID-19) and the protocols and recommendations that federal, state, and local governments, including the Centers for Disease Control and Prevention (the “CDC”), the State of California, and the County of Santa Clara, have imposed or may impose in the future. Our headquarters are located in the County of Santa Clara, California, which on March 16, 2020 announced the implementation of “shelter in place” orders prohibiting virtually all group gatherings through April 7, 2020. We do not know if these restrictions or similar restrictions will remain in place on the date of the annual meeting, but at this time do not expect that we will be able to conduct a widely attended annual meeting at a physical location.

We may also take action to change the time, date or location of the meeting and may conduct the meeting by means of remote communication (either in conjunction with a meeting held at a physical location or solely by means of remote communication). If we determine to change the date, time or location of our annual meeting, we will publicly announce such change as soon as practicable before the meeting by press release and posting on our investor relations website at https://investor.hp.com, as well as through a Securities and Exchange Commission (“SEC”) filing. Any and all future press releases, filings or other public announcements regarding the time, date or location of the annual meeting, including if the annual meeting will be held solely by remote communication and not in a physical location or both in-person and virtually and, if so, how you may access the annual meeting virtually and participate and vote during such meeting, or any other changes that may be required as determined by the Board, are incorporated by reference into this notice.

In order to ensure that your shares are represented at the meeting, we strongly encourage you to vote your shares by proxy prior to the meeting, and, further encourage you to submit your proxies electronically—by telephone or by Internet—by following the easy instructions on the enclosed WHITE proxy card. Your vote is important, and voting electronically should facilitate the timely receipt of your proxy despite any potential disruptions in mail service due to COVID-19.

As mentioned above, given a possibility of ongoing restrictions on group gatherings at the time of our annual meeting, to the extent we are able to offer some form of access via the Internet for this contested meeting, we intend to publicly disclose detailed information about such forms of access, if any, including details on how to listen to and/or watch the annual meeting via the Internet and/or participate, if applicable, on our investor relations website at https://investor.hp.com, and, if required, also announce such information via a press release and disclose in materials filed with the SEC.

If we are able to hold an in-person annual meeting based on our judgment of the public health situation at the time of the meeting in light of applicable COVID-19-related protocols and recommendations, you will be entitled to attend the annual meeting only if you were an HP stockholder of record as of the close of business on March 25, 2020 or if you hold a valid proxy for the annual meeting. Please note the admission procedures described under the heading “How Can I Attend the Meeting?” on page 86 of the proxy statement. To promote the health and safety of attendees, we may impose additional procedures or limitations on meeting attendance based on the protocols and recommendations that may be issued by federal, state, and local governments, including the CDC, the State of California, and the County of Santa Clara, at the time. Such additional procedures or limitations may include, but are not limited to, thorough screenings of attendees (including temperature checks) and limits on the number of attendees to promote social distancing.

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.

By order of the Board of Directors,
Kim M. Rivera
President, Strategy and Business Management,
Chief Legal Officer and Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 12, 2020. The definitive proxy statement and HP Inc.’s 2019 Annual Report are available electronically at www.hpannualmeeting.com.

   

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BOARD OF DIRECTORS       8
Background to the Solicitation 8
Who We Are 15
How We Are Selected 23
How We Are Organized 25
How We Govern and Are Governed 30
How We Communicate With You 34
How We Are Compensated 36
CORPORATE GOVERNANCE 39
Management Proposal No. 1 Election of Directors 39
Vote Required 39
Governance Highlights 39
Related-Person Transactions Policies and Procedures 41
AUDIT MATTERS 42
Management Proposal No. 2 Ratification of Independent Registered Public Accounting Firm 42
Vote Required 42
Report of the Audit Committee of the Board of Directors 42
Principal Accountant Fees and Services 43
Pre-Approval of Audit and Non-Audit Services Policy 43
EXECUTIVE COMPENSATION 44
Management Proposal No. 3 Advisory Vote to Approve Executive Compensation 44
Vote Required 44
Overview 45
Compensation Discussion and Analysis 47
Termination and Change in Control Protections 58
Management Proposal No. 4 Vote to Approve the Company’s 2021 Employee Stock Purchase Plan 72
Vote Required 72
OWNERSHIP OF OUR STOCK 75
Common Stock Ownership of Certain Beneficial Owners and Management 75
STOCKHOLDER PROPOSALS 77
Stockholder Proposal No. 1 Right to Act by Written Consent 77
Proposal 5 – Right to Act by Written Consent 77
Statement in Opposition 78
Board Recommendation 79
Vote Required 79
Stockholder Proposal No. 2 To Repeal Certain Provisions of, or Amendments to, the Company’s Bylaws Adopted After February 7, 2019 80
Proposal 6 – To Repeal Certain Provisions of, or Amendments to, the Company’s Bylaws Adopted After February 7, 2019 80
Statement in Opposition 80
Board Recommendation 81
Vote Required 81
OTHER MATTERS 82
Questions and Answers 82
ANNEX A: HP INC. 2021 EMPLOYEE STOCK PURCHASE PLAN 90
ANNEX B: SUPPLEMENTAL INFORMATION REGARDING PARTICIPANTS 96

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Background to the Solicitation

HP Inc. (“HP” or the “Company”) evaluates on an ongoing basis its business strategy, capital allocation, and potential strategic alternatives in an effort to drive shareholder value. This evaluation is iterative, and takes into account the perspectives of the Company’s shareholders, whose views are actively sought through the Company’s robust shareholder engagement program.

In the summer of 2018 following Xerox Holdings Corporation’s (“Xerox”) termination of the Fuji-Xerox merger agreement and the appointment of John Visentin as the chief executive office of Xerox, HP and Xerox held intermittent discussions concerning the possibility of potential joint business initiatives including, in particular, the possibility that HP would serve as a manufacturer of equipment to be sold by Xerox (the “OEM Arrangement”). These discussions were led by Steve Bandrowczak, Xerox’s president and chief operations officer, and Enrique Lores, then head of HP’s printing division. Discussions concerning the OEM Arrangement were commercial and friendly, and did result in commercial arrangements. These discussions continued throughout 2019. In the course of these discussions, Mr. Bandrowczak said on a number of occasions that Xerox wanted to be acquired by HP and sought Mr. Lores’ thoughts on that issue, and Mr. Lores replied that it was premature to contemplate that, and first the companies should get to know one another better through the OEM Arrangement and other possible joint business initiatives that could make sense.

On June 25, 2019, following an extensive corporate strategy process led by Enrique Lores, the board of directors of HP (“HP Board”) reviewed and approved an updated corporate strategy proposal that included, among other things, the pursuit of potential acquisition targets in the Print business. The HP Board subsequently reviewed and discussed considerations for a number of potential targets, including Xerox.

On August 12, 2019, Carl Icahn, the largest shareholder of Xerox, phoned Dion Weisler, HP’s then-chief executive officer. Based on publicly reported information, HP believed that Mr. Icahn was the beneficial owner of approximately 10.6% of Xerox’s outstanding common stock at such time. Mr. Icahn communicated that he believed HP was a well-run company with a strong management team and stated that he had accumulated approximately 60 million shares of HP common stock, constituting 4.125% of HP’s then-outstanding shares of common stock. Mr. Icahn further expressed his belief that there was considerable value in combining Xerox and HP, that HP should consider buying Xerox (or, if not, that Mr. Icahn would consider making an offer to acquire HP) and that he wanted a transaction to occur quickly. Mr. Weisler expressed that HP was always open to hearing from its shareholders and that the HP Board was focused on creating shareholder value. Following the call, on August 13, 2019, Mr. Icahn sent Mr. Weisler an e-mail attaching two Xerox slides showing estimated synergies of $3.5 billion that a combined company could achieve with full impact in 2023.

On August 22, 2019, the Company announced that Mr. Weisler had decided to step down for a family health matter and that the HP Board had unanimously appointed Mr. Lores (then head of HP’s printing division) to succeed Mr. Weisler as the Company’s chief executive officer effective November 1, 2019.

On August 23, 2019, Mr. Bandrowczak called Mr. Lores (then head of HP’s printing division) and advised that Mr. Visentin was planning to tell Mr. Weisler that Xerox was very interested in a combination with HP at an upcoming, previously-scheduled breakfast meeting. On August 26, 2019, Mr. Icahn called Mr. Weisler and expressed that he was focused on quickly pursuing a combination of HP with Xerox and asked Mr. Weisler for his views on HP buying Xerox. Mr. Weisler expressed to Mr. Icahn that HP would require further information from Xerox in order to assess a potential acquisition and that he would follow up directly with Mr. Visentin. Later that day, Mr. Weisler sent Mr. Visentin a list of threshold questions that would need to be addressed by Xerox before HP would engage in full discussions concerning an acquisition of Xerox. These questions related to topics including synergy calculations, Xerox’s “Project Own It” restructuring initiative, Xerox’s intellectual property, Xerox’s plans for its financing subsidiary, regulatory matters, Xerox’s joint venture with Fujifilm Holdings and the litigation between Xerox and Fujifilm, and the impact of a potential transaction on Xerox’s critical contracts.

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Board of Directors

On August 27, 2019, Mr. Visentin phoned Mr. Weisler and stated that Xerox was eager to combine with HP, and that he hoped that HP would include stock consideration in any offer to acquire Xerox. He also stated that he knew that Mr. Icahn had taken an ownership position in HP. Mr. Visentin advised that Xerox would provide HP with the information HP had requested.

On September 4, 2019, Mr. Weisler and Mr. Visentin had their previously-scheduled breakfast meeting. At the meeting, Mr. Visentin stated that, strategically, Xerox’s Board believed that Xerox was out of organic growth opportunities and must either grow through a strategic acquisition or be acquired. He informed Mr. Weisler that Xerox had offered to buy Fujifilm Holdings Corporation’s (“Fuji”) interest in their joint venture, but Fuji had declined to enter into negotiations. Mr. Visentin further stated that Xerox could try to acquire HP, but that the extreme leverage that Xerox would need to take on to make such an acquisition and the resulting potential for a credit downgrade made it preferable for HP to acquire Xerox. Mr. Visentin expressed a preference for HP to use its stock as acquisition currency, but said that cash could also be acceptable. Mr. Weisler expressed that HP was attempting to evaluate a potential transaction, but was still awaiting the requested information from Xerox that was necessary to conduct even a preliminary evaluation of a potential transaction, and without that information, HP could not determine next steps. Mr. Weisler reiterated that HP remained open to all value-creating options.

During late August/early September 2019, Kim Rivera, HP’s president of strategy and business management and chief legal officer, worked with Louie Pastor, Xerox’s executive vice president and general counsel, to coordinate a follow-up meeting between a few high level executives from their respective companies, which ultimately resulted in a meeting on September 12, 2019.

On September 12, 2019, there was an in-person meeting between selected senior management of HP and selected senior management of Xerox. Neither company’s chief executive officer was present. At the meeting, Xerox shared a slide presentation regarding, among other things, selected contractual provisions to which it was subject; the progress of Xerox’s cost cutting program, which it referred to as Project Own-It; and potential synergies of a combined HP-Xerox. Two of the slides discussing potential synergies were substantially identical to those provided to Mr. Weisler by Mr. Icahn on August 13, 2019. The slides included an illustrative valuation analysis of an acquisition of Xerox for $40-46 per share in cash and showing $3.5 billion of cost synergies achieved by 2022.

Overall, the level of information provided by Xerox was largely equivalent to Xerox’s December 9, 2019 investor presentation. “Synergy” estimates were large, round numbers without the detail required to validate that they had a sound basis. Notably, questions raised by HP about the current trajectory of the Xerox business (including but not limited to questions raised in response to the review of the materials presented by Xerox and as part of the discussion relating to the goals and results of Project Own It, which HP management believed were important in order to properly contextualize and understand trends in Xerox’s business and its publicly reported financial results) were deferred and not addressed.

On September 27, 2019, Mr. Visentin had a telephone conversation with Mr. Weisler. Mr. Visentin pressed Mr. Weisler regarding next steps. Mr. Weisler emphasized that HP required the threshold information that it had requested in order to make any determinations. Mr. Visentin said that he would attempt to facilitate the provision of that information.

On October 1, 2019, a few high-level executives from Xerox and HP participated in a video conference. Prior to the meeting, HP had shared a list of questions with Xerox and identified them as topics that HP would like to address at the meeting. The questions related to topics including Xerox’s business mix, financial performance, strategy and trajectory, Xerox’s joint venture with Fujifilm Holdings and the litigation between Xerox and Fujifilm, and compliance matters. At the meeting, the representatives of Xerox pressed the representatives of HP as to why HP required due diligence in order to make an offer to acquire Xerox. The representatives of Xerox then provided limited information with respect to plans for Xerox’s ownership interest in its joint venture with Fuji, synergies and certain other topics. Again, notably, questions raised by HP about the fundamental health and trajectory of Xerox’s business were deferred and not addressed.

On October 4, 2019, Mr. Weisler spoke with Mr. Visentin. Mr. Weisler confirmed that HP was prepared to enter into a non-disclosure agreement with Xerox and to commit time and resources to further explore a business combination, if Xerox would be willing to begin sharing substantive information with HP. Mr. Visentin stated that Xerox required HP to make an indicative offer, including the price (or price range) to acquire Xerox, before Xerox would continue the discussions. Mr. Weisler stated that HP could not specify a price without the previously requested threshold information, given HP’s concerns regarding Xerox’s business and the limited information that had been provided to date. Mr. Visentin agreed to present to the Xerox board of directors HP’s proposal to execute a non-disclosure agreement relating to the receipt of additional substantive information from Xerox.

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Board of Directors

On October 10, 2019, Mr. Visentin confirmed that Xerox was unwilling to provide any substantive information without an indicative offer price from HP. Mr. Weisler again confirmed that HP was prepared to commit the requisite time and resources to a focused, expeditious process to inform its valuation of a potential combination, if Xerox was willing to provide the threshold diligence information previously discussed. Mr. Visentin informed Mr. Weisler that Xerox was not willing and, therefore, discussions were at an end.

In the evening of November 5, 2019, Mr. Visentin contacted Mr. Weisler to inform him that Xerox’s Board had approved an offer for Xerox to acquire HP for consideration comprised of $17.00 in cash and 0.137 shares of Xerox common stock per share of HP common stock (the “November Proposal”). Mr. Visentin also stated that Xerox had received a highly confident letter from Citibank with respect to the required financing. That same evening, reports of the November Proposal appeared in the Wall Street Journal. Mr. Visentin sent a letter containing the November Proposal to Mr. Lores that evening by email.

On November 6, 2019, HP publicly confirmed that a proposal had been received from Xerox.

On November 8, 2019, a telephone conversation between Mr. Icahn, Mr. Lores and Mr. Weisler was arranged at Mr. Icahn’s request to Mr. Weisler. At Mr. Icahn’s suggestion, Keith Cozza, the Chairman of the Board of Xerox and Mr. Icahn’s employee, also joined the call. Mr. Icahn informed Mr. Weisler and Mr. Lores that he believed that HP and Xerox should move to combine swiftly in a transaction in which Mr. Icahn would receive stock of the combined company, and that if HP was unwilling to do that, Xerox and Mr. Icahn were prepared to escalate the situation. Mr. Lores informed Mr. Icahn that HP’s Board had received and was evaluating the November Proposal, and reiterated that HP had remained willing to continue discussions about the potential of a strategic combination of the two companies before Xerox terminated discussions due to its refusal to share any substantive information. On the same day, Mr. Weisler and Mr. Lores had a similar telephone conversation with Mr. Visentin.

