Stockholder Proposals, Director Nominations and Related Bylaw Provisions
27. What is the deadline to propose actions for consideration at next year's
annual meeting of stockholders?
You may submit proposals for consideration at future stockholder meetings. For a
stockholder proposal to be considered for inclusion in HP's proxy statement for
the annual meeting next year, the Corporate Secretary must receive the written
proposal at our principal executive offices no later than September 26, 2006.
Such proposals also must comply with Securities and Exchange Commission ("SEC")
regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in
company-sponsored proxy materials. Proposals should be addressed to:
Corporate Secretary
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Fax: (650) 857-4837
For a stockholder proposal that is not intended to be included in HP's proxy
statement under Rule 14a-8, the stockholder must deliver a proxy statement and
form of proxy to holders of a sufficient number of shares of HP common stock to
approve that proposal, provide the information required by the Bylaws of HP and
give timely notice to the Corporate Secretary in accordance with the Bylaws of
HP, which, in general, require that the notice be received by the Corporate
Secretary:
º •
º Not earlier than the close of business on November 10, 2006, and
º •
º Not later than the close of business on December 11, 2006.
8
If the date of the stockholder meeting is moved more than 30 days before or
60 days after the anniversary of the HP annual meeting for the prior year, then
notice of a stockholder proposal that is not intended to be included in HP's
proxy statement under Rule 14a-8 must be received not earlier than the close of
business 120 days prior to the meeting and not later than the close of business
on the later of the following two dates:
º •
º 90 days prior to the meeting; and
º •
º 10 days after public announcement of the meeting date.
28. How may I recommend or nominate individuals to serve as directors?
You may propose director candidates for consideration by the Board's Nominating
and Governance Committee. Any such recommendations should include the nominee's
name and qualifications for Board membership and should be directed to the
Corporate Secretary at the address of our principal executive offices set forth
above.
In addition, the Bylaws of HP permit stockholders to nominate directors for
election at an annual stockholder meeting. To nominate a director, the
stockholder must deliver a proxy statement and form of proxy to holders of a
sufficient number of shares of HP common stock to elect such nominee and provide
the information required by the Bylaws of HP, as well as a statement by the
nominee acknowledging that he or she will owe a fiduciary obligation to HP and
its stockholders.
29. What is the deadline to propose or nominate individuals to serve as
directors?
A stockholder may send a proposed director candidate's name and information to
the Board at anytime. Generally, such proposed candidates are considered at the
Board meeting prior to the annual meeting.
To nominate an individual for election at an annual stockholder meeting, the
stockholder must give timely notice to the Corporate Secretary in accordance
with the Bylaws of HP, which, in general, require that the notice be received by
the Corporate Secretary between the close of business on November 10, 2006 and
December 11, 2006, unless the annual meeting is moved by more than 30 days
before or 60 days after the anniversary of the prior year's annual meeting, in
which case the deadline will be as described in question 27.
30. How may I obtain a copy of HP's Bylaw provisions regarding stockholder
proposals and director nominations?
You may contact the Corporate Secretary at our principal executive offices for a
copy of the relevant Bylaw provisions regarding the requirements for making
stockholder proposals and nominating director candidates. HP's Bylaws also are
available on HP's website at http://www.hp.com/hpinfo/investor/bylaws.html.
Further Questions
31. Who can help answer my questions?
If you have any questions about the annual meeting or how to vote or revoke your
proxy, you should contact HP's proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders: (877) 750-5838 (U.S. and Canada)
(412) 232-3651 (International)
Banks and brokers (call collect):
(212) 750-5833
If you need additional copies of this proxy statement or voting materials,
please contact Innisfree as described above or send an e-mail to
info@innisfreema.com.
9
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
HP is committed to maintaining the highest standards of business conduct and
corporate governance, which we believe are essential to running our business
efficiently, serving our stockholders well and maintaining HP's integrity in the
marketplace. HP has adopted a code of business conduct and ethics for directors,
officers (including HP's principal executive officer, principal financial
officer and controller) and employees, known as the Standards of Business
Conduct. HP also has adopted Corporate Governance Guidelines, which, in
conjunction with the Certificate of Incorporation, Bylaws and Board committee
charters, form the framework for governance of HP. All of these documents are
available at http://www.hp.com/hpinfo/investor/. HP will post on this web site
any amendments to the Standards of Business Conduct or waivers of the Standards
of Business Conduct for directors and executive officers.
