Executive Compensation

Executive Compensation Tables

Fiscal 2021 Summary Compensation Table

The following table sets forth information concerning the compensation of our NEOs for fiscal years 2021, 2020, and 2019, as applicable. Per SEC reporting guidelines, our NEOs for fiscal 2021 include our CEO (Mr. Lores), our CFO (Ms. Myers), and the next three most highly compensated individuals serving as executive officers at year end (Mr. Schell, Mr. Cho, and Mr. Tran) as of the last day of the fiscal year (October 31, 2021).

Name and Principal
Position
Year Salary(3)
($)
Bonus(4)
($)
Stock
Awards(5)
($)
Option
Awards(6)
($)
Non-Equity
Incentive Plan
Compensation(7)
($)
Change in Pension
Value and Nonqualified
Deferred Compensation
Earnings(8)
($)
All Other
Compensation(9)
($)
Total
($)
Enrique J. Lores
President and CEO
2021 1,200,000 10,558,022 4,107,368 4,440,000 428,416 20,733,806
2020 1,100,000 7,976,875   3,261,085 219,555 12,557,515
2019 750,000 5,527,211   873,522 48,155 7,198,888
Marie Myers(1)
Chief Financial Officer
2021 664,445 250,000 3,185,034 1,216,998 1,794,000 111,091 7,221,568
2020 329,313 1,749,997   605,084 4,302 2,688,696
Christoph Schell(2)
Former Chief Commercial Officer
2021 760,000 5,427,349 1,977,620 2,052,000 41,000 10,257,969
2020 722,000 4,462,000   1,290,846 40,600 6,515,446
Alex Cho
President, Personal Systems
2021 740,000 4,552,967 1,673,373 1,998,002 15 43,426 9,007,783
2020 703,000 3,571,232   1,328,883 49,881 23,563 5,676,559
2019 675,000 3,427,818   1,271,882 67,760 16,795 5,459,255
Tuan Tran
President, Print
2021 715,000 4,066,688 1,673,373 1,785,712 5,418 78,876 8,325,067
(1)

Ms. Myers was appointed to the role of Acting Chief Financial Officer effective October 1, 2020, while continuing to lead our Transformation and IT organization. On February 17, 2021, Ms. Myers was appointed as Chief Financial Officer of the Company.

(2)

Mr. Schell stepped down as Chief Commercial Officer, effective February 18, 2022. Since stepping down from such position, Mr. Schell has continued to be employed by the Company in a non-executive officer role.

(3)

Amounts shown represent base salary earned or paid during the fiscal year, as described under the heading “Compensation Discussion and Analysis—Determination of Fiscal 2021 Executive Compensation—2021 Base Salary.”

(4)

Ms. Myers received a one-time lump sum cash payment of $250,000 in connection with her appointment as Acting Chief Financial Officer, while continuing to lead our Transformation and IT organization.

(5)

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 2021, they include both internal (EPS) and market-related (TSR) performance goals as described under the “Compensation Discussion and Analysis—Determination of Fiscal 2021 Executive Compensation—Long-Term Incentive Compensation—Awards from Fiscal 2021”. Amounts shown reflect the grant date fair value of the first tranche of the 2021 PARSUs for which the EPS goal has been established (i.e., for fiscal 2021) based on the probable outcome of performance conditions related to these PARSUs at the grant date. Consistent with the applicable accounting standards, the grant date fair value of the market related TSR modifier 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 2021. This value also reflects grant date fair value of the 2020 PARSU award for Year 2 (fiscal 2021 EPS) and the EPS portion of the 2019 PARSU award for Year 3 (fiscal 2021 EPS), for which goals were approved in January 2021. The table below sets forth the grant date fair value for the fiscal 2021 EPS of the 2021 PARSUs granted on December 7, 2020, the fiscal 2021 EPS of the 2020 PARSUs granted on December 6, 2019, and the fiscal 2021 EPS portion of the 2019 PARSUs granted on December 7, 2018:

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
($)**
Enrique J. Lores 12/7/2020 1,241,374 3,724,122 733,049
  12/6/2019 2,596,726 5,193,452  
  12/7/2018 586,862 1,173,724  
Marie Myers 12/7/2020 367,818 1,103,454 217,199
Christoph Schell 12/7/2020 597,692 1,793,076 352,951
  12/6/2019 1,357,373 2,714,746  
  12/7/2018 519,340 1,038,680  
Alex Cho 12/7/2020 505,737 1,517,211 298,651
  12/6/2019 1,133,122 2,266,244  
  12/7/2018 415,467 830,934  
Tuan Tran 12/7/2020 505,737 1,517,211 298,651
  12/6/2019 1,062,310 2,124,620  
*

