Solidifying its established compensation policy, Hewlett-Packard recently announced its decision to tighten the bond between executive pay and performance, and will now give shareholders more say in executive compensation matters.
The HP board approved the changes to the compensations program, which formalize the existing policy that the board will look to stockholders for approval before adopting or extending a stockholder rights plan, the computer company said in a statement. It also announced it was changing its bylaws so that it must seek shareholder approval prior to adopting or extending a shareholder rights plan.
The new long-term compensations program is in response to proposals submitted and approved by shareholders last March at HP’s annual meeting.
HP also noted that the program supports an updated approach to a performance-based plan design, as most equity grants will vest only upon the satisfaction of financial performances criteria over three years.
While the company continues to work out performance metrics and target specifics, the program will be effective with the fiscal 2008 compensation review cycle, and HP said the program reflects its longstanding policy that a hefty portion of long-term incentive compensation for senior executives be performance-based.
HP has said it expects to provide more information about the program in the company’s proxy statement for its annual meeting of stockholders in 2008.