Hewlett-Packard (HPQ)

Long-Term Incentive Pay

        In general, HP aims to set a total long-term incentive compensation target amount for its senior executives to be at or near the 75^th percentile of the long-term incentives paid by its peer group companies. In the case of the NEOs who head significant business segments, the Committee also compares compensation data for these positions against the pay for CEOs of smaller companies, as the size and complexity of those business segments exceed the size and complexity of many of HP's peer group companies. Thus, the peer group long-term target incentives for the NEOs who head these significant business segments are determined based on a blend of peer positions with similar titles and CEO positions among the smaller peer companies, using the 75^th percentile for peer-company positions and the median for CEO positions at smaller companies as competitive reference points.

        The Committee established a total long-term incentive target amount for each NEO in fiscal 2009. Approximately 80% of that amount was awarded in the form of performance-based restricted units, with the remaining amount awarded in the form of restricted stock units with time-based vesting. This mix of performance-based and time-based awards reflects HP's primary emphasis on performance-

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driven compensation, with the time-based awards providing a measure of retention value, which is also an important component of the overall executive compensation arrangement.

Long-Term Incentive Pay

        In general, HP aims to set a total long-term incentive compensation target amount for its senior executives at a level that approximates the 75^th percentile of the long-term incentives paid by its peer companies. In the case of the NEOs who head significant business segments, the Committee also compares compensation data with respect to these positions against the pay for CEOs of smaller companies, as the size and complexity of those business segments substantially exceed the size and complexity of some of HP's peer group companies. Thus, the peer group long-term target incentives for the NEOs who head these significant business segments are determined based on a blend of peer positions with similar titles and CEO positions among the smaller peer companies.

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        The Committee established a total long-term incentive target amount for each NEO in fiscal 2008. The Committee then divided that amount so that approximately 80% of that value was awarded in the form of Performance-based Restricted Units, with the remaining value awarded in the form of restricted stock with time-based vesting. This mix of performance-based and time-based awards reflects HP's primary emphasis on performance-driven compensation.

Long-Term Incentive Pay

        In general, we aim to set a total long-term incentive compensation amount for our senior executives at a level that is between the 50^th and 75^th percentile of the long-term incentives paid by our peer companies. In the case of the NEOs who head significant business units, long-term incentive amounts are set in excess of the 75^th percentile because it has been determined that it is appropriate in terms of the size and complexity of the functional role, as compared to similarly-titled positions at peer companies.

        For fiscal 2007, a total long-term incentive amount was determined for each NEO. That amount was then divided so that approximately 30% to 40% of that value was awarded under each of three programs: (1) the HP Long-Term Performance Cash Program, (2) grants of stock options, and (3) grants of restricted stock.

        For fiscal 2008, we will deliver long-term incentive compensation primarily in the form of a single vehicle, the new Performance-based Restricted Unit Program, described more fully below under "Long-Term Incentive Pay for Fiscal 2008."