HP 2011 Annual Report Download - page 138

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 16: Retirement and Post-Retirement Benefit Plans (Continued)
reform legislation is not expected to affect the cost of HP’s retiree welfare programs because the
subsidy offered by HP to retiree participants is fixed.
During fiscal year 2010, HP also announced the elimination of company-paid retiree life insurance
effective January 1, 2011.
Defined Contribution Plans
HP offers various defined contribution plans for U.S. and non-U.S. employees. Total defined
contribution expense was $626 million in fiscal 2011, $535 million in fiscal 2010 and $568 million in
fiscal 2009. U.S. employees are automatically enrolled in the Hewlett-Packard Company 401(k) Plan
(the ‘‘HP 401(k) Plan’’) when they meet eligibility requirements, unless they decline participation.
Similar to HP, EDS offered participation in defined contribution plans for U.S. and non-U.S.
employees, including an EDS 401(k) Plan.
At the time of the EDS acquisition in August 2008, the employer match for the EDS 401(k) Plan
was 25% of the employee contribution based on a maximum contribution of 6% of the employee’s
salary. Effective January 1, 2009, U.S. employees participating in the EDS 401(k) Plan became eligible
for a 4% matching contribution on eligible compensation. Similar to the HP 401(k) Plan, contributions
are invested at the direction of the employee in various funds, although the EDS 401(k) Plan does not
offer an HP stock fund.
Effective April 1, 2009, HP matching contributions under both the HP 401(k) Plan and the EDS
401(k) Plan were changed to a quarterly, discretionary, performance-based match of up to a maximum
of 4% of eligible compensation for all U.S. employees to be determined each fiscal quarter based on
business results. HP’s matching contributions for each of the subsequent quarters in fiscal 2009 and all
of the quarters in fiscal 2010 were 100% of the maximum 4% match. Effective at the beginning of
fiscal 2011, the quarterly employer matching contributions in the HP 401(k) Plan and the EDS 401(k)
Plan were no longer discretionary, but equal to 100% of an employee’s contributions, up to a maximum
of 4% of eligible compensation. Effective December 31, 2010, the EDS 401(k) Plan was merged into
the HP 401(k) Plan.
Effective January 31, 2004, HP designated the HP Stock Fund, an investment option under the HP
401(k) Plan, as an employee stock ownership plan and, as a result, participants in the HP Stock Fund
may receive dividends in cash or may reinvest such dividends into the HP Stock Fund. HP paid
approximately $8 million, $7 million and $8 million in dividends for the HP common shares held by the
HP Stock Fund in fiscal 2011, 2010 and 2009, respectively. HP records the dividends as a reduction of
retained earnings in the Consolidated Statements of Stockholders’ Equity. The HP Stock Fund held
approximately 21 million shares of HP common stock at October 31, 2011.
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