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March 20, 2013

Hewlett-Packard Company's CEO Hosts Annual Shareholder Meeting (Transcript)

Filed under: Conference Call Transcript — Tags: — admin @ 12:00 am


Ray Lane – Chairman of the Board

Meg Whitman – Chief Executive Officer

Catherine Lesjak – Chief Financial Officer

John Schultz – General Counsel and Corporate Secretary

Rishi Varma – Deputy General Counsel

Todd Bradley – EVP, Printing and Personnel Systems Group

Dave Donatelli – EVP and General Manager, Enterprise Group

Henry Gomez – EVP and Chief Communication Officer

John Hinshaw – EVP, Technology and Operations

Marty Homlish – EVP and Chief Marketing Officer

George Kadifa – EVP, HP Software

Tracy Keogh – EVP, Human Resources

Mike Nefkens – EVP, Enterprise Services.


Bill Patterson – CTW Investment Group

Denik Murphy – SEIU [Service Employees International Union Master Trust]

Hewlett-Packard Company (HPQ) Annual Shareholder Meeting Call March 20, 2013 5:00 PM ET

Ray Lane

Good afternoon. We are glad you could join us for HP’s 2013 annual meeting of stockholders. I’m Ray Lane, Chairman of the Board of HP. I’m joined on the stage by Meg Whitman, Chief Executive Officer; John Schultz, General Counsel and Corporate Secretary of HP; and Rishi Varma, who is Deputy General Counsel for HP. Other HP officers here today and seated in the front rows include Todd Bradley and let me ask you just to kind of stand as I mention your name, Executive Vice President of Printing and Personnel Systems Group; Dave Donatelli, who is the Executive Vice President and General Manager of the Enterprise Group; Henry Gomez, who is the Executive Vice President and Chief Communication Officer; John Hinshaw, who is the Executive Vice President of Technology and Operations; Marty Homlish, who is Executive Vice President and Chief Marketing Officer; George Kadifa, who is Executive Vice President of HP Software; Tracy Keogh, who is Executive Vice President of Human Resources; Mike Nefkens, who is Executive Vice President of Enterprise Services.

Also nine of the 11 director nominees are also in attendance today. I’d just ask them to raise their hands. May be just stand up and turn around, hokey pokey. Now, I would like to ask John Schultz to speak and we will now make several announcements related to this meeting, John?

John Schultz

Thank you Ray. We are conducting the meeting in accordance with HP’s bylaws and meeting rules. You have been provided with an agenda outlining the order of business for today. I apologize and we’d ask that you conduct yourself in accordance with the meeting rules. We’ve allocated one hour for this meeting. In order to ensure that the business of the meeting proceeds in an orderly fashion, we ask that you observe the meeting rules. There are three stockholder proposals to be voted upon at this meeting. The proponent of each proposal to be voted upon will have an opportunity to present his or her proposal.

We ask them to limit their presentation to no more than five minutes. Stockholder proposals from the floor will not be accepted. Please note that we will conduct a question-and-answer session later in the meeting prior to the closing of the polls. We will impose a time limit of two minutes per speaker and there will be a limit of six minutes for general topic. We ask that you hold any questions until the Q&A session begins. Rishi Varma will now make several additional announcements relating to the meeting.

Rishi Varma

Thank you John. First I would like to read a brief legal disclaimer. It is possible that some of our comments and some of our responses to your questions may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties. The risks, uncertainties and assumptions that could affect these forward-looking statements include risks that are described in our SEC reports including our first quarter 10-Q.

I would also like to point out that the information presented in this meeting may include references to amounts that are expressed on a non-GAAP basis and a reconciliation of such non-GAAP amounts relating to these non-GAAP measures is available at our Investor Relations website.

HP’s agents have certified that notice of the meeting was provided starting on February 01, 2013 to all of the stockholders of record as of the record date for this meeting, and copies of those certifications are in the possession of the Secretary. I therefore declare that the legal notice of the meeting has been duly given. The Board of Directors has appointed Bill Marsh of IVS Associates to serve as our inspector of elections for this meeting and he is present today sitting here to my left.

As required by law, Bill has taken and signed an oath as Inspector of Election. This document we filed with the minutes of today’s meeting and the Inspector of Election has informed me that a majority of the outstanding shares held as of the record date as of the close of business on January, 22, 2013 are represented at this meeting. I declare that there is a quorum present and that we may proceed with the business of the meeting. Please address any questions about voting your proxy, voting instruction card or ballot to the Inspector of Election seated at the Inspector’s table.

John will now describe the items of the business to be conducted at this meeting.

John Schultz

Thanks, Rishi. There are eight business items on the agenda. In accordance with HP’s bylaws, these are the only proposals to be voted upon at this meeting. The first item of business is to vote on a slate of 11 nominees to the Board of Directors. The 11 person who have been nominated to serve on the Board of Directors, and who will be voted upon today are Marc Andreessen, Shumeet Banerji, Raj Gupta, John Hammergren, Ray Lane, Ann Livermore, Gary Reiner, Pat Russo, Ken Thompson, Meg Whitman and Ralph Whitworth.

Their biographies are in your proxy statements, so I won’t review them in detail here. The second item of business is the ratification of the appointment of Ernst & Young as the independent registered public accounting firm of the company for fiscal year 2013.

At this time I would like to acknowledge Kevin Asher, Beth Carr, Richard Jackson and Kay Matthews representatives of Ernst & Young, who are here at the meeting today if they would just stand up please. Thank you.

Ernst & Young was responsible for the HP audit for the 2012 fiscal year as well. The third item of business is an advisory vote on HP’s executive compensation, a description of that item of business is in your proxy statements, so I won’t review it in detail here. The fourth item of business is the proposal to amend HP’s amended and restated bylaws to permit stockholder proxy access. A description of that item is also in your proxy statement, so again we won’t review it in detail here.

The fifth item of business is approval of the second amended and restated Hewlett-Packard company 2004 stock incentive plan. A description of that item is in your proxy statement, and again we won’t review it at this meeting. The sixth item of the business is a stockholder proposal relating to the formation of a Human Rights Committee. Jing Zhao the proponent of this proposal will now briefly present that proposal.

Jing Zhao

Thank you very much, I will not repeat the contents of this proposal. I want to point out the point. At last meeting I asked the CEO about our business in China and she answered that we cannot restore our business in China and so we have to do business in China, but the question is how we do business in oppressive countries which violate the human rights, it’s about the principles. I myself is a political refugee from China. So that’s the purpose of our company to setup Human Rights Committee.

I would briefly respond to the opposition statement of our Board. This statement is relatively good, it is quite a treat to see our company do have some policy and practice and our company do have some effort. But I want to point out is that we have all as the shareholder, I cannot find out mechanism to verify how the company can implement this kind of policy. For example the company mentioned they have external human rights expert organization and also mentioned some organizations.