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 2021. The grant date fair value of the 2021 PARSUs Year 1 EPS units awarded on December 7, 2020, 2020 PARSUs Year 2 EPS units awarded on December 6, 2019 and 2019 PARSUs Year 3 EPS units awarded on December 7, 2018 was $25.91 per unit, which was the closing share price of our common stock on January 12, 2021 when the EPS goal was approved. The values of 2021 PARSUs Year 2 and Year 3 EPS units will not be available until January 2022 and January 2023, respectively, and therefore are not included for fiscal 2021, 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 modifier 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 modifier of the PARSUs granted December 7, 2020 was $5.10 per unit, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 41.0%, a risk-free interest rate of 0.2%, 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, 2021, as filed with the SEC on December 9, 2021.

(6)

The grant date fair value of PCSO awards is calculated using a combination of a Monte Carlo simulation model and a lattice model, as these awards contain market conditions. For information on the assumptions used to calculate the fair value of the awards, refer to Note 5 of our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021, as filed with the SEC on December 9, 2021.

(7)

Amounts shown represent payouts under the annual incentive (amounts earned during the applicable fiscal year but paid after the end of that fiscal year).

(8)

Amounts shown represent the increase in the actuarial present value of NEO pension benefits during the applicable fiscal year. As described in more detail under the heading “Narrative to the Fiscal 2021 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, Deferred Profit-Sharing Plan returns, and changes in other actuarial assumptions. The assumptions used in calculating the changes in pension benefits are described in footnote (2) to the “Fiscal 2021 Pension Benefits Table” below. No HP plan provides for above-market earnings on deferred compensation amounts, so the amounts reported in this column do not reflect any such earnings.

(9)

The amounts shown are detailed in the “Fiscal 2021 All Other Compensation Table” below. The security amount previously disclosed under “All Other Compensation” in our Summary Compensation Table for the year 2020 inadvertently excluded certain costs associated with security services provided to Mr. Lores. This amount has been revised from previous disclosure to reflect an increased amount of $77,700 for Mr. Lores, for a total security amount of $114,835.

Fiscal 2021 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
($)
Enrique J. Lores 11,600 11,400 7,816 238,136 139,506 19,958 428,416
Marie Myers 11,600 5,639 93,852 111,091
Christoph Schell 11,600 11,400 18,000 41,000
Alex Cho 11,600 11,400 20,426 43,426
Tuan Tran 11,600 11,400 15,395 22,026 18,455 78,876
(1)

Represents matching contributions made under the HP 401(k) Plan that were earned for 2021.

(2)

Represents matching contributions credited during fiscal 2021 under the HP Executive Deferred Compensation Plan with respect to the 2020 calendar year of that plan.

(3)

For Mr. Lores and Mr. Tuan, 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 incremental cost associated with these services is reported here as a perquisite. For the CEO and CFO, we provided a home security evaluation and residential security systems. At times, we may provide security for the CEO and CFO, which included personal security services provided during business-related travel and at business facilities, as needed to address security concerns arising out of our business. We consider personal security measures to be appropriate expenses that arise out of the executive’s employment responsibilities and that are necessary to his/her job performance and to ensure the safety of the covered executive and his/her family. We believe that all Company-incurred security costs are reasonable and necessary and for the Company’s benefit. The Board and the HR & Compensation Committee periodically review and approve the amount and nature of executive officers’ security expenses.

(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 income tax and U.S. social taxes under HP’s Tax Assistance Program for Korea business travel.

(7)

Includes other amounts paid either directly to the executives or on their behalf, including financial counseling, tax preparation and estate planning services, as discussed further in “Compensation Discussion and Analysis”. For Mr. Lores, the amount includes $1,958.35 personal ground transportation expenses incurred while on business trips. For Mr. Cho, the amount includes $19,676.37 for financial counseling services that was incurred in fiscal 2019 and fiscal 2020 but not billed until fiscal 2021. For Mr. Tran it also includes $455 wellness incentive. All U.S. employees are also eligible to receive this incentive.

