NOTICE
OF
ANNUAL MEETING
OF
STOCKHOLDERS
AND
PROXY STATEMENT
Beneficial owners of stock held by banks, brokers or investment
plans ("in street name") will need proof of ownership to be
admitted to the meeting. A recent brokerage statement or letter
from your broker or bank are examples of proof of ownership.
March 9, 1995
Dear Stockholder:
Compaq Computer Corporation's annual meeting of
stockholders will be held Wednesday, April 26, 1995, at
10:00 a.m. at the Conference Center, CCA5, Compaq
Computer Corporation, 20555 SH 249, Houston, Texas.
Details of the business to be conducted at the
annual meeting are provided in the enclosed Notice of
Annual Meeting of Stockholders and Proxy Statement.
On behalf of the Board of Directors and employees
of Compaq, I cordially invite all stockholders to
attend the Annual Meeting and hope you will be able to
attend in person. If you are unable to attend in
person, please sign and promptly return the enclosed
proxy card in the enclosed prepaid return envelope.
Your shares will be voted at the Annual Meeting in
accordance with your proxy. If you plan to attend the
meeting in person, please remember to bring your
identification as a stockholder.
Sincerely,
Eckhard Pfeiffer
President and Chief
Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held April 26, 1995
To the Stockholders of
Compaq Computer Corporation:
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders of Compaq Computer Corporation, a Delaware
corporation (the "Company"), will be held at the
Conference Center, CCA5, Compaq Computer Corporation
20555 SH249, Houston, Texas, on Wednesday, April 26,
1995, at 10:00 a.m., Houston time, for the following
purposes, as more fully described in the accompanying
Proxy Statement:
(1) To elect eight directors;
(2) To amend the Company's Restated Certificate of
Incorporation, as amended, increasing the number of
authorized shares of the Company's common stock, $ .01
par value ("Common Stock"), from 400,000,000 shares to
1,000,000,000 shares;
(3) To approve the 1995 Equity Incentive Plan;
(4) To approve the Compaq Computer Corporation
Bonus Incentive Plan; and
(5) To act upon such other business as may
properly come before the meeting.
The close of business on February 28, 1995, has
been fixed as the record date for determining the
stockholders entitled to notice and to vote at the
annual meeting.
By Order of the Board of
Directors
Wilson D. Fargo,
Secretary
March 9, 1995
It is important that your stock be represented at the
meeting regardless of the number of shares you hold.
Please complete, sign, and mail the enclosed Proxy in
the accompanying envelope even if you intend to be
present at the meeting. Returning the Proxy will not
limit your right to vote in person or to attend the
annual meeting, but will ensure your representation if
you cannot attend. If you have shares in more than one
name, or if your stock is registered in more than one
way, you may receive more than one copy of the proxy
material. If so, please sign and return each of the
proxy cards you receive so that all of your shares may
be voted. The Proxy is revocable at any time prior to
its use.
COMPAQ COMPUTER CORPORATION
20555 SH 249
Houston, Texas 77070
PROXY STATEMENT
for
Annual Meeting of Stockholders
To Be Held April 26, 1995
VOTING AT THE MEETING AND PROXIES
On March 10, 1995, Compaq Computer Corporation, a Delaware
corporation (the "Company"), will mail this Proxy Statement to
stockholders entitled to vote at the Company's Annual Meeting of
Stockholders on April 26, 1995. Stockholders of record at the
close of business on February 28, 1995, will be entitled to vote
at the meeting and will receive a copy of this Proxy Statement,
furnishing information relating to the business to be transacted
at the meeting. On February 28, 1995, there were _______ shares
of the Company's common stock, $.01 par value (the "Common
Stock") outstanding. Each share of Common Stock entitles the
holder to one vote on each matter presented at the meeting. The
_______ shares of Common Stock held in the Company's treasury
will not be voted. All references to number of shares cited in
this Proxy Statement reflect an adjustment following the
Company's three-for-one stock split in the form of a stock
dividend in May 1994.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS TO SIGN, DATE AND RETURN THE
PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is postage-paid if
mailed in the United States.
Regarding the election of directors, you have three choices:
By checking the appropriate box on your proxy card you may (i)
vote for all of the director nominees as a group; (ii) withhold
authority to vote for all director nominees as a group; or (iii)
vote for all director nominees as a group except those nominees
you identify in the appropriate area. See "General Information"
under Election of Directors.
Abstentions and broker non-votes will be counted as present
for purposes of determining the existence of a quorum at the
Annual Meeting. Abstentions will be treated as shares present
and entitled to vote for purposes of any matter requiring
affirmative vote of a majority or other proportion of the shares
present and entitled to vote. With respect to shares relating to
any proxy as to which a broker non-vote is indicated on a
proposal, those shares will not be considered present and
entitled to vote with respect to any such proposal. With respect
to any matter brought before the Annual Meeting requiring the
affirmative vote of a majority or other proportion of the
outstanding shares, an abstention or non-vote will have the same
effect as a vote against the matter being voted upon.
You may revoke your proxy at any time before it is actually
voted at the Annual Meeting by (i) delivering written notice of
revocation to the Secretary of the Company, (ii) submitting a
subsequently dated proxy, or (iii) attending the meeting and
withdrawing the proxy. You may also be represented by another
person present at the meeting through executing a form of proxy
designating such person to act on your behalf. Each unrevoked
proxy card properly executed and received prior to the close of
the voting will be voted as indicated. Where specific
instructions are not indicated, the proxy will be voted for the
election of all directors as nominated and for all proposals
recommended by the Board of Directors.
Compaq Computer Corporation's Summary Annual Report to
Stockholders and Form 10-K for the year ended December 31, 1994,
including consolidated financial statements, are being mailed to
all stockholders entitled to vote at the Annual Meeting. These
reports do not constitute a part of the proxy soliciting
material.
The expense of preparing, printing and mailing this Proxy
Statement will be paid by the Company. To assist in the
solicitation of proxies, the Company has engaged Corporate
Investor Communications, Inc. ("CIC") at a fee of $9,500 plus
reimbursement of its out-of-pocket expenses. In addition to the
use of the mail, proxies may be solicited personally or by
telephone by regular employees of the Company as well as by
employees of CIC without additional compensation other than
reimbursement of out-of-pocket expenses. The Company will
reimburse banks, brokers and other custodians, nominees, and
fiduciaries for their costs in sending the proxy materials to the
beneficial owners of the Common Stock.
Proposal 1
ELECTION OF DIRECTORS
General Information
Directors elected at the Annual Meeting will hold office
until the next Annual Meeting at which their successors are duly
chosen and qualify, or until their earlier resignation or
removal. The Board of Directors has inquired of each nominee
and learned that each will serve if elected. In the event that
any of these nominees should become unavailable for election, the
Board of Directors may designate substitute nominees, in which
event the shares represented by the proxy cards returned will be
voted for such substitute nominees unless an instruction to the
contrary is indicated on the proxy card. The nominees receiving
a plurality of the affirmative vote will be elected. Each of the
nominees was elected by the stockholders at the last Annual
Meeting.
Information Concerning Nominees
BENJAMIN M. ROSEN Director since 1982
Benjamin M. Rosen, age 62, was appointed Chairman of the Board of
Directors of the Company in 1983. He has been Chairman of Rosen
Motor Company, which designs and will manufacture electric
automobiles, since ____. He has served as Chairman of the Board
of Sevin Rosen Management Company, a venture capital firm, since
1981. Mr. Rosen is a director of several privately held
technology companies. He is also Vice Chairman of the Board of
Trustees of the California Institute of Technology.
ECKHARD PFEIFFER Director since 1991
Eckhard Pfeiffer, age 53, was elected President and Chief
Executive Officer and appointed a director of the Company in
October 1991. He joined the Company in September 1983 as Vice
President, Europe and was elected Senior Vice President,
International Operations in January 1986, President, Europe and
International Division in May 1989, and Executive Vice President
and Chief Operating Officer in January 1991.
ROBERT TED ENLOE, III Director since 1986
Robert Ted Enloe, III, age 56, has served as President and Chief
Executive Officer of Liberte Investors since 1975. He was
President and a director of L&N Housing Corp. from 1981 to April
1992, and he remains a director of that entity, now known as LNH
Reit, Inc. From 1975 to September 1991 he served as the
President of Lomas Financial Corporation, and as a director of
that company from 1970 to 1991. Mr. Enloe also serves as a
trustee of Liberte Investors and as a director of Leggett &
Platt, Inc., and Sixx Holdings, Incorporated.
GEORGE H. HEILMEIER Director since 1994
George H. Heilmeier, age 58, has served as President and Chief
Executive Officer of Bell Communications Research, Inc.
(Bellcore), since 1991. He was Senior Vice President and Chief
Technical Officer of Texas Instruments, Inc. from 1983 to 1991.
He is a member of the Defense Science Board, the President's
National Security Telecommunications Advisory Committee and the
National Academy of Engineering. Dr. Heilmeier also serves as a
member of the boards of directors of Automatic Data Processing,
Inc. ("ADP") and TRW, Inc.
GEORGE E.R. KINNEAR II Director since 1988
George E.R. Kinnear II, age 67, is Chairman Emeritus of the Board
of the Retired Officers Association of the United States. From
November 1988 to January 1992 he served as Executive Vice
President of the University of New Hampshire (and as interim
President from February 1990 to August 1990). From 1982 to 1988,
he served as a vice president for Grumman Corporation or its
subsidiaries, last serving as Senior Vice President, Washington
Operations. He also serves as a member of the Board of Directors
for Precision Standard Corporation and The Aerospace Corporation.
PETER N. LARSON Director since 1993
Peter N. Larson, age 55, has served as Worldwide Chairman of the
Consumer and Personal Care Group of Johnson and Johnson and as a
director and member of the Executive Committee of the Board of
Directors of that company since October 1994. He rejoined
Johnson & Johnson as a Company Group Chairman in 1991. Prior to
joining Johnson & Johnson in 1991, he was a member of a
partnership managing consumer businesses. He previously had been
employed by Kimberly-Clark Corporation since 1978 in a variety of
assignments, including President of its Health Care Sector and a
member of its Board of Directors.
KENNETH L. LAY Director since 1987
Kenneth L. Lay, age 52, has served as Chairman of the Board and
Chief Executive Officer of Enron Corp., a diversified energy
company, since February 1986. In addition to Enron Corp., he
serves as a director of Eli Lilly & Company, Trust Company of the
West, and Enron Oil and Gas Company.
KENNETH ROMAN Director since 1991
Kenneth Roman, age 64, served as Chairman and Chief Executive
Officer of The Ogilvy Group from 1988 to 1989 (and from 1985 to
1989 as Chairman of Ogilvy & Mather Worldwide). He was Executive
Vice President of American Express in charge of corporate affairs
and communications from 1989 to 1991. He serves as a director of
IBJ Schroder Bank and Trust Company, PennCorp Financial Group,
Inc., and CIA Group PLC (U.K.)
These eight persons will be placed in nomination for
election to the Board of Directors. Directors will be elected by
a plurality of the affirmative votes cast. The shares
represented by the proxy cards returned will be voted FOR the
election of these nominees unless you specify otherwise.
BOARD ORGANIZATION AND MEETINGS
During 1994 the Board of Directors met ten times and various
committees of the Board met a total of seventeen times.
Attendance at Board meetings averaged 97% for regular Board
meetings and 93% for all Board meetings, including two telephonic
meetings. Attendance at committee meetings averaged 96%. Each
of the directors attended at least 75% of the meetings of the
Board of Directors and the committees on which he served.