Stockholders may request free printed copies of the Standards of Business
Conduct and the Corporate Governance Guidelines from:
Hewlett-Packard Company
Attention: Investor Relations
3000 Hanover Street
Palo Alto, CA 94304
(866) GET-HPQ1 or (866) 438-4771
http://investor.hp.com/docreq.cfm
Board Policy Regarding Voting for Directors
HP has adopted a policy whereby any nominee for director who receives a
greater number of votes "withheld" from his or her election than votes "for"
such election will tender his or her resignation for consideration by the
Nominating and Governance Committee. The Nominating and Governance Committee
will recommend to the Board the action to be taken with respect to such offer of
resignation.
Board Independence
HP's Corporate Governance Guidelines provide that a substantial majority of
the Board will consist of independent directors. The Board has determined that
each of the non-employee director nominees standing for election, including
Patricia C. Dunn, Lawrence T. Babbio, Jr., Sari M. Baldauf, Richard A. Hackborn,
John H. Hammergren, George A. Keyworth II, Thomas J. Perkins, Robert L. Ryan and
Lucille S. Salhany, and each of the members of each Board committee has no
material relationship with HP (either directly or as a partner, shareholder or
officer of an organization that has a relationship with HP) and is independent
within the meaning of HP's director independence standards. These standards
reflect New York Stock Exchange, Inc. ("NYSE"), NASDAQ Stock Market, Inc.
("NASDAQ") and Pacific Exchange, Inc. corporate governance listing standards
described below. In addition, each member of the Audit Committee meets the
heightened independence standards required for audit committee members under the
applicable listing standards.
HP's Director Independence Standards
In determining independence, the Board reviews whether directors have any
material relationship with HP. The Board considers all relevant facts and
circumstances. In assessing the materiality of a director's relationship to HP,
the Board considers the issues from the director's standpoint and from the
perspective of the persons or organizations with which the director has an
affiliation and is guided by the standards set forth below. The Board reviews
commercial, industrial, banking, consulting, legal, accounting, charitable and
familial relationships. An independent director must not have any material
relationship with HP, either directly or as a partner, shareholder or officer of
an organization that has a relationship with HP, or any relationship that would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
10
A director will not be considered independent in the following
circumstances:
º (1)
º The director is, or has been in the past three years, an employee of
HP, or an immediate family member of the director is, or has been in
the past three years, an executive officer of HP.
º (2)
º The director has received, or has an immediate family member who has
received, direct compensation from HP in excess of $60,000 in any
12 month period in the past three years, other than compensation for
board service, compensation received by the director's immediate
family member for service as a non-executive employee of HP, and
pension or other forms of deferred compensation for prior service with
HP that is not contingent on continued service.
º (3)
º (A) The director or an immediate family member is a current partner of
the firm that is HP's internal or external auditor; (B) the director
is a current employee of such a firm; (C) the director has an
immediate family member who is a current employee of such a firm and
who participates in the firm's audit, assurance or tax compliance (but
not tax planning) practice; or (D) the director or an immediate family
member was within the last three years (but is no longer) a partner or
employee of such a firm and personally worked on HP's audit within
that time.
º (4)
º The director or an immediate family member is, or has been in the past
three years, employed as an executive officer of another company where
any of HP's present executive officers at the same time serves or has
served on that company's compensation committee.
º (5)
º The director is a current employee, or an immediate family member is a
current executive officer, of a company that has made payments to, or
received payments from, HP for property or services in an amount
which, in any of the last three fiscal years, exceeds the greater of
$1 million, or 2% of the recipient's consolidated gross revenues.
º (6)
º The director is, or an immediate family member is, a partner in, or a
controlling shareholder or an executive officer of, any organization
to which HP made, or from which HP received, payments for property or
services in the current or any of the past three fiscal years that
exceed the greater of 5% of the recipient's consolidated gross
revenues for that year, or $200,000.
For these purposes, an "immediate family" member includes a director's
spouse, parents, children, siblings, mother and father-in-law, sons and
daughters-in-law, brothers and sisters-in-law, and anyone who shares the
director's home.
Board Structure and Committee Composition
As of the date of this proxy statement, our Board has ten directors and the
following five committees: (1) Acquisitions, (2) Audit, (3) HR and Compensation,
(4) Nominating and Governance, and (5) Technology. The committee membership and
meetings during the last fiscal year and the function of each of the committees
are described below. Each of the committees operates under a written charter
adopted by the Board. All of the committee charters are available on HP's
website at http:/ /www.hp.com/hpinfo/investor/structure.html. During fiscal
2005, the Board held 16 meetings. Each current director attended at least 75% of
all Board and applicable committee meetings. Directors are encouraged to attend
annual meetings of HP stockholders. All then-current directors attended the last
annual meeting of stockholders.
11
HR and Nominating and
Name of Director Acquisitions Audit Compensation Governance Technology
Non-Employee Directors:
Patricia C. Dunn(1) Member
Lawrence T. Babbio, Jr. Chair Chair Member
Richard A. Hackborn Member
John H. Hammergren(2) Member Member
George A. Keyworth II Member Member Chair
Robert E. Knowling,
Jr.(3) * *
Sanford M. Litvack(4) *
Thomas J. Perkins(5) Chair Member
Robert L. Ryan Member Chair Member
Lucille S. Salhany Member Member
Employee Directors
Mark V. Hurd(6)
Robert P. Wayman(7)
Former Employee
Director
Carleton S. Fiorina(8)
Number of Meetings in
Fiscal 2005 7 15 9 4 6
* = Former Committee Chair or member
º (1)
º The Board elected Ms. Dunn non-executive Chairman of the Board on
February 8, 2005.
º (2)
º Mr. Hammergren was elected to the Board effective November 22, 2005.
Mr. Hammergren joined the HR and Compensation Committee and the Technology
Committee effective January 11, 2006.
º (3)
º Mr. Knowling retired from the Board on September 23, 2005. Prior to his
retirement, he served on the HR and Compensation Committee and as Chair of
the Nominating and Governance Committee.
º (4)
º Mr. Litvack resigned from the Board on February 2, 2005. Mr. Litvack did
not attend 75% of all Board and applicable committee meetings in fiscal
2005.
º (5)
º Mr. Perkins was elected to the Board on February 7, 2005. He became the
Chair of the Nominating and Governance Committee on July 21, 2005.
º (6)
º Mr. Hurd was elected to the Board effective April 1, 2005.
º (7)
º Mr. Wayman was elected to the Board on February 8, 2005.
º (8)
º Ms. Fiorina terminated as Chairman and Chief Executive Officer and resigned
as a director on February 8, 2005.
12
Acquisitions Committee
The Acquisitions Committee assists the Board in overseeing HP's investment,
acquisition, managed services, joint venture and divestiture transactions as
part of HP's business strategy. The Acquisitions Committee evaluates and revises
policies with respect to such transactions, and reviews and approves proposed
transactions in accordance with such policies. The Acquisitions Committee also
oversees HP's integration planning and execution, and the financial results of
transactions after integration.
The charter of the Acquisitions Committee is available at
http://www.hp.com/hpinfo/investor/structure.html.
Audit Committee
HP has a separately-designated standing Audit Committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Audit Committee assists the Board in
fulfilling its responsibilities for generally overseeing HP's financial
reporting processes and the audit of HP's financial statements, including the
integrity of HP's financial statements, HP's compliance with legal and
regulatory requirements, the qualifications and independence of the independent
registered public accounting firm, the performance of HP's internal audit
function and the independent registered public accounting firm, risk assessment
and risk management, and finance and investment functions. Among other things,
the Audit Committee prepares the Audit Committee report for inclusion in the
annual proxy statement; annually reviews its charter and performance; appoints,
evaluates and determines the compensation of the independent registered public
accounting firm; reviews and approves the scope of the annual audit, the audit
fee and the financial statements; reviews HP's disclosure controls and
procedures, internal controls, information security policies, internal audit
function, and corporate policies with respect to financial information and
earnings guidance; reviews regulatory and accounting initiatives and off-balance
sheet structures; oversees HP's compliance programs with respect to legal and
regulatory requirements; oversees investigations into complaints concerning
financial matters; reviews other risks that may have a significant impact on
HP's financial statements; reviews the activities of the Investment Review
Committee; reviews and oversees treasury matters, HP's loans, loan guarantees
and outsourcings; reviews HP Financial Services' capitalization and operations;
reviews the activities of Investor Relations; and coordinates with the HR and
Compensation Committee regarding the cost, funding and financial impact of HP's
equity compensation plans and benefit programs. The Audit Committee works
closely with management as well as the independent registered public accounting
firm. The Audit Committee has the authority to obtain advice and assistance
from, and receive appropriate funding from HP for, outside legal, accounting or
other advisors as the Audit Committee deems necessary to carry out its duties.
The Board determined that each of Robert L. Ryan, Chair of the Audit Committee,
and Audit Committee members Patricia C. Dunn and Dr. George A. Keyworth II is,
and former Audit Committee member Sanford M. Litvack was, an audit committee
financial expert as defined by SEC rules and applicable listing standards.
The report of the Audit Committee is included herein on page 72. The charter of
the Audit Committee is available at
http://www.hp.com/hpinfo/investor/structure.html and also is included herein as
Appendix A. A free printed copy also is available to any stockholder who
requests it from the address on page 10.
HR and Compensation Committee
The HR and Compensation Committee discharges the Board's responsibilities
relating to the compensation of HP's executives and directors; produces an
annual report on executive compensation for inclusion in the annual proxy
statement; provides general oversight of HP's total rewards compensation
structure; reviews and provides guidance on HP's human resources programs; and
retains and approves the terms of the retention of compensation consultants and
other compensation experts. Other specific duties and
13
responsibilities of the HR and Compensation Committee include reviewing senior
management selection and overseeing succession planning, including reviewing the
leadership development process; reviewing and approving objectives relevant to
executive officer compensation, evaluating performance and determining the
compensation of executive officers in accordance with those objectives;
approving severance arrangements and other applicable agreements for executive
officers; overseeing HP's equity-based and incentive compensation plans;
overseeing non-equity based benefit plans and approving any changes to such
plans involving a material financial commitment by HP; monitoring workforce
management programs; establishing compensation policies and practices for
service on the Board and its committees and for the Chairman of the Board;
developing guidelines for and monitoring director and executive stock ownership;
and annually evaluating its performance and its charter.
The report of the HR and Compensation Committee is included herein beginning on
page 61. The charter of the HR and Compensation Committee is available at
http://www.hp.com/hpinfo/investor/structure.html and also is included herein as
Appendix B. A free printed copy is available to any stockholder who requests it
from the address on page 10.
Nominating and Governance Committee
The Nominating and Governance Committee recommends candidates to be nominated
for election as directors at HP's annual meeting, consistent with criteria
approved by the Board; develops and regularly reviews corporate governance
principles and related policies for approval by the Board; oversees the
organization of the Board to discharge the Board's duties and responsibilities
properly and efficiently; and sees that proper attention is given and effective
responses are made to stockholder concerns regarding corporate governance. Other
specific duties and responsibilities of the Nominating and Governance Committee
include: annually assessing the size and composition of the Board, including
developing and reviewing director qualifications for approval by the Board;
identifying and recruiting new directors consistent with the Board Composition
Guidelines and considering candidates proposed by stockholders; recommending
assignments of directors to committees to ensure that committee membership
complies with applicable laws and listing standards; conducting a preliminary
review of director independence and financial literacy and expertise of Audit
Committee members; and overseeing director orientation and continuing education.
The Nominating and Governance Committee also reviews proposed changes to HP's
Certificate of Incorporation, Bylaws and Board committee charters; assesses and
makes recommendations regarding stockholder rights plans or other stockholder
protections, as appropriate; reviews and approves any executive officers for
purposes of Section 16 of the Exchange Act ("Section 16 Officers") standing for
election for outside for-profit boards of directors; reviews stockholder
proposals in conjunction with the Chairman of the Board and recommends Board
responses; oversees in conjunction with the Chairman of the Board the
self-evaluation of the Board and its committees; ensures that the annual
evaluation of the CEO is conducted by the Chairman of the Board in conjunction
with the HR and Compensation Committee with input from all Board members;
evaluates senior management in conjunction with the HR and Compensation
Committee; and reviews requests for permissive indemnification.
The charter of the Nominating and Governance Committee is available at
http://www.hp.com/hpinfo/investor/structure.html and also is included herein as
Appendix C. A free printed copy is available to any stockholder who requests it
from the address on page 10.
Technology Committee
The Technology Committee assesses HP's technology development strategies and the
scope and quality of HP's intellectual property. The Technology Committee makes
recommendations to the Board as to scope, direction, quality, investment levels
and execution of HP's technology strategies; oversees the execution of
technology strategies formulated by management; provides guidance on technology
as it may pertain to, among other things, market entry and exit, investments,
mergers, acquisitions and divestitures, new
14
business divisions and spin-offs, research and development investments, and key
competitor and partnership strategies; and reviews and makes recommendations on
proposed investment, acquisition, joint venture and divestiture transactions
with a value of at least $100 million that involve technology prior to any
review by the Acquisitions Committee or the Board pursuant to HP's M&A approval
policies.
