RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The Audit Committee of the Board has appointed Ernst & Young LLP as the independent registered public accounting firm to audit HP's consolidated financial statements for the fiscal year ending October 31, 2006.2007. During fiscal 2005,2006, Ernst & Young LLP served as HP's independent registered public accounting firm and also provided certain tax and other audit-related services. See "Principal Accountant Fees and Services" on page 71.59. Representatives of Ernst & Young LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.

        Our Board recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as HP's independent registered public accounting firm for the 20062007 fiscal year. If the appointment is not ratified, the Board will consider whether it should select another independent registered public accounting firm.

Vote Required

        Ratification of the appointment of Ernst & Young LLP as HP's independent registered public accounting firm for the 20062007 fiscal year requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted at the meeting.

PROPOSAL NO. 3

APPROVAL OF
THE HEWLETT-PACKARD COMPANY 2005 PAY-FOR-RESULTS PLAN

        On November 17, 2005 the HR and Compensation Committee of the Board (the "Committee") approved the Hewlett-Packard Company 2005 Pay-for-Results Plan (the "PfR Plan"). The PfR Plan is a continuation of the Hewlett-Packard Company 2000 Executive Pay-for-Results Program, in which HP's Section 16 Officers, and other individuals previously participated. The PfR Plan provides a non-exclusive framework that can satisfy the standards of Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the "Code"). Under the PfR Plan the Committee will designate performance measures and a bonus formula with respect to a performance period for each PfR Plan participant. Utilizing those criteria and other factors that the Committee determines appropriate, the Committee uses the PfR Plan to reward accomplishments achieved or recognized during the performance period. The Board believes that the PfR Plan benefits stockholders because it creates a strong incentive for executives to meet or exceed specified financial goals. Stockholders are being asked to approve the PfR Plan to fulfill one of the requirements to qualify the amounts paid pursuant to the PfR Plan for a United States federal income tax deduction.

        The Board believes that it is in the best interests of HP and its stockholders to provide for a stockholder-approved plan under which bonuses paid to its Section 16 Officers can qualify for deductibility by HP for federal income tax purposes. Accordingly, HP has structured the PfR Plan in a manner such that payments under it can satisfy the requirements for "performance-based" compensation within the meaning of Section 162(m) of the Code. In general, Section 162(m) of the Code places a limit on the deductibility for federal income tax purposes of the compensation paid to the named executive officers set forth in the Summary Compensation Table on page 37 who were employed by HP on the last day of its taxable year. Under Section 162(m), compensation paid to such persons in excess of $1 million in a taxable year is not generally deductible. However, compensation that qualifies as "performance-based" as determined under Section 162(m) does not count against the $1 million limitation. One of the requirements of "performance-based" compensation for purposes of Section 162(m) of the Code is that the material terms of the performance goal under which compensation may be paid be disclosed to and approved by the company's stockholders. For purposes of Section 162(m) the material terms include (i) the employees eligible to receive compensation, (ii) a description of the business criteria on which the performance goal is based and (iii) the maximum amount of compensation that can be paid to an employee under the performance goal. Each of these aspects of the PfR Plan is discussed below, and stockholder approval of the PfR Plan will be deemed to constitute approval of each of these aspects of the PfR Plan for purposes of the approval requirements of Section 162(m) of the Code.

Our Board recommends a vote FOR the approval of the PfR Plan.

Vote Required

        Approval of the PfR Plan requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and entitled to vote on this proposal at the meeting.

SUMMARY OF THE PFR PLAN

        ADMINISTRATION    The Committee has complete authority to: (i) select from the eligible participants the individuals to whom awards under the PfR Plan may from time to time be paid, (ii) determine the performance periods and performance goals upon which payment of awards under the PfR Plan will be based, and (iii) make any other determination and take any other action that the Committee deems necessary or desirable to discharge its duties under the PfR Plan. The Committee may delegate various functions to a "Plan Committee" to act on certain compensation and benefits matters. The Plan

Committee will have the responsibility for general administration and interpretation of the PfR Plan, except to the extent inconsistent with Section 162(m) of the Code. The Plan Committee is composed of HP's Executive Vice President of Human Resources, General Counsel, Controller and Treasurer. The Plan Committee may further delegate its administrative tasks to other HP employees as it deems appropriate.

        PARTICIPATION AND ELIGIBILITY    Each Section 16 Officer is eligible to participate in the PfR Plan. HP's non-employee directors are not entitled to participate in the PfR Plan. Currently, HP has fifteen Section 16 Officers who are eligible to participate in the PfR Plan in fiscal 2006.

        If a person ceases to be a Section 16 Officer or becomes a Section 16 Officer during a performance period, such participant may receive a prorated bonus under the PfR Plan.

        A participant generally will forfeit any bonus for a performance period during which such participant is involuntarily terminated by HP or terminates his or her employment with HP for any reason, although the Committee may determine that the forfeiture does not apply in cases of termination due to death, workforce restructuring, disability, retirement or in connection with certain mutual separation agreements. Adjustments will also be made if a participant is on a leave of absence approved by HP or is on non-pay status.

        Awards under the PfR Plan are subject to repayment in the event of a significant restatement of financial results pursuant to the following policy. In the event of such a restatement, the Board will review all bonuses that were made to Section 16 Officers on the basis of having met or exceeded specific performance targets for performance periods beginning after December 31, 2005 for the restatement period. If such bonuses would have been lower had they been calculated based on such restated results, the Board will, to the extent permitted by governing law, seek to recoup all such bonuses paid to Section 16 Officers whose fraud or misconduct resulted in such restatement.

        PFR PLAN OPERATION    Within the earlier of (i) 90 days after commencement of a performance period, or (ii) the expiration of 25% of the performance period, the Committee will designate or approve:

•

the performance period (the PfR Plan defines "performance period" to mean HP's fiscal year or such other period that the Committee may establish),



•

the employees (designated by position or name) who will be participants in the PfR Plan for the performance period,



•

the performance measures and targeted performance goals for those measures during the performance period,



•

the bonus formula applicable to each participant for the performance period (which can be set on an individual or group basis),



•

the target bonus opportunity for each participant,



•

the weighting of each performance measure, and



•

the eligible earnings that the participant accrues during the performance period.

        When the Committee establishes a bonus program, the Committee first determines the length of the performance period in which a bonus program applies. For example, the Committee determined at its November 2005 meeting that the variable pay programs will have a performance period that coincides with HP's 2006 fiscal year, rather than being composed of two semi-annual performance periods as in prior years. The Committee also determines the performance measures, and associated weighting and targeted goals, for the applicable performance period. For the 2006 fiscal year performance period, the Committee selected non-GAAP net profit and revenue as performance measures, and the threshold funding is based on year-over-year improvement in these performance measures. For certain participants, the Committee determined that the performance measures will also include business net profit and revenue metrics.

        BUSINESS CRITERIA AND MAXIMUM AMOUNT OF COMPENSATION PAYABLE UNDER THE PFR PLAN    The performance measures for any performance period will be any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either HP as a whole or to a region, business unit, affiliate or business segment, either individually, alternatively or in any combination, and measured either on an absolute basis or relative to a pre-established target, to a previous period's results or to a designated comparison group, in each case as specified by the Committee: (i) cash flow (including operating cash flow or free cash flow), (ii) revenue (on an absolute basis or adjusted for currency effects), (iii) gross margin, (iv) operating expenses or operating expenses as a percentage of revenue, (v) earnings (which may include earnings before interest and taxes, earnings before taxes and net earnings, and may be determined in accordance with United States Generally Accepted Accounting Principles ("GAAP") or adjusted to exclude any or all non-GAAP items), (vi) earnings per share (on a GAAP or non-GAAP basis), (vii) growth in any of the foregoing measures, (viii) stock price, (ix) return on equity or average stockholders' equity, (x) total stockholder return, (xi) growth in stockholder value relative to the moving average of the S&P 500 Index or another index, (xii) return on capital, (xiii) return on assets or net assets, (xiv) return on investment, (xv) economic value added, (xvi) operating profit, controllable operating profit, or net operating profit, (xvii) operating margin, (xviii) cash conversion cycle, (xix) market share, (xx) contract awards or backlog, (xxi) overhead or other expense reduction, (xxii) credit rating, (xxiii) strategic plan development and implementation, (xxiv) succession plan development and implementation, (xxv) improvement in workforce diversity, (xxvi) customer indicators, (xxvii) new product invention or innovation, (xxviii) attainment of research and development milestones, (xxix) improvements in productivity, (xxx) attainment of objective operating goals and (xxxi) employee metrics.

