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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HEWLETT-PACKARD COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
- -------------------
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
----------------------------------
[LOGO OF HEWLETT-PACKARD]
- ---------- HEWLETT-PACKARD COMPANY
3000 Hanover Street
Palo Alto, California 94304
------------------------------
LEWIS E. PLATT
Chairman, President and
Chief Executive Officer
To the Shareholders:
I am pleased to invite you to attend the annual meeting of
the shareholders of Hewlett-Packard Company (the "Company")
to be held on Tuesday, February 27, 1996 at 2 o'clock in the
afternoon in the Oak Room of the Company's facility at 19447
Pruneridge Avenue, Cupertino, California. The annual meeting
of shareholders is more fully described in the accompanying
Notice of Annual Meeting of Shareholders and Proxy
Statement.
FOR THE FIRST TIME, THIS YEAR WE WILL BE REQUIRING ADMISSION
TICKETS FOR SHAREHOLDERS WISHING TO ATTEND THE MEETING IN
PERSON. IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
FOLLOW THE PROCEDURE FOR OBTAINING AN ADMISSION TICKET
DESCRIBED IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS.
Your vote is important. Whether or not you plan to attend
the annual meeting, we urge you to complete, sign and return
the enclosed proxy as soon as possible in the envelope
provided. This will ensure your representation at the annual
meeting if you do not attend in person.
Sincerely,
/s/ LEWIS E. PLATT
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HEWLETT-PACKARD COMPANY
3000 HANOVER STREET, PALO ALTO, CALIFORNIA 94304 (415) 857-1501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS--FEBRUARY 27, 1996
To the Shareholders:
The annual meeting of the shareholders of Hewlett-Packard Company, a
California corporation (the "Company"), will be held, as provided in the
Company's Amended By-Laws, on Tuesday, February 27, 1996, at 2 o'clock in the
afternoon in the Oak Room of the Company's facility located at 19447 Pruneridge
Avenue, Cupertino, California, for the following purposes:
1. To elect a Board of 14 Directors to serve for the ensuing year.
2. To consider and act upon a proposal that the shareholders approve the
appointment of Price Waterhouse LLP as the Company's independent
accountants for the 1996 fiscal year.
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
Nominees for directors are set forth in the enclosed Proxy Statement.
Only shareholders of record at the close of business on Friday, December 29,
1995, will be entitled to vote at this meeting. IF YOU PLAN TO ATTEND THE
MEETING IN PERSON, PLEASE MARK THE APPROPRIATE BOX ON THE ENCLOSED PROXY CARD.
IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME AND
YOU PLAN TO ATTEND THE MEETING, PLEASE SEND A WRITTEN REQUEST FOR AN ADMISSION
TICKET, TOGETHER WITH EVIDENCE OF YOUR STOCK OWNERSHIP (WHICH YOU CAN OBTAIN
FROM YOUR BANK OR STOCK BROKER), TO D. CRAIG NORDLUND, SECRETARY, HEWLETT-
PACKARD COMPANY, 3000 HANOVER STREET, MS 20 BQ, PALO ALTO, CALIFORNIA 94304.
BECAUSE SPACE IS LIMITED, NO MORE THAN TWO TICKETS WILL BE ISSUED TO EACH
SHAREHOLDER.
The meeting will begin promptly at 2 o'clock. In order to avoid disruption,
shareholders who arrive after the meeting has begun will not be admitted.
By Order of the Board of
Directors
D. CRAIG NORDLUND
Associate General Counsel and
Secretary
Palo Alto, California
January 15, 1996
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<PAGE>
PROXY STATEMENT
------------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of Hewlett-Packard Company, a California
corporation (the "Company" or "HP"), for use at the 1996 annual meeting of
shareholders to be held on February 27, 1996. Only shareholders of record on
December 29, 1995 will be entitled to vote at that meeting. On December 29,
1995, the Company had approximately 512.7 million shares of Common Stock issued
and outstanding.
The Company's principal executive offices are located at 3000 Hanover Street,
Palo Alto, California 94304. The approximate date on which the Proxy Statement
and the accompanying proxy are first being sent to shareholders is January 15,
1996.
VOTING
Each share of Common Stock outstanding on the record date is entitled to one
vote. In addition, each shareholder, or his proxy, entitled to vote upon the
election of directors may cumulate his votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of votes to which his shares are entitled, or distribute his votes calculated
on the same principle among as many candidates as he thinks fit. No shareholder
or proxy, however, shall be entitled to cumulate votes unless such candidate or
candidates have been nominated prior to the voting and the shareholder has
given notice at the meeting, prior to the voting, of the shareholder's
intention to cumulate the shareholder's votes. If any one shareholder gives
such notice, all shareholders may cumulate their votes for candidates in
nomination. An affirmative vote of a majority of the shares present and voting
at the meeting is required for approval of all items being submitted to the
shareholders for their consideration. An automated system administered by the
Company's transfer agent tabulates the votes. Both abstentions and broker non-
votes are included in the determination of the number of shares present and
voting. Each is tabulated separately. Abstentions are counted in tabulations of
the votes cast on proposals presented to shareholders, whereas broker non-votes
are not counted for purposes of determining whether a proposal has been
approved.
REVOCABILITY OF PROXIES
Any person giving a proxy in the form accompanying this Proxy Statement has
the power to revoke it at any time before its exercise. It may be revoked by
filing with the Secretary of the Company an instrument of revocation or by the
presentation at the meeting of a duly executed proxy bearing a later date. It
also may be revoked by attendance at the meeting and election to vote in
person.
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SOLICITATION
The Company will bear the entire cost of preparing, assembling, printing and
mailing this Proxy Statement, the accompanying proxy and any additional
material which may be furnished to shareholders. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries and custodians to
forward to beneficial owners of stock held in the names of such nominees. The
solicitation of proxies will be made by the use of the mails and through direct
communication with certain shareholders or their representatives by officers,
directors and employees of the Company, who will receive no additional
compensation therefor. The Company has engaged Corporate Investor
Communications, Inc. ("CIC") to solicit proxies and distribute materials to
brokerage houses, banks, custodians and other nominee holders. The Company will
pay CIC $5,500 for these services, plus expenses.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
COMPENSATION OF DIRECTORS--STANDARD ARRANGEMENTS. Directors who were not
otherwise employed by the Company were paid an annual retainer of $30,000
during fiscal 1995 and received an additional fee of $1,500 for attendance at
each meeting of the Board of Directors, as well as $1,200 for attendance at
each meeting of a committee of the Board. Directors who are employed by the
Company receive a fee of $1,500 for attendance at each meeting of the Board of
Directors but are not compensated for attendance at meetings of committees of
the Board. A non-employee director serving as a committee chairman receives an
additional $3,000 per year. Non-employee directors may elect to receive stock
options in place of the $30,000 annual retainer fee pursuant to the Company's
1987 Director Option Plan. Directors are reimbursed for any expenses attendant
to Board membership.
COMPENSATION OF DIRECTORS--OTHER ARRANGEMENTS. In addition to the standard
arrangements described above, each non-employee director receives $5,000 per
year in deferred compensation under the Company's Independent Director Deferred
Compensation Program (the "Independent Director Program"). The purpose of the
Independent Director Program is to encourage independent directors of the
Company to continue to provide services that are considered essential to the
Company's progress and thus give them further incentive to continue as
directors of the Company. Directors of the Company who are not employees of the
Company or any subsidiary of the Company are eligible to participate in the
Independent Director Program. On March 1 of each year until an independent
director terminates his services with the Company for any reason, the Company
credits $5,000 to a reserve fund to provide deferred compensation for the
director. The money allocated is credited with interest compounded semi-
annually. Upon termination of the independent director's services with the
Company, the entire amount then allocated to the reserve fund for such
director, including all accrued interest, will be paid in a lump sum to the
director, or a designated beneficiary if termination of services is due to
death. If an independent director terminates services before the
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last day of February of any year, the amount of deferred compensation and
interest payable to such director will be prorated to reflect the number of
whole months of service performed by such director in that year.