But from my experience I know that these external organizations are quite irrelevant to the issue of my concern. For example our company have very big buildings in Chongqing in China, I myself am from Chongqing and my partners here are living in Chongqing. And we know there was a big scandal in Chongqing because of their party boss Bo Xilai was arrested and his wife actually committed a murder. So, we are eventually very concerned what our business is doing in Chongqing and I have this kind of a background and knowledge why the company refused to provide any information or communication with a relevant person like me that we provide help to the company but an answer is I would thank the board to include my proposal to the meeting and I will respect the result of the vote. Thank you very much.

Unidentified Company Representative

Thank you Dr. Zhao. As described in the proxy statement, HP opposes this proposal. The Board believes that the creation of an additional committee to oversee the same HP policies and efforts under its global human rights program and legal and regulatory compliance program is unnecessary and not in the best interest of stockholders.

HP’s existing policies and practices relating to human rights are already appropriately shaped and influenced by external human rights experts and organizations. The seventh item of business is a stockholder proposal entitled 2013 Hewlett-Packard resolution on human rights policy. This proposal was co-submitted by the Board of Pensions of the Presbyterian Church, USA; the Benedictine Sisters of Boerne, Texas; Congregation of Divine Providence Inc., General Board of Global Ministries of the United Methodist Church and Mercy Investment Services Inc.

Reverend William Somplatsky-Jarman will now briefly present the proposal on behalf of the co-proponents of this proposal.

Reverend William Somplatsky-Jarman

Thank you very much. My name is William Somplatsky-Jarman as you mentioned. I’m coordinator for Social Witness Ministries of the Presbyterian Church USA and the lead proponent with our ecumenical colleagues. Our proposal relates to corporate policy on human rights which is a commitment that we share together as a company and as shareholders.

We have noted positively the evolution of HP’s policies related to human rights over the years, particularly related to your supply chain and equal employment opportunity and we appreciate the detailed reporting on these areas that is in the Annual Global Citizenship report.

We also appreciate the opportunities we’ve had to talk with HP management about our concerns related to human rights. All that said, I want to focus today on the intersection of three aspects of HP’s global human rights policy that illustrate why we decided not to withdraw this proposal.

The board’s statement asserts that the policy provides that HP will in practice one and these are only three of the several points listed complete due diligence to avoid complicity in human rights violations, promptly investigate allegations and pursue actions to mitigate any adverse human rights impacts and three, report transparently on its efforts.

We believe that it is very important for shareholders to be assured this policy has been implemented as it is stated in corporate materials. However, we note that in the human rights section of the Global Citizenship report, the area that is devoted to the proactive respecting of human rights in your global operations receives two, maybe three pages, mostly with anecdotal things about people appearing on panels and does not have the detailed reporting that you have under the global supply chain implementation.

There is no effort to catalog exactly where and how you have evaluated particular business opportunities and what role the human rights policy played in determining whether you would do take advantage of that opportunity or not.

When we raise specifics about some of the operations of Hewlett-Packard, client confidentiality is cited as why there can be no explanation of how the human rights policy was applied in determining whether the company should or should not have engaged in those particular business operations.

With no explanation given, it is very hard for shareholders to be able to say and we can only assume if the company is involved in something, it must have passed the human rights test and unfortunately the company cannot articulate a compelling reason or even any reasons whatsoever as to why a particular corporate activity does or does not pass your human rights policy.

We’ve also shared with the company materials that you have put out as marketing brochures and specifically this was a 2011 brochure describing the company’s work with Municipality Of Ariel a settlement in the occupied west Bank of Israel, Palestine.

The brochure describes, the Ariel as right smack-dab in the middle of Israel and makes no references to the occupied Palestinian territories. It’s hard to conceive that a company who does a risk assessment and looks at the human rights implications of all its business ventures could actually produce such a pamphlet. This is a contradiction of– it stands in contradiction with US government policy and with the positions of most of the countries of the world.

It would be better off if you do not produce such as thing at all because it seems to imply that Hewlett-Packard favours a one-state solution when almost everyone is in favour of a two-state solution.

Unidentified Company Speaker

Reverend William Somplatsky-Jarman, the time level for your presentation has expired. So I appreciate if you would conclude your remarks.

Reverend William Somplatsky-Jarman

Thank you very much. And some hope that this review which was proposal calls for will allow you to step back for a moment and apply fresh look at the policy and its implementation and hopefully the changes will be made. Thank you very much.

John Schultz

Thank you. As described in the proxy statement, HP opposes this proposal. HP already has a global human rights program that promotes the respect of human rights in all of HP’s business practices. The board believes the proposal is unnecessary because the existence of that program and the nominating and governance committees regular review of human rights issues already satisfy the action being solved under the proposal. The eighth item of business is a stock holder proposal entitled executives to retain significant stock. Jing Zhao will now briefly present the proposal on behalf of Howard and Joan Poulter, the proponents of this proposal.

Jing Zhao

I will definitely read it, we saw over the shareholder’s request to allow our executive pay committee adopt a policy requiring that senior executive retain a significant percentage of stock acquired through equity pay program until reaching normal retirement age. For the purpose of this policy normal retirement age shall be defined by the HP qualified retirement plan that has the largest number of plan participants.

The shareholders recommend that the committee adopt a share retention percentage requirement of 33% of such shares.

This policy should prohibit hedging transactions for shares subject to this policy which are not sales, but reduce the risk of loss to the executive. This policy shall supplement any other stock ownership requirements that have been established for senior executives and should be implemented, so as not to violate the existing HP contractor obligations or the terms of any compensation or benefit plan currently in effect requiring senior executives to hold a significant portion of stock obtained through executive pay plans would focus of our executives on our company’s long-term success.

A Conference Board Task Force report on executive pays stated that the hold-to-retirement requirements give executives an ever-growing incentive to focus on long-term stock price performance.

This proposal should also be evaluated in the context of our Company’s overall corporate governance as reported in 2012. The GMI, the corporate library and independent investment research firm rated our company “Dâ€� with a “High Governance Riskâ€� and “Very High Concernâ€� in Executive Pay $16 million for our CEO Margaret Whitman. HP shareholders rejected HP executive pay in 2011 and the shareholders vote regarding the to the (inaudible) HP executive pay was far below the level of the vast majority of companies.

In spite of the $16 million paycheck, Ms. Whitman was also on the Procter & Gamble Board which has the highest number of overburdened CEOs of any company in the Standard & Poor’s 500. “This is probably not the kind of board that you want for a company that’s about to face a crisis,â€� said Jay Lorsch, a management professor at Harvard Business School.

HP shareholders return was a negative of 37% over five years and a negative of 40% over one year. Shumeet Banerji, who owns 50% of our Audit Committee owned no stock. Kennedy Thompson the other member of our audit committee almost received our highest negative vote. Other directors receiving higher negative votes includes John Hammergren, Mark Anderson and Rajiv Gupta. Mr. Gupta was also our lead director which makes his showing all the more disturbing.

