Hewlett-Packard (HPQ)

Discretionary Bonus Awards for Fiscal 2008

        As described under "Compensation Discussion and Analysis," at its November 2008 meeting, the Committee (and with respect to the CEO, the full Board, excluding Mr. Hurd), approved additional cash awards to the NEOs for fiscal 2008 performance that the Committee determined had not been adequately rewarded under the PfR Plan. In its deliberations, the Committee (and the Board) considered the fact that HP achieved double-digit year-over-year growth on each of the key financial metrics of revenue, pre-tax earnings, net profit, cash-flow and earnings per share in fiscal 2008. The Committee also considered HP's performance relative to its competitors and the S&P 500, the difficulty of the targets, and the economic environment in which the performance was delivered. In addition, the Committee considered the discretionary bonus funding recommended by management for employees generally under the HP Variable Bonus Plan (for which all employees below director level are generally eligible), as well as the PfR Plan for non-Section 16 officers (generally covering eligible employees at director level and above). The Committee also reviewed the fact that the aggregate bonus amount paid to the entire HP organization in fiscal 2008 was lower as a percentage of pre-tax earnings than in fiscal 2007. Based on this analysis, the Committee (and the full Board, excluding Mr. Hurd, in the case of Mr. Hurd) determined to pay additional discretionary bonuses to the NEOs and the other Section 16 officers proportional to the discretionary funding made available to the non-Section 16 officer population eligible for the PfR Plan, reflecting the superior financial performance for the period. The Committee and the Board (excluding Mr. Hurd) also considered in their deliberations that payment of these amounts to certain NEOs would adversely impact the deductibility of payments made under the PfR Plan with respect to such individuals.