On November 13, 2019, Mr. Lores phoned Mr. Icahn. Mr. Lores informed Mr. Icahn that HP was considering the November Proposal. Mr. Icahn reiterated that he believed that there was significant value from a combination between Xerox and HP, and that he was open to alternative transaction structures. That same evening, Mr. Icahn was quoted in an article in the Wall Street Journal as being in favor of a combination of Xerox and HP; in that article, Mr. Icahn publicly disclosed his ownership of approximately 4.24% of HP’s then-outstanding common stock.

Also on November 13, 2019, the HP Board met to evaluate the November Proposal. The HP Board considered its financial advisor’s analysis of the November Proposal. The HP Board further considered that there remained significant unanswered questions relating to: (1) potential value creation that could arise from a combination of Xerox and HP, given the lack of access to substantive information that would be required to evaluate the quantum of synergies that a deal might create; (2) the future business trajectory of Xerox, given the recent deterioration in Xerox’s business; (3) Xerox's ability to finance a deal with investment grade notes, given Xerox's current non-investment grade ratings from all three major rating agencies (Ba1 with negative outlook from Moody's, BB+ with negative outlook from S&P, and BB from Fitch); and (4) the potential impact of outsized debt levels on the combined company’s stock. The HP Board determined that the November Proposal significantly undervalued HP relative to the Company’s standalone plan and options to deploy its strong balance sheet to generate shareholder value, and that rejecting the November Proposal was in the best interests of HP’s shareholders. The HP Board instructed Mr. Lores to convey its rejection of the November Proposal to Xerox and to reiterate that HP was open to exploring a potential combination, but still needed answers to its threshold questions to proceed further.

On November 14, 2019, Mr. Lores and Mr. Visentin spoke by telephone. Mr. Lores informed Mr. Visentin that Mr. Lores had spoken to Mr. Icahn, and informed him that HP planned to respond to Xerox’s proposal in the coming days. Mr. Visentin informed Mr. Lores that Xerox’s offer would remain open following the November 13, 2019 date stated in the letter conveying the November Proposal, and subsequently sent Mr. Lores an email confirming that Xerox would extend the time period for HP to respond to the offer until the end of the day on November 18, 2019.

On November 17, 2019, the HP Board sent the following letter to Mr. Visentin:

Dear John,

Our Board of Directors has reviewed and considered your unsolicited proposal dated November 5, 2019 at a meeting with our financial and legal advisors and has unanimously concluded that it significantly undervalues HP and is not in the best interests of HP shareholders. In reaching this determination, the Board also considered the highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock.

We have great confidence in our strategy and our ability to execute to continue driving sustainable long-term value at HP. In addition, the Board and management team continue to take actions to enhance shareholder value including the deployment of our strong balance sheet for increased repurchases of our significantly undervalued stock and for value-creating M&A.

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Board of Directors

We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox. However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox. We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects. In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination. With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.

We remain ready to engage with you to better understand your business and any value to be created from a combination.

On behalf of the Board of Directors

/s/ Enrique Lores and Chip Bergh

Also on November 17, 2019, Mr. Lores had a telephone conversation with Mr. Visentin, and multiple conversations with Mr. Icahn, regarding HP’s response to the November Proposal. Mr. Lores told Mr. Visentin and Mr. Icahn that HP continued to stand ready to do due diligence on Xerox in order to assess a potential strategic combination. Each of Mr. Visentin and Mr. Icahn separately encouraged a mutual due diligence process and conveyed that Xerox was likely unwilling to proceed with one-way diligence by HP and might pursue a proxy contest to elect directors to HP’s Board instead. Mr. Icahn suggested that, if HP wanted a consensual resolution, HP should make an offer to acquire Xerox and suggested that $45 per share might be an attractive price if HP were to do so.

On November 20, 2019, Mr. Visentin informed Mr. Lores that Xerox would respond to HP the following day. Mr. Visentin stated that Xerox would be insisting on mutual due diligence before a deal could move forward.

On November 21, 2019, Mr. Visentin sent a letter to Mr. Lores and Chip Bergh, Chairman of the Board of HP, and publicly released such letter. In the letter, Mr. Visentin stated that if HP did not agree to mutual confirmatory due diligence by Monday, November 25, 2019, Xerox would take steps to present its November Proposal directly to HP shareholders. On the same day, there were telephone conversations between Mr. Lores and Mr. Visentin to reiterate the letter sent by Mr. Visentin to Mr. Lores and Mr. Bergh on that day.

On November 23 and 24, 2019, the HP Board held a telephonic meeting during which it reviewed and considered Xerox’s November 21, 2019 letter. The HP Board considered that Xerox’s offer had not changed and, accordingly, still significantly undervalued HP. The HP Board further considered the impetus for Xerox’s perceived urgency to reach a transaction, the HP Board’s questions about Xerox’s standalone prospects, and the fact that Xerox’s requested timing would not permit the Company to perform due diligence to the extent that the HP Board considered necessary in order to assess the potential impact of a transaction on HP shareholders.

Also on November 24, 2019, and following separate conversations between Mr. Lores and Mr. Visentin and Mr. Lores and Mr. Icahn in which Mr. Lores informed Mr. Visentin and Mr. Icahn of HP’s response to the November 21 letter, Mr. Lores and Mr. Bergh responded to Mr. Visentin’s November 21, 2019 letter on behalf of the HP Board with the following letter:

Dear John,

The HP Board of Directors has reviewed and considered your November 21 letter, which has provided no new information beyond your November 5 letter. We reiterate that we reject Xerox’s proposal as it significantly undervalues HP. Additionally, it is highly conditional and uncertain. In particular, there continues to be uncertainty regarding Xerox’s ability to raise the cash portion of the proposed consideration and concerns regarding the prudence of the resulting outsized debt burden on the value of the combined company’s stock even if the financing were obtained. Consequently, your proposal does not constitute a basis for due diligence or negotiation.

We believe it is important to emphasize that we are not dependent on a Xerox combination. We have great confidence in our strategy and the numerous opportunities available to HP to drive sustainable long-term value, including the deployment of our strong balance sheet for increased share repurchases of our significantly undervalued stock and for value-creating M&A.

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It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information. When we were in private discussions with you in August and September, we repeatedly raised our questions; you failed to address them and instead walked away, choosing to pursue a hostile approach rather than continue down a more productive path. But these fundamental issues have not gone away, and your now-public urgency to accelerate toward a deal, still without addressing these questions, only heightens our concern about your business and prospects. Accordingly, we must have due diligence to determine whether a Xerox combination has any merit.

We remain prepared to study the potential value of a combination and to work quickly to learn more about your business trajectory. However, there are significant concerns about both the near-term health and long-term viability of your business that have a significant impact on Xerox’s value. The question of whether there is a path to turn around your business is a threshold issue. In addition to the visible and substantial declines at Xerox, our specific concerns include:

Xerox has missed consensus revenue estimates in four of the last five quarters;

Xerox’s revenue has fallen from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, and this is expected to continue Xerox management projects revenue declines of 6% in fiscal 2019;

Given how much of your business is based on contractual revenue, we are concerned about the decline in customer Total Contract Value (TCV) in excess of revenue declines, which suggests your revenues may decline even faster in future years. We note that the TCV of enterprise signings (including renewals) in 2018 was down 13.9% in constant currency and your churn for 2018 was 18%, both data points which Xerox has stopped providing publicly since the end of 2018;

Our review of synergies based on public information and the limited information you have shared does not support achievable synergies of the scale you suggest, and it appears that your assumptions include significant savings that are already included in each company’s independently announced cost reduction plans; and

It appears to us that when Xerox exited the Fujifilm joint venture, Xerox essentially mortgaged its future for a short-term cash infusion. We fear that the exit has left a sizeable strategic hole in Xerox’s portfolio. In addition, we have concerns as to the state of Xerox’s technology resources, research and development pipeline, future product programs, and supply continuity and capability. Finally, we note that Xerox will have to get access to the fastest growing Asia Pacific region.

The HP Board of Directors is committed to serving the best interests of HP shareholders, not Xerox and its shareholders. HP has numerous opportunities to create value for HP shareholders on a standalone basis. We will not let aggressive tactics or hostile gestures distract us from our responsibility to pursue the most value-creating path.

On behalf of the Board of Directors,

/s/ Enrique Lores and Chip Bergh

On November 26, 2019, Mr. Visentin sent a letter to Mr. Lores and Mr. Bergh, in response to the letter sent by Mr. Lores and Mr. Bergh on November 24, 2019. Mr. Visentin stated that Xerox planned to engage directly with HP shareholders to solicit their support for the November Proposal. This letter was made public on the date it was sent to HP.

On December 4, 2019, Mr. Icahn published an open letter to HP’s shareholders criticizing HP’s decision not to engage in mutual due diligence.

On December 9, 2019, Xerox filed a publicly available presentation advocating for the November 6 proposal.

On December 17, 2019, Moody’s Investors Service issued a credit opinion update that reflected uncertainty about Xerox’s ability to stabilize and grow its revenue base over the next few years. Moody’s stated that the transaction contemplated by the November Proposal would lead to higher leverage, significant costs to realize synergies, and significant execution risks. Moody’s also stated that it believed that Xerox’s credit profile could be pressured if the transaction was consummated.

On January 6, 2020, Mr. Visentin sent a letter to Mr. Lores and Mr. Bergh (which was also made public) stating that Xerox had obtained financing commitments in connection with the November Proposal from Citigroup Global Markets Inc, Mizuho Bank, Ltd. and Bank of America, N.A.

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On January 8, 2020, Mr. Lores and Mr. Bergh, on behalf of HP’s Board, sent the following letter to Mr. Visentin responding to his January 6, 2020 letter:

Dear John,

We reiterate that the HP Board of Directors’ focus is on driving sustainable long-term value for HP shareholders. Your letter dated January 6, 2020 regarding financing does not address the key issue – that Xerox’s proposal significantly undervalues HP – and is not a basis for discussion. The HP Board of Directors remains committed to advancing the best interests of all HP shareholders and to pursuing the most value-creating opportunities.

On behalf of the Board of Directors,

/s/ Enrique Lores and Chip Bergh

On January 23, 2020, Xerox submitted to HP a notice of the nomination of 11 directors and four alternate director nominees for election to the HP Board at the Company’s 2020 annual meeting. Xerox made a public announcement of its intention to nominate candidates to the HP Board on the same day.

Further on January 23, 2020, HP issued a statement in response to Xerox’s announcement of its intention to nominate directors for election to the HP Board at the Company’s 2020 annual meeting providing that the HP Board believes “that the nominations are a self-serving tactic by Xerox to advance its proposal that significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders.”

On February 10, 2020, Xerox announced its intention to launch a tender offer on or around March 2, 2020, for all of the outstanding shares of common stock of HP at a nominal price of $24.00 per share, to be comprised of $18.40 in cash and 0.149 Xerox shares for each HP share (the “Revised Proposal”). Xerox stated that, while it did not have financing sufficient to fund the Revised Proposal, it was in discussions regarding a sale of convertible securities.

On February 11, 2020, HP announced the release date for its earnings for the first fiscal quarter of 2020 would be February 24; that it would present additional information about its long-term strategic plans at such time; and that it wants its shareholders to have full information on the earnings and the value inherent in the Company before responding to Xerox’s February 10 press release.

On February 20, 2020, given Xerox’s announcement that it intended to commence a tender offer to acquire all of the outstanding shares of HP common stock, HP adopted and announced a limited shareholder rights plan that expires on February 20, 2021, and declared a dividend of one preferred share purchase right for each outstanding share of HP common stock to stockholders of record on March 2, 2020.

In the event that a person or group acquires beneficial ownership of 20% or more of HP’s then outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than such person or members of such group) to purchase additional shares of HP common stock at a substantial discount to the public market price. In addition, at any time after a person or group acquires 20% or more of HP’s outstanding common stock (unless such person or group acquires 50% or more), the HP Board may exchange one share of HP common stock for each outstanding right (other than rights owned by such person or group, which would have become void). The shareholder rights plan could make it more difficult for a third party to acquire HP or a large block of HP’s common stock without the approval of the Board.

HP adopted the shareholder rights plan because the HP Board believed that it would be essential that HP shareholders have sufficient time and full information when considering any tender offer that Xerox may commence. Following the commencement of the exchange offer by Xerox on March 2, 2020, the HP Board reaffirmed the shareholder rights plan and the maintenance of the rights to contribute to the preservation of HP’s long-term value for its stockholders, including in light of the commencement of the exchange offer.

On February 21, 2020, a friend of Mr. Icahn suggested to Mr. Bergh, the Chairman of the HP Board, that the two discuss the situation; and on February 22, 2020, Mr. Icahn and a colleague from Icahn Associates spoke with Mr. Bergh and Mr. Robert Bennett, another member of the HP Board. Mr. Bergh had not previously spoken or emailed with Mr. Icahn, and has never spoken with or otherwise had contact with Mr. Visentin. The conversation was cordial. Messrs. Bergh and Bennett stated that they were primarily there to listen and were interested to hear the views of Mr. Icahn on the situation in that HP was in a “quiet period” with earnings to be released on February 24. Mr. Icahn’s views were generally the

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same as had been reported in the news media the same day, including his perspective on management structure. Messrs. Bergh and Bennett indicated that their focus was HP shareholder value, especially in light of the significant amount of equity to be held by HP shareholders in any combination; that HP was a very large complex and global group of businesses relative to Xerox where failure to execute well on the business plan could have negative consequences on a scale greater than the value of Xerox; and that they had significant confidence in the HP team’s ability to reduce costs in the business judiciously while also executing the plan across the size and breadth of HP’s businesses over time.

On February 24, 2020, HP announced its earnings for the first fiscal quarter of 2020 and announced a new strategic and financial value plan including new 3-year financial targets and a new capital return plan. In connection with that, HP announced that the revised Xerox proposal announced on February 10 meaningfully undervalues HP, creates significant risk and compromises the future of the company. HP also announced that HP was reaching out to Xerox to explore if there is a combination that creates value for HP shareholders that is additive to HP’s strategic and financial plan. At the same time, Mr. Lores sent an email to Mr. Visentin proposing to arrange a meeting to explore the basis for a transaction and alternative transaction frameworks that could deliver attractive value to both HP and Xerox shareholders, and offering that Mr. Lores’ office would reach out to Mr. Visentin’s office to arrange a time to discuss. Such meeting was held on March 10, 2020 in New York.

On March 2, 2020, Xerox commenced an exchange offer to acquire all outstanding shares of HP common stock.

****************

The Board currently consists of 13 Directors. On the recommendation of the Nominating, Governance and Social Responsibility Committee, the Board has nominated the 12 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. Mr. Weisler is not standing for re-election at this annual meeting, and the Board has determined that the size of the Board will be reduced to 12 Directors at the time of the annual meeting.

Our Board recommends using the enclosed WHITE proxy card to vote FOR the election of all of the Board’s 12 Director nominees listed below.

Xerox has notified us of its intent to nominate a slate of 12 nominees for election as Directors at the annual meeting in opposition to the nominees proposed by our Board. Our Board does not endorse any Xerox nominee and unanimously recommends that you disregard any blue proxy card that may be sent to you by Xerox. Voting to “withhold” with respect to any of Xerox’s nominees on its proxy card is not the same as voting FOR our Board’s nominees, because a vote to “withhold” with respect to any of Xerox’s nominees on its proxy card will revoke any previous proxy submitted by you, including any vote you may have made for our Board’s nominees. If you have previously voted using a blue proxy card sent to you by Xerox, you may change your vote by voting via the Internet or by telephone by following the easy instructions provided on the enclosed WHITE proxy card. You may also sign, date and return the enclosed WHITE proxy card to the address indicated on the card, but we strongly encourage you to use this option only if you do not have access to a touch-tone telephone or to the Internet. Only the latest validly executed proxy that you submit will be counted.

