HP Inc.2017 Annual Report 2018 Proxy StatementTwitter @HPYouTube www.youtube.com/user/HPInstagram www.instagram.com/hpFacebook www.facebook.com/HPBy printing this annual report and proxy statement on paper containing 30% post-consumer recycled waste, the following environmental savingswere achieved: 25 fewer tons of wood was harvested, or the equivalent of 157 trees71 million fewer BTUs of net energy were used over the lifecycle of the paper, enough energy to power an average US home for 285 days13,617 fewer pounds CO2 equivalents were released into the atmosphere, the equivalent of removing one average car off the road for 1 year 86 days73,858 fewer gallons of water were consumed or degraded throughout the lifecycle of the paper4,944 fewer pounds of solid waste were produced, including sludge and paper disposed of in landfills and incineratorsEnvironmental impact estimates were made using the Environmental Paper Network Paper Calculator Version 3.2.1. www.papercalculator.org.This cover is an HP Indigo digital print, on paper containing 30% post-consumer recycled paper that is environmentally and socially responsible sourced fromwell-managed forests, and independently certified according to the standards of the Forest Stewardship Council (FSC®). The HP Inc.
Board
About us
Our vision is to create technology that makes life better for everyone, everywhere — every person, every organization, and
every community around the globe. This motivates us — inspires us — to do what we do. To make what we make. To invent, and
to reinvent. To engineer experiences that amaze. We won’t stop pushing ahead, because you won’t stop pushing ahead. You’re
reinventing how you work. How you play. How you live. With our technology, you’ll reinvent your world.
This is our calling. This is a new HP.
Keep reinventing.
1
2
3
Annual Report
Proxy Statement
Form 10-K
09 Corporate Governance
29 Audit Matters
31 Executive Compensation
56 Ownership of our Stock
58 Stockholder Proposals
60 Other Matters
02 Part I
25 Part II
116 Part III
117 Part IV
i Message from our
President and CEO
ii
Strategy
iii Performance
iv Good Governance
v Meet the HP Board
vi Meet HP’s Executives
vii Stockholder Engagement
viii Sustainability
ix Diversity and Inclusion
x Our Compensation Philosophy
Message from our President and CEO
Accelerating our reinvention journey
Dear Stockholders:
Our vision at HP is to create technology that makes life better for everyone,
everywhere; and our mission is to create experiences that amaze. Two years
ago, we set out as a new HP, embarking on a journey to reinvent.
This has been a tremendous year and I’m proud of what we have
accomplished. We are delivering on our
financial commitments,
outperforming the markets where we operate, accelerating growth, and
returning capital to our stockholders – all with a goal to deliver sustainable,
long-term growth and reliable returns.
We remain focused on executing on our core, expanding into growth
opportunities and capturing the future. With a clear strategy and a strong
innovation pipeline, we’re striking the right balance between how we
plan, innovate and execute. We’ve proven that we can turn ideas into real
businesses today, and are poised to disrupt entire industries into the future.
I am pleased with our performance and consistent execution. In FY17,
we generated $52.1 billion in net revenue and $3.3 billion free cash flow,
$2.3 billion of which was returned to stockholders in the form of share
repurchases and dividends. We have the strongest and most innovative
portfolio in our history.
Dion J.
Weisler
Personal Systems had a stellar year, driving broad-based growth across all regions, gaining profitable market share, and delivering impressive
innovations for our partners and customers. Our premium and commercial products and solutions continue to receive industry awards and
recognition for amazing performance, design, style and security. Overall, we have outperformed the PC market for 15 consecutive quarters.
Similarly, our Print business delivered revenue growth in both hardware and supplies. Notably, we stabilized our supplies business earlier
than expected. We also completed the acquisition of Samsung’s printer business in November, strengthening our position as we disrupt the
$55 billion A3 copier space. Our graphics business continues to grow, and the success of our consumer products like Sprocket are making
print relevant for an entirely new generation. We are delivering amazing innovation and differentiating ourselves with unrivaled security.
This year was a milestone for 3D Printing. In only four quarters, we turned our 3D initiative into a full business with global scale, repeat
customer orders, an expanding partner and materials ecosystem, and revenue. This is one of the most exciting parts of our strategy and we
believe it will serve as a growth engine for decades to come as we digitally transform and democratize the $12 trillion manufacturing market.