        The PfR Plan further provides that the Committee may appropriately adjust any evaluation of performance under a performance measure to exclude any of the following events that occurs during a performance period: (A) the effects of currency fluctuations, (B) any or all items that are excluded from the calculation of non-GAAP earnings as reflected in any HP press release and Form 8-K filing relating to an earnings announcement, (C) asset write-downs, (D) litigation or claim judgments or settlements, (E) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (F) accruals for reorganization and restructuring programs, and (G) any other extraordinary or non-operational items. However, in no event will the Committee use its discretion to increase a bonus paid to a participant.

        The maximum bonus that any one participant may be paid under the PfR Plan in any one fiscal year is $10 million.

        COMMITTEE CERTIFICATION AND DETERMINATION OF AWARDS    The bonus amount for each participant is determined after calculating the amount payable under the bonus formula approved at the beginning of the performance period for the participant. After the conclusion of each performance period, the Committee will determine and certify the extent to which the targeted goals for the performance measures applicable to the performance period were achieved. The Committee will also certify the bonus amount for each participant for the performance period based upon bonus formula for such participant as previously established by the Committee. The Committee has the authority to reduce or eliminate to zero the amount of any bonus payable under the PfR Plan to any participant; however, the Committee cannot increase the bonus amounts payable under the PfR Plan in excess of the maximum that a participant would receive based on the bonus formula established for the participant at the beginning of the performance period.

        NON-EXCLUSIVITY    Nothing contained in the PfR Plan prevents the Board from adopting other or additional compensation arrangements that provide for bonuses or other forms of compensation for HP's executive officers, directors or other employees regardless of stockholders approval of the PfR Plan. Such other arrangements may or may not qualify for deductibility under Section 162(m) of the Code and may be either applicable only for specific executives, directors or employees or may be generally applicable.

However, for payments under the PfR to qualify as performance-based compensation under Section 162(m), any such other or additional compensation arrangements may not be designed to provide PfR Plan participants all or part of the compensation they would receive under the PfR Plan regardless of whether the performance goal is attained.

        TERM: AMENDMENT AND TERMINATION OF THE PFR PLAN    The PfR Plan is effective as of November 1, 2005, provided that the PfR Plan will terminate unless it is approved at stockholders at the annual meeting. If approved by stockholders, the Committee may establish additional bonus grants for subsequent performance periods until the earlier of (i) its termination at the discretion of the Committee, (ii) the date any stockholder approval requirement under Section 162(m) of the Code ceases to be met or (iii) the date that is five years after the annual meeting.

        The Committee may amend, suspend or terminate the PfR Plan at any time as it may deem proper and in the best interests of HP; provided that no amendment, suspension or termination may be made that would increase the amount of compensation payable pursuant to a bonus awarded under the PfR Plan or cause amounts payable under the PfR Plan to fail to qualify as performance-based compensation under Section 162(m) of the Code. Administrative changes or changes required by law may be made by the Plan Committee. To the extent required under applicable law, amendments to the PfR Plan will be subject to stockholder approval.

        NEW PLAN BENEFITS    The following table shows the maximum amounts of the awards that may be paid under the PfR Plan to Section 16 Officers named in the Summary Compensation Table if the performance goals for fiscal 2006 are achieved at the highest levels.

MAXIMUM POTENTIAL AWARDS UNDER THE PAY-FOR-RESULTS PROGRAM
FOR FISCAL 2006

FEDERAL INCOME TAX CONSIDERATIONS

        All amounts paid pursuant to the PfR Plan constitute taxable income to the employee when received. If a participant elects to defer a portion of the bonus, the participant may be entitled to defer the recognition of income. Generally, and subject to Section 162(m) of the Code, HP will be entitled to a federal income tax deduction when amounts paid under the PfR Plan are included in employee income. Subject to stockholder approval of the PfR Plan, the failure of any aspect of the PfR Plan to satisfy Section 162(m) shall not void any action taken by the Committee under the PfR Plan.

        As stated above, the PfR Plan is being submitted for stockholders approval at the annual meeting so that payments under the PfR Plan can qualify for deductibility by HP under Section 162(m) of the Code. However, stockholder approval of the PfR Plan is only one of several requirements under Section 162(m) of the Code that must be satisfied for amounts payable under the PfR Plan to qualify for the "performance-based" compensation exemption under Section 162(m) of the Code, and submission of the PfR Plan to stockholder approval should not be viewed as a guarantee that all amounts paid under the PfR Plan will in practice be deductible by HP.

        The foregoing is only a summary of the effect of federal income taxation upon employees and HP with respect to amounts paid pursuant to the PfR Plan. It does not purport to be complete and does not discuss the tax consequences arising in the context of the employee's death or the income tax laws of any municipality, state or foreign country in which the employee's income or gain may be taxable.

INCORPORATION BY REFERENCE

        The foregoing is only a summary of the PfR Plan and is qualified in its entirety by reference to the full text of the PfR Plan, a copy of which is attached hereto as Appendix D.

PROPOSAL NO. 4

STOCKHOLDER PROPOSAL ENTITLEDRELATING TO
DIRECTORSTOCKHOLDER NOMINEES FOR ELECTION MAJORITY VOTE STANDARD PROPOSAL
TO THE HP BOARD

        HP has received a stockholder proposal from The United Brotherhood of Carpentersthe AFSCME Employee Pension Plan, the New York State Common Retirement Fund, the Connecticut Retirement Plans and Joiners of America ("United Brotherhood of Carpenters"), 101 Constitution Avenue, N.W., Washington, D.C. 20001. The United Brotherhood of Carpenters hasTrust Funds and the North Carolina Equity Investment Fund Pooled Trust. These proponents have requested that HP include the following proposal and supporting statement in its proxy statement for the 20062007 annual meeting of stockholders, and, if properly presented, this proposal will be voted on at the annual meeting. The United BrotherhoodHP will provide the addresses of Carpentersthese proponents and the number of shares beneficially owns 49,700 sharesowned by each upon oral or written request of HP common stock.any stockholder. The stockholder proposal is quoted verbatim in italics below.

        Management of HP does not support the adoption of the resolution proposed below and asks stockholders to consider management's response, which follows the stockholder proposal.

        Our Board recommends a vote AGAINST Proposal No. 4.3.

Vote Required

        HP believes that approval of the stockholder proposal requires the affirmative vote of sixty-six and two-thirds percent (66²/3%) of the outstanding shares entitled to vote on the proposal at the annual meeting. Article IX of HP's Bylaws requires such a vote for any proposal by a stockholder to amend provisions of the Bylaws that relate to the nomination and election of directors. While the stockholder proposal seeks to add a new section to the Bylaws, it clearly relates to the nomination and election of directors and the 66²/3% standard should apply. Among other things, the stockholder proposal expressly requires compliance with some, but not all, provisions of Section 2.2 of HP's Bylaws, and, therefore, effectively amends Section 2.2.

