Employment Agreement with Mark V. Hurd for Hewlett-Packard

Send us Feedback

Hewlett-Packard (HPQ)

	SUMMARY

	BULLS

	BEARS

	TOPICS

	DATA CENTRAL

	STOCK CHART

	SEC FILINGS

	BALANCE

	INCOME

	CASH FLOW

HPQ » Topics » Employment Agreement with Mark V. Hurd

This excerpt taken from the HPQ DEF 14A filed Jan 23, 2007.

Employment Agreement with Mark V. Hurd

HP entered into an employment agreement with Mark V. Hurd as of March 29, 2005, the terms of which are set forth below as of October 31, 2006.

Position		President and CEO
Term of Employment		At will employment. Employment may be terminated by Mr. Hurd or HP, at any time. The agreement has an initial term of four years.
Board Membership		Mr. Hurd was appointed to the Board upon his hire and thereafter will be nominated as a member of the Board during each year of his employment. Following his termination, Mr. Hurd will be deemed to have resigned from the Board.
Salary		$1,400,000 base salary. The base salary will not be reduced other than pursuant to a reduction applied to substantially all other executive officers of HP and a reduction that is no greater than the percentage reduction applied to substantially all other executive officers.
Bonus		A target annual bonus of at least 200% of base salary, pro-rated for mid-year entry, with a maximum target opportunity of 600% of base salary assuming performance goals are achieved under HP's PfR plan. The target annual bonus was increased to 220% of base salary for fiscal 2006. The applicable targets for the second six months of 2005 and the first six months of 2006 were deemed to have been met, and the incentive earned during the first half of fiscal 2005 was pro-rated based on the hire date.

Long-Term Incentives
Long-Term Cash Performance Plan		At least $4,200,000 (300% of base) pro-rated for mid-plan entry in the three-year cycles beginning May 1, 2003 and May 1, 2004, respectively. The plan provides for a cash payout after three years with additional cycles beginning May 1 of every year. The potential cash payout can range from $0 to $12,600,000, depending on actual HP performance. The applicable targets for the first year of the first full target cycle (beginning May 1, 2005) will be deemed to have been met.
Stock Options
Number of Shares		Option for 700,000 shares (with a maximum term of eight years) with a grant date of April 1, 2005.
Black-Scholes Value		Approximately $4,200,000 at the grant date.
Vesting Schedule		Vests at a rate of 25% annually over four years.
One-Time Make-Up Grants: Restricted Stock and Options		400,000 shares of restricted stock and an option for 450,000 shares (with a maximum term of eight years) with a grant date of April 1, 2005.
Value at Grant		Approximately $8,000,000 for restricted stock shares and a Black-Scholes value of approximately $2,700,000 for options on the grant date.
Vesting Schedule		Vest at a rate of 33.3% annually over three years.
Signing Bonus		$2,000,000 cash bonus payment paid within 30 days of April 1, 2005 and upon removal of any conditions. If Mr. Hurd is terminated for cause within two years of his hiring date, Mr. Hurd will return a pro-rata portion of the bonus to HP.
Price Protection		Mr. Hurd received reimbursement up to 20% for declines in the per share fair market value of NCR's stock as covered by his vested options. In the event that the share value decreased more than 20%, only the first 20% was subject to reimbursement. This price protection applied to the 850,184 shares vested prior to March 24, 2005. The starting fair market value for this price protection was the highest share price during the five full trading days immediately preceding the public announcement of Mr. Hurd's resignation from NCR. This price protection ended upon Mr. Hurd's sale of the shares covered by his vested options (or 90 days after his termination of employment with NCR, whichever was sooner). Mr. Hurd received a payment of $5,000,421 pursuant to this provision.
Benefits		Mr. Hurd is eligible to participate in HP's employee benefit plans, policies and arrangements applicable to other executive officers including: participation in the Share Ownership Plan, the HP 401(k) Plan, deferred compensation plan, medical, dental, vision and life and disability insurance.
Perquisites		Mr. Hurd is eligible for HP perquisites that are no less than those provided to other senior executive officers, including financial counseling and executive physicals.
Time Off		Mr. Hurd will receive paid time off in accordance with HP policy for other senior executive officers. In no event will Mr. Hurd receive fewer than 25 days of paid time off per calendar year.