Directors who received high negative votes and directors who owned no stock occupied all the seats on our key audit, nomination and executive pay committee, except for one seat. Ms. Whitman announced the elimination of 29,000 jobs and ironically said that there was no silver bullets. However HP has now taken advantage of the low-hanging fruit of improvements in our corporate governance that will not cause job elimination and were the cost virtually nothing. Please encourage our Board to respond positively to this proposal for improving the governance. Thank you very much.

John Schultz

Thank you. Dr. Jing Zhao. As described in the proxy statement HP opposes this proposal. The Board believes that HP’s existing stock ownership guidelines and other compensation policies effectively facilitate significant stock ownership by HP executives and that establishing our requirement to hold stock until retirement would not be in the best interest of HP stockholders.

I would now describe the eight items you’ve been asked to vote on. We will now proceed to the voting on the agenda items that I described. It is 2:30 pm and the polls are now open for voting on each of the items of business. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed and no further action is needed; however ballots are available if you wish to change your vote at this time or if you have not previously voted.

If you received a voting instruction card from your bank, broker or nominee, you are required to submit your voting instructions to your bank, broker or nominee and will not be permitted to vote at this meeting unless you have obtained a legal proxy from the record holder giving you the right to vote your shares at this meeting. If you are a record holder and wish to change your vote well do not send in a proxy, and wish to cast your vote now, you will need to submit your proxy card or ballot before the polls close.

If you do not mark the number of shares represented by your ballot, your ballot will represent all shares that you are entitled to vote at the meeting. If anyone would like to vote by ballot, please raise your hand and you will be given a ballot. As we’re passing out the ballots and you are making your decisions, Meg is going to spend a few minutes discussing HP’s business and strategy. The question-and-answer session will proceed thereafter and I would ask you sir to hold your question or comment until that point in time. Thank you.

We’re not taking a point of order at this moment in time. There will be a time to raise the point of order during the question-and-answer session or at the conclusion. Thank you.

Meg Whitman

Good afternoon and thank you for joining us and thank you for your interest in Hewlett-Packard, and I wanted to start my presentation by playing a short video that I think sums up the spirit of HP. So can we roll the video?


Well, I hope you liked it, because to me that is what HP is all about; the energy, the humanity and the optimism of this company. So our goal today is pretty straight forward. First, we want you to understand the journey that we are on and the progress we are making in turning around one of the great icons and great franchises in the technology business. Second, we want to share with you our overall corporate strategy, and lastly we are going to answer your questions. So let’s get started.

Now, most of you know that I have been CEO for about 18 months and you know what, during this time I have come to love this company, it’s people, it’s customers, it’s history and everything that Hewlett-Packard stands for and I have also come to appreciate the remarkable strengths that makes HP great.

And first among those strengths are our customers and partners. We have a long, long legacy of great partner and great customer relationships, and this is one of HP’s greatest assets. I have now met with over 300 or 400 different customers and partners around the globe and they tell us that they tell me every day we want HP to win. They have made tremendous investments in HP’s technology over many years, and they need us to continue to bring that innovation that solves their problems and helps them win in the market place.

Our customers have always been at the heart of this company. We also have unparalled scale and distribution. We can reach our customers and partners in any corner of the globe, a capability that is more and more what our customers tell us they want, because some of our biggest customers have operations on a 150 or 160 countries, they want a technology partner that can match them every step of the way.

The second big strength of this company and despite what you might have heard innovation is alive and well at Hewlett-Packard. Our culture of great innovation and engineering is a tremendous asset. All you have to do is look at our $3.3 billion in R&D, the work of HP labs and our 36,000 patents. Did you know that HP was the top of the list for patents obtained in 2012? We had more than 1300 last year and we were number one for new patents obtained in Silicon Valley, and we were number 15 worldwide.

So my conclusion after 18 months at Hewlett-Packard is not that we do not have enough innovation in this company, we have plenty, but we have got to do more better faster to bring those ideas to market to commercialize them to productize them in a way that our sales team can sell and our customers can buy. Third, I found that HP has tremendous foundational assets including a well known and trusted brand and talented, committed I will say resilient employees who will do anything for our customers.

And lastly despite of what you may have read in the headlines, we are on a solid financial foundation. Last year HP recorded almost a $120 billion in revenue, we are among the largest of the Fortune 100 firms in America and we are profitable and the biggest thing that I’ve learnt over the past year is together we truly make it matter. What we do matters to the world. It brings value to the world.

Our technology advances the lives and creativity of mankind. But I will say there is still room for improvement. In fiscal 2012, our financial results were not where they needed to be. We have to get revenue growing again and we have to get the right financial architecture in place.

Now, the good news is we’ve already started to see some improvements in our Q1 results which I will talk about shortly, but we have to execute better. And that means continuing to focus on customers and removing complexity wherever we can.

We also need to have what I call better instrumentation and what I mean by that is we need to put in place the kind of metrics and score cards that will help us run HP better. In addition, we’ve under invested in the very lifeblood of any technology company and that is R&D and IT that has already started to change but it has to change faster. And our direct and partner selling skills and abilities need renewed focus.

We need to move our direct sales team to value selling and solution selling and most of all we need to connect with our partners. Partners built Hewlett-Packard and somewhere along the way we lost that connection and we have to rebuild it and we are but we have to rebuild it fast.

A perfect example was just last month. We had what we call our global partner conference and we invited a lot of our major partners, 2,100 came that represented about a third of our overall revenue and after those two days you could see that renewed commitment to HP and that renewed understanding of what we do and what partners mean to us because partners are crucial to our future and we have to embrace them like we’ve never embraced them before.

I think the good news is we’ve made up, we made a lot of changes thus far and we have set ourselves up for more success in 2013 and success in 2014 as well. Now, at the end of 2012 at our Security Analyst Meeting up in San Francisco, I laid out a turnaround plan for Hewlett-Packard.

In the first year of that turnaround effort, we provided a very frank assessment of the challenges facing HP. We laid out a clear set of strategies at the corporate level and for each of our business units and we mapped out our journey to restore HP’s financial performance and to restore HP’s leadership in the technology business.

The good news is we did what we said we would do in fiscal ’12. We took stock of our situation. We took action to bring costs in line with our revenue trajectory of our business and we met our full year non-GAAP earnings per share outlook.

Our efforts in fiscal 2012 also began to tackle some of the structural and execution issues that I just spoke about and to build the foundation we needed to improve our performance in the face of very dynamic market trends and very significant macroeconomic challenges in places like Europe.

Now 2013, we think of that as a fixed and rebuild year where we are focused on the great products and services and software that Hewlett-Packard delivers to our customers. We are focused on consistent customer focused strategies, investment in R&D and investment in our own internal systems to make it easier to do business with Hewlett-Packard and frankly easier to work at Hewlett-Packard if you are an employee.

Now, we expect the 2014 will be characterized by what I call recovery and expansion with a return to industry leading growth and expansion. The pipe we laid in 2012 and 2013 will start to show real and measurable top line results in 2014.

And those successes and those investments should build on each other so then in 2015, we expect you will see a rapid acceleration of growth and innovation. Now, our vision is that over this period, we will return HP to being a world-class technology leader delivering unrivalled customer solutions in all of our businesses and we will have industry leading margins on the back of revenue growth and profitability growing faster than revenues.

Now, when I make this talk to some of our employees and shareholders, they say do I have to wait till 2015 to see any of this? The answer to that is no. You will not have to wait till 2015 to see results. In fact, you can already see some results in our product line up.

We have many HP executives and team members who have been with HP 25, 28, 30 years and they tell me this is the best product line up that HP has had in at least a decade. We’ve simplified our go-to-market and we’ve recommitted to our partners and our customers about being the most trusted vendor, the vendor that they want to do more business with and you’ve begun to see some results.

You saw progress in our Q1 results and in our most recent stock price. In Q1, while the results were not where we ultimately want them to be, we did better than we expected. We delivered $0.82 in diluted non-GAAP earnings per share, exceeding our financial outlook of $0.68 to $0.71 per share.

In my mind, this is tangible proof that we have the right plans in place and that we are successfully delivering on it. Performance in the quarter was driven by improved execution as well as our improvement in channel and go-to-market efforts.

Additionally, the restructuring program that we announced in May continues to deliver results. And that restructuring program did have a meaningful impact on the bottom-line in the first quarter. And we expect that will accelerate as we move through the remainder of 2013 and into fiscal 2014.

Now, in addition to the financial impact, we are also seeing the benefits of a streamlined more engaged organization translate into the crisp execution of business strategies and all of this is helping us generate impressive cash flow. Cash flow is the lifeblood of a company and in Q1 cash flow from operations was $2.6 billion up a 115% year-over-year.

As we detailed in October, we are maintaining our very disciplined approach to capital allocation with a focus on rebuilding Hewlett-Packard’s balance sheet. After returning more than $0.5 billion to investors in the form of share repurchases and dividends in Q1, we improved our operating company net debt position for the fourth successive quarter by more than $1 billion to a $4.7 billion net debt position.

But we are not done; we have got a long way to go, some of the things we are working on are very exciting. First, is creating solid product software and services road maps across the portfolio that will redefine how IT is consumed and built.

We are working hard on improving customers’ satisfaction across our product and services businesses. We are working with our sales teams to build the capacity and the skills to sell solutions. And as I have mentioned many times, we are reigniting the powerhouse of Hewlett-Packard which is the channel.

So that’s how I look at where we are headed and that’s our focus. I believe that our success hinges on the consistency of leadership, focus, execution and most importantly great products, great software and great services that are differentiated from our competitors and that are delivered in ways that customers want to buy them.

So let me tell you a little bit about our strategy and why I’m so confident and optimistic about HP. I’m excited because we are at the forefront of a unique opportunity at a critical time. We are living in a period of enormous change, there are incredibly powerful consumer and industry shifts that are changing the way technology is consumed, the way it’s delivered and the way it’s paid for.

This happens about once every 10 to 15 years in our industry. Think back to that transition from the mainframe to the client server environment. From the client server environment to Web 1.0 from Web 1.0 to what I call Web 2.0 characterized by mobility and web services.

I saw one of these huge shifts take place when I was at eBay. The leap forward in technology that accompanied the mainstreaming of e-commerce simultaneously disrupted and gave birth to whole new industries and whole new companies.

When these types of shifts happen everything changes. Opportunities abound for industry players like new profit pools, now products and innovation at it’s finest. As these opportunities present themselves guess what becomes even more important to every company globally, IT. So, we are living at a time of enormous change but I will say it feels even bigger to me than what I saw when I came to eBay. What’s emerging out there in my view is an entirely new style of IT, that’s driven by cloud, mobility and big data. It’s changing how technology is consumed, how its delivered, how it’s paid for, everything is changing. It’s also changing how end users engage with that technology. And this new style of IT is going to demand a foundation that will have to support a much greater agility, lower cost, and much higher degree of accessibility, and that foundation is going to expand devices, infrastructure, software and services to deliver on the promises that our customers expect.

A new style of IT is developing, a style that our customers are struggling to master. And our job is to help them succeed, and we will succeed because only HP can provide the solutions for the new style of IT. And our diverse portfolio that was accumulated over a number of years sets us apart because we are the only company that can bring our customers devices, hardware, software and services from the enterprise to the consumer. And if we can take advantage of this incredible opportunity in front of us, we are going to shape the direction of the IT industry for another generation.

So the new style of IT that’s emerging is changing our industry and we have to evolve. We are evolving because our customers have to evolve. In addition to our capabilities across all these dimensions, our scale and go-to-market coverage means that HP is uniquely positioned to solve very complex customer problems. And our focus on solutions makes it all work by combining our technologies to our customers’ business objectives in a historic and incredibly compelling way.

We know that for HP to deliver the most value, we have to be more than some of the parts. And to do that what we’ve got to do is aggregate our compelling and powerful capabilities and infrastructure, software and services to deliver those industry leading solutions. And the solutions that our customers want today center around four main areas, cloud, security, big data and mobility, and our strategy is to provide the solution for the new style of IT and we want to help to work to solve our customer’s toughest problems and realize their greatest opportunities and we are aligning our portfolio to deliver what they need most.

So before I close let me sum up our three primary focus areas. First, we have crisp business strategies supporting the vision that I just outlined, that supports the value of our portfolio of assets together. Second, we are improving our operational excellence and delivering against the plan that we laid out from our focus on innovation, improving our go-to-market, delivering cost savings from our restructuring, creating the financial capacity to invest in our business and improving our automation and our instrumentation. And third we are focused on cash flow and capital allocation. We are committed to rebuilding our balance sheet and to set HP up for the long term.

So I’ve to say I’m pleased with the progress that we have made, although much work remains. We remain committed to the course, committed to our plans and…

[Technical Difficulty]

…delivering for customers and buoy they are excited today. You can see the steps, the increased pride in HP, we’re coming back and we’re coming back strong. So, I am excited, I am optimistic, there is a lot of work left ahead, but I hope you as shareholders would get a sense of our optimism and the fact that we’re going to bring this great company back. So, thank you very much.

John Schultz

…one of those most important people and that is Cathie Lesjak, our Chief Financial Officer, sitting right next to me. Thank you.

Question-and-Answer Session


Okay, so let’s now go on to the Q&A section of the meeting and…

[Technical Difficulty]

…who has a question you should just approach the microphone and we’ll get to as many as we can. So, first question.

Unidentified Company Representative

I want to ask about the data center business because it is kind of called HP and because of the diverse approach we have, hardware and software services combination with PCs and so, that is the way we compete customer clear to enterprise. In contrast, one of our key competitors Oracle is more a narrow focused. They focus on a medium and large enterprises and a tight stack of products from microprocessors, server, middle ware application and all those pieces work together very well, very tightly. Those pieces are best of breed in many cases for that market. They can hold up hardware like this. Say the Spark. It’s the fastest in the world because of its way it threads, the frequency of the core, etcetera and it will run your software and your business faster than anything else. That gives a customer a great experience. The integrated experiences like Apple’s experience very integrated Mac products etcetera and that’s very good for Oracle to go after cloud business, big data business, data security business, datacenter management, all good things and while they have done that, they’ve earned a high return on capital; 17% versus our negative. Their cash flow, which was …

[Technical Difficulty]

…substantial rue at 22% when ours went negative 16%. So (inaudible) pretty key. What I mean going forward is over the last 2 or 3 years I have lost half my value of my stock in HP. Can you tell me some of the key technologies or datacenters that will help HP go after cloud and big data business. What are some of the key technologies that shareholders should look at?

Meg Whitman

Absolutely. So I think one of the questions you are asking is are you better off with a vertically integrated stack versus a commitment to open standards and open architecture. When I came to HP, I said what are the strengths that we have and how about we build on those strengths as opposed to wish we were something that we are not and focus and delist a long things, a few needed to be changed. Listen, one of the strengths of this company is our hardware business, our datacenter business and a commitment to open standards and open architecture. And if you look at product line that we’re bringing to bear, as I have said many people have been around HP for a long time tells me this is the best product line up.

So let’s start with our server business; so our Gen8 servers are off to a very fast and that is gaining momentum outselling the Gen7 servers. The next thing we have of course is Moonshot, and I don’t know if you have heard of Moonshot, this could be truly a revolution, where these servers are actually build on the same chips that are in your cell phones, whether that be ARM or Adam chips. They use about 92% less power, 87% less energy at half the cost, and the space that they take up it was 10 full racks is now in this space. It is truly a revolution that I think is one of those incredibly disruptive innovation. This is not evolutionary innovation, this is disruptive innovation.

Then you turn to 3PAR, our storage business; 3PAR by the way was an excellent acquisition for this company. This is one simple unified architecture in storage from the mid-tier to the high-end. Our customers tell us that they love this, because they are not trying to fit pieces of different storage components altogether with different architectures and then StoreOnce developed in HP labs is basically data deduplication. Think about all the stuff that has to be stored today, the storage capability is exploding, the demand for storage is exploding and instead of putting every single piece of data in it can dedupe the data, if you will sort of dehydrate the data and when it’s needed back out it rehydrates it.

So this is a very exciting product, we are actually sold out of our mid-tier storage, don’t worry we are making more, but it’s a good problem to have. We haven’t been sold out of a product for quite some time. And then last but not least is our networking business. We have now an 18% unit share of networking; we are the second biggest competitor in that space five times the size of our next largest competitor and we are the leader in software defined networking which is effectively taking dumb pipes and making them smart and so this is an incredibly exciting time for us. So you should feel really confident in my view that we have great datacenter products, we are investing in R&D, that business is led very capably by Dave Donatelli with some of the best HP engineers in Houston, Fort Collins that I have seen almost anywhere.

So you should feel very confident and our objective is to go build back your shareholdings. Thank you. Next.

Unidentified Speaker

Thank you Meg. My name is [Shelton Erlic] and I am the shareholder. We once had an administration that cared about human rights, we don’t today, and organizations like the Presbyterian Church and Methodists and their allies are trying to use shareholder proposals to create a political situation. The Presbyterian Church had a vote on support for Israel, there was a campaign to stop the church from supporting Israel, it failed. The proposal we heard today from the churches is an attempt to make Hewlett-Packard part of a conspiracy to de-legitimize the state of Israel.

I am the guy who yelled out bullshit during the conversation, and I hope this proposal fails and I hope it fails everywhere and every time, thank you.

Meg Whitman


Unidentified Company Speaker

Good afternoon Meg. I’m [Craig Ryans with Calhurst]. As a long-term shareholder we have been extremely concerned with HP’s path in recent years and going forward we would like to see a fresh thinking and greater capital discipline. Now, we would also like to see greater clarity with respect to the board leadership roles and independence and to my question what is the board’s thinking with regards to nominating an independent chairman to the board?

Meg Whitman

So this has been a difficult time for Hewlett-Packard over the last number of years. I mean certainly the last three or four years has been tough. I came to HP in a very difficult timeframe. I was the third CEO in as many years and that is very hard on customers, partners, shareholders etcetera.

My view about the board of directors is that they are helping turn Hewlett-Packard around. You’ve seen we’ve laid out a very clear turnaround strategy. This group is actually helping me lead that transition. The executive team that is here today, we are all on the same path.

And as you know in business, there’s lots of ways that you can decide to run your company but once you decide you’ve got to get everyone lined up, marching in the same direction with a just a devotion to that strategy or turning to HP to greatness that we all have.

So I feel like actually the lineup that we have right now is actually helping us turnaround the company. Thank you.

Bill Patterson – CTW Investment Group

Bill Patterson with CTW Investment Group, item number 11 is the reporting of the initial tally in the vote. The election of directors which I believe is a very important moment for this company and I wanted to invite the board to comment on the results because all indications are that a strong opposition vote will be delivered to several directors, several directors that were involved in overseeing the Autonomy acquisition and there is concern that the board of renewal process is not fully fulfilled itself.

In the event of a large opposition vote which we think may result in directors not receiving a majority of votes or a near majority of votes, I think it would be important for the board to be prepared to comment on that vote and what it intends to do going forward.

The Hewlett-Packard has just taken enormous steps to restore shareholders confidence several directors, Mr. Wayne, Mr. Whitworth, Ms. Russo and Mr. Gupta met with investors right before the meeting at the Council of Institutional Investors which was hugely valuable with Hewlett-Packard has supported for the first time the proxy access proposal, but these shareholders rights are of limited value unless this company can demonstrate that it has active independent directors on the job protecting shareholders rights. So my question is would the board be prepared to comment on the election results in the event of a strong opposition vote?

Meg Whitman

So let me call on Ralph Whitworth who is our most recent director, owns a very sizeable portion of Hewlett-Packard. Ralph, why don’t you sort of speak for the board on that subject?

Ralph Whitworth

Okay. Happy to do it, hi Bill. So this has been a difficult few years obviously for HP. I came on the board over a year and a half ago as an independent director, came on through somewhat of an unusual process by essentially approaching the company and suggesting that there was some contribution that we could make.