BOARD OF DIRECTORS--During fiscal 1995 there were eight meetings of the Board
of Directors.
AUDIT COMMITTEE--The Company's Audit Committee consisted of six non-employee
directors in fiscal 1995: Shirley M. Hufstedler (Chair), Richard A. Hackborn,
Harold J. Haynes, Walter B. Hewlett, David M. Lawrence and Paul F. Miller, Jr.
The Audit Committee met four times in fiscal 1995. The Audit Committee meets
independently with the internal auditing staff, with representatives of the
Company's independent accountants and with representatives of senior
management. The committee reviews the general scope of the Company's annual
audit and internal audit program, matters relating to internal control systems
and the fee charged by the independent accountants. In addition, the Audit
Committee is responsible for reviewing and monitoring the performance of non-
audit services by the Company's independent accountants and for recommending
the engagement or discharge of the Company's independent accountants. The
committee is also responsible for monitoring the Company's compliance with the
principles of the Defense Industry Initiative.
COMPENSATION COMMITTEE--In fiscal 1995, the Company had a Compensation
Committee consisting of five non-employee directors: John B. Fery (Chair),
Thomas E. Everhart, Harold J. Haynes, Susan P. Orr and Donald E. Petersen. The
committee met five times in fiscal 1995. The committee is responsible for
approving and reporting to the Board on the annual compensation for all
officers, including salary, stock options, stock appreciation rights and
restricted stock, including performance-based restricted stock. The committee
is also responsible for granting stock awards, stock options, stock
appreciation rights and other awards to be made under the Company's existing
incentive compensation plans.
ORGANIZATION REVIEW AND NOMINATING COMMITTEE--In fiscal 1995, the Company's
Organization Review and Nominating Committee consisted of seven directors:
Harold J. Haynes (Chair), Richard A. Hackborn, Walter B. Hewlett, George A.
Keyworth II, David W. Packard, Donald E. Petersen and Lewis E. Platt. The
committee met five times in fiscal 1995. The committee is responsible for
proposing a slate of directors for election by the shareholders at each annual
meeting and for proposing candidates to fill any vacancies on the Board. The
committee will consider candidates for Board membership proposed by
shareholders who have complied with the procedures described beginning on page
4. Any shareholder wishing to recommend or nominate a candidate for director
must follow such procedures.
EXECUTIVE COMMITTEE--The Company also has an Executive Committee, which
consisted of two directors in fiscal 1995: Lewis E. Platt (Chair) and Robert P.
Wayman. Pursuant to the Company's Amended By-Laws, the Executive Committee has
all the powers and authority of the Board of Directors in the management of the
business and affairs of the Company, except those powers that,
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<PAGE>
by law, cannot be delegated by the Board of Directors. The Executive Committee
met five times during fiscal 1995.
FINANCE AND INVESTMENT COMMITTEE--The Company's Finance and Investment
Committee was composed of five directors in fiscal 1995: Paul F. Miller, Jr.
(Chair), Thomas E. Everhart, Jean-Paul G. Gimon, David W. Packard and Robert P.
Wayman. The Finance and Investment Committee, which met five times in fiscal
1995, is responsible for the supervision of the investment of all assets held
by the Company's Retirement Plan, Deferred Profit-Sharing Plan and other
employee benefit funds, for reviewing the investment results of pension plans
of the Company's international subsidiaries and for establishing and reviewing
policies regarding the investment of general corporate assets, the issuance of
debt and the use of derivative instruments to manage currency and interest rate
exposure.
In fiscal 1995, all directors attended at least 75% of the meetings of the
Board and all committees of the Board of which they were members.
ELECTION OF DIRECTORS
The directors of the Company are elected annually to serve until the next
annual meeting of the shareholders and until their respective successors are
elected. All of the nominees except David M. Lawrence and Sam Ginn have served
as directors since the last annual meeting. Dr. Lawrence was elected by the
Board of Directors in May 1995. Mr. Ginn is standing for election as a director
for the first time at this year's annual meeting. Proxies may be voted for 14
directors.
In the event a shareholder entitled to vote for the election of directors at
a meeting wishes to propose a candidate for consideration by the Organization
Review and Nominating Committee as a possible nominee for management's proposed
slate of directors, or such shareholder wishes to make a director nomination at
a shareholder meeting, then written notice of such shareholder's intent to make
such nomination must be given, either by personal delivery or by United States
mail, postage prepaid, to D. Craig Nordlund, Secretary, Hewlett-Packard
Company, 3000 Hanover Street, Palo Alto, California 94304, not later than: (i)
with respect to the election to be held at an annual meeting of shareholders,
90 days in advance of such meeting, and (ii) with respect to any election to be
held at a special meeting of shareholders for the election of directors, the
close of business on the seventh day following the date on which notice of such
meeting is first given to shareholders. Each such notice must set forth: (a)
the name and address of the shareholder who intends to make the nomination and
of the person or persons to be nominated, (b) a representation that such
shareholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, (c) a description of
all arrangements or understandings between such shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by such shareholder, (d)
such other information regarding each nominee proposed by such shareholder as
would have been required to be included in a proxy statement filed
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<PAGE>
pursuant to the proxy rules of the Securities and Exchange Commission (the
"Commission") if such nominee had been nominated, or intended to be nominated
by the Board of Directors, and (e) the consent of each nominee to serve as a
director of the Company if elected. The chairman of a shareholder meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
Biographical summaries and ages as of December 29, 1995 of individuals
nominated by the Board of Directors for election as directors appear on pages 5
through 8 of this Proxy Statement. Data with respect to the number of shares of
the Company's Common Stock beneficially owned by all current directors and
board nominees, directly or indirectly, as of that date, appears on pages 8
through 11 of this Proxy Statement.
THOMAS E. EVERHART; AGE 63; PRESIDENT, CALIFORNIA INSTITUTE OF TECHNOLOGY
Dr. Everhart was elected a director of the Company in July 1991. He has been
President of the California Institute of Technology since 1987. Dr. Everhart is
a director of General Motors Corporation and Reveo, Inc. He also is a director
of KCET, a public television station in Los Angeles, and the Corporation for
National Research Initiatives.
JOHN B. FERY; AGE 65; RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER, BOISE CASCADE CORPORATION
Mr. Fery was elected a director of the Company in 1982. He became Chairman of
the Board and Chief Executive Officer of Boise Cascade Corporation in 1978. He
retired as Chief Executive Officer of Boise Cascade Corporation in 1994 and as
Chairman of the Board in 1995. Mr. Fery currently serves as a director of
Albertson's Inc., West One Bancorp and The Boeing Company.
JEAN-PAUL G. GIMON; AGE 59; GENERAL REPRESENTATIVE IN NORTH AMERICA, CREDIT
LYONNAIS S.A.
Dr. Gimon was elected a director of the Company in 1993. He has been the
General Representative in North America with Credit Lyonnais S.A., a major
global banking institution based in France, since 1984. Dr. Gimon is the son-
in-law of Company co-founder William R. Hewlett and is a brother-in-law of
director Walter B. Hewlett. Dr. Gimon also serves on the Board of Directors of
Belle Haven Land Company, R.V.I. America Corporation and BCCORP LLC.
SAM GINN; AGE 58; CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF AIRTOUCH
COMMUNICATIONS
Mr. Ginn will stand for election as a director of the Company in February
1996. He has been Chairman and Chief Executive Officer of AirTouch
Communications (formerly known as PacTel Corporation) since December 1993. He
was Chairman and Chief Executive Officer of the Pacific Telesis Group from 1988
until December 1993. Mr. Ginn currently serves as a director of Transamerica
Corporation, Chevron Corporation and Safeway Inc.