The Audit Committee consists of six non-employee directors:
Mr. Kinnear (Chair) and Messrs. Enloe, Heilmeier, Larson, Lay,
and Rosen. The primary purpose of the Audit Committee is to
provide independent and objective oversight of the Company's
accounting functions and internal controls and to assure the
objectivity of the Company's financial statements. The Committee
also reviews and advises the Board with respect to the Company's
insurance coverage and tax policies. This Committee is
responsible for engaging the Company's independent accountants
and reviews with them (i) the scope and timing of their audit
services and any other services they may be asked to perform,
(ii) their report on the Company's consolidated financial
statements following completion of the audit, and (iii) the
Company's policies and procedures with respect to internal
accounting and financial controls. This Committee meets
separately with representatives of the Company's independent
accountants and with representatives of senior management and the
internal auditors. The Audit Committee held four meetings during
1994.
The Compensation Committee consists of six non-employee
directors: Mr. Enloe (Chair) and Messrs. Heilmeier, Kinnear,
Larson, Lay, and Roman. The Committee advises the Board with
respect to the compensation of the Company's directors and
officers and with respect to employee benefit plans. The
Committee also is responsible for administering the Company's
employee equity incentive plans and executive bonus program.
During 1994 this Committee held seven meetings.
The Nominating Committee consists of seven non-employee
directors: Mr. Larson (Chair) and Messrs. Enloe, Heilmeier,
Kinnear, Lay, Roman, and Rosen. The primary purpose of the
Nominating Committee is to establish procedures for the selection
and retention of a Board of Directors that will perform its
functions objectively and responsibly, evaluating Board nominees
and members, and recommending nominees. The Committee is also
responsible for recommending procedures that will assure a smooth
and orderly transition in the Company's management, when the need
arises. This Committee will consider nominees for the Board of
Directors recommended by stockholders. Any such recommendations
should be forwarded to the Secretary of the Company with
pertinent background information regarding the proposed nominee.
The Nominating Committee held six meetings during 1994.
DIRECTORS' COMPENSATION
Board members other than those employed by the Company
receive an annual fee of $30,000 ($50,000 for the Chairman), a
fee of $1,000 for each Board meeting attended in person, and a
fee of $500 for each Board or committee special meeting held by
telephone. Each Committee chairman receives an additional fee of
$5,000 annually. Directors are reimbursed for travel and certain
other expenses incurred in connection with their duties as
directors of the Company. In connection with his role as
Chairman of the Board of Directors, the Company retained Mr.
Rosen to perform certain consulting services for the Company. In
1994 he received $152,000 in consulting fees from the Company.
The Company has adopted a stock option plan for non-employee
directors (the "Director Plan"), which authorizes 1,500,000
shares of Common Stock for issuance pursuant to stock options
granted to non-employee directors. Under the Director Plan, (i)
each newly appointed director is granted an option to purchase
30,000 shares of Common Stock at an exercise price equal to the
market value of the Common Stock on the date of the grant; (ii)
each year upon re-election to the Board each non-employee
director receives an option grant to acquire 12,000 shares of
Common Stock or, in the case of the director named as Chairman of
the Board, an option to acquire 15,000 shares of Common Stock
with an exercise price equal to market value on the day of grant;
and (iii) six months prior to each annual meeting each non-
employee director may file an election to receive in lieu of all
or a portion of the following year's annual retainer a stock
option grant, for which the number of shares and the exercise
price are based upon 50% of the closing price of Common Stock on
the day of the annual meeting. Upon his appointment to the Board
on February 24, 1994, Mr. Heilmeier received an option grant with
an exercise price of $33.50 per share. On April 21, 1994,
Messrs. Rosen, Enloe, Kinnear, Larson, Lay and Roman each
received an option grant upon re-election with an exercise price
of $36.25 per share. Mr. Rosen was granted an option to purchase
2,757 shares and Messrs Kinnear, Lay and Roman each were granted
options to purchase 1,656 shares, at an exercise price of $18.12,
as a result of their elections to receive options in lieu of
annual fees.
As part of its overall program to promote charitable giving,
the Company has established a directors' charitable donation
program funded by life insurance policies on directors. Upon the
death of an individual who has served as a director for three
years, the Company will donate $1 million to one or more
qualifying charitable organizations recommended by the individual
director and subsequently will be reimbursed by life insurance
proceeds. Individual directors derive no financial benefit from
this program since all charitable donations are made by the
Company. The program does not result in any material cost to the
Company.
EXECUTIVE OFFICERS
The Board elects executive officers annually at its first
meeting following the annual meeting of stockholders. Certain
information concerning the Company's executive officers is set
forth below, except that information concerning Mr. Pfeiffer is
set forth above under "Election of Directors."
Andreas Barth, age 50, was elected Senior Vice President,
Europe, Middle East and Africa in December 1991. He joined the
Company in February 1988 as Managing Director of Compaq Computer
GmbH, the Company's German subsidiary, was appointed Vice
President, Central Europe in December 1990, and Vice President,
Europe in January 1991.
Hugh Barnes, age 49, was elected Senior Vice President,
Portable PC Division in April 1994. He joined the Company in
April 1984 as director of engineering for portable computers and
was appointed Vice President, General Engineering in January
1986, Vice President, Product Development in December 1989, and
Senior Vice President, Peripherals Division, in February 1993.
Ross A. Cooley, age 54, was elected Senior Vice President,
North America in December 1991. He joined the Company in
February 1984 as a regional sales manager, and was appointed Vice
President, Sales in April 1987, Vice President, Sales and Service
in September 1989, and Vice President, North America in January
1991.
Wilson D. Fargo, age 50, was elected Senior Vice President,
General Counsel and Secretary of the Company in May 1989. He
joined the Company in September 1984 as Vice President and Gener
al Counsel and he was appointed Secretary of the Company in
October 1984.
Hans W. Gutsch, age 51, was elected Senior Vice President,
Human Resources in November 1994. Mr. Gutsch joined the Company
in 1988 as Director, Human Resources, Europe, and was appointed
Vice President, Human Resources, Europe, in June 1992, and Vice
President, Human Resources and Environment, Europe, Middle East
and Africa in _______, _____.
Gregory E. Petsch, age 44, was elected Senior Vice
President, Corporate Operations in July 1993. He joined the
Company in September 1983 as director of manufacturing control
and was named Vice President, CPU Manufacturing in May 1989, Vice
President, Manufacturing in November 1991, and Senior Vice
President, Personal Computer Division, Manufacturing in April
1993.
John T. Rose, age 49, was elected Senior Vice President,
Desktop PC Division, upon his joining the Company in July 1993.
Prior to his arrival at the Company, he was Vice President of
Digital Equipment Corporation's Personal Computing Systems
Business, which he established in 1985.
Gary Stimac, age 43, was elected Senior Vice President,
Systems Division, in October 1991. He joined the Company in
February 1982 as a systems engineer and was elected Vice
President, Engineering in January 1986, Vice President, Systems
Engineering in May 1987, and Senior Vice President, Systems
Engineering in May 1989.
Daryl J. White, age 47, was elected Senior Vice President,
Finance and Chief Financial Officer in May 1989. He joined the
Company in January 1983 as Director of Information Management and
was elected Corporate Controller in May 1984, Vice President and
Corporate Controller in January 1986, and Vice President, Finance
and Chief Financial Officer, in October 1988.
Gian Carlo Bisone, age 48, was elected Vice President, North
America Marketing, in May 1992. He joined the Company in April
1990 as Vice President, Marketing, Europe, and was appointed Vice
President, Corporate Marketing, in October 1991. Before joining
the Company, Mr. Bisone was Vice President, Marketing for
Olivetti. He was employed by Olivetti for 18 years and served in
a number of positions.
David J. Schempf, age 39, was elected Vice President,
Corporate Finance, Corporate Controller, and Treasurer in
November 1992. He joined the Company in October 1982 as
accounting manager and later served as controller of the office
and personal computer divisions and was elected Vice President
and Corporate Controller in May 1989.
Robert W. Stearns, age 44, was elected Vice President,
Corporate Development upon his joining the Company in July 1993.
Prior to his arrival at the Company, he was employed as a
consultant focusing on high technology issues with McKinsey & Co.
from August 1992 to July 1993 and as Vice President, Corporate
Marketing with Motorola/Codex from September 1986 to August 1992.
John W. White, age 56, was elected Vice President and Chief
Information Officer upon his joining the Company in February
1994. Before joining the Company, Mr. White was Vice President
of Texas Instruments, Inc., and President of its Information
Technology Group. He was employed by Texas Instruments for 28
years and served in a number of positions.
STOCK OWNERSHIP
The following table sets forth information regarding the
ownership of the Company's Common Stock by (i) each beneficial
owner of more than 5% of the outstanding Common Stock, (ii) each
director, (iii) the Chief Executive Officer and the four most
highly compensated other executive officers, and (iv) the
executive officers and directors as a group as of January 31,
1995. Unless otherwise indicated, each of the stockholders has
sole voting and investment power with respect to the shares
beneficially owned. The Company had 261,306,079 shares of Common
Stock outstanding at January 31, 1995.
Name of Owner or Number of Shares Percent
of
Identity of Group Options(a) Total(a) Outstanding
FMR Corp. (b)
82 Devonshire Street
Boston, MA 02109
Benjamin M. Rosen 188,784 1,706,748 *
Eckhard Pfeiffer 1,311,016 1,312,696 (c) *
Robert Ted Enloe, III 72,000 72,000 *
George E.R. Kinnear II 19,845 46,845 *
George H. Heilmeier 30,000 30,300 *
Peter N. Larson 30,000 30,600 *
Kenneth L. Lay 12,000 110,757 (d) *
Kenneth Roman 36,000 46,500 *
Andreas Barth 321,102 322,092 *
Ross A. Cooley 48,504 54,711 (e) *
Gary Stimac 112,756 178,933 (f) *
Daryl J. White 66,506 68,855 *
All executive
officers and 2,693,346 4,455,692 (g) 1.71%
directors as a
group
* Less than 1%
(a) Includes Company stock options that are exercisable or will
become exercisable by April 1, 1995.
(b) Based on information provided in Schedule 13G and amendments
thereto filed with the Securities and Exchange Commission
February 9, 1995, these shares are beneficially held by FMR
Corporation ("FMR") and certain of its affiliates and associates.
Fidelity Management & Research Company ("FMRC"), a registered
investment adviser and a wholly owned subsidiary of FMR, is the
beneficial owner of ____ shares as a result of acting as investment
adviser to the Fidelity Funds, voting power over which resides
with the Funds' Boards of Trustees.
(c) Includes 1,680 shares held by daughter and in custody for a
minor child.
(d) Includes 98,757 shares held by limited partnership.
(e) Includes 6,207 shares of Common Stock credited to Mr.
Cooley's account in the Company's defined contribution plan.
(f) Includes 4,185 shares of Common Stock credited to Mr.
Stimac's account in the Company's defined contribution plan.
(g) Includes 38,474 shares of Common Stock credited to the
executive officers' accounts in the Company's defined
contribution plan.
EXECUTIVE COMPENSATION
The following Tables I through III present information
concerning the cash compensation and stock options provided to
Messrs. Pfeiffer, Barth, Cooley, Stimac, and White. The notes to
these tables provide more specific information regarding
compensation. Table IV sets forth the anticipated retirement
benefits to be received by Mr. Pfeiffer and Mr. Barth under the
defined benefit retirement plan of the Company's German
subsidiary. The Company's compensation policies are discussed in
the Compensation Committee Report that appears on page 10.