Grants of Plan-Based Awards in Fiscal 2021

The following table provides information on annual incentive awards for fiscal 2021 and awards of RSUs, PCSOs and PARSUs granted during fiscal 2021 as a part of our long-term incentive program:

 


Name

 

Grant Date
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)
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/Sh)
Grant-
Date Fair
Value of
Stock
and Option
Awards(2)
($)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Enrique J. Lores                      
Annual Incentive   24,000 2,400,000 4,800,000              
RSU 12/7/2020             228,041     5,400,011
PCSO 12/7/2020               637,460 23.68 4,107,368
PARSU 12/7/2020       23,956 47,911 143,733       1,974,423
PARSU 12/6/2019       50,111 100,221 200,442       2,596,726
PARSU 12/7/2018       11,325 22,650 45,300       586,862
Marie Myers                      
Annual Incentive   8,970 897,001 1,794,002              
RSU 2/17/2021             38,052     1,000,007
  12/7/2020             67,568     1,600,010
PCSO 12/7/2020               188,877 23.68 1,216,998
PARSU 12/7/2020       7,098 14,196 42,588       585,017
Christoph Schell                      
Annual Incentive   10,260 1,026,000 2,052,000              
RSU 12/7/2020             109,797     2,599,993
PCSO 12/7/2020               306,925 23.68 1,977,620
PARSU 12/7/2020       11,534 23,068 69,204       950,643
PARSU 12/6/2019       26,194 52,388 104,776       1,357,373
PARSU 12/7/2018       10,022 20,044 40,088       519,340
Alex Cho                      
Annual Incentive   9,990 999,000 1,998,000              
RSU 12/7/2020             92,905     2,199,990
PCSO 12/7/2020               259,706 23.68 1,673,373
PARSU 12/7/2020       9,760 19,519 58,557       804,388
PARSU 12/6/2019       21,867 43,733 87,466       1,133,122
PARSU 12/7/2018       8,018 16,035 32,070       415,467
Tuan Tran                      
Annual Incentive   9,653 965,250 1,930,500              
RSU 12/7/2020             92,905     2,199,990
PCSO 12/7/2020               259,706 23.68 1,673,373
PARSU 12/7/2020       9,760 19,519 58,557       804,388
PARSU 12/6/2019       20,500 41,000 82,000       1,062,310
(1)

Amounts represent the range of possible cash payouts for fiscal 2021 annual incentive awards under the Stock Incentive Plan based upon annual salary.

(2)

For the 2019 PARSUs, amounts represent the range of shares that may be released at the end of the three-year vesting period (the two-year segment vested in November 2020) 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 relative 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. For the 2020 and 2021 PARSUs, amounts represent the range of shares that may be released at the end of the three-year vesting period applicable to the PARSUs assuming achievement of threshold, target, or maximum performance. For the 2021 PARSUs year 1 and 2020 PARSUs year 2, fiscal 2021 EPS units are reflected in this table, including the grant date fair value of the market related TSR goal modifier of the 2021 PARSUs, for which expense recognition is not subject to probable or maximum outcome assumptions. Further, the 2019 PARSUs fiscal 2021 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 based on program description. For additional details, see the discussion of PARSUs under the heading “Compensation Discussion and Analysis—Determination of Fiscal 2021 Executive Compensation—Long-Term Incentive Compensation—Awards from Fiscal 2021—2021 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 2021 Fiscal Year-End

The following table provides information on stock and option awards held by the NEOs as of October 31, 2021:

Name Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price(3)
($)
Option
Expiration
Date(4)
Number of
Shares or
Units of Stock
That Have Not
Vested(5)
(#)
Market Value
of Shares or
Units of Stock
That Have
Not Vested(6)
($)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested(7)
(#)
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested(6)
($)
Enrique J. Lores 156,976 12.47 10/29/2023 423,021 12,830,231 544,617 16,518,234
    637,460(1) 23.68 12/6/2030        
Marie Myers 188,877(2) 23.68 12/6/2030 176,640 5,357,499 42,588 1,291,694
Christoph Schell 306,925(2) 23.68 12/6/2030 728,830 22,105,414 278,756 8,454,669
Alex Cho 259,706(2) 23.68 12/6/2030 187,616 5,690,379 233,489 7,081,721
Tuan Tran 259,706(2) 23.68 12/6/2030 172,267 5,224,866 222,555 6,750,093

 

(1)

The option award held by Mr. Lores fully vests as to one-third of the options on the first, second and third anniversary of December 7, 2020, the date of grant. The option award would continue to vest in accordance with this schedule in the event Mr. Lores retires from HP. Mr. Lores is retirement-eligible.