The charter of the Technology Committee is available at
http://www.hp.com/hpinfo/investor/structure.html.
Consideration of Stockholder Recommendations for Director Nominees
Stockholder recommendations
The policy of the Nominating and Governance Committee is to consider properly
submitted stockholder recommendations of candidates for membership on the Board
as described below under "Identifying and Evaluating Candidates for Directors."
In evaluating such recommendations, the Nominating and Governance Committee
seeks to achieve a balance of knowledge, experience and capability on the Board
and to address the membership criteria set forth below under "Director
Qualifications." Any stockholder recommendations proposed for consideration by
the Nominating and Governance Committee should include the candidate's name and
qualifications for Board membership and should be addressed to:
Corporate Secretary
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Fax: (650) 857-4837
Stockholder Nominations
In addition, the Bylaws of HP permit stockholders to nominate directors for
consideration at an annual stockholder meeting and to solicit proxies in favor
of such nominees. For a description of the process for nominating directors in
accordance with HP's bylaws, see "Questions and Answers-Stockholder Proposals,
Director Nominations and Related Bylaw Provisions-28. How may I recommend or
nominate individuals to serve as directors?"
Director Qualifications
HP's Corporate Governance Guidelines contain Board membership criteria that
apply to nominees recommended for a position on HP's Board. Under these
criteria, members of the Board should have the highest professional and personal
ethics and values, consistent with longstanding HP values and standards. They
should have broad experience at the policy-making level in business, government,
education, technology or public service. They should be committed to enhancing
stockholder value and should have sufficient time to carry out their duties and
to provide insight and practical wisdom based on experience. Their service on
other boards of public companies should be limited to a number that permits
them, given their individual circumstances, to perform responsibly all director
duties. Each director must represent the interests of all stockholders of HP.
Identifying and Evaluating Candidates for Directors
The Nominating and Governance Committee utilizes a variety of methods for
identifying and evaluating nominees for director. The Nominating and Governance
Committee regularly assesses the appropriate size of the Board, and whether any
vacancies on the Board are expected due to retirement or otherwise. In the event
that vacancies are anticipated, or otherwise arise, the Nominating and
Governance Committee considers various potential candidates for director.
Candidates may come to the attention of the Nominating and Governance Committee
through current Board members, professional search firms, stockholders or other
persons. These candidates are evaluated at regular or special meetings of the
Nominating and
15
Governance Committee and may be considered at any point during the year. As
described above, the Nominating and Governance Committee considers properly
submitted stockholder recommendations for candidates for the Board to be
included in HP's proxy statement. Following verification of the stockholder
status of people proposing candidates, recommendations are considered together
by the Nominating and Governance Committee at a regularly scheduled meeting,
which is generally the first or second meeting prior to the issuance of the
proxy statement for HP's annual meeting. If any materials are provided by a
stockholder in connection with the nomination of a director candidate, such
materials are forwarded to the Nominating and Governance Committee. The
Nominating and Governance Committee also reviews materials provided by
professional search firms and other parties in connection with a nominee who is
not proposed by a stockholder. In evaluating such nominations, the Nominating
and Governance Committee seeks to achieve a balance of knowledge, experience and
capability on the Board.
HP engages a professional search firm on an ongoing basis to identify and assist
the Nominating and Governance Committee in identifying, evaluating and
conducting due diligence on potential director nominees. Sari M. Baldauf, a
nominee for election to HP's Board, was identified by the search firm.
On November 18, 2005, the Board elected John Hammergren as a director effective
November 22, 2005. Mr. Hammergren was identified by an HP director.
Executive Sessions
Executive sessions of independent directors are held at least three times a
year. The sessions are scheduled and chaired by the Chairman of the Board. Any
independent director may request that an additional executive session be
scheduled.
Communications with the Board
Individuals may communicate with the Board by contacting:
Rosemarie Thomas
Secretary to the Board of Directors
3000 Hanover Street, MS 1050
Palo Alto, CA 94304
e-mail: bod@hp.com
All directors have access to this correspondence. In accordance with
instructions from the Board, the Secretary to the Board reviews all
correspondence, organizes the communications for review by the Board and posts
communications to the full Board or individual directors, as appropriate. HP's
independent directors have requested that certain items that are unrelated to
the Board's duties, such as spam, junk mail, mass mailings, solicitations,
resumes and job inquiries, not be posted.
Communications that are intended specifically for independent or
non-management directors should be sent to the e-mail address or street address
noted above, to the attention of the Chairman of the Board.
16