This excerpt taken from the HPQ DEF 14A filed Jan 23, 2007.
Short-term incentives are provided under the PfR Plan, which was approved by stockholders in 2006. The PfR Plan is designed to reward achievement of financial performance objectives during the fiscal year; it has two components, revenue and net profit, that are equally weighted. These components address both "top line" (revenue) and "bottom line" (net profit) corporate financial goals. Bonuses are paid only when performance goals are achieved; if threshold targets are not met, no amounts are paid under the PfR Plan. If targets are exceeded, payouts under the PfR Plan may be significant. Targets for fiscal 2006 performance were set by the Committee at its November 2005 meeting. For some executive officers, payouts were determined based solely upon business unit performance; for other executive officers, payouts were determined 50% on business unit performance and 50% on overall corporate performance. For corporate executive officers, payouts were determined 100% on overall corporate performance. For fiscal 2006, the targeted short-term bonus amount for executive officers generally ranged from 50% to 220% of base salary, and the maximum payout could not exceed 300% of the target amount. The Committee has structurally reduced the maximum payout from 300% to 250% of target for fiscal 2007.