<TABLE>
TABLE I
SUMMARY COMPENSATION
<CAPTION>
Long-Term
Annual Compensation <F1> Compensation
Securities
Other All
Principal Annual Underlying Other
Position Year Salary Bonus Compensation Options (b) Compensation
<S> <C> <C> <C> <C> <C> <C>
Eckhard Pfeiffer 1994 <F3> <F4>
Chief Executive 1993 1,000,000 1,500,000 -- 360,000 --
Officer 1992 921,400 800,000 1,166,404 <F3> 360,000 --
Andreas Barth 1994 <F4>
Senior Vice 1993 380,573 350,590 -- 120,000 --
EMEA 1992 352,158 247,693 -- 120,000 --
Ross A. Cooley 1994 <F5>
Senior Vice 1993 321,766 450,000 -- 120,000 8,994<F6>
President 1992 300,159 225,000 -- 90,000 8,728<F6>
North America
Gary Stimac 1994 <F7>
Senior Vice 1993 430,000 450,000 -- 120,000 8,994<F6>
President 1992 410,000 250,000 -- 120,000 8,728<F6>
Systems Division
Daryl J. White 1994 <F8>
Chief Financial 1993 365,000 400,000 -- 120,000 8,994<F6>
Officer 1992 345,000 250,000 -- 120,000 8,728<F6>
<FN>
<F1> Amounts shown include cash compensation earned by executive
officers as well as amounts earned but deferred. Management
believes that the value of any other benefits to any officer
during 1993 or to any officer other than Mr. Pfeiffer during 1994
and 1992 did not exceed $50,000 or fall within any other category
requiring inclusion.
<F2> All figures in this column reflect number of shares adjusted
to reflect the Company's three-for-one stock split in 1994.
<F3> In accordance with the employment agreement between the
Company and Mr. Pfeiffer executed in 1992, the Company paid these
funds to Mr. Pfeiffer to reimburse him for U.S. taxes incurred in
1992 and 1994 upon exercise of certain stock options.
<F4> Amount reflects a deferred unfunded bonus, the payment of
which is subject to conditions established by the Compensation
Committee of the Board of Directors.
<F5> Amount shown includes $4,500 contributed to the Company's
defined contribution plan on behalf of Mr. Cooley and a $___
deferred unfunded bonus, the payment of which is subject to
conditions established by the Compensation Committee of the Board
of Directors.
<F6> Amounts contributed to the Company's defined contribution
plan on behalf of the named executive officers.
<F7> Amount shown includes $27,000 contributed to the Company's
defined contribution plan and deferred compensation plan on
behalf of Mr. Stimac and a $____ deferred unfunded bonus, the
payment of which is subject to conditions established by the
Compensation Committee of the Board of Directors.
<F8> Amount shown includes $23,100 contributed to the Company's
defined contribution plan and deferred compensation plan on
behalf of Mr. White and a $_____ deferred unfunded bonus, the
payment of which is subject to conditions established by the
Compensation Committee of the Board of Directors.
</FN>
</TABLE>
<TABLE>
TABLE II
1994 OPTION EXERCISES
AND YEAR-END OPTION VALUES
<CAPTION>
Number of Value of
Unexercised Unexercised
1994 Stock Option Options at in-the-Money
Exercises December 31 Options
1994 at December
31, 1994
Shares Value
Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Eckhard Pfeiffer
Andreas Barth
Ross Cooley
Gary Stimac
Daryl White
</TABLE>
<TABLE>
TABLE III
1994 STOCK OPTION GRANTS
<CAPTION>
Gains based on
Assumed Rates
1994 Stock Option Grants of Stock Price
Appreciation
for Option Term<F1>
% of 1994 Exercise/Base Expiration Assumed Assumed
Options Employee Price/share date Rate Rate
Granted <F2> Option Grants 9/22/94 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Eckhard Pfeiffer
Andreas Barth
Ross Cooley
Gary Stimac
Daryl White
All Stockholders:
258,390,613 shares outstanding 9/22/94
Named officers gain as % of
All Stockholders'gain
<FN>
<F1> The potential gain is calculated from the closing price of
Common Stock on September 22, 1994, the date of grants to
executive officers. These amounts represent certain assumed
rates of appreciation only. Actual gains, if any, on stock
option exercises and Common Stock holdings are dependent on the
future performance of the Common Stock and overall market
conditions. There can be no assurance that the amounts reflected
in this table will be achieved.
<F2> Option grants generally vest over 60 months from the date of
grant and expire ten years from date of grant.
</FN>
</TABLE>
TABLE IV
GERMAN PENSION PLAN
Final Annual Pension Benefits without
Eckhard Average Reductions
Pfeiffer Base for Anticipated Social Security and Prior
Salary Employer Pension Benefits
Years of 15 20 25 30 35
Service
$ $ $ $ $ $
900,000 352,174 469,565 540,000 540,00 540,000
1,000,000 391,304 521,739 600,000 600,00 600,000
1,100,000 430,435 573,913 660,000 660,00 660,000
1,200,000 469,565 626,087 720,000 720,00 720,000
1,300,000 508,696 678,261 780,000 780,00 780,000
Final Annual Pension Benefits without Reduction
Andreas Base for Anticipated Social Security Benefits
Barth Salary
Years of 15 20 25 30 35
Service
$ $ $ $ $ $
400,00 120,00 160,000 200,000 240,00 280,000
500,00 150,00 200,000 250,000 300,00 350,000
600,00 180,00 240,000 300,000 360,00 420,000
700,00 210,00 280,000 350,000 420,00 490,000
800,00 240,00 320,000 400,000 480,00 560,000
Table IV indicates anticipated benefits at age 65 assuming
the years of service with the Company shown. At December 31,
1994, Mr. Pfeiffer and Mr. Barth had eleven years and six years
of vested service, respectively. Benefits for Mr. Pfeiffer are
calculated based on a formula under which he receives benefits
equal to sixty percent of his average base salary over his final
three years of employment. Any benefit is offset by U.S. and
German social security benefits, pension payments from previous
employers, and any amounts contributed by the Company on his
behalf to the U.S. defined contribution plan. Benefits for Mr.
Barth are calculated based on a formula under which he receives
an annual retirement benefit equal to two percent of his final
base salary times his years of service. This benefit will be
offset by German social security benefits. The Company's
executive officers in the United States are eligible to
participate in the Company's defined contribution plan. Amounts
contributed to the defined contribution plan are included in
Table I.
Executive Officer Agreements
Effective January 1, 1992, the Company entered into an
employment agreement with Mr. Pfeiffer (the "CEO Agreement").
The CEO Agreement sets forth certain of the terms of
Mr. Pfeiffer's employment, including Mr. Pfeiffer's right to
receive a severance payment equal to four times his base salary
(excluding bonuses) upon (i) termination of employment without
cause, or (ii) his resignation following his removal as Chief
Executive Officer or a change of control of the Company. In such
events, the CEO Agreement also calls for Mr. Pfeiffer to vest in
all his outstanding stock options and to have a two-year period
to exercise options granted before 1989. Mr. Pfeiffer's right to
receive the severance payment, accelerated stock option vesting,
and an extension of the period to exercise his options is subject
to his execution of a release of any claims against the Company
and his agreement not to compete with the Company or solicit its
employees for 24 months following termination of employment. The
agreement set forth Mr. Pfeiffer's base compensation for 1992 and
calls for Mr. Pfeiffer and the Company to renegotiate Mr.
Pfeiffer's base salary on an annual basis. The CEO Agreement
also set forth the Company's agreement to indemnify Mr. Pfeiffer
for certain personal income taxes related to his relocation to
the United States in 1991, which obligation has been fulfilled.
The CEO Agreement governs the terms and conditions of Mr.
Pfeiffer's employment with the Company until he resigns or his
employment is terminated at any time by the Company, with or
without cause.
The Company has entered into severance arrangements with
Messrs. Barth, Cooley, Stimac and White. The Company has agreed
with each of these officers that upon (i) termination of
employment without cause or (ii) resignation following a material
change in the officer's duties, a change of control, disability,
a reduction in pay greater than 25%, or the Company's failure to
renew the agreement, such officer would receive a severance
payment equal to eighteen months of base compensation. The
Company's obligation to make such payment is subject to the
officer's execution of a release and noncompetition and
nonsolicitation agreement.
The Company's stock option plans provide for full vesting of
outstanding options in the event there is a change of control of
the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors,
composed of independent outside directors, is responsible for
setting the policies that govern the Company's compensation
programs, administering the Company's equity compensation plans,
and establishing the cash compensation of executive officers.
The Committee's objectives are to establish compensation programs
designed to attract, retain, and reward executives who will lead
the Company in achieving its business goals in a highly
competitive and rapidly changing industry and to ensure that
management compensation is reasonable in light of the Company's
objectives, compensation for similar personnel in other
companies, and other relevant criteria. The compensation mix for
executive officers consists of base salaries, an annual cash
bonus system, and stock option awards. As a result, much of an
executive officer's compensation is based upon the financial
performance of the Company.
The Committee makes its compensation decisions based on an
analysis of the Company's performance and an evaluation of
comparative compensation information. Comparative performance
data in 1994 was based on a group of 35 industry competitors,
which included all of the companies in the S&P Computer Systems
Index as well as certain other companies. The peer group is
recommended to the Committee by an outside consulting firm, which
analyzes companies for similar product lines, size, and financial
structure. In 1994, the Company's performance placed the Company
at about the 90th percentile in the peer group based on an
evaluation of return on total capital and sales growth, which are
highly correlated with long-term stockholder value creation.
Comparative compensation data in 1994 was derived from
analysis of several independent surveys of compensation practices
by the Company and outside consultants. Information from the
computer and electronics industry segments is used wherever
available. Nearly all of the companies in the comparative
performance analysis are included in one or more of the surveys
used to assess comparative compensation practices. The
Committee believes these sources provide the appropriate
information to evaluate the cash and equity compensation pay
practices of the companies with which the Company competes to
hire and retain executives.
The Committee annually establishes each executive officer's
base salary based on the Committee's evaluation of the officer's
performance and contribution in the previous year and on
competitive pay practices. The Company targets executive base
salary range midpoints at the 62nd percentile of relevant market
data. The Committee determined each executive officer's base
compensation for 1994, including the CEO's, based upon an
appraisal of the officer's contribution to the Company's results
in 1993, and on the officer's position and responsibilities for
1994. The criteria used in this appraisal varied based upon the
officer's sphere of responsibility, but generally focused on
measures such as sales growth in marketing and sales divisions,
an assessment of plans for existing and new products in product
divisions, expense control, and asset management.
At the end of each year, the Committee establishes a cash
bonus fund based on the Company's performance relative to the
industry peer group. In 1994 the Committee evaluated comparative
compensation data to determine the aggregate amount required to
pay bonuses that would result in average total cash compensation
to executives at the 90th percentile level, in line with the
Company's performance in 1994. The Committee then determined the
amount of the award for each executive officer by reviewing
comparative data for each executive officer's position at the
90th percentile total cash compensation levels and evaluating
this information in light of individual contribution levels,
succession plans, prospective future contributions, and retention
requirements. In establishing Mr. Pfeiffer's bonus for 1994, the
Committee considered the effective strategies that were initiated
and executed by Mr. Pfeiffer, which resulted in record-setting
financial performance in 1994, including an annual sales increase
to $10.9 billion from $7.2 billion in 1993, an increase in
earnings per share to $3.21 from $1.78 in 1993, a 50 percent
growth in the number of unit shipments worldwide, and, in
particular, the industry and financial community's confidence in
Mr. Pfeiffer's leadership. The Committee authorizes the Chief
Executive Officer to allocate the remainder of the bonus fund to
key employees other than executive officers based on competitive
pay practices and individual performance and contributions.