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Who We Are

Overview

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 and Richard Clemmer’s experience at NXP Semiconductors and Agere Systems enables him to provide valuable insight in connection with the evaluation and execution of key strategic transactions, 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.

Our Director Nominees

Name
Principal Occupation
Age HP Director
Since
Committees Other Current Public Company/
Public Registrant Boards
A F H N

Aida M. Alvarez  INDEPENDENT
Former Administrator, U.S. Small Business
Administration & Cabinet Member

70

2016

K12 Inc.
Fastly, Inc.
Oportun, Inc.

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

60

2011

Reliance Industries Ltd.

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

61

2013

Discovery Communications, Inc.
Liberty Media Corporation

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

62

2015

Levi Strauss & Co.

Stacy Brown-Philpot  INDEPENDENT
Chief Executive Officer, TaskRabbit

44

2015

Nordstrom, Inc.

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

65

2015

Corning Incorporated
Kellogg Company

Mary Anne Citrino  INDEPENDENT
Senior Advisor and former Senior Managing
Director, Blackstone

60

2015

Barclays plc
Royal Ahold Delhaize
Alcoa Corporation

Richard L. Clemmer  INDEPENDENT
Chief Executive Officer and Executive Director,
NXP Semiconductors N.V.(1)

68

2020

   

NCR Corporation(2)
NXP Semiconductors N.V.

Yoky Matsuoka  INDEPENDENT
Division CEO, Panasonic Corporation

47

2019

None

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

74

2015

None

Subra Suresh  INDEPENDENT
President, Nanyang Technological University

63

2015

Singapore Exchange Limited

Enrique Lores
President and Chief Executive Officer, HP Inc.

54

2019

None

(1) NXP Semiconductors recently nominated a successor to succeed Mr. Clemmer as Chief Executive Officer and Executive Director and this will be proposed by NXP Semiconductors’ Board of Directors at NXP Semiconductors’ annual general meeting of shareholders scheduled for May 27, 2020. Mr. Clemmer will remain a strategic advisor to NXP Semiconductors upon stepping down.
(2) Mr. Clemmer is not standing for re-election at NCR Corporation’s annual meeting of stockholders scheduled for April 21, 2020, and he will not serve as a director of NCR Corporation after such date.

Committees A Audit
Committee
F Finance, Investment
and Technology
Committee
H Human Resources
and Compensation
Committee
N Nominating, Governance
and Social Responsibility
Committee
Chair

Proxy Statement 15


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Collective Skills of Our Director Nominees

         
HP benefits from having leading academics in relevant fields sharing their expertise and providing valuable guidance on research trends and emerging areas of innovation. 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.
It’s essential that we have Directors with experience allocating capital for large and complex enterprises, as these Directors provide valuable insights as HP continues to reduce costs and optimize its cost structure. 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.
HP’s customers are the foundation of our mission – we continually seek to better serve our customer base with products and solutions that inspire and innovate. 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.
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. HP benefits from having Directors with experience leading organizations through significant strategic transactions, including mergers, acquisitions and divestitures, as well as the successful integration of acquired businesses, as these directors provide useful guidance and oversight as HP implements its strategy.
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. 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.
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. With our deep history of innovation, we know that design, technology and user experience add valuable and vital components to our Board dialogue.
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.

International Experience of Our Director Nominees

North America Europe Asia

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Biographies of Director Nominees

The biographies describe each Director nominee’s qualifications and relevant experience. The biographies include key qualifications, skills, and attributes most relevant to the decision to nominate candidates to serve on the Board.

                                                                    
Aida M. Alvarez
 

Most Recent Role

Former Administrator, U.S. Small Business Administration & Cabinet Member
 

Current Public Company Boards

HP
K12 Inc.
Fastly, Inc.
Oportun, Inc.
 

Prior Public Company Boards

MUFG Americas Holdings Corporation
Wal-Mart Stores, Inc.
PacifiCare Health Systems Inc.
Independent Director
Age: 70
Director since: 2016
HP Board Committees:
HRC, NGSR

Qualifications:

Prior Business and Other Experience

Founding Chair, Latino Community Foundation (since 2003)
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)

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 where she provided strategic feedback to the President. 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.


GOVERNMENT


STRATEGY

   


FINANCE


ROBUST BUSINESS
EXPERIENCE

     
                                                  

                                                                    
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
Independent Director
Age: 60
Director since: 2011
HP Board Committees:
HRC, NGSR (Chair)

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

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. As CEO of Booz & Company, Mr. Banerji oversaw the separation of Booz & Company from Booz Allen Hamilton. During his career at Booz Allen Hamilton and Booz & Company, he has advised numerous companies on restructuring and M&A, particularly in mature industries. He is the co-author of Cut Costs, Grow Stronger, published by Harvard Business Press in 2009.


CAPITAL
ALLOCATION


FINANCE


ROBUST BUSINESS
EXPERIENCE

   


INTERNATIONAL
BUSINESS


STRATEGIC
TRANSACTIONS; M&A


STRATEGY

     
                                                  

Proxy Statement 17


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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
Independent Director
Age: 61
Director since: 2013
HP Board Committees:
Audit, FIT (Chair)

Qualifications:

Prior Business and Other Experience

President, Discovery Holding Company (2005–2008)
President and Chief Executive Officer, Liberty Media Corporation (prior to 2005)

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. Additionally, as a result of his positions at Liberty Media, Mr. Bennett brings experience leading organizations through significant strategic transactions, including acquisitions, divestitures and integration. Mr. Bennett also has an in-depth understanding of finance and has held various financial management positions during his career including serving as CFO of a public company. He also contributes valuable insight to the Board due to his experience serving on the boards of both public and private companies.


CAPITAL
ALLOCATION


FINANCE


ROBUST BUSINESS
EXPERIENCE


INTERNATIONAL
BUSINESS

   


OPERATIONS


STRATEGIC
TRANSACTIONS; M&A


STRATEGY

     
                                                  

                                                                    
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 Boards

HP
Levi Strauss & Co.
 

Prior Public Company Boards

VF Corporation
Independent Chairman of
the Board

Age: 62
Director since: 2015
Chairman since: 2017
HP Board Committees:
HRC, NGSR

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

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.


CAPITAL
ALLOCATION


CUSTOMER
EXPERIENCE


OPERATIONS


STRATEGY

   


INTERNATIONAL
BUSINESS


ROBUST BUSINESS
EXPERIENCE


STRATEGIC
TRANSACTIONS; M&A

     
                                                  

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Board of Directors

                                                                    
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
Independent Director
Age: 44
Director since: 2015
HP Board Committees:
Audit, NGSR

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

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.


CUSTOMER
EXPERIENCE


DISRUPTIVE
INNOVATION


INTERNATIONAL
BUSINESS


ROBUST BUSINESS
EXPERIENCE

   


FINANCE


OPERATIONS


STRATEGY


TECHNOLOGY

     
                                                  

                                                                    
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.
Independent Director
Age: 65
Director since: 2015
HP Board Committees:
FIT, HRC (Chair)

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)

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. Her leadership experience includes steering Dow Corning Corporation during an extended bankruptcy and restructuring process. Dr. Burns also brings public company governance experience to the Board as a member of boards and board committees of other public companies.


CAPITAL
ALLOCATION


CUSTOMER
EXPERIENCE


OPERATIONS


SCIENCE


STRATEGY

   


FINANCE


INTERNATIONAL
BUSINESS


ROBUST BUSINESS
EXPERIENCE


STRATEGIC
TRANSACTIONS; M&A


TECHNOLOGY

     
                                                  

Proxy Statement 19


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Board of Directors

                                                                    
Mary Anne Citrino
 

Current Role

Senior Advisor and former Senior Managing Director, Blackstone, 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.
Independent Director
Age: 60
Director since: 2015
HP Board Committees:
AUDIT (Chair), FIT

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)

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.


CAPITAL
ALLOCATION


FINANCE


ROBUST BUSINESS
EXPERIENCE

   


INTERNATIONAL
BUSINESS


STRATEGIC
TRANSACTIONS; M&A


STRATEGY

     
                                                  

                                                                    
Richard L. Clemmer
 

Current Role

Chief Executive Officer and Executive Director of NXP Semiconductors N. V., a semiconductor company (since January 2009)*
 

Current Public Company Boards

HP
NCR Corporation**
NXP Semiconductors N. V.
 

Prior Public Company Boards

i2 Technologies, Inc.
Independent Director
Age: 68
Director since: 2020
HP Board Committees:
AUDIT, FIT

Qualifications:

Prior Business and Other Experience

Senior Advisor, Kohlberg Kravis Roberts & Co. (May 2007-December 2008)
President and Chief Executive Officer, Agere Systems Inc. (October 2005–April 2007)

Other Key Qualifications

Mr. Clemmer brings to the Board significant leadership experience in the high tech industry, including experience with semiconductor, storage, e-Commerce, and software companies, and brings valuable experience leading organizations through strategic transactions. In his roles at NXP Semiconductors and Agere Systems, Mr. Clemmer has overseen the successful execution of a number of key strategic transactions, including the acquisition and integration of several companies and business units.


CAPITAL
ALLOCATION


FINANCE


INTERNATIONAL
BUSINESS


OPERATIONS

   


ROBUST BUSINESS
EXPERIENCE


STRATEGIC
TRANSACTIONS; M&A


STRATEGY


TECHNOLOGY

     
                                                  
* NXP Semiconductors recently nominated a successor to succeed Mr. Clemmer as Chief Executive Officer and Executive Director and this will be proposed by NXP Semiconductors’ Board of Directors at NXP Semiconductors’ annual general meeting of shareholders scheduled for May 27, 2020. Mr. Clemmer will remain a strategic advisor to NXP Semiconductors upon stepping down.
** Mr. Clemmer is not standing for re-election at NCR Corporation’s annual meeting of stockholders scheduled for April 21, 2020, and he will not serve as a director of NCR Corporation after such date.

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Board of Directors

                                                                    
Enrique Lores
 

Current Role

President and Chief Executive Officer, HP (since November 2019)
 

Current Public Company Boards

HP
 

Prior Public Company Boards

None
President, Chief Executive Officer and Director
Age: 54
Director since: 2019
HP Board Committees:
N/A

Qualifications:

Prior Business and Other Experience

President, Imaging and Printing Solutions, HP Inc. (November 2015–October 2019)
Separation Leader, Hewlett-Packard Company (2014–October 2015)
Senior Vice President & General Manager, Business Personal Systems, Hewlett-Packard Company (2013–2014)
Senior Vice President, Worldwide Customer Support & Services, Hewlett-Packard Company (2011–2013)
Senior Vice President, Worldwide Sales and Solutions Partner Organization, Hewlett-Packard Company (2008–2011)
Vice President & General Manager, Large Format Printing, Hewlett-Packard Company (2003–2008)
Vice President, Imaging & Printing Group, EMEA, Hewlett-Packard Company (2001–2003)
Experience in a variety of roles at Hewlett-Packard Company (1989–2001)

Other Key Qualifications

Mr. Lores’s international business and leadership experience, and his service in multiple facets of the HP business worldwide, provide the Board with an enhanced global perspective. Mr. Lores’s more than 25 years of experience in the information and technology industry with HP, and his position as HP’s Chief Executive Officer, provide the Board with valuable industry insight and expertise.


CUSTOMER
EXPERIENCE


OPERATIONS


TECHNOLOGY


STRATEGY

   


DISRUPTIVE
INNOVATION


INTERNATIONAL
BUSINESS


ROBUST BUSINESS
EXPERIENCE


STRATEGIC
TRANSACTIONS; M&A

     
                                                  

                                                                    
Yoky Matsuoka
 

Current Role

Division CEO, Panasonic Corporation (since October 2019)
 

Current Public Company Boards

HP
 

Prior Public Company Boards

None
Independent Director
Age: 47
Director since: 2019
HP Board Committees:
AUDIT, FIT

Qualifications:

Prior Business and Other Experience

Vice President, Healthcare at Google, a subsidiary of Alphabet Inc. (“Alphabet”), a technology company (2018–October 2019)
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)

Other Key Qualifications

Ms. 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


SCIENCE


STRATEGY

   


CUSTOMER
EXPERIENCE


ROBUST BUSINESS
EXPERIENCE


TECHNOLOGY

     
                                                  

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Board of Directors

                                                                    
Stacey Mobley
 

Current Role

Director
 

Current Public Company Boards

HP
 

Prior Public Company Boards

International Paper Company
Hewitt Associates, Inc.
Independent Director
Age: 74
Director since: 2015
HP Board Committees:
HRC, NGSR

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

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 including the government relations strategies of public companies. He also brings public company governance experience as a member of boards and board committees of other public and private companies.


INTERNATIONAL
BUSINESS


ROBUST BUSINESS
EXPERIENCE

   


OPERATIONS

     
                                                  

                                                               
Subra Suresh
 

Current Role

President, Nanyang Technological University, autonomous global research university in Singapore (since January 2018)
 

Current Public Company Boards

HP
Singapore Exchange Limited
 
 
 
 

Prior Public Company Boards

None
Independent Director
Age: 63
Director since: 2015
HP Board Committees:
AUDIT, FIT

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)
Independent Director of the Board, Battelle Memorial Institute, Ohio, an international nonprofit that develops and commercializes technology and manages laboratories for government customers (2014–2017)
Director, National Science Foundation, a federal agency charged with advancing science and engineering research and education (October 2010–March 2013)
Dean and the Vannevar Bush Professor of Engineering, School of Engineering (2007-2010), and Professor (1993–2013), Massachusetts Institute of Technology

Other Key Qualifications

Mr. Suresh is one of the few Americans to have been elected to all three branches of the U.S. National Academies (Engineering, Sciences and Medicine) in recognition of his considerable scientific and technical accomplishments. Mr. Suresh’s experience as the president of two prominent research universities and his experience leading new entrepreneurship and innovation 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


FINANCE


SCIENCE


TECHNOLOGY





   


DISRUPTIVE INNOVATION


GOVERNMENT


STRATEGY

     

                                             

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Board of Directors

In addition to the information above, Annex B sets forth information relating to our Directors, Director nominees, and certain of our executive officers and other employees who may be considered “participants” in our solicitation under the applicable U.S. Securities and Exchange Commission (“SEC”) rules by reason of their position as Directors of the Company or as Director nominees or because they may be soliciting proxies on our behalf.

How We Are Selected

Identifying and Evaluating Candidates for Director

The Nominating, Governance and Social Responsibility (“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. If 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 below, 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 Mr. Clemmer, a third-party professional search firm identified him as a potential director nominee.

The NGSR Committee also evaluated the Xerox nominees using the same criteria it uses to evaluate all other candidates, including the Board’s nominees, and concluded that the nominees recommended by the Board and named in this proxy statement collectively have a superior skill set in light of the needs of the Company.

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 responsibly perform all Director duties).


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In addition, the NGSR Committee takes into account a potential Director’s ability to contribute to the diversity of background (such as race, gender, age 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. In addition, our Bylaws also require that to be qualified to serve as a Director and to be eligible to be a Director nominee, each Director and Director nominee:

must not have been an officer or director of a company that is a competitor of HP within the prior three years; and

must not be a named subject of a criminal proceeding (excluding traffic violations and other minor offenses) pending as of the date HP first mails the proxy materials that include the name of the nominee and, within the ten years preceding such date, must not have been convicted in such a criminal proceeding.

All members of the HP Board are provided with opportunities for in-person and remote Director education on an ongoing basis, covering a variety of 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 above are highly qualified and have the skills and experience required for effective service on the Board. All the nominees named above 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, Enrique Lores, Steven J. Fieler and Kim M. Rivera, will vote for a substitute nominee or nominees designated by the Board, unless the Board decides to decrease the size of the Board. If any substitute nominees are so designated, we will file an amended proxy statement or additional soliciting material that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the amended proxy statement or additional soliciting material and to serve as directors if elected, and includes certain biographical and other information about such nominees required by the applicable SEC rules. As previously announced, Mr. Weisler is not standing for re-election at this annual meeting.

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

Annual Review/Self-Evaluation

On an annual basis at or near the end of each fiscal year, each Director completes a self-evaluation designed to gauge the health of board function and composition. Topics addressed in the self-evaluation process include individual performance, performance of all committees on which the Director served during the fiscal year, performance of the Board as a whole, areas for improvement, accessibility of management, time allocation, and quality of materials. Directors also provide us with input on key focus areas for the Board in the upcoming fiscal year.

The NGSR Committee oversees the annual self-evaluation process in conjunction with input from the independent Chairman of the Board and reviews the findings with the independent Chairman to assess board health. Each committee additionally reviews the consolidated committee self-evaluation results.

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 the heading “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 consider all applicable membership criteria. 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 our Corporate Secretary at HP Inc., 1501 Page Mill Road, Palo Alto, California 94304.

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.”

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Board of Directors

How We Are Organized

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
Richard L. Clemmer  
Yoky Matsuoka
Stacey Mobley
Subra Suresh  
Other Directors
Enrique Lores
Dion J. Weisler
— Member
Audit Committee “financial expert”

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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, and other audit services;
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.
Disclosure Controls; Internal
Controls & Procedures; Legal
Compliance

reviewing our disclosure controls and procedures, internal controls, information and technology 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 Ms. Citrino, Chair of the Audit Committee, and each of the other Audit Committee members (Mr. Bennett, Ms. Brown-Philpot, Mr. Clemmer, Ms. Matsuoka and Mr. Suresh) are independent within the meaning of the New York Stock Exchange (“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, Mr. Clemmer 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 42.

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Board of Directors

Finance, Investment and Technology Committee

The Finance, Investment and Technology (“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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Board of Directors

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 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;
  overseeing the policies relating to, and the way HP conducts, its government relations activities; 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 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 Mr. Banerji, who serves as Chair of the NGSR Committee, and each of the other NGSR Committee members (Ms. Alvarez, Mr. Bergh, Ms. Brown-Philpot and Mr. Mobley) are independent within the meaning of the NYSE director independence standards.

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Board of Directors

Human Resources and Compensation Committee

The Human Resources and Compensation (“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 degree 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 the 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.

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

New Forefront of Governance: Board Oversight of ESG

HP continually seeks to improve and enhance its governance programs. This year, we are pleased to share for the first time an update on our Board’s involvement in our Environmental, Sustainability and Governance (“ESG”) efforts. HP is one of the leaders in this space through our Sustainability program, which includes Diversity & Inclusion, Corporate Sustainability and Environmental Impact.

Planet

The NGSR Committee oversees HP’s broad ESG strategy, including our areas of focus, global citizenship policies, and sustainable supply chain programs; our executive leadership team then integrates this into our global business strategy. The Audit Committee monitors our progress towards our sustainability goals as part of its ERM program reviews.
People

The NGSR Committee seeks to recruit directors of diverse backgrounds to lead the Board. The HRC Committee provides guidance and direction to our talent recruitment and retention strategies, including management succession planning, with a focus on ensuring our leadership represents the diversity of our workforce and customers worldwide. The Audit Committee’s oversight of our ERM program includes oversight of our global supply chain, which involves working with our suppliers to protect and empower all workers in our supply chain, not just HP employees.
Community

The Board and the NGSR Committee are committed to improving the communities in which we operate. This includes providing our leadership team with assistance in reaching out to the communities we seek to impact and approving broad-based strategies for corporate giving, including financial funding and employee engagement.

How We Govern and Are Governed

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.

Independent Chairman

oversees the planning of the annual Board 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;

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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;
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; and
performs such other functions and responsibilities as set forth in the Corporate Governance Guidelines or as requested by the Board from time to time.

Executive Sessions

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

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 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 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.

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.

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Board of Directors

For these purposes, an “immediate family” member includes a person’s spouse, parents, stepparents, 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 2017 between HP and entities associated with the independent Directors or their immediate family members. In addition to the transactions described below under the heading “Fiscal 2019 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. Clemmer has served as Chief Executive Officer and Executive Director of NXP Semiconductors N.V. since January 2009. 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 NXP Semiconductors N.V. The amount that HP paid in each of the last three fiscal years to NXP Semiconductors N.V., and the amount received in each fiscal year by HP from NXP Semiconductors N.V., 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 served as Vice President, Healthcare at Google, a subsidiary of Alphabet, from 2018 to October 2019. 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.
Ms. Matsuoka has served as Division CEO at Panasonic since October 2019. 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 Panasonic. The amount that HP paid in each of the last three fiscal years to Panasonic, and the amount received in each fiscal year by HP from Panasonic, 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, Dr. 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 the heading “Fiscal 2019 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 Messrs. Lores and Weisler, (i) each of HP’s remaining Directors, including Ms. Alvarez, Mr. Banerji, Mr. Bennett, Mr. Bergh, Ms. Brown-Philpot, Dr. Burns, Ms. Citrino, Mr. Clemmer, 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. Lores is not independent because of his status as our current President and CEO, and Mr. Weisler is not independent due to his prior service as our President and CEO until November 1, 2019 and his subsequent role as Senior Executive Advisor to the Company.

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Meeting Attendance

During fiscal 2019, the Board held eleven meetings, nine of which included executive sessions. Each incumbent Director serving during fiscal 2019 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 2019, we had the following four standing committees, which held the number of meetings indicated in parentheses during fiscal 2019: Audit Committee (13); FIT Committee (5); HRC Committee (6); and NGSR Committee (5). All 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. Ten of our eleven then-serving Directors attended our last annual meeting, held on April 23, 2019.

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.

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:

BOARD
Stays Informed of Our Risk Profile
Considers Risk in Connection with Strategic Planning and Other Matters

                                                                                                                  
          
 

AUDIT

Risk oversight

FINANCE,
INVESTMENT AND
TECHNOLOGY

Financial risks and innovation opportunities

HR AND
COMPENSATION

Compensation risks and practices

NOMINATING,
GOVERNANCE
AND SOCIAL
RESPONSIBILITY

Risks associated with governance structure and processes

 
 
 

HP MANAGEMENT
 
HP Management advises the Board and Board committees of key risks and the status of ongoing efforts to address these risks


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Compensation Risk Assessment

During fiscal 2019, Frederic W. Cook and Co., Inc. (“FW Cook”), independent compensation consultants to the HRC Committee, conducted an annual risk assessment of our executive compensation program, policies and processes as well as incentive and commission arrangements below the executive level. 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, and that our compensation programs and practices reflect a balance in design, policies, management controls, and HRC Committee oversight that is consistent with market “best-practice” for mitigating potential compensation-related risk.

Code of Conduct

We maintain a code of business conduct and ethics for Directors, officers and employees known as Integrity at HP, which is available on our 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.

How We Communicate With You

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 Committee and other Directors typically participate, is outlined below.

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Our Investor Outreach Calendar of Scheduled Events

November 2018
             
Q4 2018 HP Inc. Earnings Conference Call
December 2018
 
2018 Wells Fargo Tech Summit
Barclays Global Technology, Media & Telecommunications Conference
January 2019
Investor Meetings at CES 2019
Citi 2019 Global Technology, Media & Telecommunications West Conference
2019 J.P. Morgan Tech Forum at CES
February 2019
Q1 2019 HP Inc. Earnings Conference Call
Morgan Stanley Technology, Media & Telecom Conference
March 2019
Daiwa Investment Conference Tokyo 2019
April 2019
HP Inc. Annual Stockholder Meeting
May 2019
Q2 2019 HP Inc. Earnings Conference Call
Bernstein’s 35th Annual Strategic Decisions Conference (SDC)
June 2019
2019 Bank of America Merrill Lynch Global Technology Conference
August 2019
Q3 2019 HP Inc. Earnings Conference Call
September 2019
Citi 2019 Global Technology Conference
Deutsche Bank’s Technology Conference
October 2019
HP Securities Analyst Meeting*
HP Inc. Announces Fiscal 2020 Financial Outlook

*

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

In fiscal 2019, we also conducted outreach regarding our governance profile as part of our annual investor outreach cycle in the early part of the year. Through this program, we met or spoke with institutional investors representing more than 40% of our outstanding stock during fiscal 2019 as well as with proxy advisor firms. In fiscal 2020, prior to the filing of this proxy statement, we conducted our fiscal 2020 outreach regarding our governance profile. Through this program, we met or spoke with institutional investors representing more than 30% of our outstanding stock as of December 31, 2019, as well as proxy advisor firms. For additional details, please see pages 78-79 detailing our previous stockholder outreach conducted regarding written consent, which can be found in the opposition statement to the stockholder proposal.

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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.

How We Are Compensated

Director Compensation and Stock Ownership Guidelines

Non-employee Director compensation is determined annually by the independent members of the Board acting on the recommendation of the HRC Committee. In formulating its recommendation, the HRC Committee considers market data for our peer group and input from the independent compensation consultant retained by the HRC Committee. Mr. Weisler and Mr. Lores, as employees of the Company, do not receive any separate compensation for their HP Board service.

For the 2019 Board year, which began March 1, 2019 (and therefore approximates the period between annual stockholder meetings when non-employee Directors are regularly elected), each non-employee Director was entitled to receive an annual cash Board retainer of $105,000. 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 2019, two non-employee Directors 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 Board retainer of $215,000 for service during the 2019 Board year, with regular grants on the date of the annual stockholder meeting. Under special circumstances, the annual equity retainer may be paid in cash. No annual equity retainer was paid in cash during fiscal 2019. 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 stock option awards is determined as of the grant date based on a Black-Scholes-Merton option pricing formula. Equity grants to non-employee Directors are primarily intended to strengthen alignment with stockholder interests and to reinforce a long-term ownership view of the Company and its value. Retention is not the focus of equity grants for non-employee Directors and could cause entrenchment, which is why service-related vesting on equity awards was eliminated in July 2017. Non-employee Directors may elect to defer the settlement of shares received as part of the program until either (a) 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 non-employee 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 issuance of shares received upon the exercise of their stock options.

The Chairman of the Board receives an additional $200,000 annual cash retainer in recognition of the greater duties that the position requires. In addition to the regular annual cash and equity retainers, and the Chairman retainer described above, the non-employee Directors who served as chairs of standing committees during fiscal 2019 received cash retainers for such service. The Board approved annual cash retainers for committee chairs as follows for chair service during fiscal 2019:

$35,000 for the Audit Committee Chair;
$25,000 for the HRC Committee Chair;

$20,000 for the Nominating, Governance and Social Responsibility Committee Chair; and

$20,000 for Chairs of other Board standing committees.


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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 they may use the Company aircraft for travel to and from Board meetings and other Company events.
Fiscal 2019 Director Compensation
Name(1)     Fees Earned
or Paid in
Cash(2)
($)
    Stock
Awards(3)
($)
    Option
Awards(3)
($)
    All Other
Compensation
($)
    Total
($)
Aida Alvarez $ 104,928 $  215,003 $ $ $  319,931
Shumeet Banerji $ 123,253 $ 215,003 $ $ $ 338,256
Robert R. Bennett $ 125,253 $ 215,003 $ $ $ 340,256
Charles “Chip” V. Bergh $ 199,863 $ 160,017 $  160,002 $ $ 519,882
Stacy Brown-Philpot $ 106,928 $ 215,003 $ $ $ 321,931
Stephanie A. Burns $ 128,250 $ 215,003 $ $ $ 343,253
Mary Anne Citrino $ 142,243 $ 107,502 $ 107,501 $ $ 357,246
Yoky Matsuoka $ 82,418 $ 344,182 $ $ $ 426,600
Stacey Mobley $ 104,928 $ 215,003 $ $ $ 319,931
Subra Suresh $ 106,928 $ 215,003 $ $ $ 321,931
Dion J. Weisler(4) $ $ $ $ $
(1) Mr. Clemmer was appointed to our Board during our Fiscal 2020 year. Accordingly, he did not receive any compensation during Fiscal 2019.
(2) 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 2019, as well as any additional meeting fees paid during fiscal 2019. See “Additional Information about Fees Earned or Paid in Cash in Fiscal 2019” below.
(3) Represents the grant date fair value of stock awards and option awards granted in fiscal 2019 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, 2019, as filed with the SEC on December 12, 2019. See “Additional Information about Non-Employee Director Equity Awards” below.
(4) Mr. Weisler served as President and CEO of HP until November 1, 2019, the first day of our 2020 fiscal year. Accordingly, he did not receive compensation for his Board service during Fiscal 2019.
Additional Information about Fees Earned or Paid in Cash in Fiscal 2019
Name     Annual
Retainers(a)
($)
    Committee
Chair and
Chairman
Fees(b)
($)
    Additional
Meeting
Fees(c)
($)
    Total
($)
Aida Alvarez   $ 104,928  $ 0  $ 0 $ 104,928
Shumeet Banerji $ 104,928 $ 18,325 $ 0 $ 123,253
Robert R. Bennett $ 104,928 $ 18,325 $ 2,000 $ 125,253
Charles “Chip” V. Bergh $ 0 $ 199,863 $ 0 $ 199,863
Stacy Brown-Philpot $ 104,928 $ 0 $ 2,000 $ 106,928
Stephanie A. Burns $ 104,928 $ 23,322 $ 0 $ 128,250
Mary Anne Citrino $ 104,928 $ 33,315 $ 4,000 $ 142,243
Yoky Matsuoka $ 82,418 $ 0 $ 0 $ 82,418
Stacey Mobley $ 104,928 $ 0 $ 0 $ 104,928
Subra Suresh $ 104,928 $ 0 $ 2,000 $ 106,928
(a) 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 2018 through February 2019 Board year and cash annual retainers earned for service during the first eight months of the March 2019 through February 2020 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 2022. In the case of a termination of service, Directors can elect to receive the deferred money in the January following the termination of service if the date occurs prior to the specified distribution year elected.
(b) 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 2018 through February 2019 Board term and fees earned for service during the first eight months of the March 2019 through February 2020 Board term.
(c) 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 2019 for service in the 2018 Board term ending February 2019. Additional meeting fees for the 2019 Board term, if any, will be paid during fiscal 2020.

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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 2019, 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 2019:

Name     Stock Awards
Granted During
Fiscal 2019
(#)
    Option
Awards
Granted
During
Fiscal 2019
(#)
    Grant Date
Fair Value of
Stock and
Option
Awards
Granted
During
Fiscal 2019(a)
($)
    Stock Awards
Outstanding
at Fiscal
Year End(b)
(#)
    Option Awards
Outstanding at
Fiscal Year End
(#)
Aida Alvarez 10,702 0 $ 215,003 11,402 0
Shumeet Banerji 10,702 0 $ 215,003 0 0
Robert R. Bennett 10,702 0 $ 215,003 10,875 0
Charles “Chip” V. Bergh 7,965 38,930 $ 320,019 31,073 146,148
Stacy Brown-Philpot 10,702 0 $ 215,003 51,663 0
Stephanie A. Burns 10,702 0 $ 215,003 20,966 0
Mary Anne Citrino 5,351 26,156 $ 215,003 33,506 159,671
Yoky Matsuoka 17,138 0 $ 344,182 0 0
Stacey Mobley 10,702 0 $ 215,003 51,663 0
Subra Suresh 10,702 0 $ 215,003 19,295 0
(a) Represents the grant date fair value of stock awards and elective options granted in fiscal 2019 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, 2019, as filed with the SEC on December 12, 2019.
(b) Includes dividend equivalent units accrued with respect to share awards granted in fiscal 2019 and RSUs granted in previous years that have been deferred at the election of the Director.

Non-Employee Director Stock Ownership Guidelines

Under our stock ownership guidelines, non-employee Directors are required to accumulate, within five years of election to the Board, shares of HP’s stock equal in value to at least five times the amount of the annual cash Board 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 75 of this proxy statement.

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MANAGEMENT PROPOSAL NO. 1
Election of Directors
    
The Board recommends a vote FOR the election of all of the Director nominees listed above.
 

The Board currently consists of 13 Directors. On the recommendation of the NGSR Committee, the Board has nominated the 12 persons named above 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. Mr. Weisler is not standing for re-election at this annual meeting, and the Board has determined that the size of the Board will be reduced to 12 Directors at the time of the annual meeting.

Our Board recommends using the enclosed WHITE proxy card to vote FOR the election of all of the Board’s 12 Director nominees listed above.

Xerox has notified us of its intent to nominate a slate of 12 nominees for election as Directors at the annual meeting in opposition to the nominees proposed by our Board. Our Board does not endorse any Xerox nominee and unanimously recommends that you disregard any blue proxy card that may be sent to you by Xerox. Voting to “withhold” with respect to any of Xerox’s nominees on its proxy card is not the same as voting FOR our Board’s nominees, because a vote to “withhold” with respect to any of Xerox’s nominees on its proxy card will revoke any previous proxy submitted by you, including any vote you may have made for our Board’s nominees. If you have previously voted using a blue proxy card sent to you by Xerox, you may change your vote by voting via the Internet or by telephone by following the easy instructions provided on the enclosed WHITE proxy card. You may also sign, date and return the enclosed WHITE proxy card to the address indicated on the card, but we strongly encourage you to use this option only if you do not have access to a touch-tone telephone or to the Internet. Only the latest validly executed proxy that you submit will be counted.

Vote Required

Our Bylaws provide that each director is elected by the vote of a majority of the votes cast with respect to the nominee, except that where the secretary of the Company receives a notice that a stockholder has nominated a person for election to the Board in compliance with our Bylaws (and the notice is not withdrawn), all Directors are to be elected under a plurality voting standard. Under a plurality voting standard, the 12 nominees receiving the highest number of FOR votes will be elected. Accordingly, because Xerox has notified us that it intends to nominate a slate of 12 nominees in opposition to the nominees proposed by our Board and named in this proxy statement, the 12 nominees receiving the highest number of FOR votes will be elected as Directors at the annual meeting. Votes withheld and broker non-votes, if any, are not votes cast and will not be counted for purposes of determining the nominee receiving the highest number of FOR votes.

If you sign your WHITE proxy card but do not give instructions with respect to voting for Directors, your shares will be voted by Enrique Lores, Steven J. Fieler and Kim M. Rivera, as proxy holders, FOR the election of all 12 Board nominees. If you wish to give specific instructions with respect to voting for Directors, you may do so by indicating your instructions when you vote via Internet or by telephone, or on your WHITE proxy card or voting instruction form.

Governance Highlights

Governance Practices

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 have 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 Bylaws provide our stockholders with a proxy access right.


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Corporate Governance

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 what rights to act outside of the annual meeting they would prefer.

Directors are elected annually by majority vote in uncontested Director elections.

We have adopted a policy whereby any incumbent Director who fails to receive a majority of the votes cast in uncontested Director elections will tender his or her offer of resignation.

We maintain a close, effective dialogue with our stockholders through an 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.

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
Policy whereby any incumbent Director who fails to receive a majority of the votes cast in uncontested Director elections will tender his or her offer of resignation
Annual stockholder outreach program that typically includes the Chair of the Board, the Chair of the HRC Committee and other Directors
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
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.
11 of our 12 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 long-term incentive compensation mix with metrics that support our long-term strategy
Combination of short- and long-term performance goals
Executive and Director share ownership requirements

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Corporate Governance

Related-Person Transactions Policies and Procedures

Related Person Transactions Policy

We have adopted a written policy for approval of transactions between us and our non-employee Directors, Director nominees, executive officers, beneficial owners of more than 5% of HP’s stock, and their respective immediate family members where 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 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 considers, among other factors it deems appropriate:

the extent of the related-person’s interest in the transaction;

whether the transaction is on terms generally available to an unaffiliated third party under the same or similar circumstances;

the benefits to HP;

the impact or potential impact on a Director’s independence in the event the related person is a Director, an immediate family member of a Director or an entity in which a Director is a partner, 10% stockholder or executive officer;

the availability of other sources for comparable products or services; and

the terms of the transaction.

The NGSR Committee has delegated authority to the Chair of the NGSR Committee to pre-approve 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;

non-employee Director compensation;

transactions with another company with a value that does not exceed the greater of $1 million or 2% of the other company’s annual revenues, where the related-person has an interest only as an employee (other than executive officer), Director or beneficial holder of less than 10% of the other company’s shares;

contributions to a charity in an amount that does not exceed the greater of $1 million or 2% of the charity’s annual receipts, where the related person has an interest only as an employee (other than executive officer) or non-employee Director; 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 2019 Related-Person Transactions

We enter into commercial transactions with many entities for which our executive officers or non-employee Directors serve as non-employee Directors and/or employees in the ordinary course of our business. All 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 2020 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, 2020. During fiscal 2019, Ernst & Young LLP served as our independent registered public accounting firm and provided certain other audit-related and tax services. See “Report of the Audit Committee of the Board of Directors” and “Principal Accountant Fees and Services” below. Representatives of Ernst & Young LLP are expected to participate in the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.

Vote Required

Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2020 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”).

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Audit Matters

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, 2019, 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
Yoky Matsuoka

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 2019 and 2018. All fees paid to Ernst & Young LLP were pre-approved in accordance with the pre-approval policy, as discussed below.

      2019       2018
In Millions
Audit Fees(1) $ 15.9 $ 15.9
Audit-Related Fees(2) $ 2.4 $ 3.3
Tax Fees(3) $ 2.9 $ 4
All Other Fees(4) $ $ 0.2
Total $ 21.2 $ 23.4
(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 2019 consisted primarily of accounting consultations, employee benefit plan audits and other attestation services. Audit-related fees for fiscal 2018 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 $650,000 and $1.6 million for fiscal 2019 and fiscal 2018, respectively. For fiscal 2019 and fiscal 2018, tax fees also included tax compliance fees of $2.2 million and $2.3 million, respectively.
(4) For fiscal 2018, 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 2021.

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.

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Executive Compensation

Overview

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.
Total direct compensation is targeted at or near the median of peers to ensure that it is appropriate and competitive.
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.
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.
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 on a particular metric or time period.
A significant portion of our long-term incentives are primarily delivered in the form of performance-adjusted restricted stock units, referred to as “PARSUs,” which vest only upon the achievement of relative total shareholder return (“TSR”) and EPS objectives.
We validate the pay-for-performance relationship on an annual basis and our Human Resources and Compensation (“HRC”) Committee reviews and approves performance goals under our incentive plans.
The compensation of objectively identified peer companies based on industry and size criteria is considered to confirm that pay levels for the NEOs are appropriate and competitive.
The maximum payouts under annual incentive awards and under PARSUs are capped at 200% of bonus target and 2x shares.
     
We do not utilize executive employment contracts for senior officers.
We devote significant time to management succession planning and leadership development efforts.
We maintain a consistent market-aligned severance policy for executives and a conservative change in control policy which requires a double trigger for execution.
The HRC Committee engages an independent compensation consultant.
We have clawback and equity-forfeiture provisions that provide the Board with discretion to recoup compensation in the event of a material financial restatement or misconduct that results in material reputational harm to the Company, which mitigates compensation-related risk.
We maintain strong stock ownership guidelines for executive officers and non-employee Directors.
We prohibit all employees, including our executive officers, and also non-employee Directors, from engaging in any form of hedging transaction involving HP securities, 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.
We conduct a robust stockholder outreach program throughout the year and use that input to inform our program decisions and pay practices.
We disclose our corporate performance goals and achievements relative to these goals.
We do not provide excessive perquisites to our employees, including our executive officers.
We do not allow our executives to participate in the determination of their own compensation.

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Executive Compensation

Components of Compensation

Our executive compensation program primarily comprises performance-based components. The table below shows each pay component, the role and factors for determining the amount. Percentages are the averages of pay components at target for 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, experience and performance of individual compared to the market as well as others in the Company

Annual Incentive


(i.e., Pay-for-Results (“PfR”))
Payments to executives for annual PfR incentive purposes are made under the Stock Incentive Plan (the “Plan”)

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 Committee

Long-term Incentives

Restricted Stock Units (“RSUs”)
Performance-Adjusted Restricted Stock Units (“PARSUs”)
Supports need for long-term sustained performance
Aligns interests of executives and stockholders, reflecting the time-horizon and risk to investors
Focuses executives on critical long-term performance goals
Encourages equity ownership and stockholder alignment
Retains key employees
Target awards based on competitive marketplace, level of position, skills and performance of the executive
Actual earned values based on performance against corporate goals and TSR performance

All others:

Benefits
Limited perquisites
Severance protection
Supports the health and security of our executives and their ability to save on a tax-deferred basis
Enhances executive productivity
Competitive market practices for similar roles
Level of executive
Standards of best-in-class governance

Financial Highlights

As illustrated below for the three key financial measures used to fund our annual pay-for-performance incentive awards, we exceeded two of our three goals reflected in our business plan in fiscal 2019, even as the global-macroeconomic and foreign-currency environment was challenging.

GAAP Net Revenue Adjusted Non-GAAP Net Earnings Non-GAAP Free Cash Flow
     

$58.8
     BILLION

$3.8
     BILLION

6.78%

(as defined on page 52) compared to a target goal of $60.0 billion under our annual incentive plan.

(as defined on page 52) compared to a target goal of $3.7 billion under our annual incentive plan.

(as a percentage of revenue; as defined on page 52) compared to a target goal of 6.33% under our annual incentive plan.


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Executive Compensation

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis describes our executive compensation philosophy and program, the compensation decisions the HRC Committee has made under the program, and the considerations in making those decisions in fiscal 2019.

Named Executive Officers

Our NEOs for fiscal 2019 are:

Dion J. Weisler, former President and CEO;

Steven J. Fieler, Chief Financial Officer;

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

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

Alex Cho, President, Personal Systems.

Following the end of fiscal 2019, Mr. Weisler stepped down as our President and CEO on November 1, 2019, and Mr. Lores was appointed to the role. Upon stepping down from such positions, Mr. Weisler continues to be employed by the Company as Senior Executive Advisor, a non-executive officer role, through our 2020 Annual Meeting of Stockholders. Mr. Weisler will also continue to serve as a member of the Board of Directors until the Company’s 2020 Annual Meeting of Stockholders.

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 2019 executive compensation structure remained the same as its fiscal 2018 program.

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

We provided competitive target pay opportunities, where amounts and mix were consistent with peers and stable year over year.

Target total direct compensation (“TDC”) consists of base salary, percent-of-salary target annual incentives that would be earned for achieving 100% of goals, and long-term incentive grant-date value. NEO base salaries were unchanged for fiscal 2019, except a 7.4% promotional increase for Ms. Rivera upon being appointed President, Strategy and Business Management in addition to her ongoing role as Chief Legal Officer and Secretary, plus a 3.6% market adjustment for Mr. Weisler, HP’s President and CEO. Target annual incentives were unchanged at 200% of salary for Mr. Weisler and 125% of salary for each of the other NEOs. Regular long-term incentive grant values increased moderately consistent with the market.

We aligned real pay delivery with performance through rigorous goal setting and performance measurement.

While our target TDC opportunities reflect market practice, our real pay delivery reflects performance. Annual incentives reward short-term performance measured against applicable enterprise-wide, business unit, and individual goals. Goals were set for the overall Company and businesses against internal budgets for GAAP net revenues, adjusted non-GAAP net earnings/profit, and non-GAAP free cash flow as a percent of revenue. Non-financial individual performance goals under the Management by Objectives (“MBO”) program were set for each NEO. Meanwhile, regular annual long-term incentive grants were approximately 60% in PARSUs that reward strategic performance measured by relative TSR compared to the S&P 500 and EPS measured in two and three year overlapping segments as explained on pages 55-56; the remaining 40% is in RSUs that are primarily for ownership and retention with the delivered value tied to stock price and reinvested dividend equivalents.

NEOs earned annual incentives averaging 117.2% of target for fiscal 2019. Individual bonuses varied from 93.2% to 150.7% of target and HP’s President & CEO was at 111.5%. The Company achieved above-target results with respect to HP adjusted non-GAAP net earnings/profit and non-GAAP free cash flow margin. GAAP net revenue results were below target. Further, NEOs successfully delivered against their MBOs as detailed on pages 53-54.

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Executive Compensation

NEOs received payout for Segment 1 FY18 and Segment 2 FY17 PARSUs (measurement periods ending in fiscal 2019). EPS FY18 and EPS FY19 were above target. Fiscal 2017-2019 relative TSR approximated the 35th percentile of the S&P 500. Fiscal 2018-2019 relative TSR approximated the 15th percentile of the S&P 500.

We regularly engaged with and listened to stockholders, practiced strong governance, and mitigated potential compensation-related risks.

Our executive compensation program is continuously reviewed for peer group alignment and strategic relevance as part of a process that includes ongoing stockholder engagement. At the annual meeting in 2019, our say-on-pay proposal was approved by over 93% of the voted shares, indicating strong stockholder support. Consequently, changes have not been extensive. To ensure alignment with our three-year financial plan, we have moved our long-term performance-based incentives (PARSUs) to a single three-year performance period with full vesting only after three years of service and achievement of financial goals for that timeframe. We are also changing relative TSR from a standalone measure to a “modifier” on earnouts determined based on the three-year performance period. We feel that this will increase focus on line-of-sight strategic performance while continuing close alignment between stockholder value creation and real pay delivery.

We transitioned to a new HP President & CEO at the start of fiscal 2020, successfully executing the Board’s succession-planning process.

After a robust, in-depth succession planning assessment, Mr. Lores was appointed as President and CEO effective November 1, 2019. Mr. Lores’s initial target TDC was set moderately below the peer group median and the HRC Committee’s intent is to move him to the median or above median over the period of the next two-or-three years based on Company and individual performance. Mr. Lores did not receive a promotion grant or any special rewards in connection to his appointment as President and CEO.

Executive Compensation Program Oversight and Authority

Role of the HRC Committee and its Advisor

The HRC Committee continued to retain FW Cook as its independent consultant during fiscal 2019, and to work with them and management on all aspects of our pay program for senior executives. The HRC Committee makes recommendations regarding the CEO’s compensation to the independent members of the Board for approval, and 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 make some fine-tuning changes in the program structure for 2020 (described further on page 57) that we believe are in our stockholders’ interests. We believe that our current compensation structure and proposed changes incent and reward achievement of specific goals, reinforce year-over-year results and provide an attractive pay-for-performance opportunity that encourages retention and leadership engagement.

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 six times in fiscal 2019, and all six of these meetings included an executive session. FW Cook participated in five 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 CEO recommends compensation for Section 16 officers, including NEOs other than himself, for approval by the HRC Committee. The Board considered market competitiveness, business results, experience, and individual performance when evaluating fiscal 2019 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 2019, 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 2019, 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:

Direct talent market peers.

US-based companies in the technology sector (excluding distributors, contract manufacturers and outsourced services/IT consulting) with revenues between ~$10 billion and $250 billion and market cap between ~$7 billion and $175 billion.

Select general industry companies (industrials, consumer products and telecom) generally meeting size and business criteria that are top-brands.

Review of the peer companies chosen by companies within our proposed peer group and peer business similarity, to evaluate relevance.

We believe the resulting peer group provides HP and the HRC Committee with a valid comparison and benchmark for the Company’s executive compensation program and governance practices. For fiscal 2019, the HRC Committee added Apple (direct peer) and Micron Technology (size-appropriate technology company). The HRC Committee also removed Amazon, Procter & Gamble and Verizon as all exceeded size range and were not direct peers. The HP peer group for fiscal 2019, as approved by HRC Committee, consisted of the following companies:

Fiscal 2019 Peer Group


* Represents fiscal 2019 reported revenue, except fiscal 2018 reported revenue is provided for General Electric, Honeywell, IBM, Intel, PepsiCo, Texas Instruments and Xerox.

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Executive Compensation

Process for Setting and Awarding Executive Compensation

A broad range of facts and circumstances are considered in setting our overall executive compensation levels. In fiscal 2019, 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 “2019 Annual Incentives” below for a further description of our results and corresponding incentive payouts.

Listening to our Stockholders on Compensation

We regularly engage with our stockholders on a variety of issues, including their views on best practices in executive compensation. The following changes to our executive compensation program, shown here, reflect those conversations with stockholders.

Starting with new grants in fiscal 2020, to ensure alignment with our three-year financial plan, we have moved our long-term performance-based incentives (PARSUs) to a single three-year performance period with full vesting only after three years of service and achievement of financial goals for that timeframe. We are also changing relative TSR from a standalone measure to a “modifier” on earnouts determined based on the three-year performance period. We feel that this will increase focus on line-of-sight strategic performance while continuing close alignment between stockholder value creation and real pay delivery.

Some changes during the last few years that reflect conversations with stockholders include the following:

Increased focus on enterprise-wide GAAP net revenue and adjusted non-GAAP 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 2019 annual meeting, our annual say-on-pay proposal received the support of over 93% of the votes cast. As part of its 2019 executive compensation discussions, the HRC Committee reviewed the advisory vote result and considered it to be supportive of the Company’s compensation practices.

Determination of Fiscal 2019 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 2019 the Committee decided to maintain a consistent compensation structure for executives since it supports our business strategy and aligns pay with stockholder interests.

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Executive Compensation

2019 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 set executive base salaries at or near the market median for comparable positions. In fiscal 2019, salaries comprise on average 11% of our NEOs’ overall compensation, consistent with our peers. To decide the CEO’s salary, the HRC Committee reviews analyses and recommendations provided by FW Cook.

For fiscal 2019, Mr. Weisler’s salary was increased from $1.4 million to $ 1.45 million to recognize his contributions and better align with the market median. For fiscal 2019, the HRC Committee did not change the base salary for Mr. Fieler, Mr. Lores or Mr. Cho. During fiscal 2018, Mr. Fieler’s base salary had been increased to $690,000 during July 2018 and Mr. Cho’s base salary had been increased to $675,000 during June 2018 in conjunction with their promotions to CFO and President, Personal Systems, respectively. Ms. Rivera’s base salary was increased from $675,000 to $725,000 due to her new responsibilities as President, Strategy and Business Management while retaining her role as Chief Legal Officer and Secretary.

Changes in Base Salary

Executive     Fiscal Year-end
2018 Base Salary
    Fiscal 2019
Base Salary
    Percentage
Change
Dion Weisler      $ 1,400,000  $ 1,450,000 +3.6%
Steven Fieler $ 690,000 $ 690,000 +0.0%
Enrique Lores $ 750,000 $ 750,000 +0.0%
Kim Rivera $ 675,000 $ 725,000 +7.4%
Alex Cho $ 675,000 $ 675,000 +0.0%

2019 Annual Incentives

The fiscal 2019 annual PfR incentive plan consisted of the following three core financial metrics: GAAP net revenue, adjusted non-GAAP net earnings/profit, and non-GAAP 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 2019 were set at 200% of salary for the CEO and 125% of salary for the other NEOs.

For fiscal 2019, 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 (including each NEO) was allocated a pro rata share of 0.75% of adjusted non-GAAP 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 (including each NEO) and by the independent members of the Board for the CEO.

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Executive Compensation

Fiscal 2019 Annual Incentive Plan

Corporate Goals
Key Design Elements GAAP Net
Revenue
($ in billions)
Adjusted
Non-GAAP Net
Earnings/Profit
($ in billions)
Non-GAAP 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 $60.0 $3.7 6.33 % Various 100
Threshold Various 0
(1)

Maximum funding for non-GAAP free cash flow as a percentage of revenue is capped at 150% of target if adjusted non-GAAP net earnings/profit achievement was below target and is capped at 100% of target if adjusted non-GAAP net earnings/profit achievement was below threshold. If adjusted non-GAAP net earnings/profit achievement was above target, the maximum funding level is 250% for this metric. Maximum and threshold information are not disclosed because such disclosure would result in competitive harm. However, goals are set at levels we believe to be achievable in connection with strong performance.

(2)

Interpolated for performance between discrete points. Each individual metric 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 and Ms. Rivera.

(4)

The Business Unit Executives includes Mr. Lores and Mr. Cho. Specific Business Unit GAAP net revenue and adjusted non-GAAP net earnings/profit goals are not disclosed because such disclosure would result in competitive harm. However, goals are set at levels we believe to be achievable in connection with strong performance.

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.
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.

The following chart sets forth the definition of and rationale for each of the financial performance metrics that was used for the Fiscal 2019 Annual Incentive Plan:

Financial Performance Metrics Definition Rationale for Metric
GAAP Net Revenue       Net revenue as reported in our Annual Report on Form 10-K for fiscal 2019       Reflects top line financial performance, which is a strong indicator of our long-term ability to drive stockholder value
GAAP Business Revenue Segment net revenue as reported in our Annual Report on Form 10-K for fiscal 2019
Adjusted Non-GAAP Net Earnings(1) Non-GAAP net earnings, as defined and reported in our fourth quarter fiscal 2019 earnings press release and summarized in footnote (1) below, excluding bonus net of income tax Reflects bottom line financial performance, which is directly tied to stockholder value on a short-term basis
Non-GAAP Business Net Profit (“BNP”) Business net profit, excluding bonus net of income tax
Non-GAAP Free Cash Flow(2) Cash flow from operations less the net of investments in and proceeds from sales of property, plant and equipment, as reported in our fourth quarter fiscal 2019 earnings press release and summarized in footnote (2) below divided by net revenue as reported in our Annual Report on Form 10-K for fiscal 2019 (expressed as a percentage of revenue) Reflects efficiency of cash management practices, including working capital and capital expenditures

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(1)

As summarized above, Adjusted non-GAAP net earnings is a non-GAAP measure that is defined as GAAP net earnings (of $3.4 billion in fiscal 2019), which excludes (i) after-tax costs of $257 million related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments as well as (ii) bonus net of income tax. Management uses adjusted 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 adjusted 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.

(2) As summarized above, non-GAAP free cash flow is a non-GAAP measure that is defined as cash flow from operations ($4.7 billion in fiscal 2019) less the net of investments in and proceeds from sales of property, plant, and equipment ($0.7 in fiscal 2019). HP’s management uses non-GAAP free cash flow for the purpose of determining the amount of cash available for investment in HP’s businesses, repurchasing stock and other purposes. HP’s management also uses non-GAAP free cash flow to evaluate HP’s historical and prospective liquidity.

Following fiscal 2019, the HRC Committee reviewed performance against the financial metrics and certified the results as follows:

Fiscal 2019 Annual PfR Incentive Performance Against Financial Metrics(1,2)

Metric Weight(3) Target
($ in billions)
Result
($ in billions)
Percentage of Target
Annual Incentive Funded
GAAP Net Revenue       25.0 %               $ 60.0               $ 58.8       19.8 %
Adjusted Non-GAAP Net Earnings 25.0 % $ 3.7 $ 3.8 25.8 %
Non-GAAP Free Cash Flow (% of revenue) 25.0 % 6.33 % 6.78 % 45.9 %
Total 75.0 % 91.5 %
(1)

Mr. Weisler, Mr. Fieler and Ms. Rivera received annual PfR incentive payments based on corporate financial metrics. Mr. Lores and Mr. Cho received an annual PfR incentive payment based on corporate and business financial metrics.

(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: setting strategic direction for the Company based on optimizing stockholder value, maintaining supplies stabilization, growing profitable share in Personal Systems, engaging with all major constituents including financial analysts, media, key governmental figures, partners and customers to execute the HP strategy, and ensuring 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 reflected a number of accomplishments but overall had been achieved below target due to Print supplies performance. Mr. Weisler had strong accomplishments, including the following:

Maintained the three-pronged Core, Growth, and Future strategy, designed to drive employees across the world towards a common goal.
Expanded Personal Systems revenue in profitable categories and the attach category initiatives.
Accelerated 3D print business through development of industrial go-to-market, applications and focus on key verticals.
Developed and managed an effective plan to address key regulatory/political changes as well as to mitigate US trade/tariff impacts.
Executed a plan to consistently engage with channel partners, customers, and ecosystem partners to ensure he was getting direct feedback on the HP strategy and product portfolio to enable appropriate adjustments.
Continued to invest across all three waves (Core, Growth and Future) in each business.
Drove digital transformation and created a core competency in software, data analytics and machine learning.
Kept the organization updated and motivated, from the leadership team to the broader employee population, to ensure that all understood the strategy and priorities. Cultivated a growth mindset across the organization with extreme customer focus.
Reinvented go-to-market and customer engagement models to address dramatic shift in buying behaviors.
Continued implementation of modern ERP platform with development of standardized and simplified processes.
Worked closely with external advisors to develop future strategy and a roadmap to accelerate value creation for customers, partners and stockholders.
Worked with the Independent Chair to set the annual Board and Committee objectives, priorities and the Board/Committee meeting agendas.

As CEO, Mr. Weisler evaluated the performance of each of the other Section 16 officers (including each of the other NEOs) and presented the results of those evaluations to the HRC Committee at its November 2019 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.

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Mr. Fieler. The HRC Committee determined that Mr. Fieler’s MBOs performance had been achieved below target due to Print supplies performance. Overall, Mr. Fieler demonstrated strategic, thoughtful and engaged leadership in running the Finance function. His strong operational perspective supported the Company through business changes. Mr. Fieler has strong relationships with the investor relations community and is critical to ensuring our results deliver against financial expectations.

Mr. Lores. The HRC Committee determined that Mr. Lores’s MBOs performance had been achieved below target due to Print supplies performance. Mr. Lores did continue reinventing the Print business with a focus on differentiated innovation, business model transformation and strategic M&A. Over the past year, Mr. Lores did a remarkable job working with the HP Board on a comprehensive global review of the Company strategy and business operations, with a focus on simplifying its operating model, evolving its business models and driving significant improvement in its cost structure while making the Company more digitally enabled and customer centric.

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 infringements, counterfeit seizures and IP protection. She did an excellent job on corporate governance, tariffs, investigations, launching the “Transformation Management Office” and customer service transformation initiatives. Ms. Rivera is a well-respected leader with a strong understanding of commercial decisions and is a strong partner in business, technology and governance matters.

Mr. Cho. The HRC Committee determined that Mr. Cho’s MBO performance had been achieved above target. Despite the various challenges in the marketplace, Mr. Cho did an excellent job in delivering profits and steady revenue progress. He did a remarkable job in the introduction and roll out of new products such as Dragonfly in Asia. Mr. Cho is a thoughtful and well respected leader in the organization with a strong team to drive the business appropriately.

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 2019 Annual PfR Incentive Performance Against Non-Financial Metrics (MBOs)

Named Executive Officer Weight
(%)
Percentage of Target
Annual Incentive
Funded
(%)
Dion J. Weisler       25.0       20.0
Steven J. Fieler 25.0 20.0
Enrique J. Lores 25.0 20.0
Kim M. Rivera 25.0 27.5
Alex Cho 25.0 37.5

Based on the level of performance described above on both the financial and non-financial metrics for fiscal 2019, the payouts to the NEOs under the annual PfR incentive were as follows:

Fiscal 2019 Annual PfR Incentive Payout

Percentage of Target
Annual Incentive Funded
Total Annual
Incentive Payout
Named Executive Officer Financial
Metrics
(%)
Non-Financial
Metrics
(%)
As % of Target
Annual Incentive
(%)
Payout
($)
Dion J. Weisler       91.5       20.0       111.5       3,233,533
Steven J. Fieler 91.5 20.0 111.5 961,697
Enrique J. Lores 73.2 20.0 93.2 873,522
Kim M. Rivera 91.5 27.5 119.0 1,078,448
Alex Cho 113.2 37.5 150.7 1,271,882

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Long-term Incentive Compensation

The HRC Committee established a total long-term incentive target value for each NEO in early fiscal 2019 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.

2019 PARSUs

The fiscal 2019 PARSUs have the same structure as used in the fiscal 2017 and fiscal 2018 PARSUs. Fiscal 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 2019 and continue through the end of fiscal 2019, 2020 and 2021. 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 relative TSR performance over two years with continued service over two years, and 25% of the units are eligible for vesting based on relative TSR performance over three years with continued service over three years. This structure is depicted in the chart below:

2019 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.

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 2019) 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 are weighted equally in determining earned PARSUs. The first segment (42% of total target units) will vest after the end of fiscal 2020, 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 2021, 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 2019, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2019.”

2019 RSUs

2019 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.

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Fiscal 2019 Long-term Incentive Compensation at Target

The following table shows combined total grant values for grants attributable to fiscal 2019. 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 2019
Long-term Incentive Grant
Dion J. Weisler       $ 8,700,000       $ 5,800,000                     $ 14,500,000
Steven J. Fieler $ 2,400,000 $ 1,600,000 $ 4,000,000
Enrique J. Lores $ 3,390,000 $ 2,260,000 $ 5,650,000
Kim M. Rivera $ 3,000,000 $ 2,000,000 $ 5,000,000
Alex Cho $ 2,400,000 $ 1,600,000 $ 4,000,000

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 (2019), for which goals were approved in January 2019. Grant date fair values for the EPS component for Year 2 (2020) and Year 3 (2021) 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.

The Summary Compensation Table for fiscal 2019 also includes a portion of the fiscal 2018 PARSUs Year 2 EPS (2019) and 2017 PARSUs Year 3 EPS (2019) for which the goal was approved in fiscal 2019.

For more information on grants to the NEOs during fiscal 2019, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2019.”

2018 PARSUs

2018 PARSUs have the same vesting structure as 2019 PARSUs (chart described above). The actual performance achievement for the one- and two-year periods (i.e., fiscal 2018 and fiscal 2018–2019) as a percentage of target for the PARSUs as of October 31, 2019 is summarized in the table below:

Actual Performance – Segment 1

EPS vs. Internal Goals Relative TSR vs. S&P 500(1)
Segment Fiscal 2018 Result Payout Fiscal 2018-2019 Results Payout
Segment 1 (42%)       $1.94       192.9%       15th percentile       0.0%
Target: $1.81
(1)

Through October 2019, HP’s relative TSR performance was at the 15th percentile of the S&P 500 which corresponds to a payout of 0% of target.

