HP 2009 Annual Report Download - page 105
Download and view the complete annual report
Please find page 105 of the 2009 HP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95 -
96 -
97 -
98 -
99 -
100 -
101 -
102 -
103 -
104 -
105 -
106 -
107 -
108 -
109 -
110 -
111 -
112 -
113 -
114 -
115 -
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
-
175
-
176
-
177
-
178
-
179
-
180
-
181
-
182
-
183
-
184
-
185
 |
 |
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 2: Stock-Based Compensation (Continued)
fiscal 2009 will be determined when the annual cash flow goals are approved, and the expense will
be amortized over the remainder of the applicable three-year performance period.
(2) Reflects the weighted-average fair value for the first year of the three-year performance period
applicable to PRUs granted in fiscal 2008.
(3) HP uses historic volatility for PRU awards as implied volatility cannot be used when simulating
multivariate prices for companies in the S&P 500.
Outstanding PRUs as of October 31, 2009 and 2008 and changes during fiscal 2009 and 2008 were
as follows:
2009 2008
Shares in thousands
Outstanding at beginning of year ................................ 10,965 —
Granted .................................................. 13,966 8,783
Vested .................................................... — —
Change in units due to performance and market conditions ............. 1,193 2,492
Forfeited .................................................. (1,401) (310)
Outstanding at end of year ..................................... 24,723 10,965
PRUs assigned a fair value at end of year .......................... 13,426 5,292
At October 31, 2009, there was $193 million of unrecognized pre-tax stock-based compensation
expense related to PRUs with an assigned fair value, which HP expects to recognize over the remaining
weighted-average vesting period of 1.5 years. At October 31, 2008, there was $108 million of
unrecognized pre-tax stock-based compensation expense related to PRUs with an assigned fair value,
which HP expected to recognize over the remaining weighted-average vesting period of 2.0 years.
Stock Options
HP utilized the Black-Scholes option pricing model to value the stock options granted under its
principal option plans. HP examined its historical pattern of option exercises in an effort to determine
if there were any discernable activity patterns based on certain employee populations. From this
analysis, HP identified three employee populations on which to apply the Black-Scholes model. The
table below presents the weighted-average expected life in months of the combined three identified
employee populations. The expected life computation is based on historical exercise patterns and
post-vesting termination behavior within each of the three populations identified. The risk-free interest
rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in
effect at the time of grant.
98