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HPQ » Topics » Employment Agreement with Randall D. Mott

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

Employment Agreement with Randall D. Mott

        HP offered Mr. Mott employment on July 11, 2005 on the terms set forth below.

Position   Executive Vice President and Chief Information Officer

Term of Employment
 
At will employment. Employment may be terminated by Mr. Mott or HP, at any time.

Salary
 
$690,000 base salary.

Bonus
 
At least $690,000 (target at 100% of base), pro-rated for mid-year entry with a maximum target opportunity of $2,070,000 (300% of base) assuming performance goals are achieved under HP's PfR plan. The applicable targets for the second six months of fiscal 2005 and fiscal 2006 will be deemed to have been met and the incentive earned during fiscal 2005 was pro-rated based on the hire date.

Long-Term Incentives
 
 
 

Long-Term Cash Performance Plan
 
Eligible for $7,000,000, of which $5,000,000 is guaranteed, over the three-year cycle beginning May 1, 2005 in HP's LTPC Program. The $5,000,000 will be paid at the end of the three-year period, even if Mr. Mott is not employed by HP. Mr. Mott is eligible to participate in future performance cycles at levels commensurate with his responsibilities.

Stock Options
 
 
 

Number of Shares
 
Option for 500,000 shares (with a maximum term of eight years) with a grant price of the fair market value on the grant date.

Value of Grant
 
Approximately $3,101,604

Vesting Schedule
 
Vesting 25% annually over four years.

Restricted Stock
 
 

Number of Shares
 
285,000 shares of restricted stock

Value of Grant
 
Approximately $7,102,200

Vesting Schedule
 
Vesting 20% annually on the anniversary of Mr. Mott's hire date.

Signing Bonus
 
$2,200,000 cash bonus payment to be paid on hire, subject to repayment if Mr. Mott voluntarily terminates within one year.
       

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Benefits
 
Mr. Mott 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, cash balance retirement plan, medical, dental, vision and life and disability insurance.

Perquisites
 
Mr. Mott is eligible for HP perquisites at the same level as other senior executive officers including financial counseling and executive physicals.

Time Off
 
Mr. Mott will receive paid time off in accordance with HP policy for other senior executive officers. In no event will Mr. Mott receive fewer than 25 days of paid time off per calendar year.

Security
 
Mr. Mott will receive appropriate home security in accordance with HP's practice for similarly situated executives.

Relocation Benefit
 
Mr. Mott will receive the standard relocation package with the following adjustments:
    — A relocation allowance of $1,000,000;
    — Temporary housing for up to six months, renewable for an additional six months if necessary;
    — Extended time period for home purchasing closing cost from 90 days to up to one year from hire date;
    — Mortgage interest subsidy for four years;
    — Extended time period for beginning mortgage subsidy program from 90 days to up to one year from hire date;
    — Increase in household goods shipment weight limit to 30,000 pounds; and
    — Extended household goods storage up to six months, renewable for an additional six months if necessary.

Severance
 
For 36 months from the date of commencement of employment, Mr. Mott will be eligible to participate in HP's Severance Program for Senior Executives and will receive:
    — A one-time cash payment equal to 1.5 times Mr. Mott's base salary;
    — A lump-sum payment equivalent to any guaranteed bonuses for fiscal 2005 and fiscal 2006 to the extent such bonus has not been previously paid;
    — Payment of any banked amounts under the LTPC Program;
    — A prorated payment of any earned PfR bonus to the extent such bonus has not been previously paid;
    — Prorated vesting on any existing restricted stock based on the number of active months; and
    — 50% vesting on any unvested stock options and a one year post termination exercise period for vested options.

Confidential Information and Intellectual Property
 
Mr. Mott has been required to execute HP's Agreement Regarding Confidential Information and Proprietary Developments.

Attorneys' Fees
 
HP will reimburse Mr. Mott for reasonable legal fees incurred in connection with this agreement.

Arbitration
 
All disputes between HP and Mr. Mott will be resolved through binding arbitration.

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        On January 23, 2006, the HR and Compensation Committee agreed to increase Mr. Mott's target bonus opportunity under HP's PfR Plan to 125% of his base salary (with a maximum bonus opportunity of three times that amount).

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