STOCKHOLDER PROPOSAL

RESOLVED, pursuant to Article IX of the Bylaws (the "Bylaws") of Hewlett-Packard Company ("HP") and section 109(a) of the Delaware General Corporation Law, stockholders amend the Bylaws to add section 3.17:

"HP shall include in its proxy materials for a meeting of stockholders at which directors are to be elected the name, together with the Disclosure and Statement (both as defined in this section 3.17), of any person nominated for election to the Board of Directors by a stockholder or group thereof that satisfies the requirements of this section 3.17 (the "Nominator"), and allow stockholders to vote with respect to such nominee on HP's proxy card. Each Nominator may nominate up to two candidates for election at a meeting.

A Nominator must:

(a)

have beneficially owned 3% or more of HP's outstanding common stock ("Required Shares") continuously for at least two years;



(b)

provide written notice received by HP's Secretary within the time period specified in section 2.2(c) of these Bylaws containing (i) with respect to the nominee, (A) the information required by section 2.2(f) of these Bylaws and (B) such nominee's consent to being named in the proxy statement and to serving as a director if elected; and (ii) with respect to the Nominator, proof of ownership of the Required Shares; and



(c)

execute an undertaking that it agrees to (i) assume all liability stemming from any legal or regulatory violation arising out of the Nominator's communications with HP stockholders, including, without limitation, the Disclosure and Statement; (ii) to the extent it uses soliciting

material other than HP's proxy materials, comply with all applicable laws and regulations, including, without limitation, the SEC's Rule 14a-12.

The Nominator may furnish a statement, not to exceed 500 words, in support of the nominee's candidacy (the "Statement"), at the time the Disclosure is submitted. The Board of Directors shall adopt a procedure for timely resolving disputes over whether notice of a nomination was timely given and whether the Disclosure and Statement comply with this section 3.17 and any applicable SEC rules."

SUPPORTING STATEMENT

We believe that stockholders of U.S. public companies currently have no meaningful control over the process by which directors are nominated and elected. Stockholders whose suggested nominees are rejected by a nominating committee have no recourse other than sponsoring a dissident election campaign, which is so expensive that it rarely occurs outside the takeover context. Harvard Law School professor Lucian Bebchuk has estimated only about 80 contested elections occurred at U.S. public companies from 1996 through 2002 that did not seek to change control of the corporation.

In our view, access to the proxy for purposes of electing a director nominated by stockholders with a significant stake in HP is the most effective mechanism for ensuring accountability. We believe that greater accountability would benefit HP and enhance shareholder value.

We urge stockholders to vote for this proposal.

MANAGEMENT STATEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL

        The Board recommends a vote against this proposal that amends HP's Bylaws to require HP to include in its proxy materials (like this proxy statement) the names of up to two director candidates nominated by certain stockholders for election to HP's Board. The Board opposes this proposal because it provides for a mandatory amendment to HP's Bylaws without any input from HP's Board or management, and it would result in expensive, divisive director elections. Moreover, existing HP policies and procedures already provide for stockholder input in the director nomination and election process.

        Permitting certain stockholders to nominate director candidates in HP's proxy materials could lead to the election of "special interest directors" who represent the interests of the stockholders who nominated them, not the interests of all HP stockholders. It also could turn every director election into a proxy contest. This would be tremendously disruptive, require expenditure of significant HP resources and discourage directors from serving on the Board.

        Moreover, the proposal is not necessary because HP's stockholders have the opportunity for significant input in the director nomination and election process. As discussed on page 14 of this proxy statement, stockholders may submit recommendations for director candidates to the Nominating and Governance Committee. In addition, HP's Bylaws permit stockholders to nominate directors for consideration at an annual stockholder meeting and to solicit proxies in favor of such nominees. With respect to director elections, HP's Board has amended HP's Bylaws to implement a majority vote standard requiring that each director nominee receive more "for" than "against" votes to be elected. In addition, HP's Board has adopted a policy pursuant to which any incumbent director nominee who receives a greater number of votes "against" his or her election than votes "for" such election will tender his or her resignation for consideration by the Nominating and Governance Committee. Finally, unlike many companies, HP permits stockholders to cumulate votes in director elections, which gives stockholders an even more meaningful role in the director election process.

        For the reasons described above, the Board recommends a vote AGAINST this proposal.

PROPOSAL NO. 4

STOCKHOLDER PROPOSAL ENTITLED
SEPARATE THE ROLES OF CEO AND CHAIRMAN

        HP has received a stockholder proposal from Harold J. Mathis, Jr., represented by John Chevedden. Mr. Mathis has requested that HP include the following proposal and supporting statement in its proxy statement for the 2007 annual meeting of stockholders, and, if properly presented, this proposal will be voted on at the annual meeting. HP will provide Mr. Mathis' address and the number of shares that he beneficially owns upon oral or written request of any stockholder. The stockholder proposal is quoted verbatim in italics below.

        Management of HP does not support the adoption of the resolution proposed below and asks stockholders to consider management's response, which follows the stockholder proposal.

Our Board recommends a vote AGAINST Proposal No. 4

Vote Required

        Approval of the stockholder proposal requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted on the proposal at the annual meeting.

STOCKHOLDER PROPOSAL

4–Director Election Majority Vote Standard ProposalSeparate the Roles of CEO and Chairman

        Resolved:That the shareholders of Hewlett-Packard Company ("Company") herebyRESOLVED: Shareholders request that our Board establish a rule (required in our charter or bylaws if practicable) of separating the roles of our Board Chairman and CEO, so that an independent director who has not served as an executive officer of Directors initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders.our Company, serve as our Chairman whenever possible.

        Supporting Statement:This proposal gives our company an opportunity to follow SEC Staff Legal Bulletin 14C to cure a Chairman's non-independence. This proposal shall not apply to the extent that compliance would necessarily breach any contractual obligations in effect at the time of the 2007 shareholder meeting.

Our CompanyHarold Mathis, P.O. Box 1209, Richmond, TX 77406 sponsors this proposal.

This proposal is incorporatedrelated to the announcement that Mr. Mark Hurd will become our Chairman and CEO in Delaware. Delaware law providesJanuary 2007. The Financial Times said: Since March 2005, when Mark Hurd was appointed chief executive, shares in Hewlett-Packard soared 62% while those of rival Dell slumped 45%. Even during HP boardroom turmoil because of a scandal over its decision to spy on phone records, HP shares remained almost unnaturally calm.

Investors are belatedly waking up to probably the biggest threat: that a company's certificateMr. Hurd might get caught in the storm. HP shares fell 5% on the morning of incorporationSeptember 21, 2006. The fear is that Mr. Hurd, as CEO, was aware of elements of the investigation that were of dubious legality, or bylaws may specifydid nothing about them when he was made aware. That could raise questions over his judgment, or potentially drag him into more serious investigations by external agencies into the number of votesscandal.

Especially given that shall be necessary forvarious journalists' records were spied on by HP, the transaction ofstory looks unlikely to die any business, includingtime soon.

That leaves HP's fudged response to the elections of directors. (DGCL, Title 8, Chapter 1, Subchapter VII, Section 216.) The law provides that ifcrisis, which gives Mr. Hurd the level of voting support necessary for a specific action is not specifiedchairmanship starting in January 2007, looking increasingly misjudged. Investors want him to run the business. HP's board should have tried to ring-fence him as far as possible from the boardroom shenanigans and brought in a corporation's certificate or bylaws, directors "shall be electedheavy-hitting, external chairman—untainted by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled problems—to vote on the election of directors."

Our Company presently uses the plurality vote standard to elect directors. This proposal requests that the Board initiate a change in the Company's director election vote standard to provide that nominees for the board of directors must receive a majority of the vote cast in order to be elected or re-elected to the Board.

We believe that a majority vote standard in director elections would give shareholders a meaningful role in the director election process. Under the Company's current standard, a nominee in a director election can be elected with as little as a single affirmative vote, even if a substantial majority of the votes cast are "withheld" from the nominee. The majority vote standard would require that a director receive a majority of the vote cast in order to be elected to the Board.