Security	Mr. Hurd received appropriate home security in accordance with market practice.
Relocation Benefit	Mr. Hurd received the standard relocation package with the following adjustments:
	—	$2,750,000 relocation allowance paid after the execution of a definitive agreement and removal of any conditions (such relocation allowance paid in lieu of any other relocation allowance provided for under HP's relocation policy);
	—	Mortgage interest subsidy for four years;
	—	Temporary housing for up to one year;
	—	No limit on the weight of household goods shipped, and coverage for three cars; and
	—	Storage of household goods for up to one year.
Severance	Participation in the HP Severance Plan for Senior Executives in effect at the time of his termination if Mr. Hurd is terminated without cause and executes a full release of claims. Under the HP Severance Plan for Senior Executives as currently in effect, Mr. Hurd would be entitled to receive a one time cash payment equal to 2.0 times the sum of Mr. Hurd's base salary as of the date of termination plus the average of the actual bonuses paid to Mr. Hurd during the three years preceding the date of termination.
	In addition, Mr. Hurd would receive the following:
	—	Payment of any accrued salary and bonus;
	—	Mr. Hurd's stock options will become fully vested, exercisable and will remain exercisable until the earlier of the date provided in the applicable stock option agreement or under any applicable workforce reduction policy adopted by HP from time to time;
	—	Any unvested restricted stock will vest on a pro-rata basis;
	—	Any banked amounts in the LTPC Plan; and
	—	Continuation of certain health benefits.
	The HR and Compensation Committee reviews the HP Severance Plan for Senior Executives annually. If Mr. Hurd's duties as CEO are substantially reduced without his consent or if Mr. Hurd is not re-elected to the Board during his term of employment, then Mr. Hurd will be deemed to have been terminated without cause. The amount of severance benefits received by Mr. Hurd will not exceed 2.99 times the sum of his base salary and target bonus, unless such benefits are approved by HP's stockholders.
Confidential Information and Intellectual Property	Mr. Hurd has been required to execute HP's Agreement Regarding Confidential Information and Proprietary Developments.
Attorneys' Fees	HP reimbursed Mr. Hurd for reasonable legal fees and tax advice expenses incurred in the negotiation, preparation and execution of this agreement as well as his separation from his current employer.
Arbitration	All disputes arising as a result of Mr. Hurd's employment, including the termination thereof, or Mr. Hurd's compensation or benefits will be resolved through binding arbitration.
Indemnification	Mr. Hurd will be provided indemnification on terms no less favorable than that provided to any other HP executive officer or director, including, if applicable, appropriate directors and officers insurance.

This excerpt taken from the HPQ DEF 14A filed Jan 23, 2006.

Employment Agreement with Mark V. Hurd

HP entered into an employment agreement with Mark V. Hurd as of March 29, 2005, the terms of which are set forth below.

Position		President and CEO
Term of Employment		At will employment. Employment may be terminated by Mr. Hurd or HP, at any time. The agreement has an initial term of four years.
Board Membership		Mr. Hurd was appointed to the Board upon his hire and thereafter will be nominated as a member of the Board during each year of his employment. Following his termination, Mr. Hurd will be deemed to have resigned from the Board.
Salary		$1,400,000 base salary. The base salary will not be reduced other than pursuant to a reduction applied to substantially all other executive officers of HP and a reduction that is no greater than the percentage reduction applied to substantially all other executive officers.
Bonus		At least $2,800,000 (target at 200% of base), pro-rated for mid-year entry with a maximum target opportunity of $8,400,000 (600% of base) assuming performance goals are achieved under HP's PfR plan. The applicable targets for the second six months of 2005 and the first six months of 2006 will be deemed to have been met and the incentive earned during the first half of fiscal 2005 was pro-rated based on the hire date.