The Compensation Committee and the Board of Directors
believe that management's ownership of a significant equity
interest in the Company is a major incentive in building
shareholder wealth and aligning the long-term interests of
management and stockholders. Stock options, therefore, are
granted by the Committee at option prices not less than the fair
market value of the Company's common stock on the grant date and
generally vest over sixty months. Thus stock options have no
value unless the share price increases over the fair market value
on the date of grant. Option awards contribute to the retention
of key executives since executives realize the benefits of
options only as they vest based on tenure after the grant. The
Compensation Committee determines which employees receive stock
option grants by evaluating the responsibilities and relative
positions of key employees in comparison to like or similar
positions at competitor companies.
Based on the Company's performance in comparison to the peer
group, the Committee determined that in 1994 options should be
awarded to Mr. Pfeiffer and other key executives at levels above
the 90th percentile of comparative grant practices reflected in
the various survey sources. The Committee uses competitive
market data and historical option grant practices to determine an
appropriate range of awards for similar positions and makes
awards within this range based on an evaluation that takes into
consideration the employee's past and prospective contributions
to the success of the Company as well as the projected value of
outstanding unvested shares and proposed awards. To evaluate
projected values, the Committee uses stock price projections two
years in the future that are based on Value Line predictions of
the industry share growth rate.
In its tax year beginning December 1, 1994, the Company will
be subject to Internal Revenue Code Section 162(m), which could
limit the deductibility of certain compensation payments to its
executive officers. The Company believes that any compensation
realized in connection with the exercise of stock options granted
by the Company will continue to be deductible as performance-
based compensation. The Committee has evaluated the impact of
this legislation on its cash and equity compensation programs and
has adopted two additional compensation plans that are being
submitted for approval by the stockholders of the Company in
April 1995. The Company believes that compensation paid under
the new Compaq Computer Corporation Bonus Incentive Plan should
qualify for full deductibility under Section 162(m). The Company
generally intends to comply with the requirements of Section
162(m); however, it also intends to weigh the burdens of such
compliance against the benefits to be obtained by the Company
from such compliance, and in the future may pay compensation that
is not fully deductible if it determines that such payments are
in the Company's best interests.
Compensation Committee
Robert Ted Enloe, III, Chair Peter N. Larson
George H. Heilmeier Kenneth L. Lay
George E.R. Kinnear II Kenneth Roman
Stock Performance Graph
The following graph compares the Company's cumulative total
return to the S&P 500 and the S&P Computer Systems Composite
Index over a five-year period, beginning December 31, 1989, and
ending December 31, 1994. The total stockholder return assumes
$100 invested at the beginning of the period in Compaq Common
Stock, the S&P 500, and the S&P Computer Systems Composite Index.
It also assumes reinvestment of all dividends. Past financial
performance should not be considered to be a reliable indicator
of future performance, and investors should not use historical
trends to anticipate results or trends in future periods.
TABLE
Comparison of Five-Year Cumulative Total Return
(Linear graph with coordinates indicated in the table below)
1989 1990 1991 1992 1993 1994
Compaq Computer 100 142 66 123 186 298
Corporation
S&P 500 Composite 100 97 126 136 150 152
S&P Computer Systems 100 112 100 73 76 98
Composite
Proposal 2
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
At the meeting, stockholders will be asked to consider and
vote upon a proposal to amend the Company's Restated Certificate
of Incorporation, as amended, increasing the number of shares of
authorized common stock, $.01 par value ("Common Stock"), from
400,000,000 to 1,000,000,000. Such amendment was declared
advisable and unanimously approved by the Board of Directors in
January 1995.
The Company's Restated Certificate of Incorporation, as
amended, currently authorizes the issuance of 410,000,000 shares
of capital stock composed of 400,000,000 shares of Common Stock
and 10,000,000 shares of preferred stock, $.01 par value. The
proposed amendment would increase the Company's total authorized
capital stock by 600,000,000 shares, from 410,000,000 shares to
1,010,000,000 shares. If the amendment is authorized, the text
of Article 4.A., as amended from time to time, would be amended
to read as follows:
"A. Authorized Shares and Classes of Stock: The
total number of shares of stock that the Corporation
shall have the authority to issue is 1,010,000,000
shares composed of (i) 1,000,000,000 shares of Common
Stock, par value $.01 per share, (Common Stock); and
(ii) 10,000,000 shares of Preferred Stock, par value
$.01 per share (Preferred Stock)."
At January 31, 1995, there were 261,306,079 shares of Common
Stock outstanding and 48,117,425 shares of unissued Common Stock
reserved for issuance under the Company's employee and director
stock benefit plans. In addition, as described in "Proposal 3"
below, the Board of Directors has proposed to reserve an
additional 13,000,000 shares for issuance under the proposed 1995
Equity Incentive Plan. Assuming the 1995 Equity Incentive Plan
is adopted, the Company will have 61,117,425 shares of authorized
Common Stock reserved for future issuance under such plans. The
Board of Directors has determined that the number of authorized
shares of Common Stock should be increased to provide the Company
with the flexibility to conduct the Company's future operations,
including the issuance, distribution, exchange, or reservation of
shares of Common Stock for stock dividends, acquisitions,
financings, and employee stock benefit plans.
In May 1994, the Company issued 174,994,320 shares of Common
Stock as the result of a three-for-one stock split effected in
the form of a stock dividend. The Board of Directors currently
has no specific plans to issue additional Common Stock except as
provided in the Company's employee and director stock benefit
plans. Under certain circumstances, an increase in the number of
authorized shares of a corporation's capital stock can provide
management with a means of discouraging an unsolicited change in
control. Although the proposed amendment may allow the Board of
Directors to issue additional shares of Common Stock in the event
of an unsolicited attempt to acquire control of the Company as a
means of discouraging a hostile bidder, the Company's Board of
Directors has no present intention of using the additional shares
for such a purpose, except to the extent such an issuance could
occur under the Company's Shareholder Rights Plan. The Board of
Directors is not presently aware of any plans to acquire control
of the Company.
Holders of Common Stock do not have preemptive rights to
subscribe to additional securities that may be issued by the
Company, which means that the current stockholders do not have a
prior right to purchase any new issue of capital stock of Compaq
Computer Corporation in order to maintain their proportionate
ownership. However, stockholders wishing to maintain their
interests may be able to do so through normal market purchases.
Approval
Approval of the proposed amendment to the Company's Restated
Certificate of Incorporation requires the affirmative vote of the
holders of a majority of the shares of Common Stock outstanding.
Proxies solicited by management will be voted FOR this proposal
unless a vote against this proposal or abstention is specifically
indicated
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION.
Proposal 3
APPROVAL OF THE 1995 EQUITY INCENTIVE PLAN
In January 1995, the Board of Directors declared advisable
and unanimously adopted, subject to stockholder approval at the
Annual Meeting, the Compaq Computer Corporation 1995 Equity
Incentive Plan (the "1995 Equity Plan"). If approved by
stockholders, the 1995 Equity Plan will provide for the granting
of stock options and other stock and cash awards in order to
facilitate the attraction, retention, and motivation of key
employees, as well as enabling such employees to participate in
the long-term growth and financial success of the Company.
Shares Reserved under the 1995 Equity Plan
The initial number of shares of Common Stock that may be
purchased under the 1995 Equity Incentive Plan shall not exceed
13 million, subject to adjustment in the event of stock
dividends, stock splits, combination of shares,
recapitalizations, or other changes in the outstanding Common
Stock. Such adjustments may be made by the Committee. The
shares issuable under the 1995 Equity Plan may be drawn from
either authorized but previously unissued shares of Common Stock
or from reacquired shares of Common Stock, including shares
purchased by the Company on the open market and held as treasury
shares.
Material Features of the 1995 Equity Plan
The following brief description of the material features of
the 1995 Equity Plan is qualified in its entirety by reference to
the full text of the Plan that is attached to this Proxy
Statement as Exhibit A.
The 1995 Equity Plan shall be administered by a Committee
designated by the Board of Directors and composed of at least the
minimum number of persons required by Rule 16b-3, each of whom,
as may be required by Rule 16b-3, is a "disinterested person"
within the meaning of the same Rule. Currently the Compensation
Committee is this Committee. The Committee shall have, among
other powers, the power to interpret, waive, amend, establish, or
suspend rules and regulations of the 1995 Equity Incentive Plan
in its administration of the 1995 Equity Incentive Plan.
The Committee shall have sole and complete authority to
grant to eligible participants one or more awards of stock
options, including incentive stock options and/or nonqualified
stock options, stock appreciation rights, restricted stock and
restricted stock units, performance awards, other stock-based
awards, or any combination thereof. The Committee shall have the
sole discretion to determine the number or amount of shares,
units, cash, or other rights or awards to be awarded to any
participant; however, subject to adjustment as provided in the
1995 Equity Plan, no executive officer may receive awards under
the plan in any calendar year that relate to more than 500,000
shares, except that a new employee who begins service as Chief
Executive Officer may receive Awards that relate to up to
1,000,000 Shares in the calendar year in which employment with
the Company begins.
Subject to the restrictions described below, the Committee
in its sole discretion shall establish the exercise price, grant
price, or value of awards. Should the Committee establish a
program under which restoration options are granted to employees
utilizing options to pay the exercise price of outstanding
options, such options shall have a per share exercise price of
not less than 100% of the per share fair market value on the date
of grant. Restricted stock and restricted stock units shall have
a value equal to the fair market value of a share of Common
Stock, as determined in the Committee's discretion. Each award
will be evidenced by an award agreement that will be delivered to
the participant, specifying the terms and conditions of the award
and any rules applicable to such award.
Upon a change in control as defined in, and subject to
certain limitations under the 1995 Equity Incentive Plan, all
outstanding awards will vest, become immediately exercisable or
payable or have all restrictions lifted as may apply to the type
of award granted. Awards are nontransferable; however, an award
may be transferable under the 1995 Equity Incentive Plan to the
extent set forth in the applicable award agreement if such award
agreement provisions do not disqualify such award for exemption
under Rule 16b-3, or if such award is not intended to qualify for
exemption under Rule 16b-3. Awards may be made under the 1995
Equity Incentive Plan until the number of shares available for
grant has been exhausted; provided, however, no incentive stock
option (as defined in Section 422 of the Internal Revenue Code of
1986) shall be granted after December 31, 2005.
Eligible Participants
Under the 1995 Equity Plan, and as designated by the
Committee, any employee of the Company or the Company's
affiliates who is not a member of the Committee may participate
in the plan and receive award(s) thereunder. This includes the
Chief Executive Officer, who is a director, thirteen other
executive officers, and approximately 14,500 other employees.
Nature of Amendments Allowed to the 1995 Equity Plan Without
Stockholder Action
The Board of Directors may amend, alter, suspend,
discontinue, or terminate the 1995 Equity Plan or any portion
thereof at any time, provided that no such action will be made
without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement with which the
Board deems it necessary or desirable to comply.
New Plan Benefits
No benefits or amounts have been allocated under the 1995
Equity Plan; nor are any such benefits or amounts now
determinable. For comparison purposes, please refer to the
grants and awards that were made under the Company's existing
stock option plans in 1994, shown in the 1994 Stock Option Grants
table on page 8 of this Proxy Statement. In addition to the data
shown in that table, in 1994, 1,468,725 stock options were
granted to all current executive officers as a group, and
4,098,500 stock options were granted to all employees, including
all current officers who are not executive officers, as a group.