(2)

The performance hurdles applicable to these option awards have been achieved by the end of fiscal 2021. Such option awards vest as to one-third of the shares on the first, second and third anniversary of December 7, 2020, the date of grant.

(3)

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.

(4)

All options have a ten-year term, except for the 156,976 stock options granted to Mr. Lores, which have an eight-year term.

(5)

The amounts in this column include shares underlying dividend equivalent units credited with respect to outstanding stock awards through October 31, 2021. 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. Lores: December 7, 2021 (180,412 shares plus accrued dividend equivalent shares); December 7, 2022 (147,559 shares plus accrued dividend equivalent shares); December 7, 2023 (76,014 shares plus accrued dividend equivalent shares).
  • Ms. Myers: December 7, 2021 (22,522 shares plus accrued dividend equivalent shares); February 17, 2022 (12,684 shares plus accrued dividend equivalent shares); March 30, 2022 (32,698 shares plus accrued dividend equivalent shares); December 7, 2022 (22,523 shares plus accrued dividend equivalent shares); February 17, 2023 (12,684 shares plus accrued dividend equivalent shares); March 30, 2023 (32,698 shares plus accrued dividend equivalent shares); December 7, 2023 (22,523 shares plus accrued dividend equivalent shares); February 17, 2024 (12,684 shares plus accrued dividend equivalent shares).
  • Mr. Schell: December 7, 2021 (103,071 shares plus accrued dividend equivalent shares); July 25, 2022 (468,823 shares plus accrued dividend equivalent shares); December 7, 2022 (73,998 shares plus accrued dividend equivalent shares); December 7, 2023 (36,599 shares plus accrued dividend equivalent shares).
  • Mr. Cho: December 7, 2021 (85,448 shares plus accrued dividend equivalent shares); December 7, 2022 (62,188 shares plus accrued dividend equivalent shares); December 7, 2023 (30,969 shares plus accrued dividend equivalent shares).
  • Mr. Tuan: December 7, 2021 (73,320 shares plus accrued dividend equivalent shares); December 7, 2022 (60,237 shares plus accrued dividend equivalent shares); December 7, 2023 (30,969 shares plus accrued dividend equivalent shares).
(6)

Value calculated based on the $30.33 closing price of our stock on October 29, 2021.

(7)

The amounts in this column include the amounts of PARSUs granted in fiscal 2020 (Year 1 and Year 2 EPS units) and fiscal 2021 (Year 1 EPS units). The EPS units for PARSUs granted in fiscal 2020 and 2021 are reported based on maximum (200% and 300%, respectively) performance. Actual payout will be based on achievement of performance goals at the end of the three-year vesting period.

Option Exercises and Stock Vested in Fiscal 2021

The following table provides information about options exercised and stock awards vested for the NEOs during the fiscal year ended October 31, 2021:

Name Option Awards Stock Awards(1)
Number of
Shares Acquired
on Exercise
(#)
Value
Realized on
Exercise(2)
($)
Number of
Shares Acquired
on Vesting
(#)
Value
Realized on
Vesting(3)
($)
Enrique J. Lores 244,099 6,442,778
Marie Myers 33,592 1,060,164
Christoph Schell 269,269 7,829,677
Alex Cho 42,378 320,870 157,311 4,279,698
Tuan Tran 55,660 750,458 61,889 1,465,532
(1)

Includes PARSUs, RSUs, and accrued dividend equivalent shares.

(2)

Represents the amounts realized based on the difference between the market price of HP stock on the date of grant and the exercise price.

(3)

Represents the amounts realized based on the fair market value of our stock on the performance period end date for PARSUs (October 31, 2021) 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 2021 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)
($)
Payments
During Last
Fiscal Year
($)
Enrique J. Lores(3)
Marie Myers(4)
Christoph Schell(3)
Alex Cho RP 7.6 108,005
EBP 7.6 15
IRG 26.3 171,426
Tuan Tran RP 14.6 384,996
  EBP 14.6 254,989
(1)

The “RP” and the “EBP” are the qualified HP Retirement Plan and the non-qualified HP Excess Benefit Plan, respectively. All benefits are frozen under these plans. The RP has 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 using the assumptions under Accounting Standards Codification (ASC) Topic 715-30 Defined Benefit Plans—Pension for the 2021 fiscal year-end measurement (as of October 31, 2021). The present value is based on a discount rate of 2.91% for the RP, 1.64% for the EBP and 1.57% for the IRG, lump sum interest rates of 0.70% for the first five years, 2.55% for the next 15 years and 3.06% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years. As of October 31, 2020 (the prior measurement date), the ASC Topic 715-30 assumptions included a discount rate of 2.77% for the RP, 1.44% for the EBP, and 1.34% for the IRG, lump sum interest rates of 0.51% for the first five years, 2.31% for the next 15 years and 3.15% thereafter, and applicable mortality for lump sums with the respective mortality improvement scale applied for future years.

(3)

Mr. Lores and Mr. Schell 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.

(4)

Ms. Myers was a participant in the RP and EBP, but when she previously left the Company, she was paid her RP and EBP benefits (in the 2019 fiscal year).

Narrative to the Fiscal 2021 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. Cho under the RP, EBP and IRG and by Mr. Tran under the RP and EBP are payable to them following termination of employment, subject to the terms of the applicable plans.

Terms of the HP Retirement Plan (RP)

Mr. Cho and Mr. Tran 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. Mr. Tran was a participant in the RP before November 1, 1993 so he has a DPSP balance which is integrated with the RP. 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.

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.

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 2021 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)
($)
Enrique J. Lores 1,226,326 11,400 780,317 4,867,348
Marie Myers 70,836 5,639 61,793 352,678
Christoph Schell 11,400 11,400 20,759 102,290
Alex Cho 11,900 11,400 742 86,248
Tuan Tran 907,002 11,400 519,176 2,411,199
(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 2021 with respect to calendar year 2020 participant base pay deferrals. During fiscal 2021, 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. Lores $1,812,934, Ms. Myers $212,926, Mr. Schell $22,568, Mr. Cho $37,840, and Mr. Tran $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.

Narrative to the Fiscal 2021 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 incentive bonus payable under the annual 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 2021 pertained to base pay from $280,000 to $560,000 during calendar year 2020). During fiscal 2021, 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. As of the end of fiscal 2021, Mr. Lores was the only NEO who was retirement eligible. 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.

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, 2021 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.

 
Name
Termination Scenario Total(1) Severance(2) Long Term Incentive Programs(3)
Stock
Options
Restricted
Stock
PARSU
Enrique J. Lores(4) Voluntary $ 24,687,053 $ 0 $ 4,239,109 $ 12,830,231 $ 7,617,713
  Disability $ 30,675,630 $ 0 $ 4,239,109 $ 12,830,231 $ 13,606,290
  Retirement $ 24,687,053 $ 0 $ 4,239,109 $ 12,830,231 $ 7,617,713
  Death $ 30,675,630 $ 0 $ 4,239,109 $ 12,830,231 $ 13,606,290
  Not for Cause $ 31,919,588 $ 7,232,535 $ 4,239,109 $ 12,830,231 $ 7,617,713
  Change in Control $ 37,908,165 $ 7,232,535 $ 4,239,109 $ 12,830,231 $ 13,606,290
Marie Myers Voluntary/For Cause $ 0 $ 0 $ 0 $ 0 $ 0
  Disability $ 7,905,225 $ 0 $ 1,256,032 $ 5,357,499 $ 1,291,694
  Retirement $ 0 $ 0 $ 0 $ 0 $ 0
  Death $ 7,905,225 $ 0 $ 1,256,032 $ 5,357,499 $ 1,291,694
  Not for Cause $ 4,949,452 $ 2,497,185 $ 383,791 $ 1,637,911 $ 430,565
  Change in Control $ 10,402,410 $ 2,497,185 $ 1,256,032 $ 5,357,499 $ 1,291,694
Christoph Schell Voluntary/For Cause $ 0 $ 0 $ 0 $ 0 $ 0
  Disability $ 31,079,033 $ 0 $ 2,041,051 $ 22,105,414 $ 6,932,568
  Retirement $ 0 $ 0 $ 0 $ 0 $ 0
  Death $ 31,079,033 $ 0 $ 2,041,051 $ 22,105,414 $ 6,932,568
  Not for Cause $ 22,939,061 $ 3,440,588 $ 623,657 $ 14,952,752 $ 3,922,064
  Change in Control $ 34,519,621 $ 3,440,588 $ 2,041,051 $ 22,105,414 $ 6,932,568
Alex Cho Voluntary/For Cause $ 0 $ 0 $ 0 $ 0 $ 0
  Disability $ 13,228,494 $ 0 $ 1,727,045 $ 5,690,379 $ 5,811,070
  Retirement $ 0 $ 0 $ 0 $ 0 $ 0
  Death $ 13,228,494 $ 0 $ 1,727,045 $ 5,690,379 $ 5,811,070
  Not for Cause $ 9,783,519 $ 3,441,304 $ 527,711 $ 2,532,464 $ 3,282,040
  Change in Control $ 16,669,798 $ 3,441,304 $ 1,727,045 $ 5,690,379 $ 5,811,070
Tuan Tran Voluntary/For Cause $ 0 $ 0 $ 0 $ 0 $ 0
  Disability $ 12,510,793 $ 0 $ 1,727,045 $ 5,224,866 $ 5,558,882
  Retirement $ 0 $ 0 $ 0 $ 0 $ 0
  Death $ 12,510,793 $ 0 $ 1,727,045 $ 5,224,866 $ 5,558,882
  Not for Cause $ 8,356,169 $ 2,552,310 $ 527,711 $ 2,162,227 $ 3,113,921
  Change in Control $ 15,063,103 $ 2,552,310 $ 1,727,045 $ 5,224,866 $ 5,558,882
(1)