The majority vote proposal received high levels of support last year, winning majority support at Advanced Micro Devices, Freeport McMoRan, Marathon Oil, Marsh and McClennan, Office Depot, Raytheon, and others. Leading proxy advisory firms recommended voting in favor of the proposal.restore order.

Some companies have adopted board governance policies requiring director nomineesInstead, they now face the threat of him taking over as chairman with the scandal still rumbling—and soaking up a lot of his time. Even worse, there is the outside possibility that failthe ongoing investigations recast him as the blundering Hurd and threaten his ability to receive majority support from shareholderscontinue running the company effectively. Shareholders are right to tender their resignations to the board. We believe that these policies are inadequate for they arebe nervous. (End of text based on continued use of the plurality standard and would allow director nominees to be elected despite only minimal shareholder support. We contend that changing the legal standard to a majority vote is a superior solution that merits shareholder support.

Our proposal is not intended to limit the judgment of the Board in crafting the requested governance change. For instance, the Board should address the status of incumbent director nominees who fail to receive a majority vote under a majority vote standard and whether a plurality vote standard may be appropriate in director elections when the number of director nominees exceeds the available board seats.

We urge your support for this important director election reform.The Financial Times article.)

The primary purpose of our Chairman and Board of Directors is to protect shareholders' interests by providing independent oversight of management, including our Chief Executive Officer. Separating the roles of Chairman and CEO can promote greater management accountability to shareholders and lead to a more objective evaluation of our CEO.

The Council of Institutional Investors adopted a Corporate Governance Policy which recommends, "The board should be chaired by an independent director."

An independent Chairman can enhance investor confidence.

Separate the Roles of CEO and Chairman
Vote Yes on 4

MANAGEMENT STATEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL

        This proposal requests that HP adopt a majority voting standard for director elections so that stockholders have a meaningful role in the director election process. As noted in the proposal, HP, a Delaware company, uses a plurality voting standard, the default under Delaware law. The plurality voting standard provides that the nominees who receive the most affirmative votes are elected to serve as HP directors. Most large public companies that are incorporated in Delaware and elsewhere use a plurality voting standard.

        After careful consideration, we recommendBoard recommends a vote against this proposal becauserequesting that HP establish a rule in the charter or bylaws separating the roles of the Chairman and CEO. After careful consideration, the Board has determined that it is in the best interests of HP to maintain flexibility with respect to combining or separating the positions of Chairman and CEO. Such flexibility permits the Board to select the most qualified candidate for the position of Chairman, including a member of management, if the Board believes he or she will provide the most effective leadership for HP. At the same time, the Board believes it is important to maintain independent Board leadership, and thus, at the present time when the positions of Chairman and CEO are combined, the independent directors have appointed an independent lead director.

        HP has already implementedbeen, and continues to be, a policy (described below)strong advocate of Board independence and has put into place measures to see that addressesits directors provide independent oversight. Currently, seven of the proponent's concerns.nine HP directors are independent within the meaning of HP's director independence standards, which reflect New York Stock Exchange, Inc. and NASDAQ Global Select Market, Inc. listing standards. Moreover, as noted above, the plurality voting standardindependent directors have designated a lead independent director. The lead independent director presides at Board meetings when the Chairman is compatiblenot present, including at the executive sessions of independent directors, serves as a liaison between the Chairman and independent directors, coordinates information sent to the Board, approves meeting schedules to ensure sufficient time to cover all agenda items, is available for consultation and direct communication with HP's cumulative voting provisions, which allowmajor stockholders to aggregate their votes for a single director nominee,upon request and therefore provide stockholders a meaningful ability to express their preferences in the election of directors.

        As announced on November 2, 2005, HP has adopted a policy whereby any director nominee who receives a greater number of votes "withheld" from his or her election than votes "for"performs such election will tender his or her resignation for consideration by the Nominatingother functions and Governance Committee. HP believes that this policy is effective in giving stockholders a meaningful role in the election of directors and in removing a director opposed by stockholders. Under HP's policy, a nominee and incumbent director who receives a majority of withheld votes would tender his or her resignation and could be removed from the Board. By contrast, the majority voting standardresponsibilities as requested by the proposal only addressesBoard from time to time.

        HP's current corporate governance structure provides the voting requirement for being electedflexibility to choose the Board. It does not remove incumbent directorsmost effective leadership, while maintaining independent Board leadership through the lead independent director. Depriving the Board of the ability to exercise its business judgment to decide who have not received a majority vote because under Delaware law, an incumbent director who is not re-elected "holds over" and continuesthe best candidate to serve with the same voting rightsas Chairman is would be detrimental to HP and powers until his or her successorits stockholders. There is elected and qualified. Therefore, even if the proposal were adopted, HP could not force a director who failed to receive a majority vote to leave the Board until the next annual meeting.

        The HP policy also gives stockholders a meaningful roleno clear consensus in the director election process without interfering with cumulative voting. The ability to cumulate votes in director electionsUnited States that separating the roles of Chairman and CEO is universally recognized as protecting stockholder rights. A majority voting standard may raise difficult issues indesirable. In fact, more than two-thirds of Fortune 500 companies combine the contextpositions of cumulative voting. While the rules governing plurality voting are well understood, majority voting at companies that have cumulative voting presents technicalChairman and legal issues for which there is no precedent. These difficulties have led the American Bar Association Committee on Corporate Laws, the Council of Institutional Investors and the Institutional Shareholder Services Institute for Corporate Governance to indicate that majority voting should not apply to companies that allow cumulative voting. HP's voting system must be a reliable process for the election of qualified directors to represent the interests of all of our stockholders. In the absence of uniform, workable standards that can be consistently applied by all companies and that take into account the special circumstances of companies with cumulative voting, HP believes it would be inappropriate to adopt a majority voting standard.CEO.

        For the reasons described above, the Board recommends a vote AGAINST this proposal.

PROPOSAL NO. 5

STOCKHOLDER PROPOSAL ENTITLED
RECOUP UNEARNED MANAGEMENT BONUSES
SUBJECT ANY FUTURE POISON PILL TO SHAREHOLDER VOTE

        HP has received a stockholder proposal from Mr. Nick Rossi, custodian for Katrina Wubbolding, P.O. Box 249, Boonville, California, 95415.represented by John Chevedden. Mr. Rossi has requested that HP include the following proposal and supporting statement in its proxy statement for the 20062007 annual meeting of stockholders, and, if properly presented, this proposal will be voted on at the annual meeting. HP will provide Mr. RossiRossi's address and the number of shares that he beneficially owns 206 sharesupon oral or written request of HP common stock.any stockholder. The stockholder proposal is quoted verbatim in italics below.

        Management of HP does not support the adoption of the resolution proposed below and asks stockholders to consider management's response, which follows the stockholder proposal.

        Our Board recommends a vote AGAINST Proposal No. 5.5

Vote Required

        Approval of the stockholder proposal requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted on the proposal at the annual meeting.

STOCKHOLDER PROPOSAL

5–5—Recoup Unearned Management BonusesSubject Any Future Poison Pill to Shareholder Vote

RESOLVED:Recoup Unearned Management Bonuses. Shareholders request that our Board adopt a rule that our Board subject any future poison pill to shareholder vote, as a separate ballot item, as soon as possible. It is essential to this proposal that it be adopted through bylaw or charter inclusion and that a sunset on a poison pill will not substitute for a shareholder vote.

Nick Rossi, P.O. Box 249, Boonville, Calif. 95415 sponsors this proposal.

Pills Entrench Current Management

"Poison pills... prevent shareholders, and the overall market, from exercising their right to discipline management by turning it out. They entrench the current management, even when it's doing a poor job. They water down shareholders' votes and deprive them of a meaningful voice in corporate affairs."
        "Take on the Street" by Arthur Levitt, SEC Chairman, 1993-2001

Our Board has less accountability if it can adopt a future poison pill without a shareholder vote. I believe this proposal is consistent with other proposals to improve the lack of accountability of our Board.