The Company's existing employee plans, like the 1995 Equity Plan,
do not allow awards to non-employee directors. The Company
grants stock options to non-employee directors under the
"Director Plan," which is described in the section "Directors'
Compensation" above.
Discussion of Federal Income Tax Consequences
Set forth below is a summary of the federal income tax
consequences relating to awards granted under the 1995 Equity
Plan. The 1995 Equity Plan has been designed to meet the
requirements in Section 162(m) of the Internal Revenue Code of
1986 (the "Code").
Incentive Stock Options
No taxable income is recognized by the optionee upon the
grant or exercise of an incentive stock option ("ISO") that meets
the requirements of Section 422 of the Code. However, the
exercise of an ISO may result in alternative minimum tax
liability for the optionee. If no disposition of shares issued
to an optionee pursuant to the exercise of an ISO is made by the
optionee within two years from the date of grant or within one
year after the date of exercise, then upon sale of such shares,
any amount realized in excess of the exercise price (the amount
paid for the shares) will be taxed to the optionee as a long-term
capital gain and any loss sustained will be a long-term capital
loss, and no deduction will be allowed to the Company for federal
income tax purposes.
If shares of Common Stock acquired upon the exercise of an
ISO are disposed of prior to the expiration of the two-year and
one-year holding periods described above (a "disqualifying
disposition"), generally the optionee will recognize ordinary
income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares on the
date of exercise (or, if less, the amount realized on an arm's
length sale of such shares) over the exercise price of the
underlying options, and the Company will be entitled to deduct
such amount. Any gain realized from the shares in excess of the
amount taxed as ordinary income will be taxed as capital gain and
will not be deductible by the Company.
An ISO will not be eligible for the tax treatment described
above if it is exercised more than three months following
termination of employment, except in certain cases where the ISO
is exercised after the death or permanent and total disability of
the optionee. If an ISO is exercised at a time when it no longer
qualifies for the tax treatment described above, the option is
treated as an nonqualified stock option ("NQO").
Nonqualified Stock Options
No taxable income is recognized by the optionee at the time
an NQO is granted under the 1995 Equity Plan. Generally, on the
date of exercise of an NQO, ordinary income is recognized by the
optionee in an amount equal to the difference between the
exercise price and the fair market value of the shares on the
date of exercise, and the Company receives a tax deduction for
the same amount. Upon disposition of the shares acquired, an
optionee generally recognizes the appreciation or depreciation on
the shares after the date of exercise as either short-term or
long-term capital gain or loss depending on how long the shares
have been held.
If the stock received upon exercise of an option or stock
appreciation right is subject to a substantial risk of
forfeiture, the income and the deduction, if any, associated with
such award may be deferred in accordance with the rules described
below for restricted stock.
Stock Appreciation Rights
No income will be recognized by an optionee in connection
with the grant of a stock appreciation right ("SAR"). When the
SAR is exercised, the optionee will generally be required to
include as taxable ordinary income in the year of such exercise
an amount equal to the amount of cash received and the fair
market value of any stock received. The Company will generally
be entitled to a deduction equal to the amount includable as
ordinary income by such optionee.
Restricted Stock
A recipient of restricted stock generally will be subject to
tax at ordinary income rates on the excess of the fair market
value of the stock (measured at the time the stock is either
transferable or is no longer subject to forfeiture) over the
amount, if any, paid for such stock. However, a recipient who
elects under Section 83(b) of the Code within 30 days of the date
of issuance of the restricted stock to be taxed at the time of
issuance of the restricted stock will recognize ordinary income
on the date of issuance equal to the fair market value of the
shares of restricted stock at that time (measured as if the
shares were unrestricted and could be sold immediately), minus
any amount paid for such stock. If the shares subject to such
election are forfeited, the recipient will be entitled to a
capital loss for tax purposes only for the amount paid for the
forfeited shares, not the amount recognized as ordinary income as
a result of the Section 83(b) election. The holding period to
determine whether the recipient has long-term or short-term
capital gain or loss upon sale of shares begins when the
forfeiture period expires (or upon issuance of the shares, if the
recipient elected immediate recognition of income under Section
83(b) of the Code).
Approval
Approval of the 1995 Equity Plan requires the affirmative
vote of the holders of a majority of the shares of Common Stock
represented at the meeting. Broker non-votes will not be treated
as shares present or represented and entitled to vote at the
Annual Meeting. The Board of Directors believes that the
approval of this Plan is in the best interests of the Company
since it will facilitate the Company's attraction, motivation and
retention of key employees, while maintaining the Company's
ability to fully deduct its performance-based compensation under
Section 162(m) of the Internal Revenue Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF 1995 EQUITY INCENTIVE PLAN. Proxies solicited by management
will be voted FOR this proposal unless a vote against this
proposal or abstention is specifically indicated.
Proposal 4
APPROVAL OF THE COMPAQ COMPUTER CORPORATION
BONUS INCENTIVE PLAN
In January 1995, the Board of Directors declared advisable
and unanimously adopted, subject to stockholder approval at the
Annual Meeting, the Compaq Computer Corporation Bonus Incentive
Plan (the "Bonus Plan"). If approved by stockholders, the Bonus
Plan will provide incentives for senior executives and other key
employees whose performance in fulfilling the responsibilities of
their positions can have a major impact on the profitability and
future growth of the Company and its subsidiaries.
Material Features of the Bonus Incentive Plan
The following summary description of the material terms of
the Bonus Plan is qualified in its entirety by reference to the
full text of the Plan that is attached to this Proxy Statement as
Exhibit B.
The Bonus Incentive Plan shall be administered by a
Committee of two or more "outside" directors, designated by the
Board of Directors. Currently the Compensation Committee is this
Committee. The Committee will have full authority to interpret
the Bonus Incentive Plan and to adopt such rules and regulations
deemed necessary by the Committee to effect the purposes of the
Bonus Incentive Plan. However, the Committee may not exercise
any such authority if such action would have the effect of
increasing the amount of an award under the Bonus Incentive Plan
to any officer defined as a "covered employee" ("Covered
Employee") under Section 162(m) of the Code, which generally
includes executive officers listed in the compensation tables of
the Company's proxy statement for the annual meeting following
the year in which such compensation was paid. The Committee has
the sole discretion to select officers or employees of the
Company or the Company's subsidiaries who will be eligible to
earn awards under the Bonus Incentive Plan for that calendar
year. The Committee also has the authority to determine the
amount of such awards and any conditions under which they may be
earned.
Annual bonus awards will be paid in the form of cash, and
participants may have any or all of such awards deferred into the
Compaq Computer Corporation Deferred Compensation & Supplemental
Savings Plan. Such awards are nontransferable and nonassignable
other than by will or by the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order prior to the
payment of an award. Subject to the discretion of the Committee,
the amount of any award to any Covered Employee shall be 15% of
the plan funding amount for the award year. "Plan funding
amount" is equal to 6% of pretax operating income for the
applicable award year. Payments to a Covered Employee are
contingent upon the Committee's certifying the plan funding
amount for the applicable award year. Where special factors are
present, the Committee, at its sole discretion, may adjust net
income as it is used to determine payments under the Bonus Plan,
except that such adjustments shall be disregarded for purposes of
calculating the amount that may be paid to a Covered Employee
under the Bonus Plan. The Committee may reduce or eliminate an
award amount to a covered officer.
Eligible Participants
Under the Bonus Incentive Plan, and as designated by the
Committee, any employee of the Company or the Company's
subsidiaries may participate in the Plan and receive award(s)
thereunder. This includes the Chief Executive Officer, who is a
director, thirteen other executive officers, and approximately
14,500 other employees.
Nature of Amendments Allowed to the 1995 Bonus Incentive Plan
Without Stockholder Action
The Board of Directors may terminate or amend, in whole or
in part, the Bonus Incentive Plan. However no such action may
adversely affect the rights of any participant under any awards
deferred by such participant into the Compaq Computer Corporation
Deferred Compensation & Supplemental Savings Plan. Upon such
whole or partial termination of the Bonus Incentive Plan the
Committee may, in its sole discretion, direct the payment to
participants of any awards not already paid out prior to the
respective dates upon which payments would otherwise be made, in
a lump sum or installments. The Board of Directors may delegate
to the Committee any or all of its authority relating to amending
or terminating the Bonus Incentive Plan. However, any amendment
to the Bonus Plan that would affect any Covered Employee shall be
approved by the Company's stockholders if required by Section
162(m) of the Internal Revenue Code.
New Plan Benefits
The benefits to be received for 1995 performance under the
Compaq Computer Corporation Bonus Incentive Plan are not yet
determinable. However, the maximum amounts that could have been
received by or allocated to each of the following for fiscal year
1994 if the plan had been in effect, without giving effect to the
discretionary authority of the Committee to reduce such amounts,
are shown below in the New Plan Benefits table.
NEW PLAN BENEFITS
Compaq Computer Corporation Bonus Incentive Plan
Dollar Value
Name and Position ($) of
Payments/Deposits (a)
Eckhard Pfeiffer, Chief Executive $
Officer....................................... 10,548,000
Andreas Barth, Senior Vice President, 10,548,000
EMEA..........................................
Ross Cooley, Senior Vice President, North 10,548,000
America.......................................
Gary Stimac, Senior Vice President, Systems 10,548,000
Division......................................
Daryl White, Chief Financial 10,548,000
Officer.......................................
Executive Officer 70,320,000
Group.........................................
Non-Executive Director 0
Group.........................................
Non-Executive Officer Employee 0 (b)
Group.........................................
(a) Amounts shown are subject to reduction in the sole
discretion of the Committee and may be paid at such times and
upon such additional conditions as the Committee may establish.
(b) Maximum amount this group could receive is $70,320,000
reduced by amounts paid to Executive Officer Group.
Discussion of Federal Income Tax Consequences
The Revenue Reconciliation Act of 1993 added Section 162(m)
to Code. Section 162(m) limits the corporate income tax
deduction for publicly held companies to $1,000,000 in any tax
year for compensation paid to each of the Chief Executive Officer
and the four highest paid executive officers apart from the Chief
Executive Officer. This rule applies to all deductible
compensation including the deduction arising from the payment of
annual bonuses. Various forms of compensation are exempted from
this deduction limitation, including payments: (a) subject to the
attainment of pre-established objective performance goals, (b)
established and administered by outside directors and (c)
approved by the stockholders. The Board of Directors believes
payments made under the Bonus Plan will qualify for exemption
from the operation of Section 162(m) and, therefore, will qualify
as deductible by the Company.
Approval
Approval of the Compaq Computer Corporation Bonus Incentive
Plan requires the affirmative vote of the holders of a majority
of the shares of Common Stock represented and entitled to vote at
the Annual Meeting. Broker non-votes will not be treated as
shares present or represented and entitled to vote. The Board of
Directors believes that the approval of this Plan is in the best
interests of the Company since it will facilitate the Company's
attraction, motivation and retention of key executives, while
maintaining the Company's ability to fully deduct its performance
based compensation under Section 162(m) of the Internal Revenue
Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE COMPAQ COMPUTER CORPORATION BONUS INCENTIVE PLAN. Proxies
solicited by management will be voted FOR this proposal unless a
vote against this proposal or abstention is specifically
indicated.
GENERAL INFORMATION
Price Waterhouse LLP, independent accountants, has served as
the independent accountants of the Company since 1982, the year
of the Company's incorporation, and has been appointed to audit
the Company's consolidated financial statements for 1995. The
Board has not proposed that any formal action be taken at the
meeting with respect to the employment of Price Waterhouse LLP
inasmuch as no such action is legally required. Representatives
of Price Waterhouse LLP plan to attend the annual meeting and
will be available to answer appropriate questions.
Representatives of Price Waterhouse LLP will have the opportunity
to make a statement at the meeting if they so desire.
Proposals of shareholders that are intended to be presented
at the Company's 1996 annual meeting of stockholders must be
received by the Company no later than November 16, 1995, to be
included in the proxy statement and proxy relating to that
meeting.
Your vote is important! Please sign and return your proxy in the
enclosed envelope.
<PAGE>
EXHIBIT A
Adopted January 26, 1995
Compaq Computer Corporation
1995 Equity Incentive Plan
SECTION 1. Purpose. The purposes of the Compaq Computer
Corporation 1995 Equity Incentive Plan are to promote the
interests of Compaq Computer Corporation and its stockholders
by (i) attracting and retaining exceptional executive personnel
and other key employees of the Company and its Affiliates, as
defined below; (ii) motivating such employees by means of
performance-related incentives to achieve long-range
performance goals; and (iii) enabling such employees to
participate in the long-term growth and financial success of
the Company.
SECTION 2. Definitions. As used in the Plan, the following
terms shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or
indirectly, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, in either
case as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation
Right, Restricted Stock Award, Performance Award or other
Stock-Based Award.
"Award Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Award,
which may, but need not, be executed or acknowledged by a
Participant.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall be deemed to have occurred if:
(i) any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee
or other fiduciary holding securities under any employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of Stock of the
Company), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years
(not including any period prior to the adoption of the Plan),
individuals who at the beginning of such period constitute the
Board of Directors, and any new director (other than a director
designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii), or (iv) of this paragraph whose election by the Board of
Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at
the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board of
Directors; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires
more than 30% of the combined voting power of the Company's
then outstanding securities shall not constitute a Change in
Control of the Company; or (iv) the stockholders of the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets. If any of the
events enumerated in clauses (i) through (iv) occur, the Board
shall determine the effective date of the Change in Control
resulting therefrom, for purposes of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean a committee of the Board designated
by the Board to administer the Plan and composed of not less
than the minimum number of persons from time to time required
by Rule 16b-3, each of whom, to the extent necessary to comply
with Rule 16b-3 only, is a "disinterested person" within the
meaning of Rule 16b-3. Until otherwise determined by the
Board, the Compensation Committee designated by the Board shall
be the Committee under the Plan.
"Company" shall mean Compaq Computer Corporation, together
with any successor thereto.
"Employee" shall mean an employee of the Company or of any
Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Executive Officer" shall mean, at any time, an individual
who is an executive officer of the Company within the meaning of
Exchange Act Rule 3b-7 or who is an officer of the Company within
the meaning of Exchange Act Rule 16a-1(f).
"Fair Market Value" shall mean the fair market value of the
property or other item being valued, as determined by the
Committee in its sole discretion.
"Incentive Stock Option" shall mean a right to purchase
Shares from the Company that is granted under Section 6 of the
Plan and that is intended to meet the requirements of Section 422
of the Code or any successor provision thereto.
"Net After-Tax Amount" shall mean the net amount of
compensation, assuming for this purpose only that all vested
Awards and other forms of compensation subject to vesting upon
such Change of Control are exercised upon such Change in
Control, to be received (or deemed to have been received) by
such Participant in connection with such Change of Control under
any option agreement and under any other plan, arrangement or
contract of the Company to which such Participant is a party,
after giving effect to all income and excise taxes applicable to
such payments.
"Non-Qualified Stock Option" shall mean a right to purchase
Shares from the Company that is granted under Section 6 of the
Plan and that is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock option and shall include a Restoration Option.
"Other Stock-Based Award" shall mean any right granted under
Section 10 of the Plan.
"Participant" shall mean any Employee selected by the
Committee to receive an Award under the Plan.
"Performance Award" shall mean any right granted under
Section 9 of the Plan.
"Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision
thereof or other entity.
"Plan" shall mean this Compaq Computer Corporation 1995
Equity Incentive Plan.
"QDRO" shall mean a domestic relations order meeting such
requirements as the Committee shall determine, in its sole
discretion.
"Restoration Option" shall mean an Option granted pursuant
to Section 6(e) of the Plan.
"Restricted Stock" shall mean any Share granted under
Section 8 of the Plan.
"Restricted Stock Unit" shall mean any unit granted under
Section 8 of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and
interpreted by the SEC under the Exchange Act, or any successor
rule or regulation thereto as in effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or
any successor thereto and shall include the staff thereof.
"Shares" shall mean shares of the Common Stock, $.0l par
value, of the Company, or such other securities of the Company as
may be designated by the Committee from time to time.
"Stock Appreciation Right" shall mean any right granted
under Section 7 of the Plan.
"Substitute Awards" shall mean Awards granted in assumption
of, or in substitution for, outstanding awards previously granted
by a company acquired by the Company or with which the Company
combines.
SECTION 3. Administration.
(a) Authority of Committee. The Plan shall be administered
by the Committee. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be
granted to an eligible Employee; (iii) determine the number of
Shares to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards
may be settled, exercised, canceled, forfeited, or suspended;
(vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to,
or Award made under, the Plan; (viii) establish, amend, suspend,
or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the
administration of the Plan.
(b) Committee Discretion Binding. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company,
any Affiliate, any Participant, any holder or beneficiary of any
Award, any shareholder and any Employee.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in
Section 4(b), the number of Shares with respect to which Awards
may be granted under the Plan shall be 13 million. If, after the
effective date of the Plan, any Shares covered by an Award
granted under the Plan or by an award granted under any prior
stock award plan of the Company, or to which such an Award or
award relates, are forfeited, or if such an Award or award is
settled for cash or otherwise terminates or is canceled without
the delivery of Shares, then the Shares covered by such Award or
award, or to which such Award or award relates, or the number of
Shares otherwise counted against the aggregate number of Shares
with respect to which Awards may be granted, to the extent of any
such settlement, forfeiture, termination or cancellation, shall
again become Shares with respect to which Awards may be granted.
In the event that any Option or other Award granted hereunder or
any award granted under any prior stock award plan of the Company
is exercised through the delivery of Shares or in the event that
withholding tax liabilities arising from such Award or award are
satisfied by the withholding of Shares by the Company, the number
of Shares available for Awards under the Plan shall be increased
by the number of Shares so surrendered or withheld.
Notwithstanding the foregoing and subject to adjustment as
provided in Section 4(b), no Executive Officer of the Company may
receive Awards under the Plan in any calendar year that relate to
more than 500,000 Shares; provided, however, a new employee who
begins service as Chief Executive Officer may receive Awards that
relate to up to 1,000,000 Shares in the calendar year in which
employment with the Company begins.
(b) Adjustments. In the event that the Committee
determines that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number of Shares
or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be
granted, (ii) the number of Shares or other securities of the
Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise
price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding
Award; provided, in each case, that (A) with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to
the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code, as from time to time amended and
(B) with respect to any Award no such adjustment shall be
authorized to the extent that such authority would be
inconsistent with the Plan's meeting the requirements of Section
162(m) of the Code, as from time to time amended.
(c) Substitute Awards. Any Shares underlying Substitute
Awards shall not, except in the case of Shares with respect to
which Substitute Awards are granted to Employees who are officers
or directors of the Company for purposes of Section 16 of the
Exchange Act or any successor section thereto, be counted against
the Shares available for Awards under the Plan.
(d) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part,
of authorized and unissued Shares or of treasury Shares.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or any Affiliate, who is not a
member of the Committee, shall be eligible to be designated a
Participant.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the
Employees to whom Options shall be granted, the number of Shares
to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the
Option. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options,
or to grant both types of options, In the case of Incentive Stock
Options, the terms and conditions of such grants shall be subject
to and comply with such rules as may be prescribed by Section 422
of the Code, as from time to time amended, and any regulations
implementing such statute.
(b) Exercise Price. Subject to the requirement set forth
in Section 6(e) the Committee in its sole discretion shall
establish the exercise price at the time each option is granted.
(c) Exercise. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Committee
may, in its sole discretion, specify in the applicable Award
Agreement or thereafter. The Committee may impose such
conditions with respect to the exercise of options, including
without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.
(d) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price
therefor is received by the Company. Such payment may be made in
cash, or its equivalent, or, if and to the extent permitted by
the Committee, by exchanging Shares owned by the optionee (which
are not the subject of any pledge or other security interest), or
by a combination of the foregoing, provided that the combined
value of all cash and cash equivalents and the Fair Market Value
of any such Shares so tendered to the Company as of the date of
such tender is at least equal to such option price.
(e) Restoration Options. In the event that any Participant
delivers Shares in payment of the exercise price of any Option
granted hereunder in accordance with Section 6(d) or of any
option granted under a prior stock award plan of the Company, or
in the event that the withholding tax liability arising upon
exercise of any such Option or option by a Participant is
satisfied through the withholding by the Company of Shares
otherwise deliverable upon exercise of the Option or option, the
Committee shall have the authority to grant or provide for the
automatic grant of a Restoration Option to such Participant. The
grant of a Restoration Option shall be subject to the
satisfaction of such conditions or criteria as the Committee in
its sole discretion shall establish from time to time. A
Restoration Option shall entitle the holder thereof to purchase a
number of Shares equal to the number of such Shares so delivered
or withheld upon exercise of the original Option or option. A
Restoration Option shall have a per share exercise price of not
less than 100% of the per Share Fair Market Value on the date of
grant of such Restoration Option and such other terms and
conditions as the Committee in its sole discretion shall
determine.
SECTION 7. Stock Appreciation Rights.
(a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the
Employees to whom Stock Appreciation Rights shall be granted, the
number of Shares to be covered by each Stock Appreciation Right
Award, the grant price thereof and the conditions and limitations
applicable to the exercise thereof. Stock Appreciation Rights
may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to another Award.
Stock Appreciation Rights granted in tandem with or in addition
to an Award may be granted either at the same time as the Award
or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant, and shall have a
grant price as determined by the Committee on the date of grant.
(b) Exercise and Payment. A Stock Appreciation Right
shall entitle the Participant to receive an amount equal to the
excess of the Fair Market Value of a Share on the date of
exercise of the Stock Appreciation Right over the grant price
thereof, provided that the Committee may for administrative
convenience determine that, with respect to any Stock
Appreciation Right which is not related to an Incentive Stock
Option and which can only be exercised for cash during limited
periods of time in order to satisfy the conditions of Rule 16b-3,
the exercise of such Stock Appreciation Right for cash during
such limited period shall be deemed to occur for all purposes
hereunder on the day during such limited period on which the Fair
Market Value of the Shares is the highest. Any such
determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock
Appreciation Rights granted prior to such determination as well
as Stock Appreciation Rights thereafter granted. The Committee
shall determine whether a Stock Appreciation Right shall be
settled in cash, Shares or a combination of cash and Shares.
(c) Other Terms and Conditions. Subject to the terms of
the Plan and any applicable Award Agreement, the Committee shall
determine, at or after the grant of a Stock Appreciation Right,
the term, methods of exercise, methods and form of settlement,
and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by
the Committee from time to time and may govern the exercise of
Stock Appreciation Rights granted or exercised prior to such
determination as well as Stock Appreciation Rights granted or
exercised thereafter. The Committee may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right
as it shall deem appropriate.
SECTION 8. Restricted Stock and Restricted Stock Units.
(a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the
Employees to whom Shares of Restricted Stock and Restricted Stock
Units shall be granted, the number of Shares of Restricted Stock
and/or the number of Restricted Stock Units to be granted to each
Participant, the duration of the period during which, and the
conditions under which, the Restricted Stock and Restricted Stock
Units may be forfeited to the Company, and the other terms and
conditions of such Awards.
(b) Transfer Restrictions. Shares of Restricted Stock and
Restricted Stock Units may not be sold, assigned, transferred,
pledged or otherwise encumbered, except, in the case of
Restricted Stock, as provided in the Plan or the applicable Award
Agreements. Certificates issued in respect of Shares of
Restricted Stock shall be registered in the name of the
Participant and deposited by such Participant, together with a
stock power endorsed in blank, with the Company. Upon the lapse
of the restrictions applicable to such Shares of Restricted
Stock, the Company shall deliver such certificates to the
Participant or the Participant's legal representative.
(c) Payment. Each Restricted Stock Unit shall have a value
equal to the Fair Market Value of a Share. Restricted Stock
Units shall be paid in cash, Shares, other securities or other
property, as determined in the sole discretion of the Committee,
upon the lapse of the restrictions applicable thereto, or
otherwise in accordance with the applicable Award Agreement.
(d) Dividends and Distributions. Dividends and other
distributions paid on or in respect of any Shares of Restricted
Stock may be paid directly to the Participant, or may be
reinvested in additional Shares of Restricted Stock or in
additional Restricted Stock Units, as determined by the Committee
in its sole discretion.
SECTION 9. Performance Awards.
(a) Grant. The Committee shall have sole and complete
authority to determine the Employees who shall receive a
"Performance Award," which shall consist of a right which is (i)
denominated in cash or Shares, (ii) valued, as determined by the
Committee, in accordance with the achievement of such performance
goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the
Committee shall determine.
(b) Terms and Conditions. Subject to the terms of the Plan
and any applicable Award Agreement, the Committee shall determine
the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any
Performance Award and the amount and kind of any payment or
transfer to be made pursuant to any Performance Award.
(c) Payment of Performance Awards. Performance Awards may
be paid in a lump sum or in installments following the close of
the performance period or, in accordance with procedures
established by the Committee, on a deferred basis.
SECTION 10. Other Stock-Based Awards. The Committee shall have
authority to grant to eligible Employees an "Other Stock-Based
Award," which shall consist of any right which is (i) not an
Award described in Sections 6 through 9 above and (ii) an Award
of Shares or an Award denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible
into Shares), as deemed by the Committee to be consistent with
the purposes of the Plan; provided that any such rights must
comply, to the extent deemed desirable by the Committee, with
Rule 16b-3 and applicable law. Subject to the terms of the Plan
and any applicable Award Agreement, the Committee shall determine
the terms and conditions of any such Other Stock-Based Award.
SECTION 11. Termination or Suspension of Employment. The
following provisions shall apply in the event of the
Participant's termination of employment unless the Committee
shall have provided otherwise, either at the time of the grant of
the Award or thereafter.
(a) Nonqualified Stock Options and Stock Appreciation
Rights.
(i) Termination of Employment. If the Participant's
employment with the Company or its Affiliates is terminated for
any reason other than death, permanent and total disability, or
retirement, the Participant's right to exercise any Nonqualified
Stock Option or Stock Appreciation Right shall terminate, and
such Option or Stock Appreciation Right shall expire, on the
earlier of (A) the first anniversary of such termination of
employment or (B) the date such Option or Stock Appreciation
Right would have expired had it not been for the termination of
employment. The Participant shall have the right to exercise
such Option or Stock Appreciation Right prior to such expiration
to the extent it was exercisable at the date of such termination
of employment and shall not have been exercised.
(ii) Death, Disability or Retirement. If the
Participant's employment with the Company or its Affiliates is
terminated by death, permanent and total disability, or
retirement, the Participant or his successor (if employment is
terminated by death) shall have the right to exercise any
Nonqualified Stock Option or Stock Appreciation Right to the
extent it was exercisable at the date of such termination of
employment and shall not have been exercised, but in no event
shall such option be exercisable later than the date the Option
would have expired had it not been for the termination of such
employment. The meaning of the terms "total and permanent
disability" and "retirement" shall be determined by the
Committee.
(iii) Acceleration and Extension of Exercisability.
Notwithstanding the foregoing, the Committee may, in its
discretion, provide (A) that an Option granted to a Participant
may terminate at a date earlier than that set forth above, (B)
that an Option granted to a Participant not subject to Section 16
of the Exchange Act may terminate at a date later than that set
forth above, provided such date shall not be beyond the date the
Option would have expired had it not been for the termination of
the Participant's employment, and (C) that an Option or Stock
Appreciation Right may become immediately exercisable when it
finds that such acceleration would be in the best interests of
the Company.
(b) Incentive Stock Options. Except as otherwise
determined by the Committee at the time of grant, if the
Participant's employment with the Company is terminated for any
reason, the Participant shall have the right to exercise any
Incentive Stock Option and any related Stock Appreciation Right
during the 90 days after such termination of employment to the
extent it was exercisable at the date of such termination, but in
no event later than the date the option would have expired had it
not been for the termination of such employment. If the
Participant does not exercise such Option or related Stock
Appreciation Right to the full extent permitted by the preceding
sentence, the remaining exercisable portion of such Option
automatically will be deemed a Nonqualified Stock Option, and
such Option and any related Stock Appreciation Right will be
exercisable during the period set forth in Section 11(a) of the
Plan, provided that in the event that employment is terminated
because of death or the Participant dies in such 90-day period,
the option will continue to be an Incentive Stock Option to the
extent provided by Section 421 or Section 422 of the Code, or any
successor provision, and any regulations promulgated thereunder.
(c) Restricted Stock. Except as otherwise determined by
the Committee at the time of grant, upon termination of
employment for any reason during the restriction period, all
shares of Restricted Stock still subject to restriction shall be
forfeited by the Participant and reacquired by the Company at the
price (if any) paid by the Participant for such Restricted Stock,
provided that in the event of a Participant's retirement,
permanent and total disability, or death, or in cases of special
circumstances, the Committee may, in its sole discretion, when it
finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining
restrictions with respect to such participant's shares of
Restricted Stock.
(d) Leave Without Pay. Any time spent by a Participant in
the status of "leave without pay" shall be disregarded for
purposes of determining the extent to which any Award or portion
thereof has vested or otherwise becomes exercisable or
nonforfeitable.
SECTION 12. Change in Control. Notwithstanding any other
provision of the Plan to the contrary, upon a Change in Control
all outstanding Awards shall vest, become immediately exercisable
or payable or have all restrictions lifted as may apply to the
type of Award and no outstanding Stock Appreciation Right may be
terminated, amended, or suspended upon or after a Change in
Control; provided, however, that unless otherwise determined by
the Committee at the time of award or thereafter, if it is
determined that the Net After-Tax Amount to be realized by any
Participant, taking into account the accelerated vesting provided
for by this Section as well as all other payments to be received
by such Participant in connection with such Change in Control,
would be higher if Awards did not vest in accordance with this
Section, then and to such extent the Awards shall not vest. The
determination of whether any such Award should not vest shall be
made by a nationally recognized accounting firm selected by the
Company, which shall be instructed to consider that (i) Awards
and other forms of compensation subject to vesting upon a Change
of Control shall be vested in the order in which they were
granted and within each grant in the order in which they would
otherwise have vested and (ii) unless and to the extent any other
plan, arrangement or contract of the Company pursuant to which
any such payment is to be received provides to the contrary, such
other payment shall be deemed to have occurred after any
acceleration of Awards or other forms of compensation subject to
vesting upon a Change of Control.
SECTION 13. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination shall be made without
shareholder approval if such approval is necessary to comply with
any tax or regulatory requirement, including for these purposes
any approval requirement which is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act, for which or with
which the Board deems it necessary or desirable to qualify or
comply. Notwithstanding anything to the contrary herein, the
Committee may amend the Plan in such manner as may be necessary
so as to have the Plan conform with local rules and regulations
in any jurisdiction outside the United States.
(b) Amendments to Awards. The Committee may waive any
conditions or rights under, amend any terms of, or alter,
suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would adversely affect the
rights of any Participant or any holder or beneficiary of any
Award theretofore granted shall not to that extent be effective
without the consent of the affected Participant, holder or
beneficiary.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby
authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that no such adjustment
shall be authorized to the extent that such authority would be
inconsistent with the Plan's meeting the requirements of Section
162(m) of the Code, as from time to time amended.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may
cause any Award granted hereunder to be canceled in consideration
of a cash payment or alternative Award made to the holder of such
canceled Award equal in value to the Fair Market Value of such
canceled Award.
SECTION 14. General Provisions.
(a) Dividend Equivalents. In the sole and complete
discretion of the Committee, an Award, whether made as an Other
Stock-Based Award under Section 10 or as an Award granted
pursuant to Sections 6 through 9 hereof, may provide the
Participant with dividends or dividend equivalents, payable in
cash, Shares, other securities or other property on a current or
deferred basis.
(b) Nontransferabilitv. No Award shall be assigned,
alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant, except by will or the laws of
descent and distribution or pursuant to a QDRO, provided,
however, that an Award may be transferable, to the extent set
forth in the applicable Award Agreement, (i) if such Award
Agreement provisions do not disqualify such Award for exemption
under Rule 16b-3, or (ii) if such Award is not intended to
qualify for exemption under such rule.
(c) No Rights to Awards. No Employee, Participant or other
Person shall have any claim to be granted any Award, and there is
no obligation for uniformity of treatment of Employees,
Participants, or holders or beneficiaries of Awards. The terms
and conditions of Awards need not be the same with respect to
each recipient.
(d) Share Certificates. All certificates for Shares or
other securities of the Company or any Affiliate delivered under
the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which such Shares or
other securities are then listed, and any applicable Federal or
state laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to
such restrictions.
(e) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more
officers or managers of the Company or any Affiliate, or to a
committee of such officers or managers, the authority, subject to
such terms and limitations as the Committee shall determine, to
grant Awards to, or to cancel, modify or waive rights with
respect to, or to alter, discontinue, suspend, or terminate
Awards held by, Employees who are not officers or directors of
the Company for purposes of Section 16 of the Exchange Act, or
any successor section thereto, or who are otherwise not subject
to such Section.
(f) Withholding. A participant may be required to pay to
the Company or any Affiliate and the Company or any Affiliate
shall have the right and is hereby authorized to withhold from
any Award, from any payment due or transfer made under any Award
or under the Plan or from any compensation or other amount owing
to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding
taxes in respect of an Award, its exercise, or any payment or
transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes. The
Committee may provide for additional cash payments to holders of
Awards to defray or offset any tax arising from the grant,
vesting, exercise or payments of any Award.
(g) Award Agreements. Each Award hereunder shall be
evidenced by an Award Agreement which shall be delivered to the
Participant and shall specify the terms and conditions of the
Award and any rules applicable thereto.
(h) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate
from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of
options, restricted stock, Shares and other types of Awards
provided for hereunder (subject to shareholder approval if such
approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.
(i) No Right to Employment. The grant of an Award shall
not be construed as giving a Participant the right to be retained
in the employ of the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant
from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.
(j) No Rights as Stockholder. Subject to the provisions of
the applicable Award, no Participant or holder or beneficiary of
any Award shall have any rights as a stockholder with respect to
any Shares to be distributed under the Plan until he or she has
become the holder of such Shares. Notwithstanding the foregoing,
in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder
in respect of such Restricted Stock.
(k) Governing Law. The validity, construction, and effect
of the Plan and any rules and regulations relating to the Plan
and any Award Agreement shall be determined in accordance with
the laws of the State of Delaware.
(l) Severability. If any provision of the Plan or any
Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Person or Award,
or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of
the Committee, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(m) Other Laws. The Committee may refuse to issue or
transfer any Shares or other consideration under an Award if,
acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate
any applicable law or regulation or entitle the Company to
recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Award shall
be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing,
no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be
outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would be
in compliance with all applicable requirements of the U.S.
federal securities laws and any other laws to which such offer,
if made, would be subject.
(n) No Trust or Fund Created. Neither the Plan nor any
Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company
or any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general
creditor of the Company or any Affiliate.
(o) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities, or
other property shall be paid or transferred in lieu of any
fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(p) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 15. Term of the Plan.
(a) Effective Date. The Plan shall be effective as of
January 26, 1995, subject to approval by the shareholders of the
Company within one year thereafter.
(b) Expiration Date. No Incentive Stock Option shall be
granted under the Plan after January 25, 2005. Unless otherwise
expressly provided in the Plan or in an applicable Award
Agreement, any Award granted hereunder may, and the authority of
the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any
conditions or rights under any such Award shall, continue after
the authority for grant of new Awards hereunder has been
exhausted.
<PAGE>
EXHIBIT B
Adopted January 26, 1995
Compaq Computer Corporation
Bonus Incentive Plan
SECTION 1. Purpose. The purpose of the Compaq Computer
Corporation Bonus Incentive Plan (the "Plan") is to provide
incentives for senior executives and other key employees whose
performance in fulfilling the responsibilities of their positions
can have a major impact on the profitability and future growth of
Compaq Computer Corporation (the "Company") and its subsidiaries.
SECTION 2. Definitions. For the purposes of the Plan, the
following terms shall have the meanings indicated:
"Award" shall mean the grant of an award by the Committee to
a Participant pursuant to Section 4(a) or Section 4(d).
"Award Year" shall mean any calendar year with respect to
the Company's performance in which an Award is granted.
"Board of Directors" shall mean the Board of Directors of
the Company.
"Committee" shall mean the Committee designated pursuant to
Section 3. Until otherwise determined by the Board of
Directors, the Compensation Committee designated by the
Board of Directors shall be the Committee under the Plan.
"Covered Officer" shall mean at any date, (i) any individual
who, with respect to the previous taxable year of the
Company, was a "covered employee" of the Company within the
meaning of Section 162(m), as hereinafter defined; provided,
however, that the term "Covered Officer" shall not include
any such individual who is designated by the Committee, in
its discretion, at the time of any Award or at any
subsequent time, as reasonably expected not to be such a
"covered employee" with respect to the current taxable year
of the Company and (ii) any individual who is designated by
the Committee, in its discretion, at the time of any Award
or at any subsequent time, as reasonably expected to be such
a "covered employee" with respect to the current taxable
year of the Company or with respect to the taxable year of
the Company in which any applicable Award will be paid.
"Net Income" shall mean for any Award Year, operating income
before taxes as determined by the Company's independent
auditors for the Award Year, reduced by the aggregate amount
of dividends on the Company's preferred stock, if any.
"Participant" shall mean a senior executive or other key
employee of the Company selected by the Committee in
accordance with Section 4(a) or Section 4(d) who receives an
Award.
"Plan Funding Amount" shall mean with respect to any Award
Year an amount equal to six percent of Net Income for such
year.
"QDRO" shall mean a domestic relations order acceptable to
the Committee in its sole discretion.
"Retirement" shall mean retirement from active service to
the Company upon attaining 55 years of age, if the
Participant's age plus years of active service equals at
least 65, or as otherwise determined by the Committee.
"Section 162(m)" shall mean Section 162(m) of the Internal
Revenue Code of 1986 and the rules and other authorities
thereunder promulgated by the Internal Revenue Service of
the Department of the Treasury.
SECTION 3. Administration.
(a) Committee. Subject to the authority and powers of the Board
of Directors in relation to the Plan as hereinafter provided, the
Plan shall be administered by a Committee designated by the Board
of Directors consisting of two or more members of the Board of
Directors each of whom is an "outside director" within the
meaning of Section 162(m). The Committee shall have full
authority to interpret the Plan and from time to time to adopt
such rules and regulations for carrying out the Plan as it may
deem best; provided, however, that the Committee may not exercise
any authority otherwise granted to it hereunder if such action
would have the effect of increasing the amount of an Award to any
Covered Officer.
(b) Committee Determinations. All determinations by the
Committee shall be made by the affirmative vote of a majority of
its members, but any determination reduced to writing and signed
by a majority of the members shall be fully as effective as if it
had been made by a majority vote at a meeting duly called and
held. All decisions by the Committee pursuant to the provisions
of the Plan and all orders or resolutions of the Board of
Directors pursuant thereto shall be final, conclusive and binding
on all persons, including the Participants, the Company and its
subsidiaries and shareholders.
SECTION 4. Eligibility for and Payment of Awards.
(a) Eligible Employees. Subject to the provisions of the
Plan, in each calendar year the Committee may select officers or
employees (including officers or employees who are also
directors) of the Company or any of its subsidiaries who will be
eligible to earn Awards under the Plan with respect to such year,
and determine the amount of such Awards and the conditions under
which they may be earned.
(b) Payment of Awards. Awards that are earned with respect
to any Award Year shall be paid in cash to Participants at such
times and in such amounts as are determined by the Committee.
(c) Deferred Compensation Plan. Notwithstanding the
provisions of Section 4(b), if, prior to any date established by
the Committee for payment of any Award or portion thereof, a
Participant shall so elect, in accordance with procedures
established by the Committee, all or any part of an Award or
portion thereof shall be deferred and paid in one or more
periodic installments in accordance with the Compaq Computer
Corporation Deferred Compensation Plan.
(d) Awards to Covered Officers.
(i) Notwithstanding the provisions of Sections 4(a),
4(b), and 5(a) hereof, any Award to any Covered Officer
shall be granted in accordance with the provisions of this
Section 4(d). Subject to the discretion of the Committee as
set forth in Section 5(b) hereof, the amount of the Award
that may be granted with respect to any Award Year to any
Covered Officer at the time of such grant shall be 15% of
the Plan Funding Amount for such Award Year.
(ii) Any provision of the Plan to the contrary
notwithstanding, no Covered Officer shall be entitled to any
payment of an Award with respect to an Award Year unless the
members of the Committee shall have certified the Plan
Funding Amount for such Award Year.
SECTION 5. General Provisions.
(a) Adjustments to Net Income. If Net Income for any year
shall have been affected by special factors (including material
changes in accounting policies or practices, material
acquisitions or dispositions of property, or other unusual items)
which in the Committee's judgment should or should not be taken
into account, in whole or in part, in the equitable
administration of the Plan, the Committee may, for any purpose of
the Plan, adjust Net Income and make payments accordingly under
the Plan.
(b) No Adjustments for Covered Officers. Notwithstanding
the provisions of subparagraph (a) above, any adjustments made in
accordance with or for the purposes of subparagraph (a) shall be
disregarded for purposes of calculating the Plan Funding Amount
if and to the extent that such adjustments would have the effect
of increasing the Plan Funding Amount. In addition, the Committee
may, in the exercise of its discretion, reduce or eliminate the
amount of an Award to a Covered Officer otherwise calculated in
accordance with the provisions of Section 4(d) prior to payment
thereof.
(c) No Assignment. No portion of any Award under the Plan
may be assigned or transferred otherwise than by will or by the
laws of descent and distribution or pursuant to a QDRO, prior to
the payment thereof.
(d) Tax Requirements. All payments made pursuant to the
Plan shall be subject to withholding in respect of income and
other taxes required by law to be withheld, in accordance with
procedures to be established by the Committee.
(e) No Additional Participant Rights. The selection of an
individual for participation in the Plan shall not give such
Participant any right to be retained in the employ of the Company
or any of its subsidiaries, and the right of the Company or any
such subsidiary to dismiss or discharge any such Participant, or
to terminate any arrangement pursuant to which any such
Participant provides services to the Company, is specifically
reserved. The benefits provided for Participants under the Plan
shall be in addition to, and shall in no way preclude, other
forms of compensation to or in respect of such Participants.
(f) Liability. The Board of Directors and the Committee
shall be entitled to rely on the advice of counsel and other
experts, including the independent public accountants for the
Company. No member of the Board of Directors or of the Committee
or any officers of the Company or its subsidiaries shall be
liable for any act or failure to act under the Plan, except in
circumstances involving bad faith on the part of such member or
officer.
(g) Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any subsidiary or affiliate
of the Company from adopting or continuing in effect other
compensation arrangements, which arrangements may be either
generally applicable or applicable only in specific cases.
SECTION 6. Amendment and Termination of the Plan. The Board of
Directors may at any time terminate, in whole or in part, or from
time to time amend the Plan, provided that, except as otherwise
provided in the Plan, no such amendment or termination shall
adversely affect the rights of any Participant under any Awards
deferred by such Participant pursuant to Section 4(c). In the
event of such termination, in whole or in part, of the Plan, the
Committee may in its sole discretion direct the payment to
Participants of any Awards not theretofore paid out prior to the
respective dates upon which payments would otherwise be made
hereunder to such Participants, in a lump sum or installments as
the Committee shall prescribe with respect to each such
Participant. The Board of Directors may at any time and from
time to time delegate to the Committee any or all of its
authority under this Section 6. Any amendment to the Plan that
would affect any Covered Officer shall be approved by the
Company's shareholders if required by and in accordance with
Section 162(m).
<PAGE>
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1-4.
1. Election of Directors: (THE DIRECTORS RECOMMEND A VOTE "FOR"
ALL NOMINEES LISTED BELOW)
FOR all nominees listed below
Benjamin M. Rosen, Eckhard Pfeiffer, Robert Ted Enloe, III, George
H. Heilmeier, George E.R. Kinnear II, Peter N. Larson, Kenneth L.
Lay, and Kenneth Roman
WITHHOLD vote for all nominees
__________________________________________________
For all nominee(s) except as
designated in the blank space above
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 2-4
2. Approval of an amendment to the Company's Restated Certificate
of Incorporation increasing the number of authorized shares of
Common Stock from 400,000,000 shares to 1,000,000,000 shares.
For Against Abstain
3. Approval of the 1995 Equity Plan.
For Against Abstain
4. Approval of the Bonus Incentive Plan.
For Against Abstain
5. To act upon such other business as may properly come before
the meeting.
Please sign exactly as name
appears hereon. When shares
are held by joint owners, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give title as
such. If a corporation or a
partnership, please sign by
authorized person.
Signature:___________________________________Date_______________
Signature:___________________________________Date_______________
MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT
COMPAQ COMPUTER CORPORATION
Annual Meeting of Stockholders to be held April 26, 1995
This Proxy is Solicited on Behalf of The Board of Directors The
undersigned hereby appoints Daryl J. White and Wilson D. Fargo,
and each of them, with full power of substitution, proxies of the
undersigned to vote all shares of Common Stock Compaq Computer
Corporation (the "Company") which the undersigned is entitled to
vote at the annual meeting of stockholders to be held April 26,
1995, and all adjournments thereof, with all the powers the
undersigned would possess if personally present, and
particularly, without limiting the generality of the foregoing,
to vote and act on the following matters and in their discretion
upon such other business as may properly come before the meeting
or any adjournment thereof:THIS PROXY WILL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" ITEMS
1-4.