Our firm which represents clients all over the world owns roughly $800 million worth of the stock and I had a very unusual answer to that because it’s not the first time I’ve suggested that. I met with Meg and Ray and they said you know what; you’ve got some pretty good ideas. We wanted to do some referencing in the course, but we just might take you up on it and within a month or so, I was on the board and I went to Meg and I said well I would like to get to know a little more about company and meet some of the executives, and maybe learn a little bit more and come back and refine some of our suggestions. And I will coordinate that through your office. And she said don’t do that. Go out, see whoever you want, whenever you want, however you want and then come back and tell me what you learned because I want to know. And so I could give an anecdote after anecdote but we don’t have the time here but this is probably been the most open situation that I’ve ever been involved in terms of the board dynamics.

And I know that there has been very controversial. There’s been people questioned for and rightfully so. Some of the transactions that the company has done over the years, there has been write-downs last year, but what I said when I had that first meeting with Meg and Ray, I said, you know, I am going to come in and look forward because we have to rebuild this company.

They had just changed CEOs and that’s what we’ve all been doing. We’ve been looking forward and we’ve been rebuilding this company and there is things going on under the surface here and maybe out of the spotlight that are just incredible, and I think you are starting to see the results, some of the green shoots, but it’s not over. I mean it’s just starting and so Bill we have discussed this in the past. I was at the meeting and we don’t live in a perfect world, and if it were we probably all wouldn’t be here today.

But certainly, this board is among the best I have seen and every single board member contributes in their own way and there is a strong dynamic. Now, having said all that, all board should evolve and certainly when they have the recent past that this one does and any company of this size it doesn’t have an ongoing process to look out and reach out for the right director, the right time, or anticipate retirements, anticipate changes in people’s lives isn’t doing their job and so when I got here that was underway here and it’s been intensified.

So if you can imagine last fall with everything that was happening here that wasn’t the most opportune moment to reach out and invite directors on the board, they are employers (inaudible) that’s looks likes a pretty complicated situation, which it was.

But things are changing and that process is ongoing and it will continue and I think you can expect some evolution of the board over the coming years, months, may be but I asked you then when we spoke to be patient and to expect that we are going to do the right thing here and that everyone of these directors are committed to that.

So I just, I know that you have thought a lot about this, but I hope you will respect the results today and then to the extent you can work with us to make this company stronger and more valuable.

Meg Whitman

Thank you Ralph. Yeah, we are going to go a little longer because there’s quite a little line of questions here so go ahead.

Denik Murphy – SEIU [Service Employees International Union Master Trust]

Thank you Ms. Whitman. My name is Denik Murphy. I’m here on behalf of the SEIU Service Employees International Union Master Trust and 2.1 million hardworking US citizens, Americans who are members of our union and whose retirement savings and defined contribution and defined benefit plans are invested in Hewlett-Packard.

I would like to ask you and Mr. Lane if you can confirm media reports that Mr. Whitworth has been appointed to head of a special committee to investigate the handling of the Autonomy acquisition and in particular outline its mandates and other member composition and specifically if you can address our concern that any directors who were part of the Autonomy acquisition process that they not be on this special committee?

Meg Whitman

John, do you want to take that and talk about the exactly the definition of, I mean what it’s charged with doing?

John Schultz

Sure, absolutely. So the special committee has been formed by resolution of the board. The three members are Ralph Whitworth, Gary Reiner and Ken Thompson. That is consistent with what is provided for under applicable law. It’s consistent with our past practice and policy in similar situations that we’ve confronted over the course of time.

The charter is roughly consistent with the lawsuits that have been filed against the company. It is not simply related to the Autonomy matter but in fact relates to other aspects as well including allegations relating to certain impairment charges that were taken in connection with both the EDS acquisition and the Autonomy acquisition. As is practiced, this committee retains counsel to assist them in that process. That counsel has been selected and we will be commencing its work shortly. The independence of this committee is ultimately passed on by a Court of Law and so therefore it is required to meet certain criteria that is established by these courts under the various laws in this particular instance under the laws of Delaware.

So, we believe that the committee that’s been established has the right scope of charter, that the members and the processes that are in place to maintain its independence and fairness is consistent with all applicable law.

Denik Murphy – SEIU [Service Employees International Union Master Trust]

I appreciate what you just said. We would like to express our grave concern that Mr. Thompson’s participation in this committee we believe is a great conflict and will not benefit the company or shareholders in the long term. Thank you.

Unidentified Speaker

(inaudible) shareholder, I also worked 35 years for HP in what I call the good old days. You talked about a building in your slight journey, you had for 2014, recovery and expansion. I hope you will take some time to also celebrate HP’s 75th anniversary. Thank you.

Meg Whitman

Thank you for that comment. We have an entire employee committee that will celebrate the 75th anniversary around the globe. So thank you for the comment.

Unidentified Speaker

Thank you and good afternoon Ms. Whitman. My name is Stephanie (inaudible). I want to congratulate you on a fantastic presentation. That’s getting close to an hour of talking without one note, just unbelievable. However I think in the sense you might be selling yourself short, because there are some things that you could list on your credit list that you haven’t listed and there are some things that are not there that it would be nice if you did list. For instance it would be nice if you listed that, Hewlett-Packard and its peregrinations around this world was exercising what I would call a Hewlett-Packard standard of surveillance over our operations in LDCs in less developed countries where unfortunately these less developed countries also have a less developed sense of what we would consider human rights.

But what you haven’t listed that is very much to your credit is that we employ so many thousands and give them health benefits which you also give to the retirees. The people in this room, every one of them, they are your hommies. They are not traders, not one of us depends on HP’s dividends for economic survival. We all have other resources which depend on high employment in the Valley as a whole and what’s good for us stockholders is also good for the company as a whole and the economy as a whole because we all buy from each other.

Never ever forget that David Packard is most admired not for the Lucile Salter Packard Hospital or other wonderful things he did, but for cutting 10% off expenses by cutting the compensation of everybody in the company including his own. The bonus part of executive compensation leaves the community to go to investment companies on the other side of the mountain, while earnings of the workers all stay right here.

When the workers lose purchasing power, everybody suffers; even our real estate goes down. One significant labor cost that could be reduced is the unnecessary cost for private health insurance brokerage, which is borne even by companies which self insure. The employers raise all the money, the doctors and hospitals provide the service. The brokers add nothing. The original purpose of health insurance was to mitigate the effects of unemployment on the cities where the manufacturers elected to put their factories by having employees contribute to a fund which would take up the slack if and when the workers were no longer able to work for one reason or another and it’s worked well in Europe for over 100 years.

