HP 2005 Annual Report Download - page 111

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 13: Stockholders’ Equity
Dividends
The stockholders of HP common stock are entitled to receive dividends when and as declared by
HP’s Board of Directors. Dividends are paid quarterly. Dividends were $0.32 per common share in
each of fiscal 2005, 2004 and 2003.
Employee Stock Purchase Plan
HP sponsors the Hewlett-Packard Company 2000 Employee Stock Purchase Plan, also known as
the Share Ownership Plan (the ‘‘ESPP’’), pursuant to which eligible employees may contribute up to
10% of base compensation, subject to certain income limits, to purchase shares of HP’s common stock.
Employees purchase stock semi-annually at a price equal to 85% of the fair market value at certain
plan-defined dates. As of November 1, 2005, the ESPP was changed such that employees will purchase
stock semi-annually at a price equal to 85% of the fair market value on the purchase date. At
October 31, 2005, approximately 140,000 employees were eligible to participate and approximately
57,000 employees were participants in the ESPP. In fiscal 2005, participants purchased 20,673,000 shares
of HP common stock at a weighted-average price of $17 per share. In fiscal 2004, participants
purchased 25,868,000 shares of HP common stock at a weighted-average price of $14 per share. In
fiscal 2003, participants purchased 23,884,000 shares of HP common stock at a weighted-average price
of $14 per share.
Incentive Compensation Plans
HP has stock option plans, including principal plans adopted in 2004, 2000, 1995 and 1990
(‘‘principal option plans’’), as well as various stock option plans assumed through acquisitions, under
which stock options are outstanding. All regular employees were eligible to receive stock options in
fiscal 2005. There were approximately 127,000 employees holding options under one or more of the
option plans as of October 31, 2005. The principal option plans permit options granted to qualify as
‘‘incentive stock options’’ under the U.S. Internal Revenue Code. The exercise price of a stock option
generally is equal to the fair market value of HP’s common stock on the date the option is granted.
The term of options granted in fiscal 2005, 2004 and 2003 was generally eight years, while options
granted prior to fiscal 2003 generally had a ten-year term. Under the principal option plans, HP may
choose, in certain cases, to establish a discounted exercise price at no less than 75% of fair market
value on the grant date. HP did not grant any discounted options in fiscal 2005, 2004, and 2003.
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