It’s results like these that give me confidence in the trajectory of our business moving forward.
Our strong results are built on a solid foundation of corporate values and operating principles. We have made enormous strides in being
a beacon for diversity and inclusion as well as continuing our leadership on environmental issues and working towards a better and more
sustainable world. We will continue to drive progress on societal, environmental, and business-critical initiatives; we’re not just making a
difference in our company, but also challenging our suppliers and the entire industry to do the right thing.
As we accelerate our reinvention journey in FY18 and beyond, we remain focused and disciplined on delivering amazing experiences and
reinventing the iconic company that has been entrusted to us. We have never been as well positioned as we are today, and I’m confident that
our best days are ahead.
On behalf of the entire management team, our partners and our employees, thank you for your continued support.
Sincerely,
Dion J. Weisler
Annual Report
i
Strategy
Delivering on our commitments
Our journey to keep reinventing
It was just two years ago that we began our reinvention journey, anchored by three key
pillars: core, growth and future. We committed to compete and win in our core, enter
new growth markets and natural adjacencies and invest in our future where we can
disrupt industries and create new categories. We also committed to a relentless focus on
productivity to take cost out of the business.
Our goal was to create a company with the heart and the energy of a start-up but the brains
and muscle of a Fortune 100 corporation. We set out to reinvent a new kind of technology
company with a mission to engineer experiences that amaze for everyone everywhere. The
great products and services that we are creating for our diverse customer needs show that
our reinvention strategy is paying off, and we are humbled by our success and optimistic
about our future. We are more competitive, more fixated on the customer, more innovative
and more focused on operational excellence today than ever before.
We have never been as well positioned to execute on our core, expand into growth
opportunities and to capture the future.
Executing on our strategy and driving financial returns
For our stockholders, we are doing what we said we would do, delivering operational
excellence, predictable stockholder returns and building a business for the long-term.
We have proven in fiscal 2017 that we can deliver reliable earnings and cash flow, take
profitable share, and drive productivity.
We drove impressive top line growth in fiscal 2017, with net revenue up 8% year-over-year
to $52.1 billion. We grew non-GAAP diluted net earnings per share year-over-year for three
consecutive quarters in fiscal 2017. For fiscal 2017, we set a goal of $1 billion in productivity
improvements for the year and have achieved that savings goal for the second year in a row.
We committed to delivering 50% to 75% of free cash flow to stockholders through share
repurchases and dividends. Our initial outlook free cash flow was $2.3 to $2.6 billion
dollars, which we increased to at least $3 billion in the third quarter. We ultimately delivered
$3.3 billion of free cash flow in fiscal 2017, and we returned 69% of that free cash flow to
stockholders through $2.3 billion in share repurchases and dividends.
There are a few important drivers on how we plan to deliver long term profitable growth
and stockholder value. It all starts with leadership in the core and predictable earnings and
cash flows that are generated by these incredible businesses. Our cash flows are supported
by business fundamentals, including a strong annuity-like print supplies business,
a growing percentage of contractual business and a focus on shifting our mix to higher
margin categories.
We manage the company for the long term by investing in design and innovation, and
then listening to our customers and building relevant products, not just technology for
technology’s sake. Our solutions are grounded in quality and security and real value that
our customers are depending on. We are also evolving our business models to stay ahead.
During fiscal 2017, we began to successfully shift our print supplies model to a healthier
demand-based model. We are also shifting towards more service and subscription based
models in both print and personal systems. We are well positioned to continue to generate
robust cash flow and evolve our business to allow us to deliver long-term results.
Our three pillars
Core
Revitalize consumer and
drive commercial
Lead commercial and
grow premium
Growth
Disrupt the copier market and
accelerate graphics
Drive commercial
transformation
Future
Lead 3D printing
Create new immersive
categories
ii
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Fiscal 2017
operating highlights
•
For the full year, Personal Systems grew
11% year-over-year, with double-digit
growth in each of the past four quarters.
• We announced our biggest premium
launch across both the consumer
and commercial spaces, introduced
the worlds’ most powerful and first
detachable PC workstations, unleashed
our most powerful OMEN X laptop for
gaming athletes, and are doubling down
on security by developing some of the
world’s most secure and manageable
commercial PCs.
