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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

HEWLETT PACKARD ENTERPRISE COMPANY

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GRAPHIC   2018 PROXY STATEMENT
         
         


Patricia F. Russo
Chair of the Board
  Hewlett Packard Enterprise Company
3000 Hanover Street
Palo Alto, CA 94304
www.hpe.com

To our fellow Stockholders:

This marks the end of an era and the beginning of the next for HPE. Nearly seven years ago, Meg Whitman joined Hewlett-Packard Company with a bold, innovative turnaround plan designed to create a company with a clear vision and the right assets through portfolio optimization and enterprise transformation. This fiscal year, under the oversight of this Board of Directors, Meg led HPE through the culminating steps of that plan. Now, HPE stands on the horizon of the next era with a crystal clear, long-term oriented strategy, an agile corporate structure, a streamlined portfolio, and the challenge tested leadership of Antonio Neri. I am humbled to serve as Board Chair through HPE's transition from the era of transformation into our next chapter.

This journey has not been without its trying moments, but I can speak for every member of HPE's Board of Directors when I say that it has been exciting and fulfilling. We have deliberately and successfully established a board that is optimally designed to deliver guidance tailored to HPE while maintaining a diversity of experience and thought that is vital to our success. This Board is experienced. This Board is vigilant. This Board is committed. Throughout this era of transformation, this Board has expanded its depth of oversight far beyond traditional meetings and the traditional boardroom setting into active oversight, including one-on-one and small group sessions with members of management, panel conversations at employee meetings, stockholder engagement participation, continued education, and appearances at customer events. We have been and we remain committed and excited to provide oversight and guidance to HPE's management on the execution of our strategy.

Sustainability and corporate citizenship are core values with Board level oversight at HPE and I want to take this moment to note that, as HPE has undergone its era of transformation, society has faced an ever-changing geopolitical landscape, a volatile economic framework, and an uncertain future. Now, more than ever, corporations must adhere to sound corporate governance and maintain values that responsibly create stockholder value. Our Board and our management team have maintained a best in class governance profile and remain committed to applying the innovation engine of HPE to corporate governance and citizenship.

The annual meeting is a time for us to reflect on where we have been and where we are going. We are pleased and excited to invite you to attend the third annual meeting of stockholders of HPE on Wednesday, April 4, 2018 at 9:00 a.m., Pacific Time. This year's annual meeting will again be a completely virtual meeting of stockholders, conducted via live webcast. We are pleased to provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission's "notice and access" rules. As a result, we are mailing to many of our stockholders a notice of Internet availability instead of a paper copy of this proxy statement and our 2017 Annual Report. The notice contains instructions on how to access those documents over the Internet as well as how to receive a paper copy of our proxy materials. All stockholders who do not receive a notice will receive a paper copy by mail unless they have previously requested delivery of proxy materials electronically. Continuing to employ this distribution process will conserve natural resources and reduce the costs of printing and distributing our proxy materials. Your vote is important to us and I do hope you will vote as soon as possible.

In closing, I would like to convey sincere appreciation. First, to HPE's employees: this company's most important capital truly is its human capital. On behalf of the entire Board of Directors, we recognize and celebrate the dedication and ingenuity required to deliver this transformation. Second, to our customers, our valued partners who are the reason driving everything we do. And finally, to you, our stockholders, we truly appreciate your confidence and investment in HPE. As we accelerate into the next era, we are honored and delighted that you have chosen to join us.

Sincerely,

GRAPHIC

Patricia F. Russo
Chair of the Board


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2018 PROXY STATEMENT

 

 

 

 

 

 

 

 

 

 

HEWLETT PACKARD ENTERPRISE COMPANY

3000 Hanover Street
Palo Alto, California 94304
(650) 687-5817

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Time and Date   9:00 a.m., Pacific Time, on Wednesday, April 4, 2018

Place

 

Online at HPE.onlineshareholdermeeting.com

Items of Business

 

(1)

 

To elect the 13 directors named in this proxy statement

 

 

(2)

 

To ratify the appointment of the independent registered public accounting firm for the fiscal year ending October 31, 2018

 

 

(3)

 

To approve, on an advisory basis, the company's executive compensation

 

 

(4)

 

To consider and vote upon one stockholder proposal, if properly presented

 

 

(5)

 

To consider such other business as may properly come before the meeting

Adjournments and Postponements

 

Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.

Record Date

 

You are entitled to vote only if you were a Hewlett Packard Enterprise Company stockholder as of the close of business on February 5, 2018.

