Hewlett-Packard (HPQ)

The FY'06 PfR program runs November 1, 2005 through October 31, 2006

This statement confirms your participation in the FY'06 Pay-for-Results (PfR) program* based on your current eligibility status. Important changes have been made to the program for FY'06 to make it simpler, easier to understand, and more aligned with HP's operating model:

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PfR is now an annual program, aligned with HP's fiscal year



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there are only two metrics in the plan—net profit and revenue



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as the focus is on year-over-year improvement, metric goals (gate, target, stretch) have been set with consideration to FY05 results



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once the gate for HP net profit has been passed, the plan begins to fund; the greater the improvement, the larger the funding, the higher the bonus



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for participants in the business segments, results are measured at both the HP worldwide and business segment level, reinforcing HP's operating model to drive P&L accountability further down the organization and providing managers with greater ability to influence their bonus through metrics they can more directly impact

Your FY'06 Metrics and Bonus Opportunity
Below is a summary of your plan metrics and target bonus opportunity for FY'06. Your actual bonus under the program will be a factor of the following:

1.

Performance on the metrics relative to the ASPIRE plans for FY'06.

2.

Your Target Bonus Opportunity, which is stated as a percentage of your accumulated eligible earnings

3.

Your accumulated eligible earnings during FY'06. This is typically your base pay, but may include adjustments based on employment status such as Part-Time or Leave of Absence.

The PfR program is a variable pay program and ultimate payment is discretionary based upon achievement of business objectives with participation and payout subject to the terms and conditions of the PfR plan. Your current status and participation does not guarantee future status and participation in PfR. HP's variable pay philosophy allows participation in only one variable pay program; payments made from other programs may preclude your participation in PfR this period. Refer to Business Group-specific plan documents or websites for additional information in this regard.

As a normal part of aligning its Total Rewards, HP continues to monitor the competitiveness of its variable pay programs and adjusts performance measurement goals, bonus opportunities and plan eligibility to reflect business requirements and market norms.

To read about other important changes to the FY06 PfR program, please go to the variable pay website at:

        http://hrcms01.atl.hp.com:6041/public/pages/prg_prj/en_US/column_page_0002.htm

If you have questions about the information specific to you, please contact me or Contact HR.

Regards,