2017 PARSUs

2017 PARSUs have the same vesting structure as 2018 and 2019 PARSUs (chart described above). The actual performance achievement for the two-year period (i.e., fiscal 2017–2018), as a percentage of target for the HP PARSUs as of October 31, 2018, was summarized in our proxy statement for fiscal 2018. The actual performance achievement for the three-year period (i.e., fiscal 2017–2019) as a percentage of target for the HP PARSUs as of October 31, 2019 is summarized in the table below:

Actual Performance – Segment 2

EPS vs. Internal Goals Relative TSR vs. S&P 500(1)
Segment 2018 Payout 2019 Payout Fiscal 2017-2019 Results Payout
Segment 2 (58%)                   $ 1.94       192.9%                   $ 2.23       122.7%       35th percentile       70.4%
Target: $1.81 Target: $2.18
(1)

Through October 2019, HP’s relative TSR performance was at the 35th percentile of the S&P 500 which corresponds to a payout of 70.4% of target.


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CEO Transition

Dion Weisler stepped down from his positions as President and Chief Executive Officer of the Company, effective November 1, 2019. Upon stepping down from such positions, Mr. Weisler continued to be employed by the Company in a non-executive role as a Senior Executive Advisor. During the period between November 1, 2019 through January 31, 2020, Mr. Weisler’s compensation arrangements remained unchanged from those in place while he served as President and Chief Executive Officer of the Company. The Board approved continuing to employ Mr. Weisler as a Senior Executive Advisor beyond January 31, 2020 through the date of the Company’s 2020 Annual Meeting of Stockholders with his compensation consisting solely of his base salary at the monthly rate of $120,833, which was Mr. Weisler’s base salary rate for fiscal year 2019. Mr. Weisler also continued to serve as a member of the Board and will continue to do so until the Company’s 2020 Annual Meeting of Stockholders. He has not received and will not receive any compensation in connection with his services as a member of the Board.

Fiscal 2020 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.

However, as we plan to discuss in further detail in the fiscal 2020 proxy statement, we made the following changes that we believe are in our stockholders’ interests and are appropriate to the characteristics and business strategy of the Company, and to ensure our compensation is tied to our three-year strategic and financial plan:

Our annual incentive continues to focus on Revenue Growth, Net Earnings and Cash Flow goals
We have moved to three-year cliff vesting on our Performance Based equity compensation to align with our annual plan
Grants made for 2020 (granted in Dec 2019) will vest in 2022
The metrics on those performance-based shares consist of EPS with a TSR governor
EPS consists of three annual goals that roll up into our three-year annual EPS plan
Then, a TSR governor is applied to the EPS payout to ensure alignment with our stockholders’ experience
TSR is measured over the full three-year period based on performance against market (S&P 500)
The relative TSR is a market-based governor that adjusts payout so there is alignment with stockholder results

Fiscal 2021 Compensation Program

As the HRC Committee embarks upon our compensation plan design for 2021 and beyond, we will be looking at the most appropriate measures to continue reinforcing the commitments articulated in our long-term financial plans. While EPS and TSR are important measures that tie management and stockholder interest, key metrics like operating profit and cash flow, could be impactful as three-year measures tied to our long-term incentives. Operating profit and cash flow are critical value drivers to deliver on the long-term commitments we have made to stockholders. The final compensation structure will be discussed in more detail in our 2021 proxy.

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 2019. 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 allowed under the qualified HP 401(k) Plan (the “HP 401(k) Plan”) (the 401(k)-deferral limit for calendar 2019 was $19,000) 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 $11,200 in calendar 2019). 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 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 (including the NEOs) that provides for payments, grants or awards following the death of the officer in the form of unearned salary or unearned annual incentives, accelerated vesting or the continuation in force of unvested equity grants, perquisites, and other payments or awards made in lieu of compensation, except to the extent that such payments, grants or awards are provided or made available to our employees generally.

We provide our executives with financial counseling services to assist them in obtaining professional financial advice, a common benefit among our peer group companies, for convenience and to increase the understanding and effectiveness of our executive compensation program.

Limited 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 2019, please refer to the All Other Compensation Table on page 62.

Due to our global presence, we maintain one corporate aircraft. In the event a 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 2019, which was for convenience and security.

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.

Termination and Change in Control Protections

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 most of the 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 (including all of the NEOs) because severance often serves as a bridge when employment is involuntarily terminated, and should therefore not be affected by other, longer-term accumulations. As a result, and consistent with the practice of our peer group companies, other compensation decisions are not generally based on the existence of this severance protection.

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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.

Severance Benefits in the Event of a Change in Control under SPEO

In order to better ensure the retention of our executive leadership team in the event of a potentially disruptive corporate transaction, 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, 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. We do not provide tax gross ups in connection with terminations, including terminations in the event of a change in control.

The HRC Committee is focused on ensuring that the change of control provisions in the SPEO are consistent with market practice, provide clarity to prospective and current executives, and will help attract and retain talent.

Amendment and Restatement of SPEO

Effective February 28, 2020, HP adopted an Amended and Restated Severance and Long-Term Incentive Change in Control Plan for Executive Officers. Under the SPEO as amended and restated, in the event of a change in control of HP, all outstanding and unvested equity will vest either in full if the successor does not assume such awards or if an individual is terminated without Cause or terminates with Good Reason within 24 months of a change in control, with performance-based awards that remain subject to performance criteria as of the date of the qualifying termination or change in control, as applicable, vesting based on target levels of performance. In addition, under the SPEO as amended and restated, in the event of any dispute under the SPEO relating to a participant’s termination of employment within 24 months following a change in control, the Company will reimburse all related legal fees and expenses reasonably incurred by the participant if claims are brought in good faith. Other than these provisions, the terms of the SPEO as amended and restated are substantially similar in all material respects to the terms of the SPEO as in effect prior to the amendment and restatement as described herein.

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 2019, 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. During fiscal 2019, we leveraged our robust, in-depth succession planning to successfully maneuver through various leadership changes on the executive team. We executed a CEO assessment process in partnership with the Board to identify internal and external candidates for Mr. Weisler’s replacement, which led to unanimous Board support for Mr. Lores. We also shifted other executives into new or expanded roles based on business needs and tied to succession and development plans. Further, there is a People Update at each HRC Committee meeting, which includes a review of key people processes and developments for that quarter.

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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 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 is the only NEO who has served in a role covered by our stock ownership guidelines for over five years and his ownership exceeds 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 all employees, including executive officers, and Directors from engaging in any form of hedging transaction (derivatives, equity swaps, forwards, etc.) involving Company securities, including, among other things, short sales and transactions involving publicly traded options. In addition, with limited exceptions, our executive officers are prohibited from holding 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.

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 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 is not 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). Despite the modifications to Section 162(m), the HRC Committee intends to continue to implement compensation programs that it believes are competitive and in the best interests of HP and its stockholders.

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 (including the NEOs) 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 (and award agreements) allow 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.

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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, 2019.

HR and Compensation Committee of the Board of Directors

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

Fiscal 2019 Summary Compensation Table

The following table sets forth information concerning the compensation of our NEOs for fiscal years 2019, 2018, and 2017, as applicable. Per SEC reporting guidelines, our NEOs for fiscal 2019 include our CEO (Mr. Weisler), our CFO (Mr. Fieler), and the next three most highly compensated individuals still serving as executive officers at year end (Mr. Lores, Ms. Rivera, and Mr. Cho) as of the last day of the fiscal year (October 31, 2019).

Name and Principal
Position
   Year    Salary(2)
($)
   Stock
Awards(3)
($)
   Non-Equity
Incentive
Plan
Compensation(4)
($)
   Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(5)
($)
   All Other
Compensation(6)
($)
   Total
($)
Dion J. Weisler(1)
former President and CEO
2019 1,450,000 14,531,293 3,233,533 103,146 19,317,972
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
Steven J. Fieler
Chief Financial Officer
2019 690,000 3,427,818 961,697 332 14,950 5,094,797
2018 550,000 2,382,017 793,632 210 19,404 3,745,263
Enrique J. Lores(1)
President and CEO (formerly President, Imaging,
Printing and Solutions)
2019 750,000 5,527,211 873,522 48,155 7,198,888
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
President, Strategy and Business Management and Chief Legal Officer
2019 725,000 4,717,598 1,078,448 54,705 6,575,751
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
Alex Cho
President, Personal Systems

2019 675,000 3,427,818 1,271,882 67,760 16,795 5,459,255
 
(1) Mr. Weisler stepped down as our President and Chief Executive Officer on November 1, 2019 at which time Mr. Lores was appointed to the role. Upon stepping down from such positions, Mr. Weisler continues to be employed by the Company as Senior Executive Advisor, a non-executive officer role, until the date of our 2020 Annual Meeting of Stockholders. Mr. Weisler will also continue to serve as a member of the Board of Directors until the Company’s 2020 Annual Meeting of Stockholders.
(2) Amounts shown represent base salary earned or paid during the fiscal year, as described under the heading “Compensation Discussion and Analysis—Determination of Fiscal 2019 Executive Compensation—2019 Base Salary.

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(3) 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 2019, amounts shown reflect the grant date fair value of the PARSUs for the two- and three-year vesting periods beginning with fiscal 2019 based on the probable outcome of performance conditions related to these PARSUs at the grant date. The 2019 PARSUs include both internal (EPS) and market-related (TSR) performance goals as described under the “Compensation Discussion and Analysis—Determination of Fiscal 2019 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 2019. This value also reflects grant date fair value of the EPS portion of the 2018 PARSU award for Year 2 (fiscal 2019 EPS) and the EPS portion of the 2017 PARSU award for Year 3 (fiscal 2019 EPS), for which goals were approved in January 2019. The table below sets forth the grant date fair value for the 2019 PARSUs granted on December 7, 2018; the fiscal 2019 EPS portion of the 2018 PARSUs granted on December 7, 2017 and the fiscal 2019 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 12/7/2018 1,223,552 2,447,105 4,805,041
12/7/2017 1,270,894 2,541,788
12/7/2016 1,431,800 2,863,600
Steven J. Fieler 12/7/2018 337,537 675,074 1,325,534
7/1/2018 164,737 329,475
Enrique J. Lores 12/7/2018 476,761 953,523 1,872,307
12/7/2017 470,699 941,398
12/7/2016 447,439 894,878
Kim M. Rivera 12/7/2018 421,905 843,810 1,656,910
12/7/2017 310,656 621,312
12/7/2016 328,127 656,255
Alex Cho 12/7/2018 337,537 675,074 1,325,534
7/1/2018 164,737 329,475
* 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 2019. The grant date fair value of the 2019 PARSUs Year 1 EPS units awarded on December 7, 2018, of the 2018 PARSUs Year 2 EPS units awarded on December 7, 2017 (or for Mr. Fieler’s and Mr. Cho’s grants, on July 1, 2018) and of the 2017 PARSUs Year 3 EPS units awarded on December 7, 2016 was $21.05 per unit, which was the closing share price of our common stock on January 16, 2019 when the EPS goal was approved. The values of 2019 PARSUs Year 2 and Year 3 EPS units will not be available until January 2020 and January 2021 respectively, and therefore are not included for fiscal 2019, 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 $27.56 per unit, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 26.5%, a risk-free interest rate of 2.7%, and a simulation period of 2.9 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, 2019, as filed with the SEC on December 12, 2019.
(4) 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).
(5) 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 the heading “Narrative to the Fiscal 2019 Pension Benefits Table” below, pension accruals have generally ceased for all NEOs, and NEOs hired after the dates that pension accruals ceased are not eligible to participate in any U.S. defined benefit pension plan. The only exception for the NEOs listed above is that Mr. Cho participates in the International Retirement Guarantee (IRG) which is provided to a small closed group of employees who have transferred between countries with pension/retirement indemnity plans. Mr. Cho will not accrue additional benefits under the IRG unless he transfers outside of the US with HP Inc. for an extended period of time. Accordingly, the amounts reported for the NEOs do not reflect additional accruals but reflect the passage of one more year from the prior present value calculation and changes in other actuarial assumptions. The assumptions used in calculating the changes in pension benefits are described in footnote (2) to the “Fiscal 2019 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.
(6) The amounts shown are detailed in the “Fiscal 2019 All Other Compensation Table” below.

Fiscal 2019 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)
($)
     Security
Services/
Systems(4)
($)
     Personal
Aircraft
Usage(5)
($)
     Non-U.S. Tax
Gross-Up(6)
($)
     Miscellaneous(7)
($)
     Total
AOC
($)
Dion J. Weisler 11,200 10,800 15,937 2,707 36,654 9,073 16,775 103,146
Steven J. Fieler 11,200 3,750 14,950
Enrique J. Lores 11,200 11,000 7,895 60 18,000 48,155
Kim M. Rivera 11,200 26,796 16,709 54,705
Alex Cho 11,200 4,920 675 16,795
(1) Represents matching contributions made under the HP 401(k) Plan that were earned for fiscal year 2019.
(2) Represents matching contributions credited during fiscal 2019 under the HP Executive Deferred Compensation Plan with respect to the 2018 calendar year of that plan.

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(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 business travel in Korea. Due to the taxation impact on US taxpayers who travel to Korea on business and the increase in Korea travel due to our acquisition of Samsung’s Print business, the HRC Committee approved a Tax Assistance Program during its July 2017 meeting that covers our Section 16 officers. The program has the same characteristics as the existing tax equalization program for all other employees. Both programs together ensure a tax neutral scenario for all HP employees who must comply with Korean tax requirements due to business travel to Korea.
(4) Represents home security services provided to the NEOs and, consistent with SEC guidance, the expense is reported here as a perquisite since there is an incidental personal benefit.
(5) Represents the value of personal usage of HP corporate aircraft. For purposes of reporting the value of such personal usage in this table, we use data provided by an outside firm to calculate the hourly cost of operating each type of aircraft. These costs include the cost of fuel, maintenance, landing and parking fees, crew, catering and supplies. For trips by NEOs that involve mixed personal and business usage, we include the incremental cost of such personal usage (i.e., the excess of the cost of the actual trip over the cost of a hypothetical trip without the personal usage). For income tax purposes, the amounts included in NEO income are calculated based on the standard industry fare level valuation method. No tax gross ups are provided for this imputed income.
(6) Represents tax gross up costs for Korean, California state and U.S. social taxes under HP’s Tax Assistance Program for Korea business travel.
(7) Includes amounts paid either directly to the executives or on their behalf for financial counseling, tax preparation and estate planning services.

Grants of Plan-Based Awards in Fiscal 2019

The following table provides information on annual PfR incentive awards for fiscal 2019 and awards of RSUs and PARSUs granted during fiscal 2019 as a part of our long-term incentive program:




Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
    All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(3)
(#)
    Grant-Date
Fair Value
of Stock
and Option
Awards(2)
($)
Name     Grant
Date
    Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
Dion J. Weisler
PfR 29,000 2,900,000 5,800,000
RSU 12/7/2018 252,944 5,800,006
PARSU 12/7/2018 116,253 232,506 465,012 6,028,593
PARSU 12/7/2017 30,188 60,375 120,750 1,270,894
PARSU 12/7/2016 34,010 68,019 136,038 1,431,800
Steven J. Fieler
PfR 8,625 862,500 1,725,000
RSU 12/7/2018 69,778 1,600,010
PARSU 12/7/2018 32,070 64,140 128,280 1,663,071
PARSU 7/1/2018 3,913 7,826 15,652 164,737
Enrique J. Lores
PfR 9,375 937,500 1,875,000
RSU 12/7/2018 98,561 2,260,004
PARSU 12/7/2018 45,299 90,597 181,194 2,349,069
PARSU 12/7/2017 11,181 22,361 44,722 470,699
PARSU 12/7/2016 10,628 21,256 42,512 447,439
Kim M. Rivera
PfR 9,063 906,250 1,812,500
RSU 12/7/2018 87,222 2,000,000
PARSU 12/7/2018 40,087 80,174 160,348 2,078,815
PARSU 12/7/2017 7,379 14,758 29,516 310,656
PARSU 12/7/2016 7,794 15,588 31,176 328,127
Alex Cho
PfR 8,438 843,750 1,687,500
RSU 12/7/2018 69,778 1,600,010
PARSU 12/7/2018 32,070 64,140 128,280 1,663,071
PARSU 7/1/2018 3,913 7,826 15,652 164,737
(1) Amounts represent the range of possible cash payouts for fiscal 2019 PfR incentive awards, under the Stock Incentive Plan based upon annual salary.