For instance, a proposal that seeks access to H-P's proxy in order to allow shareholders groups more say in who gets on the H-P board has been submitted for the 2007 annual meeting. The proposal asks H-P to change its bylaws to allow groups that hold 3% or more of the company's stock to be able to post nominations for H-P board members. The sponsors are retirement funds from the states of New York, Connecticut and North Carolina plus the American Federation of State, County and Municipal Employees Pension Funds (AFSCME). The four funds own a combined 30 million H-P shares worth about $676 million.

At least one governance expert goes so far as to recommend a complete sweep of the existing board. "I think you clean house," said Charles Elson, the chairman of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "You do it in a logical, determined, measured way, but I think over the next couple of years you need to reconstitute that board." Elson suggested to Business Week to start with those who had the closest connections to past management.

There are additional improvements our Board can make. For one, the new majority-vote rule only goes so far: The board can still reject a member's resignation, making the rule, which can be rescinded, "pretty slippery,"

Nell Minow told Business Week. Minow is the co-founder and editor of governance adviser The Corporate Library.

The board should also turn to a new outside attorney, said governance experts. Larry Sonsini, H-P outside attorney, suggested that the H-P Board leak investigation was "within legal limits" and then helped run an H-P board meeting after news of the scandal broke.

To improve the lack of accountability of our Board...

Subject Any Future Poison Pill to Shareholder Vote
Yes on 5

MANAGEMENT STATEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL

        The Board recommends a vote against this proposal requesting that HP submit any future stockholder rights plan (often referred to as a "poison pill") to a vote of HP's stockholders because in 2003 the Board adopted a policy (described below) that addresses the proposal's objective. The Board believes that the existing policy addresses the proposal's objective because it gives stockholders the assurance that the Board will not adopt a future stockholder rights plan without stockholder approval except where the Board determines it to be in the best interest of stockholders.

        In July 2003, the Board adopted a policy providing that HP will submit any future stockholder rights plan to a stockholder vote, subject only to the ability of the Board to adopt a policy whereby,stockholder rights plan on its own if, in the eventexercise of its fiduciary duties under Delaware law, the Board determines that adoption of a stockholder rights plan prior to stockholder approval would be in the best interests of stockholders (often called a "fiduciary out"). HP currently does not have a stockholder rights plan, as the Board terminated the previous rights plan and the preferred share purchase rights issued under the rights plan effective January 21, 2003.

        The existing policy was designed to balance the concerns of stockholders with the Board's fiduciary responsibilities under Delaware law. The Board announced the adoption of its policy following stockholders' approval of a similar proposal submitted by the proponent at HP's 2003 annual meeting. The policy responds directly to stockholders' concerns by setting forth a process that the Board must follow in considering and, if applicable, implementing a stockholder rights plan.

        Further, as provided by Delaware law, the Board must have the ability to adopt a stockholder rights plan in certain circumstances without the prior approval of stockholders in order to protect the interests of HP's stockholders. Delaware counsel has advised the Board that a commitment to submit all future stockholder rights plans to a stockholder vote without a fiduciary out would be impermissible under Delaware law. Such a blanket requirement that stockholders approve all rights plans under all circumstances could, in certain circumstances, prevent the directors from fulfilling their fiduciary responsibilities, especially in the context of preventing certain unfair and coercive takeover attempts. Thus, the policy gives the Board the flexibility to adopt a stockholder rights plan in the future when, consistent with its fiduciary duties under Delaware law, the Board determines this action is necessary and in the best interests of the stockholders.

        While the proposal requests that the Board adopt a bylaw or charter amendment, the existing policy requires the Board to follow the same process regardless of whether that process is included in a Board policy, HP's Bylaws or HP's Certificate of Incorporation. HP's Board will adopt a stockholder rights plan only if the Board first submits the plan to a stockholder vote, unless the Board determines, in the exercise of its fiduciary duties, that it is in the best interests of HP's stockholders to adopt a rights plan without delay.

        The Board believes that its existing policy addresses the concerns raised by the proposal, and accordingly, the proposal is unnecessary.

        For the reasons described above, the Board recommends a vote AGAINST this proposal.

PROPOSAL NO. 6

STOCKHOLDER PROPOSAL ENTITLED
LINK PAY TO PERFORMANCE

        HP has received a stockholder proposal from William Steiner, represented by John Chevedden. Mr. Steiner has requested that HP include the following proposal and supporting statement in its proxy statement for the 2007 annual meeting of stockholders, and, if properly presented, this proposal will be voted on at the annual meeting. HP will provide Mr. Steiner's address and the number of shares that he beneficially owns upon oral or written request of any stockholder. The stockholder proposal is quoted verbatim in italics below.

        Management of HP does not support the adoption of the resolution proposed below and asks stockholders to consider management's response, which follows the stockholder proposal.

Our Board recommends a vote AGAINST Proposal No. 6

Vote Required

        Approval of the stockholder proposal requires the affirmative vote of a majority of the shares of HP common stock present in person or represented by proxy and entitled to be voted on the proposal at the annual meeting.

STOCKHOLDER PROPOSAL

6–Link Pay to Performance

RESOLVED: Shareholders request the Board of Directors adopt a long-term policy that a significant restatementportion of financial results or significant extraordinary write-off, our board will review all bonuses and any other awards that were madefuture long-term equity compensation to senior executives on the basis of having met or exceeded specificshall be performance-based, i e., linked to demonstrable performance criteria, measured by challenging performance targets, duringand using as benchmarks such criteria as Hewlett-Packards' performance compared to its peers and a broader market standard.

Mr. William Steiner, 112 Abbottsford Gate, Piermont, NY 10968 sponsors this proposal.

The Corporate Library (TCL), an independent investment research firm in Portland, Maine expressed concern about executive pay not linked to demonstrable performance criteria at H-P. TCL said H-P executive compensation was a "Very High Concern" category:
"The amount of the restatement period and will recoup forCEO's 'Other Annual Compensation' questions the benefit of our Company all such bonuses or awardsboard's ability to the extentensure that the specified performance targets were not achievedexecutive compensation process is sufficiently performance-related."

TCL also said that Performance-Based CEO Compensation is a key indicator of board independence. Additionally Mr. Mark Hurd, H-P Chairman and focus on those employees most responsible. This would include that all applicable employment agreements adopt enabling text in an expedited manner as soon as feasibly possible and/or retroactively.CEO, had annual pay of $23 million according to TCL.

Important Because Our Board Has a RecordHistory of OvercompensationOver-Paying

        On February 8, 2005 our Board ousted our chairpersonChairperson Carleton Fiorina. Our board shoulders much of the blame for both Ms. Fiorina's pay and her failure. Our board delivered excess pay to Ms. Fiorina in the beginning, front-loaded, with a massive value not related to performance.

Ms. Fiorina received almost $180 million in pay during her tenure, including a $21 million severance.

Our Board approved the pay in question, including the "golden hello",hello," the excess base salary the substantial stock option awards and the excessive severance package. None of these were properly tied to performance,performance; indeed most were completely independent of it. Consequently our board should not be surprised that since October 1998, Hewlett-Packard lost $41 in share price. If pay is delivered regardless of performance, there is no incentive to deliver performance. If our board had made all but the basic fixed elements of Ms. Fiorina's pay dependent on both turning HP around and realizing the so-called promise of the Compaq merger, then HP stockholders would be richer.

        Text of the above three paragraphs based on a 2005 report from The Corporate Library (TCL), an independent investment research firm in Portland, Maine.

Similar to Proposal Voted at Computer Associates

This proposal is similar to the proposal voted at the Computer Associates (CA) August 2004 annual meeting. In October 2003 Computer Associates announcedI believe that it had inflated revenues in the fiscal year ending March 31, 2000 by reporting revenue from contracts before they had been signed.

Bonusesour Board of Directors should adopt a more rigorous standard for senior executivesexecutives' incentive pay—one that year were based on income exceeding goals. Sanjay Kumar, then CEO, received a $3.2 million bonusconsiders both our company's performance and 80,000 shares based on Computer Associates' supposedly superioralso how that performance in 2000. Mr. Kumar did not offercompares to return his bonuses based on discredited earnings.

There is no excuse for over-compensation based on discredited earnings at any company. This proposal will give shareholders more options if we find ourselves in a situation with similarities toits peers and the Computer Associates scenario. If it appears that our Company reported erroneous results that must be restated downward, then our board should be enabled by adoption of this proposal to recoup money that was not earned or deserved.broader market.

Recoup Unearned Management BonusesLink Pay to Performance
Vote Yes on 56

MANAGEMENT STATEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL

        The Board recommends a vote against this proposal. The Board believes that HP's executive compensation arrangements are already substantially performance-related in a manner that aligns the interests of the executive officers with those of the stockholders. In addition, the Board believes that adopting the proposal would put HP at a competitive disadvantage in hiring and retaining executives. The proposal also fails to take into account non-financial performance measures that are essential in the evaluation of executive performance.

        The HR and Compensation Committee of the Board, which is composed solely of independent directors, sets executive compensation in a manner it believes to be in the best interests of HP and its stockholders. HP's executive compensation programs are designed to attract and retain highly qualified executives and to motivate executives to maximize stockholder returns. In determining compensation, the committee considers HP's compensation and benefits programs holistically. The HRcomponents of compensation and Compensation Committeebenefits include: (1) base pay, (2) variable pay, (3) rewards and the Board agree that a review of executive performance-based compensation is appropriate when resultsrecognition programs, (4) equity, and (5) benefits. Of these components, variable pay and equity are restated due to fraud or misconduct,performance-related, and the Board has adopted a policy that addresses the fundamental concerns expressed by the proposal. The Board believes that the key concerns expressed by this proposal are already addressed by the policy adopted by the Board, as well as the Sarbanes-Oxley Act of 2002. In contrast, the stockholder proposal adopts an overly mechanistic approach to this issue. In addition, the Board believes that it would be difficult or impossible to implement some aspects of this proposal because the proposal is vague in some respects and would cause HP to violate existing contractual obligations in other respects. Accordingly, after careful consideration, the Board recommends a vote against the stockholder's proposal.

        The Board believes that the fundamental concerns expressed by the proposal are already largely addressed. Upon the recommendation of the HR and Compensation Committee, the Board has implemented a policy that accomplishes many of the underlying goals raised by the proposal, without mechanistically recouping bonuses in inequitable circumstances or violatingfor most HP's existing contractual commitments. In particular, the policy provides:

In the event of a significant restatement of financial results, our Board will review all bonuses that were made to senior executives, onthese two components make up the basismajority of having met or exceeded specific performance targets for performance periods beginning after December 31, 2005 which occur during the restatement period. If such bonuses would have been lower had they been calculated based on such restated results, the Board will, to the extent permitted by governing law, seek to recoup for the benefit of our company all such bonuses to senior executives whose fraud or misconduct resulted in such restatement, as determined by the Board. For purposes of this policy, the term "senior executives" means executive officers for purposes of the Securities Exchange Act of 1934, as amended, and the term "bonuses" means bonuses and awards undercompensation. The variable pay programs include the Pay-for-Results ("PfR") Program (a one-year bonus program) and the Long-Term Performance Cash Program.Program (the "LTPC Program") (a three year bonus program). The performance metrics for the PfR Program are based on revenue and non-GAAP net profit, and HP must have improvements over prior year revenue and non-GAAP net profit for bonuses to be paid. The LTPC program uses balance sheet and total stockholder return performance measures. Thus, each program requires the achievement of specific, pre-established financial goals as a condition of payout.

        Moreover,HP's equity awards mostly consist of stock option grants, which require achievement of improved financial performance to realize gains. HP option grants are generally subject to a four-year vesting period (25% vesting each year) and have an eight-year term. As options are granted at fair market value on the Sarbanes-Oxley Actdate of 2002 already requires thatgrant, the recipient has no economic benefit from the grant unless HP's stock price increases during the term of the option. Likewise, restricted stock awards also align the interests of employees with the interests of stockholders by focusing employee efforts on improved company performance as reflected through an increase in the casecompany's stock price. In addition, HP's stock ownership guidelines are designed to increase executives' equity stakes in HP and to align executives' interests more closely with those of accounting restatements duestockholders. The guidelines provide that the CEO should attain an investment position in HP's stock equal to five times his base salary and all other executive officers should attain an investment position equal to three times their base salary. These guidelines should be achieved within five years.

        The Board also opposes the issuer's material non-compliance, asproposal because it believes it would put HP at a competitive disadvantage in recruiting and retaining executives. As described in last year's proxy, HP negotiated an employment contract with Mr. Hurd that included certain equity awards, guaranteed performance payments and certain benefits in the event of termination. The contract was the result of misconduct,an arms-length negotiation, and the Board believed that each of these components was necessary to recruit Mr. Hurd. Furthermore, with any financial reporting requirement underrespect to existing executives, several of HP's executives have been approached regarding potential offers of employment from other companies, including HP's competitors. Thus, in order to have the securities laws,ability to recruit and retain its executives, the company's chief executive officer and chief financial officerBoard believes it must have the full range of compensation reward vehicles at its disposal, as well as full discretion to make awards it believes are in HP's overall interests.

must reimburse the company for any bonus or other incentive-based or equity-based compensation and profits from the sale of the company's securities during the 12-month period following initial publication of the financial statement that had to be restated.

        The proposal is fundamentally flawed because of its mechanistic approach. Under the proposal, the Board would be required to recoup all affected bonuses and awards to executive officers without regard to the relevant facts and circumstances present in a particular case, including whether the restatement was merely due to a change in accounting pronouncements. Because the proposal could put a substantial portion of performance-based compensation at risk due to events over which an executive had no control and would prevent the Board from considering all relevant facts and circumstances, we believe that attempted implementation of the proposal would be inequitable, thereby negatively affecting employee morale and inhibiting HP's ability to attract, retain and motivate executive talent.

        Finally, the proposal would be difficult or impossiblefails to implement as written. In particular,recognize the fact that superior performance by HP executives requires more than an increase in stock price. For example, evaluation of Mr. Hurd's performance by the Board includes not only a review of HP's financial performance, but also Mr. Hurd's leadership abilities, people development, management of external relationships and effectiveness in working with the Board. Succession planning and development of people within HP is critical to HP's future success. Thus, the Board opposes the proposal requiresbecause it fails to take into account the broad range of performance measures that in the event of a "significant extraordinary write-off," the Board will recoup all bonusesgo into evaluating executive performance and awards that were made to senior executives "during the restatement period." Since there are no "restatement periods" associated with write-offs, it is not possible to tell which bonuses should be recouped. Moreover, our existing employment agreements and the agreements governing bonuses and long-term performance cash previously awarded to our senior executives do not provide for recouping bonuses in the event of a restatement. While future awards could include provisions for recouping bonuses, HP cannot unilaterally change the terms of preexisting agreements without violating its contractual commitments.setting executive compensation.

        For the reasons described above, the Board recommends a vote AGAINST this proposal.

COMMON STOCK OWNERSHIP OF
CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth information, as of December 31, 2005,2006, concerning beneficial ownership by:

•

holders of more than 5% of HP's common stock,



•

HP directors and nominees and each of the named executive officers set forth in the Summary Compensation Table on page 37,34, and



•

current directors and HP executive officers as a group.

        There are currently no known beneficial owners of more than 5% of HP's common stock.

        The information provided in the table is based on HP's records, information filed with the SEC and information provided to HP, except where otherwise noted.

