Hewlett-Packard (HPQ)

Performance-based Restricted Unit Program

        As described under "Compensation Discussion and Analysis—Analysis of Elements of Executive Compensation—Long-Term Incentive Pay," HP instituted a new long-term incentive program during fiscal 2008 under which eligible executives are granted PRUs that are released (if at all) in the form of HP shares at the end of a three-year performance period based on annual achievement of cash flow from operations as a percentage of revenue, modified by HP's TSR relative to the S&P 500 over that three-year period.

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        PRU awards were granted in fiscal 2009 to the NEOs in the amounts indicated in the Grants of Plan-Based Awards Table below and have the potential to release two times the number of shares subject to those awards at the end of the three-year performance period.

        At its January 2009 meeting, the Committee set the fiscal 2009 cash flow target for the portions of the fiscal 2008 and fiscal 2009 PRU awards applicable to fiscal 2009 performance (i.e., the second one-third of the units awarded in fiscal 2008 and the first one-third of the units awarded in fiscal 2009). At its November 2009 meeting, the Committee reviewed the company's cash flow results for the period and certified that performance had been achieved at 100.94% of target. This resulted in participants being credited with 100.94% of one-third of the units of each of the fiscal 2008 and fiscal 2009 awards. Whether or not these or any other units credited under the PRU awards are released in the form of shares at the end of any three-year performance period will depend on HP's TSR performance over the full three-year period.