This excerpt taken from the HPQ DEF 14A filed Jan 27, 2010.
Discretionary Bonus Awards for Fiscal 2009
As described under "Compensation Discussion and AnalysisAnalysis of Elements of Executive CompensationAnnual Incentive Pay," at its November 2009 meeting, the Committee (and with respect to the CEO, the independent members of the Board), approved additional cash awards to the NEOs for fiscal 2009 performance that the Committee determined had not been adequately rewarded under the PfR Plan. In its deliberations, the Committee (and the Board, in the case of the CEO) considered HP's performance relative to its competitors and the S&P 500, the difficulty of achieving the targets, and the challenging economic environment in which the performance was delivered. The Committee also reviewed the fact that the aggregate bonus amount paid to the entire company in fiscal 2009 was approximately equal as a percentage of pre-tax earnings to the bonus paid in fiscal 2008, even with the discretionary portion taken into account. Based on this analysis, the Committee (and, with respect to the CEO, the independent members of the Board) determined to pay additional discretionary bonuses to the NEOs and the other Section 16 officers. All or a portion of the discretionary bonuses is equal to the amount of the base pay reductions incurred by the NEOs as part of the fiscal 2009 base pay reductions incurred by all HP U.S. employees, which, in the case of the CEO, was 20% of his base pay earned from March 16, 2009 through October 31, 2009, and, in the case of the other NEOs, was 15% of their base pay earned during that period. Other employees who incurred a base pay reduction in fiscal 2009 also received a discretionary bonus equal to the base pay reductions they incurred, and employees in some business units received additional discretionary amounts as well. The Committee and the independent members of the Board 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.