        The number of shares beneficially owned by each entity or individual is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the entity or individual has sole or shared voting power or investment power and also any shares that the entity or individual has the right to acquire as of March 1, 20062007 (60 days after December 31, 2005)2006) through the exercise of any stock option or other right. Unless otherwise indicated, each person has sole voting and investment power (or shares such powers with his or her spouse) with respect to the shares set forth in the following table.

BENEFICIAL OWNERSHIP TABLE

*

Represents holdings of less than one percent.

(1)

Pursuant to Rule 13d-3(d)(1) of the Exchange Act, "Vested Options" are options that may be exercised as of March 1, 20062007 (60 days after December 31, 2005)2006).

(2)

On its Schedule 13G filed February 14, 2005, Capital Research and Management Company, an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, reported the beneficial ownership of 156,949,130 shares, or 5.2% of the 3,019,899,000 shares then outstanding, as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. In its Schedule 13G filed February 14, 2005, Capital Research and Management Company disclaimed beneficial ownership pursuant to Rule 13d-4.

(3)

2,600 shares are held by the Hammergren Family Trust.

(4)(3)

4,250 shares are held by Dr. Keyworth's wife.

(5)

160,945 shares are held by the Thomas J. Perkins Ttee Frank Caufield Ttee UAD 12/14/72 Perkins Bypass Trust C and 348,541 shares are held by TJ Perkins & F Caufield Ttees Survivors Trust A U/A dated 11/13/1987. Mr. Perkins serves as co-trustee of both trusts. The foregoing shares have been pledged to a securities broker pursuant to the terms of prepaid variable equity forward contracts established in May 2004 when Mr. Perkins was not a director or affiliate of HP. Mr. Perkins does not have voting or investment power with respect to the shares held by these trusts as a result of the foregoing arrangements. In addition, a trust for the benefit of Mr. Perkins' daughter also owns 304 shares.

(6)

21,09621,070 shares are held by Mr. Wayman in the HP 401(k) Plan, 95,142 shares are held by the Wayman Family Trust and 2,8203,370 shares are held for the benefit of Mr. Wayman's son.

(7)(4)

52,313 shares are held by Mr. Joshi in a living trust.

(8)(5)

3,8233,854 shares are held by Ms. Livermore in the HP 401(k) Plan.

(9)(6)

48,265 shares are held by Mr. Robison in a living trust.

(7)

Includes an aggregate of 7,261,8256,519,369 shares that the current directors and executive officers have the right to acquire as of March 1, 2006.2007.

(10)(8)

Includes an aggregate of 7,984,2156,751,489 shares held by current directors and executive officers in fiduciary or beneficial capacities.

(11)

Ms. Fiorina terminated as Chairman and Chief Executive Officer and resigned as a director on February 8, 2005.

(12)

Mr. Winkler retired on November 7, 2005.

(13)

4,679 shares are held by Mr. Winkler in the HP 401(k) Plan.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Exchange Act, requires our directors, executive officers and holders of more than 10% of HP common stock to file reports with the SEC regarding their ownership and changes in ownership of our securities. HP believes that, during fiscal 2005,2006, its directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements, with the exceptions noted herein. One late Form 4 was filed by Ann O. BaskinsRobert P. Wayman on February 9, 2005September 6, 2006 to report an option exercise on November 15, 2004.August 31, 2006. One late Form 4 was filed by Dick LampmanShane V. Robison on December 7, 2004May 24, 2006 to report a salethe release of shares of restricted stock on November 23, 2004.May 15, 2006. One late Form 4 was filed by Duane ZitznerGeorge A. Keyworth II on December 22, 2005 to report a purchase of shares by Mr. Keyworth's spouse on November 12, 2004 to report an option exercise and same day sale on November 9, 2004.21, 2005. One late Form 4 was filed by Marcela Perez De AlonsoAnn O. Baskins on January 20, 2005December 22, 2006 to report a dispositiongifts of shares for tax withholding purposesto Ms. Baskins' sons that were not timely reported on January 15, 2005.Form 5. In making these statements, HP has relied upon examination of the copies of Forms 3, 4, and 5, and amendments thereto, provided to HP and the written representations of its directors, executive officers and 10% stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        In 2005, Ms. Lyons, an HP executive officer, repaid $85,037.46 plus $23,806.19 in interest to HP for required withholding taxes that HP paid on behalf of Ms. Lyons upon the release of a restricted stock grant prior to the time that she became an executive officer.

EXECUTIVE COMPENSATION

        The following table discloses compensation received by HP's current CEO, each other person who served as CEO during fiscal 2005, HP'schief executive officer and four other most highly paid executive officers and a former executive officer who would have been among HP's four most highly paid executive officers at the end of fiscal 20052006 (collectively, the "named executive officers") and their compensation from HP for each of the fiscal years ending October 31, 2006, 2005 2004 and 2003.2004.

SUMMARY COMPENSATION TABLE

(1)

The amounts shown in this column reflect payments under HP's Executive2005 Pay-for-Results Plan (the "Executive PfR"PfR Plan," which term includes its predecessors, as applicable). HP employees who were subject to Section 16 Officers16(a) of the Exchange Act at the beginning of the applicable performance period, and selected other employees, were eligible to participate in the Executive PfR Plan. During the fiscal years shown, all of the named executive officers who were employed by HP during such years participated in the Executive PfR Plan.

The ExecutiveUnder the PfR Plan, permitsawards are calculated based on a formula with targets that are set at the beginning of each performance period; both the formula and the targets are approved by the HR and Compensation Committee to designate a portion of the target annual cash compensation for participants, including executive officers, as variable pay. Under the Executive PfR Plan for theCommittee. In fiscal years shown, the percentage of the targeted variable amount that is paid depends upon the degree to which2004 and 2005, performance metrics definedobjectives (and payouts, if any) were set on a semi-annual basis were met.basis. In fiscal 2006, the PfR Plan was revised to provide for the establishment of annual performance objectives, with annual payouts upon achievement of objectives. In November 2004 and June 2005, the HR and Compensation Committee established the performance metrics for fiscal 2006, which were weighted 50% based on revenue and 50% based on net profit. For fiscal 2006, the HR and Compensation Committee determined that the amounts referenced above in column (d) had been earned under the PfR Plan.

For the first and second halveshalf of fiscal 2005, respectively, which were weighted 40% based on revenue, 40% based on net profit, and 20% based on total customer experience for executive officers.

Thethe HR and Compensation Committee determined that no variable compensation for the named executive officers had been earned under the Executive PfR Plan for the first half of fiscal 2005. For the first half of fiscal 2005,Plan. Mr. Hurd received $233,333 under the Executive PfR Plan as a guaranteed pro-rated bonus payment paid at target.target for that period. For the second half of fiscal 2005, the HR and Compensation Committee determined that the following variable compensation for the named executive officers had been

earned under the Executive PfR Plan: Mr. Hurd, $2,898,000; Mr. Wayman, $1,513,688; Mr. Joshi, $1,002,656; Ms. Livermore, $789,448; Mr. Bradley, $724,796; Mr. Mott, $438,231; and Mr. Winkler, $751,992.

(2)

Robison, $760,725. For fiscal 2004,2005, the HR and Compensation Committee awarded a bonus outside of the variable pay plans for all employees in an aggregate amount of $90 million for HP's performance in the fourth quarter of fiscal 2004. The bonus column also includes the following amounts paid to the named executive officers pursuant to that action: Mr. Wayman, $197,438; Mr. Joshi, $130,781; Ms. Livermore, $130,781; Ms. Fiorina, $567,000; and Mr. Winkler, $123,399.

(3)

The amount shown in this column for Mr. Hurd also includes the $2,000,000 signing bonus described in "Employment Contracts, Termination of Employment and Change-in-Control Arrangements—Employment Agreement with Mark V. Hurd" beginning on page 50.

