HP 2008 Annual Report Download - page 33

In order to be successful, we must attract, retain and motivate key employees, and failure to do so could
seriously harm us.
In order to be successful, we must attract, retain and motivate executives and other key employees,
including those in managerial, technical, sales, marketing and IT support positions. Hiring and retaining
qualified executives, engineers, skilled solutions providers in the IT support business and qualified sales
representatives are critical to our future, and competition for experienced employees in the IT industry
can be intense. The failure to hire executives and key employees or the loss of executives and key
employees could have a significant impact on our operations.
Changes to our compensation and benefit programs could adversely affect our ability to attract and retain
employees.
We have historically used stock options and other forms of share-based payment awards as key
components of our total rewards employee compensation program in order to align employees’
interests with the interests of our stockholders, encourage employee retention and provide competitive
compensation and benefit packages. Like other companies, HP has implemented changes to its
compensation programs intended to reduce fixed costs, create a high performance culture at all levels
and provide an opportunity for employees to earn significant rewards if HP delivers strong financial
results. HP also has reduced the total number of share-based payment awards granted to employees
and the number of employees who receive share-based payment awards. In addition, effective in fiscal
2008, HP changed its primary form of share-based payment award to performance-based restricted
stock units that contain conditions relating to HP’s long-term financial performance and continued
employment by the recipient that may be viewed unfavorably by some employees who are accustomed
to the fixed vesting and other terms historically associated with other forms of share-based payment
awards. Due to these changes in our compensation strategy, combined with the pension and other
benefit plan changes undertaken to reduce costs, we may find it difficult to attract, retain and motivate
employees, and any such difficulty could materially adversely affect our business. Moreover, difficulties
relating to obtaining stockholder approval of equity compensation plans could make it harder or more
expensive for us to grant share-based payment awards to employees in the future.
HP’s stock price has historically fluctuated and may continue to fluctuate, which may make future prices of
HP’s stock difficult to predict.
HP’s stock price, like that of other technology companies, can be volatile. Some of the factors that
could affect our stock price are:
• speculation in the press or investment community about, or actual changes in, our business,
strategic position, market share, organizational structure, operations, financial condition,
financial reporting and results, effectiveness of cost cutting efforts, value or liquidity of our
investments, exposure to market volatility, prospects, business combination or investment
transactions, or executive team;
• the announcement of new products, services, technological innovations or acquisitions by HP or
its competitors;
• quarterly increases or decreases in revenue, gross margin, earnings or cash flow from operations,
changes in estimates by the investment community or guidance provided by HP, and variations
between actual and estimated financial results;
• announcements of actual and anticipated financial results by HP’s competitors and other
companies in the IT industry; and
• the timing and amount of share repurchases by HP.
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