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RICHARD A. HACKBORN; AGE 58; RETIRED EXECUTIVE VICE PRESIDENT, HEWLETT-PACKARD
COMPANY
Mr. Hackborn has been a director of the Company since 1992. He retired as a
Company Officer in November 1993 after a 33-year career with the Company. He
was Executive Vice President, Computer Products Organization from 1990 until
his retirement. Mr. Hackborn currently serves as a director of Microsoft
Corporation and is also a member of the Idaho State Information Technology
Advisory Council.
WALTER B. HEWLETT; AGE 51; INDEPENDENT RESEARCHER AND DIRECTOR, CENTER FOR
COMPUTER ASSISTED RESEARCH IN THE HUMANITIES
Mr. Hewlett was elected a director of the Company in 1987. He is an
independent software developer involved with computer applications in the
humanities. In 1994, Mr. Hewlett participated in the formation of a new
telephone company, Vermont Telephone Company of Springfield, Vermont. He
currently serves as Chairman of that company. In 1990, Mr. Hewlett founded
Merit Software Corporation, of which he is President and a director. Merit
Software develops software for research in the humanities. In 1984, Mr. Hewlett
founded the Center for Computer Assisted Research in the Humanities, for which
he serves as Director. Mr. Hewlett has been a trustee of The William and Flora
Hewlett Foundation since its founding in 1966 and currently serves as its
Chairman. Mr. Hewlett is the son of Company co-founder William R. Hewlett and
is a brother-in-law of director Jean-Paul G. Gimon.
GEORGE A. KEYWORTH II; AGE 56; CHAIRMAN AND SENIOR FELLOW, THE PROGRESS &
FREEDOM FOUNDATION
Dr. Keyworth became a director of the Company in 1986. Prior to assuming his
current position with The Progress & Freedom Foundation, a public policy
research institute, in 1995, he had been a Distinguished Fellow of the Hudson
Institute since 1985. He was Science Advisor to the President and Director of
the White House Office of Science and Technology Policy from 1981 through 1985,
and prior to that time was the Director of the Experimental Physics Division at
the Los Alamos Scientific Laboratory. He also served as a member of the
President's Commission on Industrial Competitiveness from 1984 to 1985 and the
National Commission on Superconductivity from 1989 to 1990. Dr. Keyworth is
also a director of e.on Corporation, North Texas Research and Development
Corp., and Novalink Technologies, Inc. He holds various honorary degrees and is
an honorary professor at Fudan University in Shanghai, People's Republic of
China.
DAVID M. LAWRENCE, M.D.; AGE 55; CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER, KAISER FOUNDATION HEALTH PLAN, INC. AND KAISER FOUNDATION HOSPITALS
Dr. Lawrence became a director of the Company in 1995. He has been Chairman
of the Board since 1992 and Chief Executive Officer since 1991 of Kaiser
Foundation Health Plan, Inc. and Kaiser Foundation Hospitals. He held a number
of management positions with those organizations prior to assuming his current
positions, including Vice Chairman of the Board and Chief Operating Officer.
Dr. Lawrence also is a director of Pacific Gas and Electric Company.
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<PAGE>
PAUL F. MILLER, JR.; AGE 68; RETIRED PARTNER, MILLER, ANDERSON & SHERRERD, LLP
Mr. Miller was elected a director in 1984. In 1995, he retired as a limited
partner of the investment management firm of Miller, Anderson & Sherrerd, LLP.
He was a general partner of Miller, Anderson & Sherrerd, LLP from 1969 to 1991
and a limited partner of that firm from 1991 to 1995. Mr. Miller is a director
of The Mead Corporation, Rohm and Haas Company, SPS Technologies and LTCB-MAS,
a joint venture of Miller, Anderson & Sherrerd and Long-Term Credit Bank of
Japan. He also serves as a trustee of the University of Pennsylvania, a member
of the Board of Overseers of the Wharton School, a trustee of the Colonial
Williamsburg Foundation and director of the World Wildlife Fund.
SUSAN PACKARD ORR; AGE 49; PRESIDENT, TECHNOLOGY RESOURCE ASSISTANCE CENTER
Ms. Orr became a director of the Company in 1993. Since 1986 she has been
President and owner of the Technology Resource Assistance Center, which
provides computer consulting and software development services to non-profit
organizations. She was formerly an economist at the National Institutes of
Health and a senior programmer and project leader in Health Computer Services
at the University of Minnesota. Ms. Orr also serves as President and a director
of The David and Lucile Packard Foundation, and as Vice President and director
of The Packard Humanities Institute. She is the daughter of Chairman Emeritus
David Packard and is the sister of director David W. Packard.
DAVID WOODLEY PACKARD; AGE 55; PRESIDENT, THE PACKARD HUMANITIES INSTITUTE AND
THE STANFORD THEATRE FOUNDATION
Dr. Packard became a director of the Company in 1987. He also founded The
Packard Humanities Institute in that year for the development of technology to
support basic research in the humanities. In 1984, Dr. Packard founded the
Ibycus Corporation, which sells computer systems specially designed for work
with ancient languages, and has served as its Chairman and President since its
inception. Prior to founding Ibycus, he was a professor of ancient Greek. He
also serves on the boards of other non-profit organizations, including The
David and Lucile Packard Foundation. Dr. Packard is the son of Chairman
Emeritus David Packard and is the brother of director Susan P. Orr.
DONALD E. PETERSEN; AGE 69; RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER, FORD MOTOR COMPANY
Mr. Petersen has served as a director of the Company since 1987. He was
Chairman of the Board of Directors and Chief Executive Officer of Ford Motor
Company from 1985 until his retirement in 1990. Mr. Petersen is also a member
of the Board of Directors of Dow Jones & Company, Inc., The Boeing Company and
four mutual fund boards of the Capital Research & Management Corp. He is a
member of the National Academy of Engineering, the National Research
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Council Industry Advisory Board and the Science, Technology and Economic Policy
Board. He is also active in education programs at Stanford University and the
University of Washington in engineering and manufacturing management.
LEWIS E. PLATT; AGE 54; CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AND CHAIRMAN OF THE EXECUTIVE COMMITTEE, HEWLETT-PACKARD COMPANY
Mr. Platt has served as a director of the Company, President and Chief
Executive Officer since November 1992 and has served as Chairman since
September 1993. He was an Executive Vice President from 1987 to 1992. Mr. Platt
held a number of management positions in the Company prior to becoming its
President, including managing the Computer Systems Organization from 1990 to
1992. He is a director of Molex Inc. and Pacific Telesis. He also serves on the
Wharton School Board of Overseers.
ROBERT P. WAYMAN; AGE 50; EXECUTIVE VICE PRESIDENT, FINANCE AND ADMINISTRATION
AND CHIEF FINANCIAL OFFICER, HEWLETT-PACKARD COMPANY
Mr. Wayman has served as a director of the Company since December 1993. He
has been an Executive Vice President responsible for finance and administration
since 1992. He has held a number of financial management positions in the
Company and was elected a Vice President and Chief Financial Officer in 1984.
He is a director of Consolidated Freightways, Inc. and Sybase Inc. He also
serves as a member of the Board of the Private Sector Council and of the
Kellogg Advisory Board, Northwestern University.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The Company is not aware of any person who, on December 29, 1995, was the
beneficial owner of 5% or more of the Company's outstanding Common Stock,
except for David Packard, William R. Hewlett, Susan P. Orr and David W.
Packard. The following table sets forth information concerning such ownership
as of December 29, 1995. The table also shows information concerning beneficial
ownership by all directors and board nominees, by each of the executive
officers named in the Summary Compensation Table beginning on page 12 (the
"Summary Compensation Table") and by all directors and executive officers as a
group. The number of shares beneficially owned by each director or executive
officer is determined under rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the individual
has the sole or shared voting power or investment power and also any shares
which the individual has the right to acquire within 60 days of December 29,
1995 through the exercise of any stock option or other right. Unless otherwise
indicated, each person has sole investment and voting power (or shares such
powers with his or her spouse) with respect to the shares set forth in the
following table.