Thehis employment agreement. For Mr. Wayman, the amount shown in this column for Mr. Waymanalso includes the $3,000,000 cash payment awarded him on April 1, 2005 in recognition of his service as interim CEO of HP and his ongoing contribution to the transition to the new CEO.

For the first half of fiscal 2004, the HR and Compensation Committee determined that the following variable compensation for the named executive officers had been earned under the PfR Plan: Mr. Wayman, $348,904; Mr. Joshi, $231,105; Ms. Livermore, $224,893; and Mr. Robison, $152,076. For the second half of fiscal 2004, the HR and Compensation Committee determined that no variable compensation for the named executive officers had been earned

under the PfR Plan. The HR and Compensation Committee awarded a bonus outside of the variable pay plans for all employees in an aggregate amount shownof $90 million for HP's performance in thisthe fourth quarter of fiscal 2004. This column for Mr. Bradleyalso includes the $1,000,000 signing bonus described in "Employment Contracts, Termination of Employmentfollowing amounts paid to the named executive officers pursuant to that action: Mr. Wayman, $197,438; Mr. Joshi, $130,781; Ms. Livermore, $130,781; and Change-in-Control Arrangements—Employment Agreement with R. Todd Bradley" beginning on page 53.





The amount shown in this column for Mr. Mott includes the $2,200,000 signing bonus described in "Employment Contracts, Termination of Employment and Change-in-Control Arrangements—Employment Agreement with Randall D. Mott" beginning on page 55.


Robison, $94,500.

The amount shown in this column for Mr. Winkler includes retention bonuses of $1,082,500 described in "Employment Contracts, Termination of Employment and Change-in-Control Arrangements—Michael J. Winkler Agreement" on page 57.

(4)(2)

This column includes the perquisites outlined in the table below valued at the incremental cost of providing such perquisites as well as tax reimbursements for the named executive officers. For fiscal 2003, this column includes tax reimbursements but does not include perquisites and other personal benefits where the total incremental cost of all perquisites did not exceed $50,000 per year, as permitted under the SEC rules.

Perquisites include the personal use of HP's corporate aircraft. For proxy statement valuation purposes, HP utilizesuses data provided by an outside firm to calculate the variablehourly cost per hour of operating each type of aircraft, includingaircraft; these costs include the cost of fuel, maintenance, landing and parking fees, crew and catering and supplies. For proxy reporting and tax purposes, personal use of corporate aircraft includes use of the aircraft for relocation purposes. At the time Mr. Hurd was hired in April 2005, he lived with his family out-of-state. Until he relocated later in the year, consistent with HP's policy for the use of corporate aircraft described below, Mr. Hurd utilized HP aircraft for commuting purposes. The incremental cost to HP of such usage during fiscal 2005 is shown in the table below in the column entitled "Personal aircraft usage—relocation." For trips by named executive officers that involve mixed personal and business usage, HP includes the incremental cost of such personal usage (i.e., the excess of the cost of the actual trip over the cost of a hypothetical trip without the personal usage). For proxy statement reporting and tax purposes, personal use of corporate aircraft includes use of the aircraft for relocation purposes. There was no relocation usage by any named executive officer during fiscal 2006.

Under HP's policy for the personal use of corporate aircraft, by senior executives, the CEO isand his direct reports (the "Executive Council") are eligible to use the aircraft for personal purposes. The value of all relocation travel,For the CEO, the first 25 hours of non-relocation personal usage, as well as spousal travel, is added to the CEO'shis income based on the standard industry fare level ("SIFL") valuation method and grossed up so that it is tax neutral to the CEO.up. Other Executive Council members may use the corporate aircraft for personal purposes, subject to review by and approval of the CEO, butCEO; the value of such trips is added to the executives' income and is not grossed up. The value of spousal travel on business trips is added to income, and this value is grossed up if the spousal travel is requested by HP. All amounts included in income are calculated based on the standard industry fare level ("SIFL") valuation method.

For the 20042005 and 20032004 fiscal years, this column also includes tax reimbursements for each named executive officer as follows: Mr. Hurd, $75,869 and $0; Mr. Wayman, $4,342$5,234 and $3,198;$4,342; Mr. Joshi, $14,664$3,454 and $3,563;$14,664; Ms. Livermore, $2,204$240 and $2,822; Ms. Fiorina, $41,646 and $26,205;$2,204; and Mr. Winkler, $8,533Robison, $1,209 and $3,999.

$2,893. The amounts reported for fiscal 2005 and 2004 forinclude financial counseling as follows: Mr. Hurd $10,500 and $0; Mr. Wayman, include $47,846 for personal aircraft usage$18,000 and $18,000; Mr. Joshi, $18,000 for financial counseling. The amounts reported for fiscal 2004 for Messrs. Joshi and Winkler include $21,000$21,000; and $18,000, respectively, for financial counseling. Amounts reported for Ms. Livermore, include $89,239$18,000 and $57,436$18,000. Amounts reported for personal aircraft usage in fiscal 2005 and 2004 were: Mr. Hurd, $296,654 and 2003, respectively.$0; Mr. Wayman, $106,774 and $58,170; Mr. Joshi, $296 and $810; Ms. Livermore, $50,223 and $144,058; and Mr. Robison, $21,160 and $19,201. Amounts reported for Ms. Fiorina include $66,846security services/systems in fiscal 2005 and $38,1652004 were $109,835 and $0 for Mr. Hurd. The amounts reported for personal use of corporate aircraft usageby Mr. Wayman, Ms. Livermore and Mr. Robison for 2004 differ from the amounts previously reported because the previously reported amounts did not include the value associated with aircraft staging in fiscalconjunction with personal use. The 2004 and 2003, respectively.amounts have been re-calculated so all amounts are reported on a consistent basis.

(5)(3)

The amounts shown in this column reflect the dollar values based on the closing price at grant of time-based restricted stock granted to the named executive officers in fiscal 2005. The2006. On January 23, 2006, the HR and Compensation Committee granted restricted stock vesting at a rate of 33%, 33% and 34%, respectively, on each anniversary of the grant date for three years as follows: 150,000 shares to Messrs.Mr. Hurd, Bradley60,000 shares to Mr. Joshi, 60,000 shares to Ms. Livermore, and Mott in50,000 shares to Mr. Robison. On January 23, 2006, the amounts indicated belowHR and Compensation Committee also granted 7,000 shares of restricted stock to Ms. Livermore, vesting 100% on the first anniversary of the grant date.

In fiscal 2005, the HR and Compensation Committee granted 400,000 shares of restricted stock to Mr. Hurd pursuant to their respectivehis employment agreementsagreement described under "Employment Contracts, Termination of Employment and Change-in-Control Arrangements" beginning on page 49. The44. On March 17, 2005, the HR and Compensation Committee granted 150,000 shares of restricted stock to Mr. Joshi, and 150,000 shares of restricted stock to Ms. Livermore on March 17, 2005,and Mr. Robison, each vesting 100% on the second anniversary of the grant. Thegrant date.

In fiscal 2004, the HR and Compensation Committee also granted 50,000 shares of restricted stock to Mr. Joshi on December 16, 2004, vesting 50% on each of the first and third anniversaries of the grant date.

At the end of fiscal 2005,2006, the aggregate share amount and dollar value based on the closing price of $28.04 on October 31, 2005 of the restricted stock held by the named executive officers based on the closing price of $38.74 on October 31, 2006 was:

The named executive officers receive non-preferential cash dividends on the restricted shares they hold.

(6)(4)

On July 17, 2004, Ms. Fiorina received 795,878 sharesAmounts in this column reflect payments made pursuant to HP's Long-Term Performance Cash Program, described under "Long-Term Incentive Plans" below. The amounts were based upon HP's performance over the release ofthree year period from May 2003 through April 2006 compared to targets for specific measures that were set and approved by the award of restricted stock units granted to her in fiscal 1999.HR and Compensation Committee.

(7)(5)

For the named executive officers, this column includes the following payments by HP infor the fiscal years indicated: