Hewlett-Packard (HPQ)

Analysis of Executive Compensation

        A broad range of facts and circumstances is considered in setting executive compensation. Among the factors considered for HP's executives generally, and for the NEOs in particular, are business results, market competitiveness, internal equity, past practice, experience and individual performance. The weight given each factor may differ from year to year and may differ among individual NEOs in any given year. For example, when HP recruits externally, market competitiveness and experience as well as the circumstances unique to a particular candidate may weigh more heavily in the compensation analysis. In contrast, when determining year-over-year compensation for current NEOs, business results, peer company metrics, and internal equity generally factor more heavily in the analysis.

        Business results from the most recently completed fiscal year are the primary factor analyzed in setting the targets associated with the portions of executive compensation that are performance-based. These results are reviewed and discussed by the Committee and its independent advisors. A comparison of the financial results with the targets approved by the Committee under HP's incentive compensation plans generally forms the basis for determining payouts under those plans for that fiscal year. The actual payouts approved by the Committee may be more or less than the amounts determined solely by performance against targets due to a range of other factors, such as the quality of earnings, the number and size of strategic acquisitions, and the speed and efficiency with which acquired companies are integrated into the business. Based on the financial results and recommendations presented by management, the Committee reviews the individual performance of the NEOs (other than the CEO) as reported by the CEO and approves their compensation for the current fiscal year.

        In evaluating the performance of the CEO and recommending his compensation to the Board, the Committee takes into account corporate financial performance, as well as performance on a range of

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non-financial factors, including accomplishment of strategic goals, workforce development and succession planning, and his working relationship with the Board. Overall, the Committee and the Board believe that, under the CEO's leadership in fiscal 2008, HP achieved strong financial results in a difficult financial environment and also continued to demonstrate significant achievements on a broad range of non-financial goals, including strategic acquisitions, talent management and succession planning.

        The Committee generally does not consider the effect of past changes in stock price, or expected payouts or earnings under other plans, in setting the future awards of NEO compensation. In addition, incentive compensation decisions are made without regard to length of service or prior awards. For example, NEOs with longer service at HP or who may soon become eligible for retirement do not receive greater or lesser awards, or larger or smaller target amounts, in a given year than do NEOs with shorter service.

Analysis of Executive Compensation

        A broad range of facts and circumstances is considered in setting executive compensation. Among the factors considered for HP's executives generally, and for the NEOs in particular, are market competitiveness, company results, internal equity, past practice, experience and individual performance. The weight given each factor may differ from year to year, and may differ among individual NEOs in any given year. For example, when HP recruits externally, market competitiveness, experience, as well as the circumstances unique to a particular candidate may weigh more heavily in the compensation analysis. In contrast, when determining year-over-year compensation for current NEOs, peer company metrics, business results and internal equity generally factor more heavily into the analysis.

        Business results from the most recently completed fiscal year factor heavily in setting executive compensation. These results are reviewed and discussed by the Committee and its independent advisors. The financial results against the targets approved by the Committee under HP's incentive compensation plans generally determine payouts under those plans for the fiscal year just ended. In addition, these results typically form the basis for setting performance targets for the next fiscal year. Based on the financial results presented by management, the Committee reviews the individual performance of the NEOs (other than the CEO) as reported by the CEO and approves their compensation for the current fiscal year.

        In evaluating the performance of the CEO and setting his compensation, the Committee takes into account corporate financial performance, as well as performance on a range of non-financial factors, including accomplishment of strategic goals, workforce development and succession planning, and the working relationship with the Board. Overall, the Committee and the Board believe that HP, under the CEO's leadership in fiscal 2007, achieved superior financial results, as well as significant achievement on a

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broad range of non-financial goals, including strategic acquisitions, talent management and succession planning.

        We generally do not consider the effect of past changes in stock price, or expected payouts or earnings under other plans, in setting future awards of NEO compensation. In addition, incentive compensation decisions are made without regard to length of service or prior awards. For example, NEOs with longer service at HP or who may be eligible for retirement do not receive greater or lesser awards, or larger or smaller target amounts, in a given year, than NEOs with shorter service.