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(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 relative TSR performance. 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 relative TSR performance over three years with continued service over three years. 2019 PARSU year 1 EPS units and all relative TSR units are reflected in this table. Further, the 2018 PARSU – fiscal 2019 EPS units and the 2017 PARSU – fiscal 2019 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 the heading “Compensation Discussion and Analysis—Determination of Fiscal 2019 Executive Compensation—Long-Term Incentive Compensation—2019 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 2019 Fiscal Year-End

The following table provides information on stock and option awards held by the NEOs as of October 31, 2019:

Option Awards Stock Awards
Name   Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
   Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
   Option
Exercise
Price(1)
($)
   Option
Expiration
Date(2)
   Number of
Shares or
Units of
Stock That
Have Not
Vested(3)
(#)
   Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(4)
($)
   Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested(5)
(#)
   Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(4)
($)
Dion J. Weisler 369,020 17.29 12/9/2022 701,986 12,193,497 137,827 2,394,055
525,719 13.83 11/1/2023
Steven J. Fieler 350,191 6,082,818 30,913 536,959
Enrique J. Lores 156,976 12.47 10/29/2023 260,215 4,519,935 52,783 916,841
Kim M. Rivera 203,543 3,535,542 42,725 742,133
Alex Cho 9,566 17.29 12/9/2022 179,887 3,124,637 30,913 536,959
48,812 13.83 11/1/2023
(1) 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.
(2) All options have an eight-year term.
(3) The amounts in this column include shares underlying dividend equivalent units credited with respect to outstanding stock awards through October 31, 2019. The amounts also include PARSUs granted in fiscal 2018 (Year 2 EPS units) and fiscal 2019 (Year 1 EPS units) plus accrued dividend equivalent shares. The 2018 PARSUs Year 2 EPS units and 2019 PARSUs Year 1 EPS units are reported based on actual performance since those results have been certified (fiscal 2019 EPS period). 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: December 7, 2019 (269,223 shares plus accrued dividend equivalent shares); December 7, 2020 (170,152 shares plus accrued dividend equivalent shares); December 7, 2021 (84,315 shares plus accrued dividend equivalent shares). The number of PARSUs and dividend equivalent shares, as described above, that will be paid out at the end of the two- and three-year vesting periods is 151,874.
Mr. Fieler: December 7, 2019 (35,181 shares plus accrued dividend equivalent shares); January 3, 2020 (168,351 shares plus accrued dividend equivalent shares); January 11, 2020 (15,618 shares plus accrued dividend equivalent shares); July 1, 2020 (11,753 shares plus accrued dividend equivalent shares); December 7, 2020 (35,181 shares plus accrued dividend equivalent shares); July 1, 2021 (11,753 shares plus accrued dividend equivalent shares); December 7, 2021 (23,260 shares plus accrued dividend equivalent shares). The number of PARSUs and dividend equivalent shares, as described above, that will be paid out at the end of the two- and three-year vesting periods is 30,267.
Mr. Lores: December 7, 2019 (95,604 shares plus accrued dividend equivalent shares); December 7, 2020 (64,646 shares plus accrued dividend equivalent shares); December 7, 2021 (32,854 shares plus accrued dividend equivalent shares). The number of PARSUs and dividend equivalent shares, as described above, that will be paid out at the end of the two- and three-year vesting periods is 57,668.
Ms. Rivera: December 7, 2019 (72,760 shares plus accrued dividend equivalent shares); December 7, 2020 (50,057 shares plus accrued dividend equivalent shares); December 7, 2021 (29,074 shares plus accrued dividend equivalent shares). The number of PARSUs and dividend equivalent shares, as described above, that will be paid out at the end of the two- and three-year vesting periods is 44,511.
Mr. Cho: December 7, 2019 (57,968 shares plus accrued dividend equivalent shares); July 1, 2020 (11,753 shares plus accrued dividend equivalent shares); December 7, 2020 (38,360 shares plus accrued dividend equivalent shares); July 1, 2021 (11,753 shares plus accrued dividend equivalent shares); December 7, 2021 (23,260 shares plus accrued dividend equivalent shares). The number of PARSUs and dividend equivalent shares, as described above, that will be paid out at the end of the two- and three-year vesting periods is 30,267.
(4) Value calculated based on the $17.37 closing price of our stock on October 31, 2019.
(5) The amounts in this column include the amounts of PARSUs granted in fiscal 2018 (50% of TSR units) and fiscal 2019 (all TSR units) plus accrued dividend equivalent shares. The TSR units are reported based on threshold performance. Actual payout will be on achievement of performance goals at the end of the two- and three-year vesting periods.

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Option Exercises and Stock Vested in Fiscal 2019

The following table provides information about options exercised and stock awards vested for the NEOs during the fiscal year ended October 31, 2019:

Option Awards Stock Awards(1)
Name       Number of
Shares
Acquired
on Exercise
(#)
      Value
Realized
on
Exercise
($)
      Number of
Shares Acquired
on Vesting
(#)
      Value Realized
on Vesting(2)
($)
Dion J. Weisler 942,712 19,492,224
Steven J. Fieler 233,744 4,688,198
Enrique J. Lores 250,258 4,943,981
Kim M. Rivera 264,931 5,690,415
Alex Cho 83,297 1,809,716
(1) Includes PARSUs, RSUs, and accrued dividend equivalent shares.
(2) Represents the amounts realized based on the fair market value of our stock on the performance period end date for PARSUs (October 31, 2019) and on the vesting date for RSUs and accrued dividend equivalent shares. Fair market value is determined based on the closing price of our stock on the applicable performance period end/vesting date.

Fiscal 2019 Pension Benefits Table

The following table provides information about the present value of accumulated pension benefits payable to each NEO:

Name       Plan
Name(1)
      Number of
Years of
Credited
Service
(#)
      Present Value of
Accumulated
Benefit(2)
($)
      Payments During
Last Fiscal Year
($)
Dion J. Weisler(3)
Steven J. Fieler CAPP 1.3         $ 9,955
Enrique J. Lores(3)
Kim Rivera(3)
Alex Cho RP 7.6 91,020
EBP 7.6 12
IRG 24.3 138,518
(1) The “RP” and the “EBP” are the qualified HP Retirement Plan and the non-qualified HP Excess Benefit Plan, respectively. “CAPP” is the qualified Cash Account Pension Plan. All benefits are frozen under these plans. The RP and CAPP have been merged into the HP Inc. Pension Plan (formerly known as the Hewlett-Packard Company Retirement Plan). The “IRG” is the International Retirement Guarantee which is a nonqualified plan covering certain highly compensated international transfers.
(2) The present value of accumulated benefits is shown at the age 65 unreduced retirement age for the RP, the EBP and the IRG, and the immediate unreduced benefit from the CAPP using the assumptions under Accounting Standards Codification (ASC) Topic 715-30 Defined Benefit Plans—Pension for the 2019 fiscal year-end measurement (as of October 31, 2019). The present value is based on a discount rate of 3.21% for the RP (this discount rate also applies for CAPP but since the benefit is currently unreduced, there is no discounting applied), 2.39% for the EBP and 2.50% for the IRG, lump sum interest rates of 2.13% for the first five years, 3.07% for the next 15 years and 3.65% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years. As of October 31, 2018 (the prior measurement date), the ASC Topic 715-30 assumptions included a discount rate of 4.54% for the RP, 4.02% for the EBP, and 4.07% for the IRG, lump sum interest rates of 3.21% for the first five years, 4.26% for the next 15 years and 4.55% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years.
(3) Mr. Weisler, Mr. Lores and Ms. Rivera are not eligible to receive benefits under any defined benefit pension plan because we ceased benefit accruals under all of our U.S.-qualified defined benefit pension plans prior to the commencement of their employment with HP in the United States.

Narrative to the Fiscal 2019 Pension Benefits Table

No NEO currently accrues a benefit under any qualified or non-qualified defined benefit pension plan because we ceased benefit accruals in all our U.S.-qualified defined benefit pension plans (and their non-qualified plan counterparts) in prior years. In the case of Mr. Cho, his IRG benefit is based on the US retirement program and since the US pension plans are frozen there is no accrual under that plan. Benefits previously accrued by Mr. Fieler under CAPP and those accrued by Mr. Cho under the RP, EBP and IRG are payable to them following termination of employment, subject to the terms of the applicable plans.

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Terms of the HP Retirement Plan (RP)
Mr. Cho earned benefits under the RP and the EBP based on pay and service prior to 2006. The RP is a traditional defined benefit plan that provided a benefit based on years of service and the participant’s “highest average pay rate,” reduced by a portion of Social Security earnings. “Highest average pay rate” was determined based on the 20 consecutive fiscal quarters when pay was the highest. Pay for this purpose included base pay and bonus, subject to applicable IRS limits. Benefits under the RP may be taken in one of several different annuity forms or in an actuarially equivalent lump sum. Since Mr. Cho became a participant in the RP after November 1, 1993, he has no Deferred Profit Sharing Plan (DPSP) balance to be integrated with the RP.

Benefits not payable from the RP due to IRS limits are paid from the EBP under which benefits are unfunded and unsecured. When an EBP participant with relatively small benefits terminates they are paid their EBP benefit in January of the year following their termination, subject to any delay required by Section 409A of the Code.

Terms of the Cash Account Pension Plan (CAPP)
Mr. Fieler earned benefits under the CAPP based on his compensation beginning in September 2004 through the end of 2005 when benefits were frozen. While interest continues to accrue on the CAPP balance, no pay credits have been applied since the end of 2005. CAPP provided for 4% of pay credits to a cash balance account with interest credited at a 1-year Treasury bill plus 1% interest rate. The CAPP balance can be paid as a lump sum with the appropriate election and spousal consent if married or can be converted to annuity forms of payment.

Terms of the International Retirement Guarantee (IRG)
Employees who transferred internationally at the Company’s request prior to 2000 were put into an international umbrella plan. This plan determines the country of guarantee which is generally the country in which an employee has spent the longest portion of his HP Inc. career. For Mr. Cho, the country of guarantee is currently the U.S. The IRG determines the present value of a full career benefit for Mr. Cho under the HP Inc. sponsored retirement benefit plans that applied to employees working in the U.S., and U.S. Social Security (since the U.S. is his country of guarantee) then offsets the present value of the retirement benefits from plans and social insurance systems in the countries in which he earned retirement benefits (France and the US) for his total period of HP Inc. employment. The net benefit value is payable as a single lump sum amount as soon as practicable after termination or retirement, subject to any delay required by Section 409A of the Code. This is a nonqualified retirement plan.

Fiscal 2019 Non-Qualified Deferred Compensation Table

The following table provides information about contributions, earnings, withdrawals, distributions, and balances under the EDCP:

Name       Executive
Contributions
in Last FY(1)
($)
      Registrant
Contributions
in Last FY(1)(2)
($)
      Aggregate
Earnings
in Last FY
($)
      Aggregate
Withdrawals/
Distributions(3)
($)
      Aggregate
Balance at
FYE(4)
($)
Dion J. Weisler 10,800 10,800 3,854 79,705
Steven J. Fieler 1,829 18,672
Enrique J. Lores 595,866 11,000 186,131 2,189,074
Kim M. Rivera 2,810 28,313
Alex Cho 10,320 4,920 2,698 35,985
(1) The amounts reported here as “Executive Contributions” and “Registrant Contributions” are reported as compensation to such NEO in the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the “Summary Compensation Table” above.
(2) The contributions reported here as “Registrant Contributions” were made in fiscal 2019 with respect to calendar year 2018 participant base pay deferrals. During fiscal 2019, the NEOs were eligible to receive a 4% matching contribution on base pay deferrals that exceeded the IRS limit that applies to the qualified HP 401(k) Plan up to a maximum of two times that limit.
(3) The distributions reported here were made pursuant to participant elections made prior to the time that the amounts were deferred in accordance with plan rules.
(4) Of these balances, the following amount was reported as compensation to such NEO in the Summary Compensation Table in prior proxy statements: Mr. Weisler $52,258, Mr. Lores $644,811, Ms. Rivera $8,840, Mr. Fieler $9,932, and Mr. Cho $0. The information reported in this footnote is provided to clarify the extent to which amounts payable as deferred compensation represent compensation reported in our prior proxy statements, rather than additional earned compensation.

66 www.hpannualmeeting.com


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Executive Compensation

Narrative to the Fiscal 2019 Non-qualified Deferred Compensation Table

HP sponsors the EDCP, a non-qualified deferred compensation plan that permits eligible U.S. employees to defer base pay in excess of the amount taken into account under the qualified HP 401(k) Plan and bonus amounts of up to 95% of the annual PfR incentive bonus payable under the annual PfR incentive plan. In addition, a matching contribution is available under the plan to eligible employees. The matching contribution applies to base pay deferrals on compensation above the IRS limit that applies to the qualified HP 401(k) Plan, up to a maximum of two times that compensation limit (matching contributions made in fiscal year 2019 pertained to base pay from $275,000 to $550,000 during calendar year 2018). During fiscal 2019, the NEOs were eligible for a matching contribution of up to 4% on base pay contributions in excess of the IRS limit, up to a maximum of two times that limit.

Upon becoming eligible for participation or during the annual enrollment period, employees must specify the amount of base pay and/or the percentage of bonus to be deferred, as well as the time and form of payment. If termination of employment occurs before retirement (defined as at least age 55 with 15 years of continuous service), distribution is made in the form of a lump sum in January of the year following the year of termination, subject to any delay required under Section 409A of the Code. At retirement (or earlier, if properly elected), benefits are paid according to the distribution election made by the participant at the time of the deferral election, subject to any delay required under Section 409A of the Code. In the event of death, the remaining vested EDCP account balance will be paid to the designated beneficiary, or otherwise in accordance with the EDCP provisions, in a single lump-sum payment in the month following the month of death.

Amounts deferred or credited under the EDCP are credited with hypothetical investment earnings based on participant investment elections made from among the investment options available under the HP 401(k) Plan. Accounts maintained for participants under the EDCP are not held in trust, and all such accounts are subject to the claims of general creditors of HP. No amounts are credited with above-market earnings.

Proxy Statement 67


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Executive Compensation

Potential Payments Upon Termination or Change in Control

The amounts in the following table estimate potential payments due if a NEO had terminated employment with HP effective October 31, 2019 under each of the circumstances specified below. These amounts are in addition to benefits generally available to U.S. employees upon termination of employment, such as distributions from the retirement plans and the HP 401(k) Plan and payment of accrued vacation where required.

Long Term Incentive Programs(3)
Name Termination Scenario Total(1) Severance(2) Stock
Options
Restricted
Stock
PARSU
Dion J. Weisler       Voluntary/For Cause       $ 0       $ 0       $ 0       $ 0       $ 0
Disability $ 20,173,559 $ 0 $ 0 $ 9,555,432 $ 10,618,127
Retirement $ 0 $ 0 $ 0 $ 0 $ 0
Death $ 20,173,559 $ 0 $ 0 $ 9,555,432 $ 10,618,127
Not for Cause $ 20,357,645 $ 10,743,471 $ 0 $ 4,565,618 $ 5,048,556
Change in Control $ 30,917,030 $ 10,743,471 $ 0