Long-Term Incentives
Long-Term Cash Performance Plan		At least $4,200,000 (300% of base) pro-rated for mid-plan entry in the three-year cycles beginning May 1, 2003 and May 1, 2004, respectively. The plan provides for a cash payout after three years with additional cycles beginning May 1 of every year. The potential cash payout can range from $0 to $12,600,000, depending on actual HP performance. The applicable targets for the first year of the first full target cycle (beginning May 1, 2005) will be deemed to have been met.
Stock Options
Number of Shares		Option for 700,000 shares (with a maximum term of eight years) with a grant date of April 1, 2005
Black-Scholes Value		Approximately $4,200,000
Vesting Schedule		Vests at a rate of 25% annually over four years.
One-Time Make-Up Grants: Restricted Stock and Options		400,000 shares of restricted stock and an option for 450,000 shares (with a maximum term of eight years) with a grant date of April 1, 2005.
Value at Grant		Approximately $8,000,000 for restricted stock shares and a Black-Scholes value of approximately $2,700,000 for options
Vesting Schedule		Vest at a rate of 33.3% annually over three years.
Signing Bonus		$2,000,000 cash bonus payment paid within 30 days of April 1, 2005 and upon removal of any conditions. If Mr. Hurd is terminated for cause within two years of his hiring date, Mr. Hurd will return a pro-rata portion of the bonus to HP.
Price Protection		Mr. Hurd received reimbursement up to 20% for declines in the per share fair market value of NCR's stock as covered by his vested options. In the event that the share value decreased more than 20%, only the first 20% was subject to reimbursement. This price protection applied to the 850,184 shares vested prior to March 24, 2005. The starting fair market value for this price protection was the highest share price during the five full trading days immediately preceding the public announcement of Mr. Hurd's resignation from NCR. This price protection ended upon Mr. Hurd's sale of the shares covered by his vested options (or 90 days after his termination of employment with NCR, whichever was sooner). Mr. Hurd received a payment of $5,000,421 pursuant to this provision.
Benefits		Mr. Hurd is eligible to participate in HP's employee benefit plans, policies and arrangements applicable to other executive officers including: participation in the Share Ownership Plan, 401(k) Plan, deferred compensation plan, cash balance retirement plan, medical, dental, vision and life and disability insurance.
Perquisites		Mr. Hurd is eligible for HP perquisites at at least the same level as other senior executive officers including financial counseling and executive physicals.

Time Off	Mr. Hurd will receive paid time off in accordance with HP policy for other senior executive officers. In no event will Mr. Hurd receive fewer than 25 days of paid time off per calendar year.
Security	Mr. Hurd received appropriate home security in accordance with market practice.
Relocation Benefit	Mr. Hurd received the standard relocation package with the following adjustments:
	—	$2,750,000 relocation allowance paid after the execution of a definitive agreement and removal of any conditions (such relocation allowance paid in lieu of any other relocation allowance provided for under HP's relocation policy);
	—	Mortgage interest subsidy for four years;
	—	Temporary housing for up to one year;
	—	No limit on the weight of household goods shipped, and coverage for three cars; and
	—	Storage of household goods for up to one year.
Severance	Participation in the Severance Program for Executives in effect at the time of his employment agreement if Mr. Hurd is terminated without cause and provides an execution of a full release of claims. Under the Severance Program for Executives in effect at the time of his employment agreement, Mr. Hurd was entitled to receive:
	—	A one time cash payment equal to 2.5 times Mr. Hurd's then-current base salary plus target bonus (in July 2005, this multiple was reduced to a multiple of two times, and his base salary plus actual bonus would be used for the calculation);
	—	Payment of any accrued salary and bonus;
	—	Mr. Hurd's stock options will become fully vested, exercisable and will remain exercisable until the earlier of the date provided in the applicable stock option agreement or under any applicable workforce reduction policy adopted by HP from time to time;
	—	Any unvested restricted stock will vest on a pro-rata basis;
	—	Any banked amounts in the LTPC Plan; and
	—	Continuation of certain health benefits.
	The HR and Compensation Committee reviews the Severance Program for Executives annually. If Mr. Hurd's duties as CEO are substantially reduced without his consent or if Mr. Hurd is not re-elected to the Board during his term of employment, then Mr. Hurd will be deemed to have been terminated without cause. The amount of severance benefits received by Mr. Hurd will not exceed 2.99 times the sum of his base salary and bonus, unless such benefits are approved by HP's stockholders.
Confidential Information and Intellectual Property	Mr. Hurd has been required to execute HP's Agreement Regarding Confidential Information and Proprietary Developments.
Attorneys' Fees	HP reimbursed Mr. Hurd for reasonable legal fees and tax advice expenses incurred in the negotiation, preparation and execution of this agreement as well as his separation from his current employer.

Arbitration		All disputes arising as a result of Mr. Hurd's employment, including the termination thereof, or Mr. Hurd's compensation or benefits will be resolved through binding arbitration.
Indemnification		Mr. Hurd will be provided indemnification on terms no less favorable than that provided to any other HP executive officer or director, including, if applicable, appropriate directors and officers insurance.

On January 23, 2006, the HR and Compensation Committee agreed to increase Mr. Hurd's target bonus opportunity under HP's PfR Plan to 220% of his base salary (with a maximum bonus opportunity of three times that amount).

EXCERPTS ON THIS PAGE:

DEF 14A	Jan 23, 2007

DEF 14A	Jan 23, 2006

Hewlett-Packard (HPQ)

HPQ » Topics » Employment Agreement with Mark V. Hurd

EXCERPTS ON THIS PAGE:

RELATED TOPICS for HPQ: