Fiscal 2018 Summary Compensation Table
The following table sets forth information concerning the compensation of our NEOs for fiscal years 2018, 2017 and 2016, as applicable. Per SEC reporting guidelines, our NEOs for fiscal 2018 include our CEO, (Mr. Weisler), anyone who served as CFO during the year (Ms. Lesjak and Mr. Fieler), the next three most highly compensated individuals still serving as executive officers at year end (Mr. Lores, Ms. Rivera, Ms. Keogh), and up to two additional officers who would have been amongst our top three most highly compensated had they been employed by HP at year end (Mr. Flaxman and Mr. Coughlin).
|Name and Principal Position||Year||Salary(5)
|Dion J. Weisler
President and CEO
|Steven J. Fieler(1)
Chief Financial Officer
|Catherine A. Lesjak(2)
Interim Chief Operating Officer
|Enrique J. Lores
President, Imaging, Printing and Solutions
|Kim M. Rivera
Chief Legal Officer
|Tracy S. Keogh
Chief Human Resources Officer
|Ron V. Coughlin(3)
(Former) President, Personal Systems
|Jon E. Flaxman(4)
(Former) Chief Operating Officer
- Mr. Fieler was appointed Chief Financial Officer effective July 1, 2018.
- Ms. Lesjak served as Chief Financial Officer from the beginning of our fiscal year until June 30, 2018 when she was succeeded by Mr. Fieler. She was appointed Interim Chief Operating Officer effective July 1, 2018.
- Mr. Coughlin resigned from this role effective June 13, 2018.
- Mr. Flaxman served as Chief Operating Officer until he passed away on March 28, 2018.
- Amounts shown represent base salary earned or paid during the fiscal year, as described under “Compensation Discussion and Analysis—Determination of Fiscal 2018 Executive Compensation—2018 Base Salary.”
- The grant date fair value of all stock awards has been calculated in accordance with applicable accounting standards. In the case of RSUs, the value is determined by multiplying the number of units granted by the closing price of our stock on the grant date. For PARSUs awarded in fiscal 2018, amounts shown reflect the grant date fair value of the PARSUs for the two- and three-year vesting periods beginning with fiscal 2018 based on the probable outcome of performance conditions related to these PARSUs at the grant date. The 2018 PARSUs include both internal (EPS) and market-related (TSR) performance goals as described under the “Compensation Discussion and Analysis—Determination of Fiscal 2018 Executive Compensation—Long-Term Incentive Compensation.” Consistent with the applicable accounting standards, the grant date fair value of the market-related TSR component has been determined using a Monte Carlo simulation model. Further, consistent with accounting standards, grant date fair value reflects the EPS portion of the award for Year 1 only, for which goals were approved in January 2018. This value also reflects grant date fair value of the EPS portion of the 2017 PARSU award for Year 2 (fiscal 2018 EPS), for which goals were approved in January 2018. The table below sets forth the grant date fair value for the 2018 PARSUs granted on December 7, 2017 and the fiscal 2018 EPS portion of the 2017 PARSUs granted on December 7, 2016:
Name Date of
Probable Outcome of
Grant Date Fair Value
Maximum Outcome of
Grant Date Fair Value
Component Grant Date
Dion J. Weisler 12/7/2017 1,437,505 2,875,010 4,279,984 12/7/2016 1,619,509 3,239,017 Steven J. Fieler 7/1/2018 177,572 355,144 654,449 Catherine A. Lesjak 12/7/2017 575,012 1,150,023 1,711,994 12/7/2016 674,799 1,349,598 Enrique J. Lores 12/7/2017 532,415 1,064,831 1,585,172 12/7/2016 506,105 1,012,211 Kim M. Rivera 12/7/2017 351,388 702,776 1,046,219 12/7/2016 371,126 742,253 Tracy S. Keogh 12/7/2017 349,793 699,585 1,041,469 12/7/2016 391,389 782,778 Ron V. Coughlin 12/7/2017 569,678 1,139,356 1,696,138 12/7/2016 607,322 1,214,643 Jon E. Flaxman 12/7/2017 460,533 921,066 1,371,179 12/7/2016 506,105 1,012,211
Amounts shown represent the grant date fair value of the PARSUs subject to the internal EPS performance goal (i) based on the probable or target outcome as of the date the goals were set and (ii) based on achieving the maximum level of performance for the performance period beginning in fiscal 2018. The grant date fair value of the 2018 PARSUs Year 1 EPS units awarded on December 7, 2017 and of the 2017 PARSUs Year 2 EPS units awarded on December 7, 2016 was $23.81 per unit, which was the closing share price of our common stock on January 23, 2018 when the EPS goal was approved. The grant date fair value of the 2018 PARSUs Year 1 EPS units for Mr. Fieler’s grant on July 1, 2018 was $22.69, the closing stock price on June 29, 2018. The values of 2018 PARSUs Year 2 and Year 3 EPS units will not be available until January 2019 and January 2020 respectively, and therefore are not included for fiscal 2018, but will be included for their respective fiscal years.
Amounts shown represent the grant date fair value of PARSUs subject to the market-related TSR goal component of the PARSUs, for which expense recognition is not subject to probable or maximum outcome assumptions. The grant date fair value of the market-related TSR goal component of the PARSUs granted December 7, 2018 was $23.63 per unit, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 29.8%, a risk-free interest rate of 1.9%, and a simulation period of 2.9 years. For Mr. Fieler’s grant on July 1, 2018 the weighted grant date fair value for the TSR component was $27.88 determined using a Monte Carlo simulation assuming volatility rate of 24.8%, risk-free interest rate of 2.5%, and simulation period of 2.3 years. For information on the assumptions used to calculate the fair value of the awards, refer to Note 5 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, as filed with the SEC on December 13, 2018.
- 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).
- Amounts shown represent the increase in the actuarial present value of NEO pension benefits during the applicable fiscal year. As described in more detail under “Narrative to the Fiscal 2018 Pension Benefits Table” below, pension accruals have ceased for all NEOs, and NEOs hired after the dates that pension accruals ceased are not eligible to participate in any U.S. defined benefit pension plan. Accordingly, the amounts reported for the NEOs do not reflect additional accruals but reflect the passage of one more year from the prior present value calculation and changes in other actuarial assumptions. The assumptions used in calculating the changes in pension benefits are described in footnote (2) to the “Fiscal 2018 Pension Benefits Table” below. No HP plan provides for above-market earnings on deferred compensation amounts, so the amounts reported in this column do not reflect any such earnings.
- The amounts shown are detailed in the “Fiscal 2018 All Other Compensation Table” below.
Fiscal 2018 All Other Compensation Table
The following table provides additional information about the amounts that appear in the “All Other Compensation” column in the “Summary Compensation Table” above.
|Dion J. Weisler||11,000||10,800||12,810||984||17,610||14,742||10,236||16,000||94,182|
|Steven J. Fieler||11,000||8,404||—||—||—||—||—||—||19,404|
|Catherine A. Lesjak||11,000||10,800||—||20,963||—||—||—||18,000||60,763|
|Enrique J. Lores||11,000||10,800||9,300||—||—||—||544||12,329||43,973|
|Kim M. Rivera||11,000||—||40,427||—||—||—||—||21,500||72,927|
|Tracy S. Keogh||11,000||10,800||—||—||—||—||—||18,000||39,800|
|Ron V. Coughlin||—||10,800||—||—||—||—||—||—||10,800|
|Jon E. Flaxman||6,710||—||—||—||—||—||—||12,970||19,680|
- Represents matching contributions made under the HP 401(k) Plan that were earned for fiscal year 2018.
- Represents matching contributions credited during fiscal 2018 under the HP Executive Deferred Compensation Plan with respect to the 2017 calendar year of that plan.
- For Ms. Rivera, represents benefits provided under our domestic executive mobility program. For Mr. Weisler and Mr. Lores, represents tax preparation, filing, equalization and compliance services paid under HP’s tax assistance due to Korea business travel. Due to the taxation impact on US taxpayers who travel to Korea on business and the increase in Korea travel due to the closing of our acquisition of Samsung’s Print business, the HRC approved a Tax Assistance Program during its July 2017 meeting that covers our Section 16 officers. The program has the same characteristics as the existing tax equalization program for all other employees. Both programs together ensure a tax neutral scenario for all HP employees who must comply with Korean tax requirements due to business travel to Korea.
- Represents home security services provided to the NEOs and, consistent with SEC guidance, the expense is reported here as a perquisite due to the fact that there is an incidental personal benefit.
- Represents legal fees paid on behalf of Mr. Weisler for immigration related expenses.
- 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.
- Represents tax gross up for Korean state and social taxes under HP’s Tax Assistance Program for Korea business travel.
- Includes amounts paid either directly to the executives or on their behalf for financial counseling, tax preparation and estate planning services. For Mr. Flaxman amounts represent company-paid airfare for his family related to his passing.
Grants of Plan-Based Awards in Fiscal 2018
The following table provides information on annual PfR incentive awards for fiscal 2018 and awards of RSUs and PARSUs granted during fiscal 2018 as a part of our long-term incentive program:
|Estimated Future Payouts
Incentive Plan Awards(1)
Estimated Future Payouts
Incentive Plan Awards(2)
|Dion J. Weisler|
|Steven J. Fieler|
|Catherine A. Lesjak|
|Enrique J. Lores|
|Kim M. Rivera|
|Tracy S. Keogh|
|Ron V. Coughlin|
|Jon E. Flaxman|
- Amounts represent the range of possible cash payouts for fiscal 2018 PfR incentive awards, under the Stock Incentive Plan based upon annual salary.
- PARSU amounts represent the range of shares that may be released at the end of the two- and three-year vesting periods applicable to the PARSUs assuming achievement of threshold, target, or maximum performance. 50% of the PARSUs are eligible for vesting based on EPS performance and 50% are eligible for vesting based on TSR performance. PARSUs vest as follows: 16.6% of the units are eligible for vesting based on EPS performance on year one with continued service over two years, 16.6% of the units are eligible for vesting based on EPS performance of year two with continued service over three years, 16.6% of the units are eligible for vesting based on EPS performance of year three with continued service over three years, 25% of the units are eligible for vesting based on TSR performance over two years with continued service over two years, 25% of the units are eligible for vesting based on TSR performance over three years with continued service over three years. 2018 PARSU year 1 EPS units and all TSR units are reflected in this table. Further, the 2017 PARSU – fiscal 2018 EPS units are also included. If our EPS and relative TSR performance are below threshold for the performance period, no shares will be released for the applicable segment. For additional details, see the discussion of PARSUs under “Compensation Discussion and Analysis—Determination of Fiscal 2018 Executive Compensation—Long-Term Incentive Compensation—2018 PARSUs.”
- RSUs vest as to one-third of the units on each of the first three anniversaries of the grant date, subject to continued service.
Outstanding Equity Awards at 2018 Fiscal Year-End
The following table provides information on stock and option awards held by the NEOs as of October 31, 2018:
|Option Awards||Stock Awards|
|Dion J. Weisler||369,020||—||17.29||12/9/2022||788,653||19,038,083||550,882||13,298,291|
|Steven J. Fieler||456,956||11,030,918||38,779||936,125|
|Catherine A. Lesjak||277,020||—||17.29||12/9/2022||318,715||7,693,780||224,452||5,418,271|
|Enrique J. Lores||156,976||12.47||10/29/2023||205,166||4,952,707||189,793||4,581,603|
|Kim M. Rivera||230,429||5,562,556||130,899||3,159,902|
|Tracy S. Keogh||201,284||17.29||12/9/2022||220,105||5,313,335||133,636||3,225,973|
|Ron V. Coughlin||0||0||0||0|
|Jon E. Flaxman||0||0||0||0|
- Option awards in this column will fully vest as to one-third of the shares on the third anniversary of November 2, 2015, the respective date of the grant (if stock price performance conditions have been satisfied), and subject to continued service in each case.
- 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.
- All options have an eight-year term.
- The amounts in this column include shares underlying dividend equivalent units credited with respect to outstanding stock awards through October 31, 2018. The release dates and release amounts for all unvested stock awards are as follows, assuming continued service and satisfaction of any applicable financial performance conditions:
- Mr. Weisler: November 2, 2018 (156,665 shares plus accrued dividend equivalent shares); December 7, 2018 (184,908 shares plus accrued dividend equivalent shares); December 9, 2018 (132,123 shares plus accrued dividend equivalent shares); December 7, 2019 (184,909 shares plus accrued dividend equivalent shares); December 7, 2020 (85,837 shares plus accrued dividend equivalent shares).
- Mr. Fieler: December 7, 2018 (11,921 shares plus accrued dividend equivalent shares); January 3, 2019 (168,350 shares plus accrued dividend equivalent shares); January 11, 2019 (15,618 shares plus accrued dividend equivalent shares); July 1, 2019 (11,752 shares plus accrued dividend equivalent shares); December 7, 2019 (11,922 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 (11,922 shares plus accrued dividend equivalent shares) ; July 1, 2021 (11,753 shares plus accrued dividend equivalent shares).
- Ms. Lesjak: November 2, 2018 (60,256 shares plus accrued dividend equivalent shares); December 7, 2018 (75,614 shares plus accrued dividend equivalent shares); December 9, 2018 (55,051 shares plus accrued dividend equivalent shares); December 7, 2019 (75,615 shares plus accrued dividend equivalent shares); December 7, 2020 (34,335 shares plus accrued dividend equivalent shares).
- Mr. Lores: December 7, 2018 (62,751 shares plus accrued dividend equivalent shares); December 9, 2018 (38,536 shares plus accrued dividend equivalent shares); December 7, 2019 (62,751 shares plus accrued dividend equivalent shares); December 7, 2020 (31,792 shares plus accrued dividend equivalent shares).
- Ms. Rivera: November 9, 2018 (79,308 shares plus accrued dividend equivalent shares); December 7, 2018 (43,686 shares plus accrued dividend equivalent shares); December 9, 2018 (28,627 shares plus accrued dividend equivalent shares); December 7, 2019 (43,686 shares plus accrued dividend equivalent shares); December 7, 2020 (20,983 shares plus accrued dividend equivalent shares).
- Ms. Keogh: November 2, 2018 (34,949 shares plus accrued dividend equivalent shares); December 7, 2018 (44,829 shares plus accrued dividend equivalent shares); December 9, 2018 (31,930 shares plus accrued dividend equivalent shares); December 10, 2018 (28,936 shares plus accrued dividend equivalent shares); December 7, 2019 (44,830 shares plus accrued dividend equivalent shares); December 7, 2020 (20,887 shares plus accrued dividend equivalent shares).
- Mr. Coughlin: has no outstanding equity as all shares were forfeited when he departed the company.
- Mr. Flaxman: All outstanding equity was paid out to his estate/beneficiaries after his death, per appropriate terms.
- Value calculated based on the $24.14 closing price of our stock on October 31, 2018.
- The amounts in this column include the amounts of PARSUs granted in fiscal 2017 (Year 2 EPS units and 50% of TSR units) and fiscal 2018 (Year 1 EPS units and all TSR units) plus accrued dividend equivalent shares. The shares are reported at target, except for 2017 PARSUs Year 2 EPS units and 2018 PARSUs Year 1 EPS units since those results have been certified (fiscal 2018 EPS period). Actual payout will be on achievement of performance goals at the end of the two- and three-year vesting periods.
Option Exercises and Stock Vested in Fiscal 2018
The following table provides information about options exercised and stock awards vested for the NEOs during the fiscal year ended October 31, 2018:
|Option Awards||Stock Awards(1)|
|Dion J. Weisler||525,719||3,886,618||1,194,116||27,509,840|
|Steven J. Fieler||—||—||188,040||4,035,115|
|Catherine A. Lesjak||496,399||5,616,378||512,424||11,773,873|
|Enrique J. Lores||530,149||6,384,161||475,522||11,128,546|
|Kim M. Rivera||—||—||304,825||6,952,913|
|Tracy S. Keogh||234,551||2,268,108||327,559||7,468,390|
|Ron V. Coughlin||405,836||4,704,323||87,343||1,836,489|
|Jon E. Flaxman(4)||393,944||3,801,558||688,909||15,030,414|
- Includes PARSUs, RSUs, and accrued dividend equivalent shares.
- Represents the amounts realized based on the difference between the market price of HP stock on the date of grant and the exercise price.
- Represents the amounts realized based on the fair market value of our stock on the performance period end date for PARSUs (October 31, 2018) 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.
- For Mr. Flaxman the stock awards value realized on vesting, after December 7, 2017, is based on the closing stock price of $21.92, on March 29, 2018, date of transfer of equity to his estate. The number of options and value recognized on exercise represent actual exercises which occurred before Mr. Flaxman’s death.
Fiscal 2018 Pension Benefits Table
The following table provides information about the present value of accumulated pension benefits payable to each NEO:
|Name||Plan Name(1)||Number of Years of
|Present Value of
Last Fiscal Year
|Dion J. Weisler(3)||—||—||—||—|
|Steven J. Fieler||CAPP||1.3||$||9,623||—|
|Catherine A. Lesjak||RP||21.3||$||427,330||—|
|Ron V. Coughlin(3)||—||—||—||—|
|Jon E. Flaxman(4)||RP||26.6||$||223,064||—|
|Enrique J. Lores(3)||—||—||—||—|
- 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 HP Pension Plan).
- The present value of accumulated benefits is shown at the age 65 unreduced retirement age for the RP and the EBP 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 2018 fiscal year-end measurement (as of October 31, 2018). The present value is based on a discount rate of 4.54% for the RP (this discount rate also applies for CAPP but since the benefit is currently unreduced, there is no discounting applied) and 4.02% for the EBP, 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. As of October 31, 2017 (the prior measurement date), the ASC Topic 715-30 assumptions included a discount rate of 3.82% for the RP and 2.99% for the EBP, lump sum interest rates of 1.96% for the first five years, 3.58% for the next 15 years and 4.35% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years.
- Mr. Weisler, Mr. Coughlin, Mr. Lores, Ms. Rivera and Ms. Keogh 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.
- Mr. Flaxman passed away in March of 2018 and his EBP benefit was transferred to the EDCP and was paid to his estate/beneficiaries pursuant to the terms of the EBP. The amount shown for the EBP as paid was the amount transferred to the EDCP on May 14, 2018 and is reflected in the “Executive Contributions in Last FY” column of the Nonqualified Deferred Compensation Table below. Mr. Flaxman’s wife received the $223,064 for his RP benefits in November 2018 pursuant to the terms of the RP. This payment from the RP is the survivor benefit which is 50% of the benefit that would have been payable to Mr. Flaxman had he survived to the benefit commencement date for his wife and elected a lump sum.
Narrative to the Fiscal 2018 Pension Benefits Table
No NEO currently accrues a benefit under any qualified or non-qualified defined benefit pension plan because we ceased benefit accruals in all of our U.S.-qualified defined benefit pension plans (and their non-qualified plan counterparts) in prior years. Benefits previously accrued by the NEOs under HP pension plans are payable to them following termination of employment, subject to the terms of the applicable plan.
Terms of the HP Retirement Plan (RP)
Ms. Lesjak and Mr. Flaxman earned benefits under the RP and the EBP based on pay and service prior to 2008. 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. Benefits calculated under the RP are offset by the value of benefits earned under the HP Deferred Profit Sharing Plan (the “DPSP”) before November 1, 1993. Together, the RP and the DPSP constitute a “floor-offset” arrangement for periods before November 1, 1993.
Benefits not payable from the RP and the DPSP due to IRS limits are paid from the EBP under which benefits are unfunded and unsecured. When an EBP participant terminates employment, the benefit liability is transferred to the EDCP, where an account is established for the participant. That account is then credited with hypothetical investment earnings (gains or losses) based upon the investment election made by participants from among investment options similar to those offered under the HP 401(k) Plan. There is no formula that would result in above-market earnings or payment of a preferential interest rate on this benefit.
At the time of distribution, amounts representing EBP benefits are paid from the EDCP in a lump sum or installment form, according to pre-existing elections made by those participants, except that participants with a small benefit or who have not qualified for retirement status (age 55 with at least 15 years of continuous service) are paid their EBP benefit in January of the year following their termination, subject to any delay required by Section 409A of the Code.
Fiscal 2018 Non-qualified Deferred Compensation Table
The following table provides information about contributions, earnings, withdrawals, distributions, and balances under the EDCP:
in Last FY(1)
in Last FY(2)
in Last FY
Balance at FYE(4)
|Dion J. Weisler||10,800||10,800||900||—||54,251|
|Steven J. Fieler||1,528||8,404||(469||)||—||16,843|
|Catherine A. Lesjak||11,800||10,800||170,443||840,971||1,816,715|
|Enrique J. Lores||376,284||10,800||(37,055||)||—||1,396,077|
|Kim M. Rivera||—||—||27||—||25,503|
|Tracy S. Keogh||387,885||10,800||23,178||—||3,042,945|
|Ron V. Coughlin(5)||378,259||10,800||(44,635||)||—||1,011,579|
|Jon E. Flaxman(6)||3,507,461||—||17,564||3,525,024||—|
- The amounts reported here as “Executive Contributions” and “Registrant Contributions” are reported as compensation to such NEO in the “Summary Compensation Table” above.
- The contributions reported here as “Registrant Contributions” were made in fiscal 2018 with respect to calendar year 2017 participant base pay deferrals. During fiscal 2018, 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.
- 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.
- Of these balances, the following amount was reported as compensation to such NEO in the Summary Compensation Table in prior proxy statements: Mr. Weisler $30,658, Mr. Lores $257,727, Ms. Rivera $21,208, Ms. Keogh $1,253,817, Mr. Coughlin $293,196 and Ms. Lesjak $0 as distributions from her account have been in excess of plan contributions. 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.
- Mr. Coughlin’s balance will be paid to him in January 2019, per the plan guidelines.
- Reflects the transfer of Mr. Flaxman’s accrued benefit under the EBP at the time of his death. Pursuant to the terms of the EBP, the accrued amount was distributed and transferred to his EDCP account and then transferred from his employee EDCP account to an EBP account established for his beneficiaries on June 18, 2018. It will be paid out to beneficiaries per plan rules in January 2019.
Narrative to the Fiscal 2018 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 (for fiscal 2018 matching contributions, on calendar year 2017 base pay from $270,000 to $540,000). During fiscal 2018, 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. This approach was applied to Mr. Coughlin after his voluntary termination from HP this year and the payout of his EDCP balance will occur in January 2019, as described in footnote (5) to the NQDC table above. 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. In the event of death, a participant’s EBP account, distributed from the EDCP, will be distributed to the participant’s beneficiary in a single lump-sum in the January following death. This approach was applied to Mr. Flaxman as described in footnote (6) of the NQDC table above. No withdrawals are permitted prior to the previously elected distribution date, other than “hardship” withdrawals as permitted by applicable law.
Amounts deferred or credited under the EDCP are credited with hypothetical investment earnings based on participant investment elections made from among the investment options available under the HP 401(k) Plan. Accounts maintained for participants under the EDCP are not held in trust, and all such accounts are subject to the claims of general creditors of HP. No amounts are credited with above-market earnings.
Potential Payments Upon Termination or Change in Control
The amounts in the following table estimate potential payments due if an NEO had terminated employment with HP effective October 31, 2018 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)|
|Dion J. Weisler||Voluntary/For Cause||$||0||$||0||$||0||$||0||$||0|
|Not for Cause||$||36,884,144||$||10,024,413||$||5,420,163||$||11,620,164||$||9,819,404|
|Change in Control||$||52,499,104||$||10,024,413||$||5,420,163||$||19,038,073||$||18,016,455|
|Steven J. Fieler||Voluntary/For Cause||$||0||$||0||$||0||$||0||$||0|
|Not for Cause||$||6,771,511||$||1,889,961||$||0||$||4,277,804||$||603,746|
|Change in Control||$||14,236,823||$||1,889,961||$||0||$||11,030,918||$||1,315,944|
|Catherine A. Lesjak(4)||Voluntary||$||10,115,256||$||0||$||0||$||6,102,954||$||4,012,302|
|Not for Cause||$||17,209,930||$||3,419,178||$||2,084,682||$||7,693,768||$||4,012,302|
|Change in Control||$||20,531,988||$||3,419,178||$||2,084,682||$||7,693,768||$||7,334,360|
|Enrique J. Lores||Voluntary/For Cause||$||0||$||0||$||0||$||0||$||0|
|Not for Cause||$||8,605,027||$||2,877,138||$||0||$||2,384,639||$||3,343,250|
|Change in Control||$||14,058,637||$||2,877,138||$||0||$||4,952,703||$||6,228,796|
|Kim M. Rivera||Voluntary/For Cause||$||0||$||0||$||0||$||0||$||0|
|Not for Cause||$||8,796,164||$||2,674,819||$||0||$||3,798,614||$||2,322,731|
|Change in Control||$||12,524,087||$||2,674,819||$||0||$||5,562,535||$||4,286,733|
|Tracy S. Keogh||Voluntary/For Cause||$||0||$||0||$||0||$||0||$||0|
|Not for Cause||$||9,590,349||$||2,534,483||$||1,209,116||$||3,465,817||$||2,380,933|
|Change in Control||$||13,428,093||$||2,534,483||$||1,209,116||$||5,313,319||$||4,371,175|
- Total does not include amounts earned or benefits accumulated due to continued service by the NEO through October 31, 2018, including vested stock options, PCSOs, RSUs, PARSUs, accrued retirement benefits, and vested balances in the EDCP, as those amounts are detailed in the preceding tables. Total also does not include amounts the NEO was eligible to receive under the annual PfR incentive with respect to fiscal 2018 performance.
- The amounts reported are the cash benefits payable in the event of a qualifying termination under the SPEO: for CEO, 2x multiple of base pay plus the average of the actual annual incentives paid for the preceding three years; for other NEOs, 1.5x multiple of base pay plus the average of the actual annual incentives paid for the preceding three years, and includes 18 months’ COBRA premiums for continued group medical coverage for the NEOs and their eligible dependents.
- Upon an involuntary termination not for cause, covered executives receive pro-rata vesting on unvested equity awards as discussed under “Executive Compensation—Compensation Discussion and Analysis—Severance and Long-term Incentive Change in Control Plan for Executive Officers.” Full vesting of PARSUs based on performance at target levels (to the extent that the actual performance period has not been completed) applies in the event of a termination due to death or disability for all grant recipients. Pro-rata vesting of PARSUs based on actual performance applies in the event of a termination due to retirement for all grant recipients. To calculate the value of unvested PARSUs for purposes of this table, target performance is used unless the performance period has been completed and the results have been certified. Full vesting of unvested PCSOs applies in the event of a termination due to death or disability for all grant recipients. PCSOs vest pro-rata in the event of a termination due to retirement, with the exception of launch grant PCSOs, which are forfeited; all outstanding launch grant PCSOs vested on November 2, 2018. With respect to the treatment of equity in the event of a change in control of HP, the information reported reflects the SPEO approved change in control terms.
- As of the end of fiscal 2018, Ms. Lesjak is retirement eligible (a minimum age of 55 plus years of service equal to or greater than 70 points). In the event that Ms. Lesjak retires, she would receive retirement equity treatment in regards to the long-term incentive programs. Values in the “Voluntary” section for Ms. Lesjak reflect the retirement equity treatment in a voluntary termination.
- Amounts reflected for Mr. Flaxman represent the transfer of equity to his estate on March 29, 2018 after his death, valued at $21.92, the closing stock price on that day. For stock options, this represents the potential value based upon the March 29, 2018 stock price and the option strike price at the time the options were transferred to Mr. Flaxman’s beneficiaries.
HP Severance Plan for Executive Officers
An executive will be deemed to have incurred a qualifying termination for purposes of the SPEO if he or she is involuntarily terminated without cause and executes a full release of claims in a form satisfactory to HP promptly following termination. For purposes of the SPEO, “cause” means an executive’s material neglect (other than as a result of illness or disability) of his or her duties or responsibilities to HP or conduct (including action or failure to act) that is not in the best interest of, or is injurious to, HP. The material terms of the SPEO are described under “Executive Compensation—Compensation Discussion and Analysis—Severance and Long-term Incentive Change in Control Plan for Executive Officers.”
Narrative to the Potential Payments Upon Termination or Change in Control Table
Voluntary or “For Cause” Termination
In general, an NEO who remained employed through October 31, 2018 (the last day of the fiscal year) but voluntarily terminated employment immediately thereafter, or was terminated immediately thereafter in a “for cause” termination, would be eligible (1) to receive his or her annual incentive amount earned for fiscal 2018 under the annual PfR incentive (subject to any discretionary downward adjustment or elimination by the HRC Committee prior to actual payment, and to any applicable clawback policy), (2) to exercise his or her vested stock options up to three months following a voluntary termination, and up to the date of termination in the case of termination “for cause,” (3) to receive a distribution of vested amounts deferred or credited under the EDCP, and (4) to receive a distribution of his or her vested benefits, if any, under the HP 401(k) and pension plans. An NEO who terminated employment before October 31, 2018, either voluntarily or in a “for cause” termination, would generally not have been eligible to receive any amount under the annual PfR incentive with respect to the fiscal year in which the termination occurred, except that the HRC Committee has the discretion to make payment of prorated bonus amounts to individuals on leave of absence or in non-pay status, as well as in connection with certain voluntary severance incentives, workforce reductions, and similar programs.
“Not for Cause” Termination
A “not for cause” termination of an NEO who remained employed through October 31, 2018 and was terminated immediately thereafter would qualify the NEO for the amounts described above under a “voluntary” termination in addition to benefits under the SPEO if the NEO signs the required release of claims in favor of HP.
In addition to the cash severance benefits and pro-rata equity awards payable under the SPEO, the NEO would be eligible to exercise vested stock options up to one year after termination and receive distributions of vested, accrued benefits from HP deferred compensation and pension plans.
Termination Following a Change in Control
In the event of a change in control of HP, RSUs, stock options, and PCSOs will vest 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. Outstanding PARSUs will vest in full upon a termination in connection with or following a change in control, assuming target performance level. Upon failure of the successor to assume outstanding PARSUs in connection with a change in control, the PARSUs will vest in full based on the better of (i) pro-rata vesting at target, and (ii) 100% of units vesting based on actual performance as determined by the Committee within 30 days of change in control.
Death or Disability Terminations
An NEO who continued in employment through October 31, 2018 whose employment is terminated immediately thereafter due to death or disability would be eligible (1) to receive his or her full annual incentive amount earned for fiscal 2018 under the annual PfR incentive determined by HP in its sole discretion, (2) to receive a distribution of vested amounts deferred or credited under the EDCP, and (3) to receive a distribution of his or her vested benefits under the HP 401(k) and pension plans.
Upon termination due to death or disability, equity awards held by the NEO may vest in full. If termination is due to disability, RSUs, stock options, and PCSOs will vest in full, subject to satisfaction of applicable performance conditions, and must be exercised within three years of termination or by the original expiration date, if earlier; all unvested portions of the PARSUs, including any amounts for dividend equivalent payments, shall vest based on performance at target levels. If termination is due to the NEO’s death, RSUs, stock options, and PCSOs will vest in full and must be exercised within one year of termination or by the original expiration date, if earlier; all unvested portions of the PARSUs, including any amounts for dividend equivalent payments, shall vest based on performance at target levels.
HP Severance Policy for Senior Executives
Under the HP Severance Policy for Senior Executives adopted by the Board in July 2003 (the “HP Severance Policy”), HP will seek stockholder approval for future severance agreements, if any, with certain senior executives that provide specified benefits in an amount exceeding 2.99 times the sum of the executive’s current annual base salary plus annual target cash bonus, in each case as in effect immediately prior to the time of such executive’s termination. Individuals subject to this policy consist of the Section 16 officers designated by the Board. In implementing this policy, the Board may elect to seek stockholder approval after the material terms of the relevant severance agreement are agreed upon.
For purposes of determining the amounts subject to the HP Severance Policy, benefits subject to the limit generally include cash separation payments that directly relate to extraordinary benefits that are not available to groups of employees other than the Section 16 officers upon termination of employment. Benefits that have been earned or accrued, as well as prorated bonuses, accelerated stock or option vesting, and other benefits that are consistent with our practices applicable to employees other than the Section 16 officers, are not counted against the limit. Specifically, benefits subject to the HP Severance Policy include: (a) separation payments based on a multiplier of salary plus target bonus, or cash amounts payable for the uncompleted portion of employment agreements; (b) the value of any service period credited to a Section 16 officer in excess of the period of service actually provided by such Section 16 officer for purposes of any employee benefit plan; (c) the value of benefits and perquisites that are inconsistent with our practices applicable to one or more groups of employees in addition to, or other than, the Section 16 officers (“Company Practices”); and (d) the value of any accelerated vesting of any stock options, stock appreciation rights, restricted stock, RSUs, or long-term cash incentives that is inconsistent with Company Practices. The following benefits are not subject to the HP Severance Policy, either because they have been previously earned or accrued by the employee or because they are consistent with Company Practices: (i) compensation and benefits earned, accrued, deferred or otherwise provided for employment services rendered on or prior to the date of termination of employment pursuant to bonus, retirement, deferred compensation, or other benefit plans (e.g., 401(k) Plan distributions, payments pursuant to retirement plans, distributions under deferred compensation plans or payments for accrued benefits such as unused vacation days), and any amounts earned with respect to such compensation and benefits in accordance with the terms of the applicable plan; (ii) payments of prorated portions of bonuses or prorated long-term incentive payments that are consistent with Company Practices; (iii) acceleration of the vesting of stock options, stock appreciation rights, restricted stock, RSUs or long-term cash incentives that is consistent with Company Practices; (iv) payments or benefits required to be provided by law; and (v) benefits and perquisites provided in accordance with the terms of any benefit plan, program, or arrangement sponsored by HP or its affiliates that are consistent with Company Practices.
For purposes of the HP Severance Policy, future severance agreements include any severance agreements or employment agreements containing severance provisions that we may enter into after the adoption of the HP Severance Policy by the Board, as well as agreements renewing, modifying, or extending such agreements. Future severance agreements do not include retirement plans, deferred compensation plans, early retirement plans, workforce restructuring plans, retention plans in connection with extraordinary transactions, or similar plans or agreements entered into in connection with any of the foregoing, provided that such plans or agreements are applicable to one or more groups of employees in addition to the Section 16 officers.
HP Retirement Arrangements
Upon retirement immediately after October 31, 2018 with a minimum age of 55 and years of combined age and service equal to or greater than 70, HP employees in the United States receive full vesting of time-based options granted under our stock plans with a post-termination exercise period of up to three years or the original expiration date, whichever comes first, as well as full vesting of RSUs. PCSOs will receive prorated vesting if the stock price appreciation conditions are met and may vest on a prorated basis post-termination to the end of the performance period, subject to stock price appreciation conditions and certain post-employment restrictions. Any unvested Launch Grants (RSUs or PCSOs) will be forfeited upon voluntary retirement. Awards under the PARSU program, if any, are paid on a prorated basis to participants at the end of the performance period based on actual results, and bonuses, if any, under the annual PfR incentive plan may be paid in prorated amounts at the discretion of management based on actual results. In accordance with Section 409A of the Code, certain amounts payable upon retirement (or other termination) of the NEOs and other key employees will not be paid out for at least six months following termination of employment.
We sponsor two retiree medical programs in the United States, one of which provides subsidized coverage for eligible participants based on years of service. Eligibility for this program requires that participants have been continuously employed by HP since January 1, 2003 and have met other age and service requirements. None of the NEOs are eligible for this program.
The other U.S. retiree medical program we sponsor provides eligible retirees with access to coverage at group rates only, with no direct subsidy provided by HP. As of the end of fiscal 2018, Ms. Lesjak is eligible to retire under this program. All the other NEOs could be eligible for this program if they retire from HP on or after age 55 with at least ten years of qualifying service or if they retire at any age with combined age plus service equal to 80 or more years. In addition, beginning at age 45, eligible U.S. employees may participate in the HP Retirement Medical Savings Account Plan (the “RMSA”), under which certain participants are eligible to receive HP matching credits of up to $1,200 per year, up to a lifetime maximum of $12,000, which can be used to cover the cost of such retiree medical coverage (or other qualifying medical expenses) if the employee meets the eligibility requirements for HP retiree medical benefits. Ms. Lesjak is the only NEO eligible for the HP matching credits under the RMSA.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of October 31, 2018.
|Plan Category||Common shares
to be issued
available for future
issuance under equity
reflected in column (a))
|Equity compensation plans approved by HP stockholders||37,309,092||(3)||$13.7919||305,766,637||(4)(5)|
|Equity compensation plans not approved by HP stockholders||—||—||—|
- This column does not reflect awards of options and RSUs assumed in acquisitions where the plans governing the awards were not available for future awards as of October 31, 2018. As of October 31, 2018, there were no individual awards of options and RSUs outstanding pursuant to awards assumed in connection with acquisitions and granted under such plans.
- This column does not reflect the exercise price of shares underlying the assumed options referred to in footnote (1) to this table or the purchase price of shares to be purchased pursuant to the ESPP or the legacy HP Employee Stock Purchase Plan (the “Legacy ESPP”). In addition, the weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding awards of RSUs and PARSUs, which have no exercise price.
- Includes awards of options and RSUs outstanding under the ESPP, the 2004 Plan and the HP 2000 Stock Plan. Also includes awards of PARSUs representing 3,911,062 shares that may be issued under the 2004 Plan. Each PARSU award reflects a target number of shares that may be issued to the award recipient. HP determines the actual number of shares the recipient receives at the end of a three-year performance period based on results achieved compared with Company performance goals and stockholder return relative to the market. The actual number of shares that a grant recipient receives at the end of the period may range from 0% to 200% of the target number of shares.
- Includes (i)223,582,280 shares available for future issuance under the 2004 Plan; (ii) 78,092,366 shares available for future issuance under the ESPP; (iii) 2,725,611 shares available for future issuances under the Legacy ESPP, a plan under which employee stock purchases are no longer made; and (iv) 1,366,380 shares are reserved for issuance under our Service Anniversary Stock Plan, a plan under which awards are no longer granted. Taking into account these adjustments, 305,766,637 shares were available for future grants as of October 31, 2018.
- In January 2018, the Board approved an amendment and restatement of HP’s 2004 Stock Incentive Plan, which included a retirement of 80 million shares from the plan’s share reserves.