For our print business, hardware units
grew year-over-year driven by consumer
demand; Q4 being our fifth consecutive
quarter of year-over-year unit growth.
Graphics continues to grow with the
signing of the single largest deal in our
Graphics’ history with Lightning Source,
a multi-million dollar, multi-year deal
for 24 PageWide digital presses across
five printing sites on three continents.
•
•
• We turned our 3D printing initiative into
a growing business with a global reach,
including 65 channel partners and more
than 50 materials partners across the world.
• On November 1, 2017, we closed the
acquisition of Samsung’s printing
business, which better positions us to
attack the overall $55 billion A3 market
growth opportunity and strengthens our
position in the A4 market.
Performance
How we delivered
Americas
46% of net revenue
6% y/y
6% CC(1)
Non-US net revenue was
63% of total net revenue
EMEA
34% of net revenue
8% y/y
11% CC(1)
Asia Pacific
20% of net revenue
11% y/y
11% CC(1)
Personal systems FY17
Net revenue
$33.4 billion
11% y/y
12% CC (1)
Operating profit
$1.2 billion
3.6% of net revenue
Total units
Notebooks net revenue
Desktops net revenue
Commercial net revenue
Consumer net revenue
7% y/y
16% y/y
11% y/y
units
3% y/y
1% y/y
units
9% y/y
16% y/y
Printing FY17
Net revenue
$18.8 billion
3% y/y
4% CC (1)
Operating profit
$3.2 billion
16.8% of net revenue
Supplies net revenue
5% y/y
5% y/y
CC(1)
Total hardware units
Commercial hardware units
Consumer hardware units
3% y/y
2% y/y
4% y/y
1.
CC = Constant currency; adjusted to eliminate the effects of foreign exchange fluctuations.
NOTE: Arrows represent the mathematical direction of the amount the arrow is associated with.
Annual Report
iii
Good Governance
Our commitment to independent
governance starts with our Board
Introduction
The HP Board of Directors (the “Board”) oversees company strategy and management
performance, monitors business performance, and maintains an appropriate framework
to mitigate risk.
To fulfill these responsibilities, the Board reviews its composition and performance on an
ongoing basis to maintain:
• Diverse and complementary skills and experiences relevant to HP’s strategic
opportunities and challenges;
• Diversity of thought, background and culture to bring broad insights into the
boardroom; and
• Ongoing education and access to management, employees and customers
to enable Directors to develop a sound understanding of HP’s operations and
competitive environment to make appropriately informed decisions.
Visit our annual meeting website
Expand your Annual Meeting experience using your computer, tablet or cellphone. Our Annual
Meeting website features enriched content including videos and interviews, interactive
disclosures and links to vote.
www.hpannualmeeting.com
Governance highlights
Independent board leadership
9 Robust board oversight and leadership
by an independent Chairman, more
details beginning on page 18 of our
proxy statement.
9 Our independent Chairman participates in
a robust stockholder outreach program.
9 Our independent Chairman coordinates
the annual performance evaluation of the
Chief Executive Officer (“CEO”).
9 Our independent Chairman oversees
the Board and committee evaluations
and recommends changes to improve
Board, committee and individual
director effectiveness.
Other governance best practices
9 Our Bylaws provide our stockholders with
a proxy access right.
9 All members of our committees
are independent.
9 Our stockholders owning 25% or more
of our common stock have a right to call
special meetings.
9 Directors are elected annually by majority
vote in uncontested director elections.
9 Each director nominee has agreed to
resign from the Board in the event that he
or she fails to receive a majority vote.
9 We have a robust stockholder and
investor outreach program.
9 Non-employee directors are expected to
own HP stock equal to at least five times
their annual cash Board retainer within
five years of joining the Board.
iv
www.hpannualmeeting.com
Meet the HP Board
Leading HP into the future
Aida
Alvarez
Shumeet
Banerji
Robert R.
Bennett
Charles V.
Bergh
Stacy
Brown-
Philpot
Stephanie A.
