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Director Compensation and Stock Ownership Guidelines

Non-employee Director compensation is determined annually by the Board acting on the recommendation of the HRC Committee. In formulating its recommendation, the HRC Committee considers market data for our peer group and input from the third-party compensation consultant retained by the HRC Committee regarding market practices for Director compensation. Mr. Weisler, as an employee of the Company, does not receive any separate compensation for his HP Board activities.

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

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

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

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

Each non-employee Director also receives $2,000 for Board meetings attended in excess of ten meetings per Board year (which begins in March and ends the following February), and $2,000 for each committee meeting attended in excess of a total of ten meetings of each committee per Board year.

Non-employee Directors are reimbursed for their expenses in connection with attending Board meetings (including expenses related to spouses when spouses are invited to attend Board events), and non-employee Directors may use the Company aircraft for travel to and from Board meetings and other company events.

Fiscal 2018 Director Compensation
Name(3) Fees Earned or
Paid in Cash(1)
($)
Stock
Awards(2)
($)
Option
Awards(2)
($)
All Other
Compensation
($)
Total
($)
Aida Alvarez          $ 103,267 $ 205,004 $ $— $ 308,271
Shumeet Banerji $ 118,257 $ 205,004 $ $— $ 323,261
Robert R. Bennett $ 122,257 $ 205,004 $ $— $ 327,261
Charles “Chip” V. Bergh $ 233,083 $ 155,014 $ 155,005 $— $ 543,102
Stacy Brown-Philpot $ 107,267 $ 205,004 $ $— $ 312,271
Stephanie A. Burns $ 123,253 $ 205,004 $ $— $ 328,257
Mary Anne Citrino $ 135,586 $ 102,502 $ 102,502 $— $ 340,590
Stacey Mobley $ 103,267 $ 205,004 $ $— $ 308,271
Subra Suresh $ 105,267 $ 205,004 $ $— $ 310,271
Dion J. Weisler(4) $ $ $ $— $
  1. For purposes of determining Director compensation, the board year begins in March and ends the following February, which does not coincide with our November through October fiscal year. Cash amounts included in the table above represent the portion of the annual retainers and committee chair fees earned with respect to service during fiscal 2018, as well as any additional meeting fees paid during fiscal 2018. See “Additional Information about Fees Earned or Paid in Cash in Fiscal 2018” below.
  2. Represents the grant date fair value of stock awards and option awards granted in fiscal 2018 calculated in accordance with applicable accounting standards relating to share-based payment awards. For awards of shares, that amount is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of shares awarded. For elective options, that amount is calculated by multiplying the Black-Scholes-Merton value determined as of the date of grant by the number of options awarded. For information on the assumptions used to calculate the value of the stock awards, refer to Note 5 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, as filed with the SEC on December 13, 2018. See “Additional Information about Non-Employee Director Equity Awards” below.
  3. Ms. Matsuoka was appointed to our Board during our Fiscal 2019 year. Accordingly, she did not receive any compensation during Fiscal 2018.
  4. Mr. Weisler has served as President and CEO of HP since November 1, 2015. Accordingly, he does not receive compensation for his Board service.
Additional Information about Fees Earned or Paid in Cash in Fiscal 2018
Name
Annual
Retainers(1)
($)
Committee Chair and
Chairman Fees(2)
($)
Additional
Meeting Fees(3)
($)
Total
($)
Aida Alvarez
$
103,267
                 $
              $
$
103,267
Shumeet Banerji
$
103,267
$
14,990
$
$
118,257
Robert R. Bennett
$
103,267
$
14,990
$
4,000
$
122,257
Charles “Chip” V. Bergh
$
33,219
$
199,863
$
$
233,082
Stacy Brown-Philpot
$
103,267
$
$
4,000
$
107,267
Stephanie A. Burns
$
103,267
$
19,986
$
$
123,253
Mary Anne Citrino
$
103,267
$
28,318
$
4,000
$
135,585
Stacey Mobley
$
103,267
$
$
$
103,267
Subra Suresh
$
103,267
$
$
2,000
$
105,267
  1. The board year begins in March and ends the following February, which does not coincide with HP’s November through October fiscal year. The dollar amounts shown include cash annual retainers earned for service during the last four months of the March 2017 through February 2018 Board year and cash annual retainers earned for service during the first eight months of the March 2018 through February 2019 Board year. This also includes cash earned in the period described that was deferred by Director election into the 2005 Executive Deferred Compensation Plan, which provides that Directors may elect when to receive their deferred cash annual retainer. Directors may not receive their deferred cash annual retainer earlier than January 2021. In the case of a termination of service, Directors can elect to receive the deferred money in the January following the termination of the service if the date occurs prior to the specified distribution year elected.
  2. Committee chair fees are calculated based on service during each Board term. The dollar amounts shown include such fees earned for service during the last four months of the March 2017 through February 2018 Board term and fees earned for service during the first eight months of the March 2018 through February 2019 Board term.
  3. Additional meeting fees are calculated based on the number of designated Board meetings and the number of committee meetings attended during each Board term. The dollar amounts shown include any additional meeting fees paid during fiscal 2018 for service in the 2017 Board term ending February 2018. Additional meeting fees for the 2018 Board term, if any, will be paid during fiscal 2019.
 Additional Information about Non-Employee Director Equity Awards