The United States by making the health and social services fund in to a tax produced exactly the effect that the original inventors feared. When the workers lost their jobs, the local community, that’s us, ended up supplying healthcare, and Hewlett-Packard has done more than its share to help us with our hospitals with Kaiser, El Camino and Stanford Hospitals by supplying this health insurance, which other companies and the government have not succeeded in doing or tried to do. So, I would say that our government, the US by making the health and social services fund in to a tax, produced the wrong effect and then exacerbated the problem by handing the whole medical industry to the insurance companies as a concession so that they insure all the healthy workers with the good jobs while the taxpayers insure the lame, (inaudible) and the blind thus building up the supply of investment capital. The effect of their presence is to skew the entire compensation structure. They demand discounts and exchange for the increased business they supposedly give providers, but there is no increased business because they pocket the surplus.

Meg Whitman

Sorry, but I have got about six behind you so, what you are saying is fabulous but can we…

Unidentified Speaker

I am just saying if you could, there is it’s quite naïve to say that Hewlett-Packard has no political influence. If you could influence our government and your fellow great players on this stage to adopt this self funding of health of mutual fund, which is called single payer insurance that would be very helpful for all of us including the balance sheet of Hewlett-Packard. And I thank you.

Meg Whitman

Thank you for your comment. So, we are going to take one, we are going to go to the man in the red, I think it’s all we are going to able to take and then three of you who are not there we will get you offline. So right up the man in the red, and then go ahead and if you can just be a little bit shorter, so we can get to know more people because I know some people have to leave, because it was supposed to be an hour

Unidentified Speaker

Hello, my name is Jeff Browning; I am coming before you not only as a Presbyterian Minister but also as an investor and a former employee of HP. I am concerned that HP is indeed straying from the values that has really made this country and this company great. And I have to say that since this is a public forum, that the Presbyterian Church in no way has ever voted against Israel, we always support Israel’s right to exist within secured borders.

Having said that HP is using its products to support the occupation in a way that is not beneficial for this company or for the people. There are human rights violations and I’m afraid that we become complicit in that when we allow our products to be used in that way. I guess as my colleague pointed out, the business ethics of HP include a commitment to transparency and what I did not see in the reply to the proxy statement which sounded very good in terms of proposal of business ethics it seemed very substantial. But I didn’t see anything that would change what is currently going on. Where is the transparency that helps investors or others in the community who might be investors who are concerned about how our products are being used to really know what decisions were being made and I didn’t see a response in the proxy reply, the reply to the proxy statement resolution?

Meg Whitman

So I take your comments on Board and what I would like to do is introduce you to Ashley Watson who is some place way in the back there. She runs our basically human rights organization the part our ethics and compliance part of HP who is responsible for the transparency, how we respond to these things. These issues are very complex as you know and so what I’d love to do is connect the two of you and see if there’s something that can be worked out that would sort of more meet some of the needs around transparency. So thank you for the comments. Next?

Unidentified Speaker

Good afternoon, my name is Jerry Ups. I’m an HP stockholder and an HP retiree. Over the last several years, my HP stock portfolio has taken a dramatic fall as has everybody else’s. But regardless of this, a few moments ago I marked the ballot to support everything that the board recommends steady as it goes. In line with that, I would like to read you something that was published in 1976, 36 years ago.

From the day we started the company, we tried to follow certain fundamentals deemed necessary and appropriate for the success of any type of business. We learned early in the game that our product would have to represent technological advance, fuel a real market need and offer a good value.

To go on down, to follow down. Today, approximately 13,000 HP computers have been installed around the world. That represents a lot of customer confidence in our products. We won’t issue a share user customer that Hewlett-Packard computer will serve you well and will have the complete support of our people and resources. This on the heels of the reintroduction of the HP 2000.

With some of you have been there a long time, know that history, okay. My question to you today Meg Whitman and the board is can we as stockholders count on you for the same customer satisfaction and innovative products?

Meg Whitman

So the answer is yes. We will do our very best job to live up to the history and the iconic nature of this company and one of the things that I have understood about being here now for 18 months and this is a really good thing for Hewlett-Packard, turns out its really hard to kill founder DNA.

And this is a really good thing for Hewlett-Packard because this commitment to product engineering we are at our core and engineering company that does great things for customers and that is the DNA of this company and we are working really hard to celebrate that. Sir, thank you for your comments.

Unidentified Speaker

Hi, I’m (inaudible) and I’m here on behalf of the AFL-CIO Reserve Fund. And around where the ratification of auditors is considered routine where broker votes are allowed to count and the average shareholder vote is 98.6%, can you discuss how the committee plans to address what we expect to be the largest vote against an S&P 500 auditor over the past 12 months and more specifically rather than ignoring the vote, will you commit to reducing your use of Ernst & Young’s non-audit related services by half or alternatively putting out to tender the outside auditor contract.

Meg Whitman

Yeah, so let me tell you what my view is on this. So the bulk of Ernst & Young’s fees outside of the audits that they do for Hewlett-Packard supports our enterprise services business. So when we do an IT outsourcing deal with an Aon or Allianz or, Proctor & Gamble, one of the first questions they ask HP is can you have someone certify the controls, the processes, the financials of HP.

To have someone other than our auditor do that doesn’t make a lot of sense. It’s not cost effective and you would end up having sort of two auditors who have to certify our results. So the vast majority of that work really covers the needs of our IT outsourcing business and I think frankly, that is a good use of your money, shareholders’ money and not at all a breach of the relationship that we have with Ernst & Young to monitor our financial performance. So I am actually very comfortable with the non-audit fees that Ernst & Young charges us because it would be just duplicative effort to tap someone else’s come in. So thank you.

Unidentified Analyst

Ms. Whitman, I read in a proxy about you are on several other boards besides HP and HP is a large company and by your own admission, it has a lot of problems that will take time to be fixed. So how do you justify the time spent on other boards versus giving a 100% of your work time to HP?

Meg Whitman

Great question and I after I lost the governor’s race, which people probably remember in this audience, I actually was asked to go on a lot of boards and I did. So, when I took this job at Hewlett-Packard, I had already made commitments to companies and organizations and I have actually been systematically reducing that commitment.

So for example, I was on the Zipcar board that company has actually been sold. So I am now off that board. I was on the Princeton University Board of Trustees and actually told them about three weeks ago that I could no longer serve on that board because it was 3,000 miles across the country.

I’ve actually reduced my non-profit time to some of public schools as well as Teach for America board. So the remaining corporate board that I sit on is Proctor & Gamble and I would tell you this is really good for Hewlett-Packard because I watch another very large company struggling with some of the same issues that we do and it is really good for the shareholders that I have another perspective on a big large company.

So in moving those commitments down and as soon as I, you know, as when it becomes appropriate, I will continue to move those commitments down. Thank you.

Unidentified Analyst

Also I have here an HP 20S calculator, it’s 20 years old this year and to me as an engineer it’s been a companion for a long time and it’s taken plenty a knocks and it works as well as the day I got it and it’s an example to me I am not an HP employee or ex-employee of the HP way and I would really like to see that return and it seems to me that when more business trained executives started taking over the company rather than engineering trained executives, it’s really changed. And the focus on this quarter for Wall Street to appease them is really short sighted.

Meg Whitman

So let me give you my perspective on that. So I came to Hewlett-Packard to set this company up for the next 75 years, not this quarter, not next year, the next 75 years. Because this company as an icon of Silicon Valley and icon of American business and frankly we are incredibly important to company, to the communities in which we operate around the globe.

And what you will see that we did is last year we delivered $4.05 to the shareholders. This year in our guidance to Wall Street, we set $3.40 to $3.60. Never an easy thing to do for a shareholders right, you want improving EPS not the declining EPS, but we had to take a pause to create the financial capacity to invest, to straighten out some of the executional issues, to integrate the acquisitions that have been made and to get this company on track to grow.

So I think that’s the best indication that this leadership team and this board is not about next quarter, because it would have been easy just to slice a bit more off of some of the cost and that you wouldn’t see the results of that until many years later. So I want you to have confidence we are doing the right thing for the long-term health of Hewlett-Packard.

One last question and then we will go to the results of the vote. I want to just spend a little time, there was such a demand for questions. I want to make sure that we had a chance to answer as many as we could. Sir?

Unidentified Company Speaker

Yeah, mine is simple after I was at Booz Allen Hamilton I worked for [Technical Difficulty] who would you have contacted if you had some M&A issues to deal with you from?

Meg Whitman

In other words there’s companies you would like to sell to us or?

Unidentified Company Speaker


Meg Whitman

Okay. That would be Cathie….

Unidentified Company Representative

You were trained by us.

Unidentified Company Representative

245 Park Avenue.

Meg Whitman

So M&A reports to Cathie Lesjak, our Chief Financial Officer and its and Cathie will see.

Unidentified Company Representative

How do you spell your last name Cathie?

Cathie Lesjak


Unidentified Company Representative

You are going too fast.

Cathie Lesjak

L-E-S-J-A–K. We will get it to you afterwards. Okay, thank you very much.

Unidentified Company Representative

One comment, next year I think you should have the Vice President or Manager of these divisions, make a presentation where they are responsible and provide us their emails to us also.

Meg Whitman

Okay, thank you very much.

John Schultz

Alright. So we intend to close the polls shortly. Therefore, I would ask that you complete your proxy cards or ballots and raise your hand if you have a ballot or proxy to be submitted. You must submit them now in order for them to be counted.

The Inspector of Elections will not accept proxies or ballots submitted after the closing of the polls. Please note that any proxies or ballots submitted here today will be subject to final verification by the Inspector of Elections.

There being no further ballots, I hereby declare that it is 03:29 PM and the polls are now closed for voting on the items of business. All ballots and proxies are now in the custody of the Inspector of Elections and Ray will now announce the results of the vote.

Ray Lane

Thank you, John. Results to be announced are based on the preliminary tally provided by our Inspector of Election. The votes are subject to the final count certified by the inspector. Okay, now let’s start with the votes cast for the Election of Directors.

Bill Marsh

The inspector’s report will show that each of the 11 nominees did receive their requisite 50% vote which is the percentage needed under majority voting.

Ray Lane

I declare that all 11 director nominees have been elected to serve for the next year to hold office until their successors are duly elected and qualified. Now, I’ll ask Bill to announce the results of the vote on the ratification of Ernst & Young as HP’s independent registered public accounting firm.

Bill Marsh

The inspector’s report on the second proposal concerning the accountants will show that roughly 84.7% of the shares voted in favor and roughly 14.7% of those shares voted, voted against.

Ray Lane

Thank you, based on that vote, I declare the appointment of Ernst & Young’s as HP’s independent registered public accounting firm has been ratified. Now I’ll ask Bill to announce results of the advisory vote on executive compensation.

Bill Marsh

On proposal three, the advisory on executive compensation inspector’s report will show that 75.2% of those shares voted, did vote in favor and 24% of the shares voted, voted against.

Ray Lane

Thank you Bill. Now I’ll ask Bill to announce the results of the proposal to amend HP’s amended and restated bylaws to permit shareholders proxy access. As noted the proxy statement approval of this proposal requires the affirmative vote of the holders of at least 66 and two-thirds percent of HP’s outstanding shares.

Bill Marsh

On proposal four concerning proxy access the inspector’s report will show that 68.1% of the outstanding shares voted in favor of this proposal and 2% of the outstanding shares voted against.

Ray Lane

Based on the vote, I declare that the proposal to permit shareholders proxy access has been approved. Now I’ll ask Bill to announce the results of the approval of the second amended and restated Hewlett-Packard Company 2004 stock incentive plan.

Bill Marsh

The vote on proposal five concerning the 2004 incentive plan, the inspector’s report will show that roughly 87% of the shares voted, voted in favor and 12% voted against.

Ray Lane

Based on this vote, I declare that the second amended and restated Hewlett-Packard Company 2004 stock incentive plan has been approved. Now, I’ll ask Bill to announce the results of the stockholder proposal relating to the formation of a human rights committee.

Bill Marsh

The proposal identified as number six concerning the formation of the human rights committee, the inspector’s report will show that 3.39% of the shares voted, voted in favor, and 59.4% of the shares voted, voted against.

Ray Lane

Based on this vote, I declare that stockholder proposal has not been approved. Now, I’ll ask Bill to announce the results of the stockholder proposal entitled 2013, Hewlett-Packard resolution on Human Rights policy.

Bill Marsh

On proposal 7 concerning the Human Rights policy, the inspector’s report will show that 6.21% of the shares voted, voted in favor and 78% of the shares voted, voted against. I would like to go back to the previous proposal. Against percentage, should have been 84%, not the 59% that I read.

Ray Lane

Based on the vote, I declare that the stockholder proposal has also not been approved. Now, I’ll Bill to announce the results of the stockholder proposal entitled executives to retain significant stock.

Bill Marsh

Yes sir. Proposal identified our final proposal concerning stock retention, the inspector’s report will show that 27.6% of the shares voted, voted in favor and 71.6% of the shares voted, voted against.

Ray Lane

Based on this vote, I declare that stockholder proposal has not been approved.

Unidentified Company Speaker

(Question Inaudible)

Unidentified Company Speaker

So that information will be more (inaudible)

John Schultz

And we also would be happy to provide to you at the end of the meeting but the question-and-answer period is over as is the proposal, for shareholder proposals coming from the floor. So I will direct you to the team for purposes of the information at the end of the meeting. So thank you.

Ray Lane

So it’s now 3.35 PM and I declare the business of today’s meeting is concluded. I want to thank everybody for attending this afternoon and especially thank you for all of your questions and comments. We are sincerely grateful of your interest and continued confidence in HP. Thank you.

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