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<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP/(1)/ CLASS
--------------------------- ----------
<S> <C> <C>
David Packard
1501 Page Mill Rd.
Palo Alto, CA 94304.................... 71,757,414/(2)/ 14.0%
William R. Hewlett
1501 Page Mill Rd.
Palo Alto, CA 94304.................... 37,957,496/(3)//(4)/ 7.4%
Edward W. Barnholt...................... 124,706 Direct/(5)/
1,628 Indirect/(6)/ *
Richard E. Belluzzo..................... 101,733/(7)/ *
Thomas E. Everhart...................... 2,588 Direct/(8)/
9,550 Indirect/(9)/ *
John B. Fery............................ 7,482/(10)/ *
Jean-Paul G. Gimon...................... 100 Direct
4,845,116 Indirect/(11)/ *
Sam Ginn................................ 0
Richard A. Hackborn..................... 10,742 *
Harold J. Haynes........................ 6,000 *
Walter B. Hewlett....................... 237,780 Direct
4,285,580 Indirect/(12)/ *
Shirley M. Hufstedler................... 10,402/(13)/ *
George A. Keyworth II................... 2,020 Direct
2,000 Indirect/(14)/ *
David M. Lawrence....................... 0
Paul F. Miller, Jr...................... 38,878/(15)/ *
Susan P. Orr
3000 Hanover St.
Palo Alto, CA 94304.................... 1,158,452 Direct
25,463,850 Indirect/(16)/ 5.2%
David Woodley Packard
3000 Hanover St.
Palo Alto, CA 94304.................... 758,284 Direct
25,502,490 Indirect/(17)/ 5.1%
Donald E. Petersen...................... 7,488 *
Lewis E. Platt.......................... 367,888/(18)/ *
Willem P. Roelandts..................... 146,801 Direct/(19)/
430 Indirect/(20)/ *
Robert P. Wayman........................ 187,410/(21)/ *
All Directors and Executive Officers as
a Group (25 persons)................... 34,275,141/(22)//(23)/ 6.7%
</TABLE>
- ---------
* Represents holdings of less than one percent.
9
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(1) Except for Ms. Susan P. Orr and Dr. David W. Packard, who beneficially own
5.2% and 5.1%, respectively, no current director beneficially owns more
than 1% of the Company's outstanding shares.
(2) Includes 25,170,400 shares held by The David and Lucile Packard Foundation,
of which Ms. Susan P. Orr, Mr. David Packard and Dr. David W. Packard are
directors. As directors of the Foundation, they share voting and investment
power over these shares with the other Foundation directors. Ms. Orr, Mr.
Packard and Dr. Packard disclaim any beneficial interest in all shares
owned by the Foundation.
(3) Includes 4,278,600 shares held by The William and Flora Hewlett Foundation,
of which Mr. William R. Hewlett, Mr. Walter B. Hewlett and the wife of Dr.
Jean-Paul G. Gimon are directors. As directors of the Foundation, they
share voting and investment power over these shares with the other
Foundation directors. Dr. Gimon and Messrs. William R. Hewlett and Walter
B. Hewlett disclaim any beneficial interest in all shares owned by the
Foundation.
(4) Includes 570,160 shares held in a trust for Mr. William R. Hewlett's
grandchildren, of which Mr. Hewlett is a co-trustee. Mr. Hewlett disclaims
any beneficial interest in all shares owned by the trust.
(5) Includes 58,150 shares which Mr. Barnholt has the right to acquire within
60 days of December 29, 1995 through the exercise of options.
(6) Includes 1,628 shares held by Mr. Barnholt's children.
(7) Includes 16,250 shares which Mr. Belluzzo has the right to acquire within
60 days of December 29, 1995 through the exercise of options.
(8) Includes 1,388 shares which Dr. Everhart has the right to acquire within 60
days of December 29, 1995 through the exercise of options.
(9) Includes 7,550 shares held in trust for and 2,000 shares held in the
endowment of the California Institute of Technology, over which shares Dr.
Everhart shares voting and investment power with other members of the
university's Investment Committee.
(10) Includes 5,482 shares which Mr. Fery has the right to acquire within 60
days of December 29, 1995 through the exercise of options.
(11) Includes 566,516 shares held by Dr. Gimon's wife and 4,278,600 shares held
by The William and Flora Hewlett Foundation, of which Dr. Gimon's wife is
a director. Dr. Gimon disclaims any beneficial interest in all shares held
by the Foundation.
(12) Includes 6,340 shares held by Mr. Walter B. Hewlett as a custodian for his
children, 640 shares held by his wife, and 4,278,600 shares held by The
William and Flora Hewlett Foundation, of which Mr. Hewlett is a director.
Mr. Hewlett disclaims any beneficial interest in all shares held by him as
custodian, by his wife and by the Foundation.
10
<PAGE>
(13) Includes 5,302 shares which Ms. Hufstedler has the right to acquire within
60 days of December 29, 1995 through the exercise of options.
(14) Includes 2,000 shares held by Dr. Keyworth's wife.
(15) Includes 6,878 shares which Mr. Miller has the right to acquire within 60
days of December 29, 1995 through the exercise of options.
(16) Includes 588 shares held by Ms. Orr's son, 3,908 shares held by Ms. Orr as
custodian for her daughter, 11,000 shares held by her husband, 16,162
shares held in a family trust, 261,792 shares held in trust for her
children, of which trusts she is a trustee, and 25,170,400 shares held by
The David and Lucile Packard Foundation of which Ms. Orr is a director.
Ms. Orr disclaims any beneficial interest in all shares held by the
Foundation.
(17) Includes 47,988 shares held by Dr. Packard's wife, 9,348 shares owned by
his minor children, 258,592 shares held in trust for his children and
16,162 shares held in trust for his family. Also includes 25,170,400
shares held by The David and Lucile Packard Foundation, of which Dr.
Packard is a director. Dr. Packard disclaims any beneficial interest in
all of these shares.
(18) Includes 184,000 shares which Mr. Platt has the right to acquire within 60
days of December 29, 1995 through the exercise of options.
(19) Includes 98,600 shares which Mr. Roelandts has the right to acquire within
60 days of December 29, 1995 through the exercise of options.
(20) Includes 430 shares held by Mr. Roelandts as custodian for his children.
(21) Includes 117,750 shares which Mr. Wayman has the right to acquire within
60 days of December 29, 1995 through the exercise of options.
(22) Includes an aggregate of 714,775 shares which the directors and executive
officers have the right to acquire within 60 days of December 29, 1995
through the exercise of options.
(23) Includes an aggregate of 30,032,912 shares held by directors and executive
officers in fiduciary capacities.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. The Company believes
that during the fiscal year ended October 31, 1995, its officers, directors and
holders of more than 10% of the Company's Common Stock complied with all
Section 16(a) filing requirements, with the following exceptions: Walter B.
Hewlett, director, reported late on amended Form 4s three transactions from
prior years involving gifts to his minor children and Susan P. Orr, director,
reported late on Form 4 a transaction involving a gift made during the fiscal
year ended October 31, 1995. In making these statements, the Company has relied
upon the written representations of its directors and officers.