The following table provides additional information about non-employee Director equity awards, including the stock awards and elective options made to non-employee Directors during fiscal 2018, the grant date fair value of each of those awards and the number of stock awards and option awards outstanding as of the end of fiscal 2018:

Name Stock Awards
Granted During
Fiscal 2018
(#)
Option Awards
Granted During
Fiscal 2018
(#)
 Grant Date
Fair Value of
Stock and
Option Awards
Granted During
Fiscal 2018(1)
($)
 Stock Awards
Outstanding
at Fiscal
Year End(2)
(#)
 Option Awards
Outstanding at
Fiscal Year End
(#)
Aida Alvarez 9,670 0 $205,004 11,061  
Shumeet Banerji 9,670 0 $205,004    
Robert R. Bennett 9,670 0 $205,004    
Charles “Chip” V. Bergh 7,312 32,564 $310,019 22,295 107,218
Stacy Brown-Philpot 9,670 0 $205,004 39,577  
Stephanie A. Burns 9,670 0 $205,004 9,781  
Mary Anne Citrino 4,835 21,534 $205,004 27,238 133,515
Stacey Mobley 9,670 0 $205,004 39,577  
Subra Suresh 9,670 0 $205,004 18,736  
  1. Represents the grant date fair value of stock awards and elective options granted in fiscal 2018 calculated in accordance with applicable accounting standards. For stock awards, that number is calculated by multiplying the closing price of HP’s stock on the date of grant by the number of shares awarded. For elective options, that amount is calculated by multiplying the Black-Scholes-Merton value determined as of the date of grant by the number of options awarded. For information on the assumptions used to calculate the value of the stock awards, refer to Note 5 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, as filed with the SEC on December 13, 2018.
  2. Includes dividend equivalent units accrued with respect to share awards granted in fiscal 2018 and RSUs granted in previous years, that have been deferred at the election of the Director.

Non-Employee Director Stock Ownership Guidelines

Under our stock ownership guidelines, non-employee Directors are required to accumulate, within five years of election to the Board, shares of HP’s stock equal in value to at least five times the amount of their annual cash retainer. Shares counted toward these guidelines include any shares held by the Director directly or indirectly, including deferred vested awards.

All non-employee Directors with more than five years of service have met our stock ownership guidelines and all non-employee Directors with less than five years of service have either met or are on track to meet our stock ownership guidelines within the required time based on current trading prices of HP’s stock. See “Common Stock Ownership of Certain Beneficial Owners and Management” on page 63 of this proxy statement.