Burns
Mary Anne
Citrino
Stacey
Mobley
Board composition
Independence
10%
Our CEO
Gender diversity
60%
Male
90%
Independent
Directors
40%
Female
Tenure (inc. HP Co. tenure)
10%
5-8 years
80%
0-2 years
Subra
Suresh
Dion J.
Weisler
10%
3-4 years
International experience
Europe
North
America
Asia
Australia
Contact the HP Board*
You can reach us by emailing us at
bod@hp.com or by writing to us at:
The HP Board of Directors
1501 Page Mill Road
Palo Alto, CA
94304
* All directors have access to this correspondence. In accordance with instructions from the Board, the Secretary to the Board reviews all correspondence, organizes the
communications for review by the Board and posts communications to the full Board or to individual directors, as appropriate. Our independent directors have requested that
certain items that are unrelated to the Board’s duties, such as spam, junk mail, mass mailings, solicitations, resumes and job inquiries, not be posted.
Communications that are intended specifically for the Chairman of the Board, other independent directors or the non-employee directors should be sent to the e-mail address
or street address noted above, to the attention of the Chairman of the Board.
Annual Report
v
Meet HP’s executives
Engineer experiences that amaze
Our commitments
Optimize
cost structure
Ron
Coughlin
Jon E.
Flaxman
Tracy S.
Keogh
Catherine A.
Lesjak
President,
Personal Systems
Chief Operating
Officer
Chief Human
Resources Officer
Chief Financial
Officer
Invest in our
growth and future
Enrique
Lores
Marie
Myers
Kim M.
Rivera
Dion J.
Weisler
President, Printing,
Solutions and
Services Systems
Global Controller
and Head of
Finance Services
Chief Legal Officer
and General
Counsel
President and
Chief Executive
Officer
Manage the business
for the long term
Operating in
170 Countries
49,000
employees worldwide
as of October 31, 2017
Operate with integrity,
transparency
over 70 years of history
vi
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Stockholder engagement
Dialogue with HP investors
How we communicate with
HP investors
We engage with current HP stockholders
on a continual basis to gain insights into
governance issues and trends that matter to
our investors, and to elicit feedback about
our executive compensation program and
other topics. We do so in a variety of forums,
including in our investor roadshow, which
typically occurs in the first quarter of the
calendar year.
Our engagement philosophy
1 We believe in having a partnership with
our stockholders
2 We focus on an ongoing, year-round
dialogue with our stockholders
3 We seek to continually improve value for
all of our stockholders
4 We implement changes as a result of
feedback from our stockholders
Who engages with our
stockholders?
It is our ongoing conversation with the
investor community that allows us to
understand and respond to stockholder
feedback, and to continue our tireless effort
to improve stockholder value. In addition to
our investor relations and legal teams, our
Executive Leadership Team and our Board of
Directors all speak directly to stockholders
on an ongoing basis, sharing our progress on
the journey of reinventing HP and soliciting
feedback on the way.
Our investor calendar
A calendar of investor events, with all of our presentations and webcasts, is available on our
investor relations website at www.hp.com/investor/home. Highlights include:
November 2016
•
•
Q4 2016 HP Inc. Earnings Conference Call
Credit Suisse 20th Annual Technology Conference
December 2016
•
Barclays Global Technology, Media and Telecommunications Conference
January 2017
•
• Citi Tech Forum at the 2017 International CES
J.P. Morgan’s 15th Annual Tech Forum at the 2017 International CES
February 2017
• Mobile World Congress, Barcelona
• Q1 2017 HP Inc. Earnings Conference Call
March 2017
• Printing and 3D Printing Showcase, Barcelona
• BAML Asia-Pacific Telecom, Media and Technology Conference, Taipei
• Morgan Stanley Technology, Media & Telecom Conference, San Francisco
April 2017
• HP Inc. Annual Stockholder Meeting
May 2017
• Bernstein’s 33rd Annual Strategic Decisions Conference
• Q2 2017 HP Inc. Earnings Conference Call
June 2017
• Bank of America Merrill Lynch Global Technology Conference
August 2017
•
Jefferies 2017 Semiconductor, Hardware and Communications
Infrastructure Summit
• Q3 2017 HP Inc. Earnings Conference Call
September 2017
• Deutsche Bank Technology Conference 2017
• UBS Best of Americas 2017
• Citi 2017 Global Technology Conference
• Mizuho Investment Conference Tokyo 2017
October 2017
• HP Securities Analyst Meeting 2017
November 2017
• Credit Suisse Technology, Media & Telecom Conference
• Q4 2017 HP Inc. Earnings Conference Call
Annual Report
vii
Sustainability
Reinventing for impact
Recognized for sustainability
leadership
Sustainability is at the heart of our reinvention journey. It drives progress toward our business
priorities, from designing and delivering our core products and services, to developing new
business models and breakthrough technologies that generate growth and shape the future.
Our customers, investors, and employees expect us to contribute to society and increasingly
demand sustainability leadership from us. Our approach to sustainability spans our entire value
chain—and extends beyond our business, partners, and customers into communities around
the world. We recognize the role we play in the global community, so we are contributing
progress toward 15 of the 17 United Nations Sustainable Development Goals.
Environment
We are shifting our business model and operations toward a circular and low-carbon
economy—moving from transactional product sales to service models, while transforming how
whole industries design, make, and distribute products. Through investments in research and
development, we enable customers to seize new opportunities while advancing their own
sustainability agendas. We continue to support the Paris Climate Agreement and have set
greenhouse gas emissions (GHG) reduction goals for our global operations, product portfolio
and supply chain that have been approved by the Science Based Targets Initiative.
Society
We foster a diverse, inclusive, and collaborative company and industry. We work with our supply
chain partners to empower and ensure protections for the people who make our products. We
believe everyone, everywhere should have access to a quality education and be empowered
with the skills and opportunities to thrive. To this end, we work with partners to improve
learning outcomes for millions around the world through access to technology and training.
Integrity
We are uncompromising in our expectations of ethical behavior by our employees, partners,
and suppliers, and we have strict standards in place to safeguard human rights and protect
and empower workers across our value chain. Top priority is given to protecting the personal
data entrusted to us. We also provide market-leading technologies, products, and solutions
that ensure high levels of security for our customers.
Learn more about our sustainability initiatives and goals at www.hp.com/sustainability
A few of our goals
1 Achieve zero deforestation
associated with HP brand paper
and paper-based product
packaging by 2020. (Packaging
is the box that comes with the
product and all paper, including
packaging and materials, inside
the box.)
2 Use 100% renewable electricity in
our global operations, with a goal
of 40% by 2020.
3 Develop skills and improve well-
being of 500,000 factory workers
by 2025, beginning in 2015.
4 Enable better learning outcomes
for 100 million people by 2025,
beginning in 2015.
viii
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Diversity and Inclusion
Demonstrating Innovation through Diversity
Our priorities
Reinvent the
standard for
diversity
• Be the industry leader
• Drive our strategy to Belong,
Innovate, and Grow
• Embed the value of diversity
internally and externally
• Foster cultural competence and
inclusion at all levels
Reinvent our
culture
• Connect employees at all levels to
our vision, strategy, and culture, so
we can deliver sustainable business
results
• Strengthen employees’ pride in HP
innovation and solutions
• Drive improvement in employee
engagement through global and local
programs and forums
Implement talent
and leadership
programs
• Build a talent and leadership pipeline
that supports diversity and inclusion
• Develop leadership aligned with our
culture for all levels of employees
• Reinforce innovation, risk-taking, and
continuous development
Our Progress
Gender Equity in Leadership
Since separation (October 2015), we’ve increased women in our leadership positions around
the world:
• Vice President 27.9%; up 9.6%
• Director and VP combined 28.5%; up 6.6%
Diversity hiring
US minority hiring increased by +8% year to year; based on applicant self-identification.
Industry Recognition
• 36 Company and Employee Diversity Awards
• 100% on Disability Equality Index 2nd year
• 100% on Human Rights Campaign Corporate
Equality Index 15th year
• Ranked #3 on Top 10 Companies Millennials
are Excited to Work For by Fortune
• Top 100 Company for Women US Working
Mother Magazine 27th year
• Top Company for Women Technologists by
AnitaB.Org 2nd year
• Recognized on inaugural Diversity Best
Practices Inclusion Index
Building Diversity in our Pipeline
STEM in our communities
HP employees around the world volunteered their time to support Hour of Code activities in local
communities, advancing science, technology, engineering, and math (STEM) education for girls
and underrepresented minorities. In three years of participating, over 3,000 HP volunteers from
30 sites have delivered 8,700 volunteer hours reaching over 33,000 students around the world.
HBCU Business Challenge
As part of our partnership with the National HBCU Business Deans Roundtable, HP launched
a new business-case competition where students from 85 schools had an opportunity to
jumpstart their entry into the real world of business, putting their brightest ideas to work by
crafting a solution for an actual HP business problem.
Annual Report
ix
2017 highlights
Most Diverse Board
HP has the most diverse board of
directors among U.S. technology
companies, with 40% women, 50%
minorities, and 30% underrepresented
minorities (as of Jan 2018).
Dedicated Leadership
Dion Weisler was one of the first
150 company leaders to sign the
CEO Action for Diversity & Inclusion™,
June 2017.
Disrupt
Systemic Bias
We utilize tools to craft inclusive job
descriptions, encourage and facilitate
Courageous Conversations, and train
hiring managers and recruiters around
the work to identify and mitigate
unconscious bias.
x
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Business Imperatives and Actions
Gender & Minority Pay Equality
HP is committed to paying women the same as men for similar responsibilities and qualifications.
Our recent review of employee compensation in the US found no evidence of pay inequality
based on gender or race. It’s an exercise HP does regularly with the help of a third party.
They analyze how we pay employees across many variables to make sure our compensation
practices are aligned with our principles.
Diversity Thought Leaders and Drivers
Global Diversity Advisory Board brought a strong focus from 18 senior leaders across HP
organizations, countries, sites and levels. This advisory body engages with stakeholders across
the company to set strategic priorities implemented by teams at the local level that drive
progress for employees to Belong, Innovate, and Grow.
Business Impact through Employee Engagement
We elevated the role of our employee groups in supporting HP’s business objectives. In doing
so, we’ve rebranded what previously were known as Employee Resource Groups/ERGs to now
be known as Business Impact Networks for all 9 constituencies. We’ve continued to grow in
numbers of active chapters, membership and participation. Today, there are 81 active chapters,
in 19 countries and 5 Global Impact Networks with executive sponsorship.
Allies@HP
This global program launched to educate, engage and create visible allies for our LGBTQ
community at all HP sites around the world.
Diverse Talent Development
We deliver new and innovative programs that prepare our top talent to advance and leverage
the perspectives of a diverse community.
Launched women’s sponsorship program
Increased women’s participation in top talent programs
•
•
• Enhanced leadership skills for inclusion in Executive and Manager training
• Elevated participation in industry leading conferences and events
Industry Partnerships
Positive results associated with HP initiatives to improve diversity in marketing partnerships,
legal service providers, and supply chain management.
•
First agency diversity scorecard showed significant progress made with women on HP’s
account teams and senior leadership (+5% and +4% over agency targets for the year’s
progress).
• Global Legal Affairs’ Diversity “Hold Back” initial results are very positive. The number
of firms with a diverse relationship partner has doubled and there has been a steady
increase in the number of diverse attorneys working on HP matters in each quarter.
73% of participating firms have met the diversity requirements.
U.S. spend with small businesses was $647 million USD. Spend on U.S.-based minority-owned
and women-owned businesses totaled $229 million during the year.
Our Compensation Philosophy
A conversation with the HRC Committee
Tracy Keogh, HP’s Chief Human Resources
Officer, talks with Chair of the HRC Committee
Stephanie Burns about
the Company’s
executive compensation program and the
Committee’s duties in overseeing its design
and implementation.
The Committee consists of Ms. Burns and four
of our other independent Directors: Ms. Alvarez,
Mr. Banerji, Mr. Bergh and Mr. Mobley. All bring
valuable experience and understanding of
the role that setting appropriate executive
in ensuring company
compensation plays
performance and stockholder value.
TK: Stephanie, so good to have you with us today. You’ve been a member of the HP Board since
2015 and have chaired the HRC Committee since November 2017. Can you talk about the role the
HR and Compensation Committee plays?
SB: Certainly. The Committee oversees and provides strategic direction to management regarding
our pay-for-performance program. The Committee sets Dion’s compensation, and reviews and
approves the compensation of the rest of the leadership team. We also review senior management
selections and oversee succession planning. To do this, the Committee works with its own
independent compensation consultant to help analyze competitive pay practices and market trends,
and to generally strengthen the pay-for-performance relationship and alignment with stockholders.
The Committee also gets an update at every meeting on the key people practices and initiatives
going on in the organization. Everything from employee engagement to workforce planning to key
hires is within our remit.
TK: Can you describe HP’s overall philosophy and strategy on executive compensation?
SB: Our compensation program is closely aligned with HP’s company goals. It focuses on driving the
right behaviors while simplifying executive compensation plans. Ultimately it’s designed to help us
attract, retain, and reward the executive team for delivering value to stockholders over the long term.
We have a pay-for-performance philosophy that forms the foundation for all decisions regarding
compensation, with a strong bias towards variable pay in our executive compensation. Our program
is also designed to facilitate strong corporate governance. Our executive compensation is aligned
with shareholder value through equity-based programs, shareholder value-based performance
measures (like relative Total Shareholder Return), and using financial performance measures that
executives can control and are closely correlated with shareholder value over time.
TK: Are there specific elements of our program that you’ve found to showcase our best practices?
SB: HP’s program includes many robust best practices and we are continuously working to improve.
Some specific elements of our program that are best-in-class include:
• We target compensation to approximate the median level among a group of relevant peers,
and only go above this level when performance warrants
• We utilize non-discretionary financial metrics, and specific management objectives in our
annual cash incentive plan, which we believe are correlated to long-term value creation
• We do not use employment contracts with any of our executives, and have consistent and
market-aligned severance
TK: Thanks for that great overview Stephanie.
Target compensation mix
CEO
45%
PARSUs
Other NEOs
43%
PARSUs
8%
Salary
17%
Bonus
30%
RSUs
13%
Salary
16%
Bonus
28%
RSUs
For more information regarding target
compensation mix and other compensation
details for all of our NEOs, including our CEO,
please see page 31 of the Proxy Statement
for our complete Compensation Discussion
and Analysis.
Annual Report
xi
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the
assumptions prove incorrect, the results of HP Inc. and its consolidated subsidiaries (“HP”) may differ materially from those expressed or implied by such
forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking
statements, including but not limited to any projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows,
benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact
of cost savings or restructuring and other charges; any statements of the plans, strategies and objectives of management for future operations, including, but
not limited to, our sustainability goals, the execution of restructuring plans and any resulting cost savings, net revenue or profitability improvements; any
statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements
regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements
regarding pending investigations, claims or disputes; any statements of expectation or belief, including with respect to the timing and expected benefits
of acquisitions and other business combination and investment transactions; and any statements of assumptions underlying any of the foregoing. Risks,
uncertainties and assumptions include the need to address the many challenges facing HP’s businesses; the competitive pressures faced by HP’s businesses;
risks associated with executing HP’s strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers
and the distribution of HP’s products and the delivery of HP’s services effectively; the protection of HP’s intellectual property assets, including intellectual
property licensed from third parties; risks associated with HP’s international operations; the development and transition of new products and services and
the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance
of contracts by HP and its suppliers, customers, clients and partners; the hiring and retention of key employees; integration and other risks associated with
business combination and investment transactions; the results of the restructuring plans, including estimates and assumptions related to the cost (including
any possible disruption of HP’s business) and the anticipated benefits of the restructuring plans; the resolution of pending investigations, claims and disputes;
and other risks that are described herein, including but not limited to the items described in HP’s Annual Report on Form 10-K/A for the fiscal year ended
October 31, 2017 and that are otherwise described or updated from time to time in HP’s other filings with the Securities and Exchange Commission (“the SEC”).
HP assumes no obligation and does not intend to update these forward-looking statements.
HP’s Investor Relations website at www.hp.com/investor/home contains a significant amount of information about HP, including financial and other information
for investors. HP encourages investors to visit its website from time to time, as information is updated and new information is posted.
© Copyright 2018 Hewlett-Packard Development Company, LP. The information contained herein is subject to change without notice. This document is provided
for information purposes only. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products
and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions
contained herein.
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