11
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four remaining most highly paid executive officers
for the three fiscal years ended October 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
ANNUAL
COMPENSATION AWARDS
------------------ -----------------------------
(a) (b) (c) (d) (e) (f) (g)
SECURITIES
UNDERLYING
NAME AND PRINCIPAL SALARY BONUS RESTRICTED STOCK OPTIONS/ ALL OTHER
POSITION YEAR ($) ($)/(1)/ AWARD(S)($)/(2)/ SARS(#)/(3)/ COMPENSATION ($)/(4)/
------------------ ---- --------- -------- ---------------- ------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
Lewis E. Platt......... 1995 1,375,000 155,755 2,088,646 80,000 17,606
Chairman, President 1994 1,087,500 91,888 1,670,404 70,000 17,246
and Chief Executive 1993 818,750 53,988 44,612 100,000 39,423
Officer, Chairman of
the Executive
Committee
Robert P. Wayman....... 1995 725,000 82,105 640,568 35,000 18,083
Executive Vice Presi- 1994 632,292 53,127 836,356 30,000 16,046
dent, Chief Financial 1993 550,000 36,401 28,911 40,000 22,658
Officer and Director
Willem P. Roelandts.... 1995 535,000 60,583 327,529 20,000 6,083
Senior Vice President 1994 477,500 40,348 425,122 20,000 8,594
1993 433,750 28,731 16,392 20,000 19,373
Richard E. Belluzzo.... 1995 517,500 58,612 528,441 25,000 6,083
Executive Vice Presi- 1994 431,250 36,439 424,132 20,000 4,703
dent 1993 357,500 23,627 1,755,318 20,000 15,806
Edward W. Barnholt..... 1995 503,750 57,047 527,598 25,000 6,083
Senior Vice President 1994 442,500 37,390 422,452 25,000 8,846
1993 393,750 26,057 19,771 13,000 16,916
</TABLE>
(See footnotes on following pages)
12
<PAGE>
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(1) The amounts shown in this column reflect payments under the Company's cash
profit-sharing plan in which all employees of the Company participate.
(2) The amounts disclosed in this column represent the dollar values of (i) the
Company's Common Stock which HP contributed in fiscal 1995, 1994 and 1993
under its Employee Stock Purchase Plan (the "Stock Purchase Plan") as a
match for every two shares purchased by the named executive officers, (ii)
for fiscal 1995 and 1994, performance-based restricted shares of Common
Stock which the Company granted to the named executive officers in November
1994 and May 1994, respectively, and (iii) for fiscal 1993, restricted
shares of Common Stock which the Company granted to Mr. Belluzzo.
The Stock Purchase Plan is a broad-based plan which is available to all
regular full-time or part-time employees after one year of Company service.
The matching shares vest two years after the date of the Company's
contributions, which occur on a rolling fiscal quarter basis, and are
subject to forfeiture during the two-year period in the event of
termination or certain other events. The named executive officers receive
non-preferential dividends on these restricted shares.
In fiscal 1995 and fiscal 1994, the Company granted performance-based
restricted stock to the named executive officers in the following amounts
and values based upon the grant date closing prices of $50.44 and $40.4375
per share, respectively (all share numbers and per share prices have been
adjusted to reflect the two-for-one stock split which occurred in March
1995): Mr. Platt, 40,000 shares ($2,017,600) and 40,000 shares
($1,617,500); Mr. Wayman, 12,000 shares ($605,280) and 20,000 shares
($808,750); Mr. Roelandts, 6,000 shares ($302,640) and 10,000 shares
($404,375); Mr. Belluzzo, 10,000 shares ($504,400) and 10,000 shares
($404,375); Mr. Barnholt, 10,000 shares ($504,400) and 10,000 shares
($404,375). The restricted stock will vest only to the extent that the
Company achieves certain performance goals over a three-year period ending
October 31, 1997 and 1996, for restricted stock granted in fiscal 1995 and
fiscal 1994, respectively. The named executive officers receive non-
preferential dividends on these shares.
In fiscal 1993, the Company made two grants of restricted stock to Mr.
Belluzzo in the amounts and values based upon the grant date closing prices
of $35.56 and $34.22, respectively, of 20,000 shares ($711,200) and 30,000
shares ($1,026,600). (Share numbers and per share prices have been adjusted
to reflect the two-for-one stock split which occurred in March 1995.) The
restricted stock vests five years from the date of grant. Mr. Belluzzo
receives non-preferential dividends on these shares.
At October 31, 1995, the named executive officers held restricted stock in
the following aggregate numbers and values, based on the October 31, 1995
closing price of $92.625 per share:
13
<PAGE>
Mr. Platt, 82,243 shares, $7,617,758; Mr. Wayman, 33,145 shares,
$3,070,056; Mr. Roelandts, 36,837 shares, $3,412,027; Mr. Belluzzo, 70,799
shares, $6,557,757; and Mr. Barnholt, 20,748 shares, $1,921,784.
(3) All option numbers have been restated to reflect the two-for-one stock
split which occurred in March 1995.
(4) The amounts disclosed in this column include:
(a) Company contributions of $8,146 in fiscal year 1993 under HP's Deferred
Profit-Sharing Plan, a defined contribution plan, on behalf of each of
the named executive officers. Effective November 1, 1993, no further
contributions have been made to the Deferred Profit-Sharing Plan.
(b) Company contributions under HP's Tax Saving Capital Accumulation Plan,
a defined contribution plan, in fiscal 1995, of $5,521 for Mr. Platt
and $6,000 for each of Mr. Wayman, Mr. Roelandts, Mr. Belluzzo and Mr.
Barnholt; in fiscal 1994, of $8,763 for each of Mr. Platt, Mr. Wayman
and Mr. Barnholt, $8,511 for Mr. Roelandts and $4,620 for Mr. Belluzzo;
and in fiscal 1993, of $2,998 for each of the named executive officers.
(c) Company contributions of the following amounts in fiscal 1993, under
HP's Excess Benefit Retirement Plan, operating as a defined
contribution plan, on behalf of Mr. Platt, $20,996; Mr. Wayman,
$11,431; Mr. Roelandts, $8,146; Mr. Belluzzo, $4,579; and Mr. Barnholt,
$5,689. Effective November 1, 1993, the Excess Benefit Retirement Plan
no longer operates as a defined contribution plan for future accruals.
(d) Payment of $83 by the Company in each of fiscal 1995, 1994 and 1993,
for term life insurance on behalf of each of the named executive
officers.
(e) Aggregate fees for attendance at Board of Directors meetings in fiscal
1995 of $12,000 for each of Mr. Platt and Mr. Wayman, in fiscal 1994 of
$8,400 for Mr. Platt and $7,200 for Mr. Wayman and in fiscal 1993 of
$7,200 for Mr. Platt.
14
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR/(1)/
The following table provides information on option grants in fiscal 1995 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
------------------------------------------------------------------ ---------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE MARKET
GRANTED EMPLOYEES IN PRICE EXPIRATION VALUE ON GRANT DATE
NAME (#)/(2)/ FISCAL YEAR/(3)/ ($/SHARE)/(4)/ DATE GRANT DATE PRESENT VALUE($)/(5)/
---- ------------ ---------------- -------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Lewis E. Platt.......... 80,000 1.6% $50.44 Nov. 2004 $50.44 $1,281,600
Robert P. Wayman........ 35,000 0.7% $50.44 Nov. 2004 $50.44 $ 560,750
Willem P. Roelandts..... 20,000 0.4% $50.44 Nov. 2004 $50.44 $ 320,400
Richard E. Belluzzo..... 25,000 0.5% $50.44 Nov. 2004 $50.44 $ 400,500
Edward W. Barnholt...... 25,000 0.5% $50.44 Nov. 2004 $50.44 $ 400,500
</TABLE>
FOOTNOTES TO OPTION/SAR GRANTS TABLE
(1) No stock appreciation rights were granted to executive officers in fiscal
1995.
(2) The options granted in 1995 are exercisable 25% after the first year from
the grant date, 50% after the second year, 75% after the third year, and
100% after the fourth year. Under the terms of the option plan, the
Compensation Committee retains discretion, subject to plan limits, to
modify the terms of outstanding options. Option numbers have been restated
to reflect the two-for-one-stock split which occurred in March 1995.
(3) The Company granted options representing 4,898,564 shares to employees in
fiscal 1995.
(4) The Company may, but need not, permit the payment of applicable withholding
taxes due upon exercise of an option by the withholding of shares otherwise
issuable upon exercise of the option. Option exercise prices have been
adjusted to reflect the two-for-one stock split which occurred in March
1995.