Total does not include amounts earned or benefits accumulated due to continued service by the NEO through October 31, 2021, 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.

(2)

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 either the average of the actual annual incentives paid for the preceding three years, or target bonus if less than three full years at the level by the end of the fiscal year; for other NEOs, 1.5x multiple of base pay plus either the average of the actual annual incentives paid for the preceding three years, or target bonus if less than three full years at the level by the end of the fiscal year; and includes 18 months’ COBRA premiums for continued group medical coverage for the NEOs and their eligible dependents. In addition, each NEO would be eligible to receive a pro-rata cash bonus based on actual performance (in the event of a qualifying termination outside of the context of a change in control) or based on target performance (in the event of a qualifying termination within 24 months of a change in control); such amounts have not been included in this column.

(3)

Upon an involuntary termination not for cause, covered executives receive pro-rata vesting on unvested equity awards as discussed under the heading “Executive Compensation—Compensation Discussion and Analysis—Termination and Change in Control Protections—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 recorded as of October 31, 2021. No TSR modifier was applied to such values. Full vesting of unvested PCSOs applies in the event of a termination due to death or disability for all grant recipients. 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 the fiscal 2021, only Mr. Lores is retirement eligible.

(4)

As of the end of fiscal 2021, Mr. Lores is retirement eligible (a minimum age of 55 plus years of service equal to or greater than 70 points).

Narrative to the Potential Payments Upon Termination or Change in Control Table

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 conviction of, or plea of guilty or nolo contendere to, a felony under federal law or the law of the state in which such action occurred; executive’s willful and deliberate failure in the performance of the executive’s duties in any material respect; executive’s willful misconduct that results in material harm to HP; or a material violation of HP’s ethics and compliance program, code of conduct or other material policy of HP. The material terms of the SPEO are described under the heading “Executive Compensation—Compensation Discussion and Analysis—Termination and Change in Control Protections—Severance and Long-term Incentive Change in Control Plan for Executive Officers.”

We have not entered into individual fixed-term employment agreements or any severance or change in control agreements with our current NEOs.

Voluntary or “For Cause” Termination

In general, an NEO who remained employed through October 31, 2021 (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 2021 under the annual 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, 2021, either voluntarily or in a “for cause” termination, would generally not have been eligible to receive any amount under the annual 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, 2021 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 vesting 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. Under each scenario, outstanding PARSUs will vest in full with vesting based on actual performance with respect to awards for which the performance period has ended and target performance level with respect to awards for which the performance period has not ended, as determined by the HRC Committee within 30 days of change in control.

Death or Disability Terminations

An NEO who continued in employment through October 31, 2021 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 2021 under the annual 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, in the case of stock options and PCSOs, 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, in the case of stock options and PCSOs, 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, 2021 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 (other than options granted under a retention agreement on or after June 25, 2019) 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 (other than RSUs granted under a retention agreement on or after June 25, 2019). Awards under the PCSO program, if any, will continue to vest and become exercisable once the share price and time component have been satisfied. Such an individual will vest at the same time as other participants with a post-termination exercise period of up to five years or the original expiration date, whichever comes first. 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 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. As of the end of fiscal 2021, Mr. Lores was the only NEO who was retirement eligible.

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. All the 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. None of the NEOs are currently receiving the HP matching credits under the RMSA.