(5) The Company used a modified Black-Scholes model of option valuation to
determine grant date present value. The Company does not advocate or
necessarily agree that the Black-Scholes model can properly determine the
value of an option. Calculations for the named executive officers are based
on a six-year option term which reflects the Company's experience that its
options, on average, are exercised within six years of grant. Other
assumptions used for the valuations are: Interest rate of 5.8%; annual
dividend yield of 1.0%; and volatility of 30.0%. The resulting values are
reduced by 12.5% to reflect the Company's experience with forfeitures.
15
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES/(1)/
The following table provides information on option/SAR exercises in fiscal
1995 by the named executive officers and the values of such officers'
unexercised options/SARs at October 31, 1995.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS/SARS
UNEXERCISED OPTIONS/SARS AT AT FISCAL YEAR-
SHARES FISCAL YEAR-END END($)/(2)/
ACQUIRED ON VALUE ------------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lewis E. Platt.......... 0 $ 0 146,500 289,464 $10,582,475 $18,054,862
Robert P. Wayman........ 20,000 $724,240 107,500 145,124 $ 7,853,725 $ 9,305,469
Willem P. Roelandts..... 18,060 $969,469 84,600 67,244 $ 6,147,130 $ 4,060,954
Richard E. Belluzzo..... 1,300 $ 44,324 5,000 75,000 $ 288,150 $ 4,560,750
Edward W. Barnholt...... 24,000 $930,864 45,650 76,494 $ 3,311,198 $ 7,228,683
</TABLE>
- ---------
(1) No SARs are held by any of the named executive officers.
(2) The value of unexercised options is based upon the difference between the
exercise price and the average of the high and low market prices on October
31, 1995 of $94.50. The numbers shown reflect the value of options
accumulated over a ten-year period.
16
<PAGE>
PENSION PLANS
The table that follows shows the estimated annual benefits payable upon
retirement to Company employees in the United States under the Company's
Deferred Profit-Sharing Plan (the "Deferred Plan") and the Company's
Retirement Plan (the "Retirement Plan"), as well as the Company's Excess
Benefit Retirement Plan (the "Excess Benefit Plan"). Effective November 1,
1993, no further contributions have been made to the Deferred Plan. After
November 1, 1993, all future benefit accruals come from the Retirement Plan
and the Excess Benefit Plan.
ESTIMATED ANNUAL RETIREMENT BENEFITS/(1)//(2)/
<TABLE>
<CAPTION>
HIGHEST
FIVE-YEAR 15 20 25 30
AVERAGE YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE
- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 400,000 $ 87,812 $117,083 $146,353 $175,624
500,000 110,312 147,083 183,853 220,624
600,000 132,812 177,083 221,353 265,624
700,000 155,312 207,083 258,853 310,624
800,000 177,812 237,083 296,353 355,624
900,000 200,312 267,083 333,853 400,624
1,000,000 222,812 297,083 371,353 445,624
1,100,000 245,312 327,083 408,853 490,624
1,200,000 267,812 357,083 446,353 535,624
1,300,000 290,312 387,083 483,853 580,624
1,400,000 312,812 417,083 521,353 625,624
1,500,000 335,312 447,083 558,853 670,624
1,600,000 357,812 477,083 596,353 715,624
1,700,000 380,312 507,083 633,853 760,624
1,800,000 402,812 537,083 671,353 805,624
</TABLE>
- ---------
(1) Amounts exceeding $120,000 would be paid pursuant to the Excess Benefit
Plan.
(2) Effective November 1, 1989, no more than $200,000, and effective November
1, 1994, no more than $150,000 (as adjusted from time to time by the
Internal Revenue Service) of cash compensation may be taken into account
in calculating benefits payable under the Retirement Plan.
The compensation covered by the plans whose benefits are summarized in the
table above equals base pay. The covered compensation for each of the
executive officers named in the Summary Compensation Table is the highest
five-year average of the amounts shown in the "Salary" column of that table.
For each of these named executive officers, the current compensation covered
by the plans is at least 10% less than the aggregate compensation set forth in
the Summary Compensation Table.
Officers named in the Summary Compensation Table have been credited with the
following years of service: Mr. Platt, 29 years; Mr. Wayman, 26 years; Mr.
Roelandts, 12 years; Mr. Belluzzo,
17
<PAGE>
20 years; and Mr. Barnholt, 29 years. Mr. Roelandts has a total of 28 years of
service to the Company and its subsidiaries, and earned retirement benefits
while an employee of the Company's French and Belgian subsidiaries. The Company
expects that, under its policy governing international transfers, Mr.
Roelandts' ultimate retirement benefit will be determined in accordance with
the U.S. plans whose benefits are summarized in the table.
Retirement benefits shown are payable at age 65 in the form of a single life
annuity to the employee and reflect the maximum offset allowance currently in
effect under Section 401 (1) of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), to compute the offset for such benefits under
the plans. For purposes of calculating the benefit, an employee may not be
credited with more than 30 years of service.
OFFICERS EARLY RETIREMENT PLAN/(1)/
The following table shows the fully vested estimated annual benefits payable
upon retirement to HP officers in the United States under the Company's
Officers Early Retirement Plan (the "Officers Plan"). Effective for officers
elected on or after November 1, 1993, an officer must work five years after
becoming an officer to be fully vested under the Officers Plan unless the Board
approves a shorter period.
<TABLE>
<CAPTION>
15 20 25 30 35
FINAL YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 400,000 $120,000 $140,000 $160,000 $180,000 $200,000
500,000 150,000 175,000 200,000 225,000 250,000
600,000 180,000 210,000 240,000 270,000 300,000
700,000 210,000 245,000 280,000 315,000 350,000
800,000 240,000 280,000 320,000 360,000 400,000
900,000 270,000 315,000 360,000 405,000 450,000
1,000,000 300,000 350,000 400,000 450,000 500,000
1,100,000 330,000 385,000 440,000 495,000 550,000
1,200,000 360,000 420,000 480,000 540,000 600,000
1,300,000 390,000 455,000 520,000 585,000 650,000
1,400,000 420,000 490,000 560,000 630,000 700,000
1,500,000 450,000 525,000 600,000 675,000 750,000
1,600,000 480,000 560,000 640,000 720,000 800,000
1,700,000 510,000 595,000 680,000 765,000 850,000
1,800,000 540,000 630,000 720,000 810,000 900,000
</TABLE>
- ---------
(1) Benefits start no earlier than age 60, unless earlier benefits are approved
by the Board, and end upon reaching age 65. Annual benefits shown in the
table assume retirement at age 60. Benefits which start before age 60 are
reduced.
18
<PAGE>
Under the Officers Plan, officers may retire at age 60, or earlier if
approved by the Company's Board of Directors. A retiring officer receives under
the Officers Plan a percentage of his annual salary at retirement until age 65,
at which time any benefits under the Officers Plan terminate and standard
retirement benefits begin. The benefits are not subject to deduction for any
offset amounts. The percentage of salary received by an officer retiring before
age 65 is based on a formula that includes age, date of election as an officer
and years of service as factors.
The compensation covered by the Officers Plan is the retiring officer's base
rate of pay (the "Rate of Pay") averaged over the last four fiscal quarters of
active employment with the Company. The Rate of Pay for a retiring officer
would equal the rate used to determine the amount in the "Salary" column of the
Company's Summary Compensation Table.
The estimated credited years of service for each of the named executive
officers as of October 31, 1995, are as follows: Mr. Platt, 29 years; Mr.
Wayman, 26 years; Mr. Roelandts, 28 years; Mr. Belluzzo, 20 years; and Mr.
Barnholt, 28 years.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, that might incorporate future filings, including
this Proxy Statement, in whole or in part, the following report and the
Performance Graph on page 25 shall not be incorporated by reference into any
such filings, nor shall they be deemed to be soliciting material or deemed
filed with the Securities and Exchange Commission under the Securities Act or
under the Exchange Act.
REPORT OF THE COMPENSATION COMMITTEE
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork that is focused on meeting the expectations
of customers and shareholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with business
objectives and performance, and to enable the Company to attract, retain and
reward executive officers whose contributions are critical to the long-term
success of the Company. The Company's compensation
19
<PAGE>
program for executive officers is based on the same four principles applicable
worldwide to compensation decisions for all employees of the Company:
. The Company pays competitively.
The Company is committed to maintaining a pay program that helps
attract and retain the best people in the industry. To ensure that pay
is competitive, the Company regularly compares its pay practices with
those of other leading companies and sets its pay parameters based on
this review.
. The Company pays for sustained performance.
Executive officers are rewarded based upon corporate performance,
business unit performance and individual performance. Corporate
performance and business unit performance are evaluated by reviewing
the extent to which strategic and business plan goals are met,
including such factors as profitability, performance relative to
competitors and timely new product introductions. Individual
performance is evaluated by reviewing organizational and management
development progress against set objectives and the degree to which
teamwork and Company values are fostered.
. The Company strives for fairness in the administration of pay.
The Company strives to compensate a particular individual equitably
compared to other executives at similar levels both inside the Company
and at comparable companies.
. The Company believes that employees should understand the performance
evaluation and pay administration process.
The process of assessing performance is as follows:
1. At the beginning of the performance cycle, the evaluating manager
and the employee set and agree upon objectives and key goals.
2. The evaluating manager gives the employee ongoing feedback on
performance.
3. At the end of the performance cycle, the manager evaluates the
accomplishment of objectives and key goals.
4. The manager compares the results to the results of peers within the
Company.
5. The evaluating manager communicates the comparative results to the
employee.
6. The comparative results affect decisions on salary and, if
applicable, stock options.
20
<PAGE>
COMPENSATION VEHICLES
The Company has had a long and successful history of using a simple total
compensation program that consists of cash- and equity-based compensation.
Having a compensation program that allows the Company to attract and retain key
employees permits it to provide useful products and services to customers,
enhance shareholder value, motivate technological innovation, foster teamwork,
and adequately reward employees. The vehicles are:
CASH-BASED COMPENSATION
Salary
The Company establishes salary ranges for employees by reviewing the
aggregate of base salary and annual bonus for competitive positions in the
market. The Company surveys approximately fifty companies, 50% of which are
in the S&P High Technology Composite Index (the "S&P High Tech Index"). The
remaining 50% are other "Fortune 100" companies which are included within
the S&P 500 Index. Generally, the Company sets its competitive salary
midpoint for an executive officer position at the median level compared to
those companies it surveys. The Company then creates a salary range based
on this midpoint. The range is designed to place an executive officer above
or below the midpoint, according to that officer's overall individual
performance. As described above, overall individual performance is measured
against the following factors: long-term strategic goals, short-term
business goals, profitability, the development of employees and the
fostering of teamwork and other Company values. In both setting goals and
measuring an executive officer's performance against those goals, the
Company takes into account the performance of its competitors and general
economic and market conditions. None of the factors included in the
Company's strategic and business goals is assigned a specific weight.
Instead, the Company recognizes that these factors may change in order to
adapt to specific business challenges and to changing economic and
marketplace conditions.
The Company does not have a bonus plan.
Cash Profit-Sharing
The Company has a worldwide profit-sharing plan under which it
distributes to all employees, including executive officers, who have been
employed continuously for at least six months, twelve percent of its
profits before taxes and other adjustments. The Company believes that all
employees share the responsibility of achieving profits. Accordingly, it
shares a portion of these profits with all employees. The same profit-
sharing percentage applies to each employee worldwide, with the payment
determined by applying this percentage to the individual's salary level.
21
<PAGE>
EQUITY-BASED COMPENSATION
Stock Incentive Program
The purpose of this program is to provide additional incentives to
employees to work to maximize shareholder value. The Company also
recognizes that a stock incentive program is a necessary element of a
competitive compensation package for its employees. The program utilizes
vesting periods to encourage key employees to continue in the employ of the
Company and thereby acts as a retention device for key employees. The
Company believes that the program encourages employees to maintain a long-
term perspective. The Company grants stock options annually to a broad-
based group representing approximately twelve percent of the total employee
population.
In determining the size of an option award for an executive officer, the
Compensation Committee's (the "Committee") primary considerations are the
"grant value" of the award and the performance of the officer measured
against the same performance criteria described above under "Cash-based
Compensation" which is used to determine salary. To determine the grant
value guidelines for option awards, the Company surveys the same group of
companies it surveys for salary purposes. The Company compares an option's
market value, as determined annually by calculating a three-year rolling
average of the Company's stock price, to the cash component of
compensation--salary--for a given executive position. Because the Company
does not have a bonus plan, it compares salary for an officer of the
Company to a combination of salary and bonus for an officer of a
competitor. Based upon a survey of the cash and equity components of
compensation for comparable positions in the market, the Company then
determines what percentage of this competitive compensation it believes
should be represented by the value of an option grant. In addition to
considering the grant value and the officer's performance, the Committee
also considers the number of outstanding unvested options which the officer
holds and the size of previous option awards to that officer. The Committee
does not assign specific weights to these items.
The Company also periodically grants restricted stock to certain key
employees the Company wishes to retain. The Committee may structure this
restricted stock to vest upon the satisfaction of specified performance
goals or upon the lapse of certain time periods. During fiscal 1995, the
Company granted performance-based restricted stock to certain key
executives. Any entitlement to delivery of these restricted shares after
the three-year performance period ending October 31, 1997 will depend on
whether the Company meets certain goals with respect to earnings per share
and return on assets.
Corporate Tax Deduction on Compensation in Excess of $1 Million a Year
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1
million paid to the Company's Chief
22
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Executive Officer or any of the four other most highly compensated
executive officers. Certain performance-based compensation, however, is
specifically exempt from the deduction limit. The Company does not have a
policy that requires or encourages the Committee to qualify stock options
or restricted stock awarded to executive officers for deductibility under
Section 162(m) of the Internal Revenue Code. However, the Committee does
consider the net cost to the Company in making all compensation decisions.
CEO COMPENSATION
Lewis E. Platt has been President and Chief Executive Officer ("CEO") of the
Company since November 1, 1992 and Chairman of the Board since September 1993.
The Committee used the same compensation policy described above for all
employees to determine Mr. Platt's fiscal 1995 compensation.
In setting both the cash-based and the equity-based elements of Mr. Platt's
compensation, the Committee made an overall assessment of Mr. Platt's
leadership in achieving the Company's long-term strategic and business goals.
SALARY
Mr. Platt's base salary reflects a consideration of both competitive forces
and the Company's performance. The Committee does not assign specific weights
to these categories.
Competitive Forces
The Company surveys total cash compensation for chief executive officers at
the same group of companies described under "Cash-based Compensation" above.
When setting CEO compensation, the Company believes that it is especially
relevant to survey additional companies that are not a part of the S&P High
Tech Index because of the possibility of a company outside one industry
recruiting a CEO from another industry. Based upon its survey, the Company then
determines a median around which it builds a competitive range of compensation
for the CEO. As a result of this review, the Committee concluded that Mr.
Platt's salary was in the low end of the competitive market for CEOs. In
addition, the Committee is keenly aware that other companies within its
industry look to HP as a prime place to recruit managerial talent. A market
survey published in the August 8, 1994 edition of "Business Week" asked 100
senior executives of technology companies for the one place they would most
like to recruit senior executives. HP was the most frequent response. The
Company believes that the results of this market survey continue to reflect the
current hiring environment.
Performance
Through the first quarter of fiscal 1995, Mr. Platt's annual salary was
$1,150,000, the amount the Committee set in February 1994. In January 1995, the
Committee reviewed Mr. Platt's salary. It considered the Company's financial
results as compared to other companies within the high-
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<PAGE>
technology industry, HP's financial performance for fiscal 1994 as compared to
fiscal 1993, Mr. Platt's salary relative to the salaries of CEOs who have
comparable positions of responsibility, complexity and scope within and outside
of the high-technology industry, the growth of the Company's stock price
relative to other companies in the S&P High Tech Index and the S&P 500 Index
and Mr. Platt's salary history. Given the Company's strong financial
performance, favorable comparison to peer companies and Mr. Platt's relative
position on his salary range, the Committee increased Mr. Platt's salary from
$1,150,000 to $1,450,000, effective February 1, 1995.
STOCK OPTIONS; PERFORMANCE-BASED RESTRICTED STOCK
The Company follows the same policy described above to determine Mr. Platt's
stock incentive awards as it does for other executive officers. Stock options
and performance based-restricted stock are granted to encourage and facilitate
personal stock ownership by the executive officers and thus strengthen both
their personal commitment to the Company and a longer term perspective in their
managerial responsibilities. This component of an executive officer's
compensation directly links the officers' interests with those of the Company's
other shareholders.
In November 1994, the Committee granted Mr. Platt an option to purchase
80,000 shares (adjusted to reflect the two-for-one stock split which occurred
in March 1995) with an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. In granting the option to Mr.
Platt, the Committee reviewed the grant value guidelines described above under
"Equity-based Compensation," evaluated his performance against the performance
criteria described above under the "Performance" section of "Salary",
considered his holdings of unvested option shares and took into account the
size of previous option awards to Mr. Platt.
In November 1994, the Committee also granted Mr. Platt 40,000 shares
(adjusted to reflect the two-for-one stock split which occurred in March 1995)
of performance-based restricted stock. Any entitlement to delivery of shares
after the three-year performance period ending October 31, 1997 will depend on
whether the Company meets certain goals with respect to earnings per share and
return on assets. To the extent the Company exceeds these goals, Mr. Platt may
receive additional shares. In determining this award, the Committee considered
Mr. Platt's salary and stock grant history, the number of unvested Company
shares he holds, the Committee's evaluation of his performance and the size of
the proposed grant to Mr. Platt as compared to the size of grants to Mr.
Platt's senior staff members. Working within these parameters, the Committee
made an assessment that an award of 40,000 performance-based restricted shares
to Mr. Platt was appropriate.
COMPENSATION COMMITTEE
John B. Fery, Chair
Thomas E. Everhart
Harold J. Haynes
Susan P. Orr
Donald E. Petersen
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PERFORMANCE GRAPH
Note: The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG HEWLETT-PACKARD COMPANY, THE S&P 500 INDEX
AND THE S&P HIGH TECH COMPOSITE INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period HEWLETT- S&P S&P HIGH TECH
(Fiscal Year Covered) PACKARD 500 INDEX COMPOSITE INDEX
- ------------------- ---------- --------- ---------------
<S> <C> <C> <C>
Measurement Pt- 10/90 $100 $100 $100
FYE 10/91 $196 $134 $128
FYE 10/92 $224 $147 $129
FYE 10/93 $293 $169 $161
FYE 10/94 $395 $175 $195
FYE 10/95 $755 $221 $296
</TABLE>
*$100 INVESTED ON 10/31/90 IN STOCK OR
INDEX, INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING 10/31.
25
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no "interlocks" as defined by the Commission, with respect to any
member of the Compensation Committee. The following non-employee directors
served on the Compensation Committee during fiscal 1995: John B. Fery (Chair),
Thomas E. Everhart, Harold J. Haynes, Susan P. Orr and Donald E. Petersen.
TRANSACTIONS WITH MANAGEMENT
EQUIPMENT LOANS TO DIRECTORS. The Company has a program under which non-
employee directors of the Company may borrow certain HP personal computer
products for their own use. Several directors participated in this program in
fiscal 1995. The aggregate fair rental value of equipment loaned to directors
under this program in fiscal 1995 was approximately $66,500.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
From time to time certain shareholders of the Company submit proposals that
they believe should be voted upon by the shareholders. The Commission has
adopted regulations that govern the inclusion of such proposals in the
Company's annual proxy materials. All such proposals must be submitted to the
Secretary of the Company no later than September 17, 1996 in order to be
considered for inclusion in the Company's 1997 proxy materials.
APPROVAL OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Company's current
Audit Committee consisting of six non-employee directors, Shirley M.
Hufstedler, Richard A. Hackborn, Harold J. Haynes, Walter B. Hewlett, David M.
Lawrence and Paul F. Miller, Jr. has appointed Price Waterhouse LLP as the
Company's independent accountants to audit the consolidated financial
statements of the Company for the 1996 fiscal year. Price Waterhouse LLP served
as the Company's independent accountants for the fiscal year ended October 31,
1995, and during the course of that fiscal year they were also engaged by the
Company to provide certain tax and consulting services.
The Board of Directors recommends that the shareholders vote FOR approval of
the appointment of Price Waterhouse LLP as the Company's independent
accountants for the succeeding year. If the appointment is not approved, the
Board will select other independent accountants. Representatives of Price
Waterhouse LLP will be present at the meeting to respond to appropriate
questions from the shareholders and will be given the opportunity to make a
statement should they desire to do so.
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<PAGE>
MATTERS NOT DETERMINED AT THE TIME OF SOLICITATION
If any matters should come before the meeting other than the election of
directors and the proposal to approve the appointment of Price Waterhouse LLP
as the Company's independent accountants for the succeeding year, then the
persons named in the enclosed form of proxy will have discretionary authority
to vote all proxies with respect thereto in accordance with their judgment.
VOTE OF PROXIES
All shares represented by duly executed proxies will be voted for the
election of the nominees named above as directors unless authority to vote for
the proposed slate of directors or any individual director has been withheld.
If for any unforeseen reason any of such nominees should not be available as a
candidate for director, the proxies will be voted in accordance with the
authority conferred in the proxy for such other candidate or candidates as may
be nominated by the Board of Directors. With respect to the proposal to approve
the appointment of Price Waterhouse LLP as the Company's independent
accountants, all such shares will be voted for or against, or not voted, as
specified on each proxy. If no choice is indicated, a proxy will be voted for
the proposal to approve Price Waterhouse LLP as the Company's independent
accountants.
By Order of the Board of
Directors
D. Craig Nordlund
Associate General Counsel and
Secretary
Dated: January 15, 1996
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[LOGO OF HEWLETT-PACKARD]
5964-6523EUS
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<PAGE>
HEWLETT-PACKARD COMPANY
ANNUAL MEETING OF SHAREHOLDERS FEBRUARY 27, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lewis E. Platt and D. Craig Norlund and each of
them as proxies for the undersigned, with full power of substitution, to act and
to vote all the shares of Common Stock of Hewlett-Packard Company held of record
by the undersigned on December 29, 1995, at the annual meeting of shareholders
to be held on Tuesday, February 27, 1996, or any adjournment thereof.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
HEWLETT-PACKARD COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. Election of Directors -
T.E. Everhart, J.B. Fery, J.P.G. Gimon, S. Ginn, R.A. Hackborn, W.B.
Hewlett, G.A. Keyworth II, D.M. Lawrence, P.F. Miller, Jr., S.P. Orr, D.W.
Packard, D.E. Petersen, L.E. Platt, and R.P. Wayman
FOR ALL
FOR WITHHELD EXCEPT NOMINEE(S) WRITTEN BELOW
[_] [_] [_] _________________________________________
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED)
2. Proposal to Approve the Appointment of Price Waterhouse LLP as Independent
Accountants.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE MARK IN OVAL IF YOU PLAN TO ATTEND THE ANNUAL MEETING:
I plan to attend the annual meeting. Please send me an admission ticket. [_]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ITEMS 1 AND 2.
Dated _____________________, 1996
_________________________________
Signature
_________________________________
Signature
Please sign exactly as your name or names appear on the reverse side. For joint
accounts, each owner should sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please give your full title.