Virtual Meeting Admission

 

Stockholders of record as of February 5, 2018, will be able to participate in the annual meeting by visiting HPE.onlineshareholdermeeting.com . To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials. The annual meeting will begin promptly at 9:00 a.m., Pacific Time.

Pre-Meeting

 

The online format for the annual meeting also allows us to communicate more effectively with you via www.proxyvote.com for beneficial owners and proxyvote.com/hpe for registered stockholders and you can submit questions in advance of the annual meeting, and also access copies of our proxy statement and annual report.

Voting

 

Your vote is very important to us. Regardless of whether you plan to participate in the annual meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or via a toll-free telephone number. If you received a paper copy of a proxy or voting instruction card by mail, you may submit your proxy or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided. Stockholders of record and beneficial owners will be able to vote their shares electronically at the annual meeting (other than shares held through the Hewlett Packard Enterprise Company 401(k)  Plan, which must be voted prior to the meeting). For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers—Voting Information beginning on page 87 of the proxy statement.
     
By order of the Board of Directors,
    GRAPHIC
    JOHN F. SCHULTZ
Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary

This notice of annual meeting and proxy statement and form of proxy are being distributed
and made available on or about February 13, 2018.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 4, 2018.
This proxy statement and Hewlett Packard Enterprise Company's 2017 Annual Report are available electronically at
www.hpe.com/investor/stockholdermeeting2018 and with your 16-digit control number by visiting www.proxyvote.com for beneficial owners and proxyvote.com/hpe for registered stockholders.


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2018 PROXY STATEMENT

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

PROXY STATEMENT EXECUTIVE SUMMARY

  1

CORPORATE GOVERNANCE

  2

Stockholder Outreach and Engagement

  2

Corporate Citizenship Through Living Progress

  4

Hewlett Packard Enterprise Board of Directors

  5

Board Composition

  5

Director Candidate Selection and Evaluation

  7

Board and Committee Meetings and Attendance

  8

Board Leadership Structure

  8

Board Structure and Committee Composition

  9

Board Risk Oversight

  13

Succession Planning

  14

Director Evaluations

  15

Limits on Director Service on Other Public Company Boards

  15

Director Independence

  15

Director Compensation and Stock Ownership Guidelines

  19

Non-Employee Director Stock Ownership Guidelines

  22

Stock Ownership Information

  23

Common Stock Ownership of Certain Beneficial Owners and Management

  23

Section 16(a) Beneficial Ownership Reporting Compliance

  25

Related Persons Transaction Policies and Procedures

  25

Governance Documents

  27

Communications with the Board

  27

PROPOSALS TO BE VOTED ON

  28

PROPOSAL NO. 1 Election of Directors

  28

PROPOSAL NO. 2 Ratification of Independent Registered Public Accounting Firm

  41

PROPOSAL NO. 3 Advisory Vote to Approve Executive Compensation

  42

PROPOSAL NO. 4 Stockholder Proposal Related to Action by Written Consent of Stockholders

  44

EXECUTIVE COMPENSATION

  49

Compensation Discussion and Analysis

  49

Executive Summary

  49

Executive Compensation Pay-for-Performance Philosophy

  51

Oversight and Authority over Executive Compensation

  52

Detailed Compensation Discussion and Analysis

  53

Process for Setting and Awarding Fiscal 2017 Executive Compensation

  54

Determination of Fiscal 2017 Executive Compensation

  55

Other Compensation-related Matters

  63

HRC Committee Report on Executive Compensation

  66

Summary Compensation Table

  67

Grants of Plan-Based Awards in Fiscal 2017

  69

Outstanding Equity Awards at 2017 Fiscal Year-End

  71

Option Exercises and Stock Vested in Fiscal 2017

  72

Fiscal 2017 Pension Benefits Table

  73

Fiscal 2017 Non-qualified Deferred Compensation Table

  74

Potential Payments Upon Termination or Change in Control

  76

EQUITY COMPENSATION PLAN INFORMATION

  80

AUDIT-RELATED MATTERS

  81

Principal Accounting Fees and Services

  81

Report of the Audit Committee of the Board of Directors

  83

OTHER MATTERS

  84

QUESTIONS AND ANSWERS

  85

Proxy Materials

  85

Voting Information

  87

Annual Meeting Information

  91

Stockholder Proposals, Director Nominations and Related Bylaw Provisions

  92

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Proxy Statement Executive Summary

The following is a summary of proposals to be voted on at the annual meeting. This is only a summary, and it may not contain all of the information that is important to you. For more complete information, please review the proxy statement as well as our 2017 Annual Report, which includes our Annual Report on Form 10-K for the fiscal year ended October 31, 2017. References to "Hewlett Packard Enterprise," "HPE," "the Company," "we," "us" or "our" refer to Hewlett Packard Enterprise Company.

On November 1, 2015, HP Inc., formerly known as Hewlett-Packard Company (referred to in this proxy statement as "HP", "HPI", "HP Inc.", "HP Co.", "Parent", or "our former parent") spun-off Hewlett Packard Enterprise Company, pursuant to a separation and distribution agreement. To effect the spin-off, HP Inc. distributed all of the shares of Hewlett Packard Enterprise common stock owned by HP Inc. to its stockholders on November 1, 2015. Holders of HP Inc. common stock received one share of Hewlett Packard Enterprise common stock for every share of HP Inc. stock held as of the record date. As a result of the spin-off, we now operate as an independent, publicly-traded company.

ANNUAL MEETING OF STOCKHOLDERS

Time and Date  

9:00 a.m., Pacific Time, on Wednesday, April 4, 2018

Place  

Online at HPE.onlineshareholdermeeting.com

Record Date  

February 5, 2018

PROPOSALS TO BE VOTED ON AND BOARD VOTING RECOMMENDATIONS

    Proposal 1

Election of Directors

The Nominating, Governance and Social Responsibility Committee has nominated 13 directors for re-election at the annual meeting to hold office until the 2019 annual meeting. Information regarding the skills and qualifications of each nominee can be found on page 28.

Recommendation: Our Board recommends a vote FOR the election to the Board of each of the 13 nominees.

          Proposal 2

Ratification of Independent Registered Public Accounting Firm

The Audit Committee has appointed, and is asking stockholders to ratify, Ernst & Young LLP ("EY") as the independent registered public accounting firm for fiscal 2018. Information regarding fees paid to and services rendered by EY can be found on page 41.

Recommendation: Our Board recommends a vote FOR the ratification of the appointment.

   
                        
    Proposal 3

Advisory Vote to Approve Executive Compensation

Our Board of Directors and HR and Compensation Committee of the Board are committed to excellence in corporate governance and to executive compensation programs that align the interests of our executives with those of our stockholders. Information regarding our programs can be found on page 42.

Recommendation: Our Board recommends a vote FOR the approval of the compensation of our named executive officers.

          Proposal 4

Stockholder Proposal Related to Action by Written Consent of Stockholders

We received a stockholder proposal seeking to have us amend HPE's Bylaws to enable stockholder action by written consent and, if properly presented, the proposal will be voted on at the annual meeting. Information can be found on page 44.

Recommendation: Our Board recommends a vote AGAINST a stockholder proposal seeking to have us amend HPE's Bylaws to enable stockholder action by written consent.

   

HEWLETT PACKARD ENTERPRISE

 

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Corporate Governance

Our Board of Directors (the "Board") is committed to excellence in corporate governance. We know that our long-standing tradition of principled, ethical governance benefits you, our stockholders, as well as our customers, employees and communities, and we have developed and continue to maintain a governance profile that aligns with industry-leading standards. We believe that the high standards set by our governance structure have had and will continue to have a direct impact on the strength of our business. The following table presents a brief summary of highlights of our governance profile, followed by more in-depth descriptions of some of the key aspects of our governance structure.

    Board Conduct and Oversight       Independence and Participation       Stockholder Rights    
 
   

Development and oversight of execution of Company strategy

Rigorous stock ownership guidelines, including a 7x base salary requirement for the CEO

Regular, conscientious risk assessment

Standards of Business Conduct, applied to all directors, executive officers and employees

Annual review of developments in best practices

Significant time devoted to succession planning and leadership development efforts

Annual evaluations of Board, committees, and individual directors

     

Independent Chair

10 of 13 director nominees are independent by NYSE standards

Executive sessions of non-management directors generally held at each Board and committee meeting

Audit, HRC, and NGSR Committees are each made up entirely of independent directors

Governance guidelines express preference for the separation of the Chair and CEO roles

Participation in one-on-one meetings with management

Expansive direct engagement with stockholders

Frequent participation at customer events

     

Proxy Access Right for eligible stockholders holding 3% or more of outstanding common stock for at least three years to nominate up to 20% of the Board

Special Meeting Right for stockholders of an aggregate of 25% of voting stock

All directors annually elected; no staggered Board

Majority voting in uncontested director elections

No "poison pill"

No supermajority voting requirements to change organizational documents

Expansive direct engagement with stockholders

   

STOCKHOLDER OUTREACH AND ENGAGEMENT

We maintain a dynamic, robust, and multi-faceted stockholder outreach program designed to provide continuous and meaningful stockholder engagement and participation across our broad base of stockholders, throughout the entire year. Rather than focusing on short term results, We maintain the goal of fostering strong stockholder relationships leading to mutual understanding of issues and approaches, ultimately giving the company insight into stockholder support as it designs and implements strategies for long-term growth.

The key elements of our stockholder outreach program are (i) the Securities Analyst Meeting, (ii) the Board Outreach Program, and (iii) the Annual Stockholders Meeting. Our comprehensive stockholder engagement program is supplemented by our year-round investor relations outreach program that includes post-earnings communications, roadshows, bus tours, one-on-one conferences, group meetings, technology webcasts, and general availability to respond to investor inquiries. The multi-faceted nature of this program allows us to

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HEWLETT PACKARD ENTERPRISE

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Corporate Governance   (continued)

maintain meaningful engagement with a broad audience including large institutional investors, smaller to mid-size institutions, pension funds, advisory firms, and individual investors.

We recognize that stockholders are the owners of the company and remain committed to stockholder outreach programs that are truly a dialogue. We use every element of the outreach program to provide stockholders with honest, candid information on relevant issues, sharing the rationale for our corporate strategy and the impact of the Board's oversight in key areas of the company, gathering stockholder views and feedback on each area, as well as on the outreach program itself.

Securities Analyst Meeting

We lauch our stockholder outreach program in the fall with our annual Securities Analyst Meeting (SAM). At SAM, our leadership team provides an update on strategy and the financial outlook, including detailed information for each business unit, for the upcoming fiscal year. Although the event itself is geared toward the analyst community, a primary purpose of SAM is to give stockholders direct insight into our business, strategy, and outlook, providing those who plan to participate in the off-season engagement an informed basis to formulate their views and questions. Accordingly, the entire event is publicly broadcast live, with the recorded videos and transcripts also available on our investor relations website following the event.

Board Outreach Program

On the heels of SAM comes a cornerstone of our stockholder outreach—our innovative Board Outreach Program. The program consists of focused, one-on-one meetings between stockholders and our directors over a three-month period that are designed to give institutional stockholders an opportunity to better understand the companies in which they invest. These meetings enable our stockholders to better fulfil their fiduciary duties toward their investors and voice any concerns they have about HPE to our directors. This season, we extended our extensive board outreach efforts to holders of nearly 47% of our stock, with holders of more than 42% of our stock electing to participate.

We maintain clear structural goals for these meetings:

    Provide direct stockholder access to the Board.

    We believe it is important for stockholders to hear directly from our Board, just as it is important for directors to hear stockholder's concerns and perspectives unfiltered. Directors participating in the meetings include the Board Chair, committee chairs, as well as other directors with whom stockholders may have a particular interest in meeting. A limited number of members of management are also present, for the primary purpose of facilitating the meetings as well as being available to answer more technical questions that may arise.

    Achieve meaningful benefits.

    In order to maximize the benefit of the engagement to both the investor and the company, we take the time to conduct extensive research to understand each institutional stockholder's voting policies and patterns, salient issues and other areas of concern, and goals of engagement. Similarly, we understand institutional governance teams work under time and resource constraints, and by inviting participants well in advance of the meeting, and providing detailed updates of the company's strategy and outlook during our Securities Analysts Meeting and other investor and analyst events, we ensure stockholder participants will have opportunity and information to prepare and engage in meaningful dialogue.

    Comprehensive discussion.

    We strive to ensure the stockholder meetings cover a comprehensive range of key topics including short- and long-term strategy, capital allocation targets, governance and board oversight, Mergers and Acquisitions activity, succession planning, and environmental and social concerns. Maintaining a disciplined approach to the discussions, and allowing adequate meeting times, ensures matters important to stockholders are not neglected in favor of addressing only current salient issues.

HEWLETT PACKARD ENTERPRISE

 

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Corporate Governance   (continued)

Virtual Stockholder Meeting

GRAPHIC

Our year-long stockholder outreach program culminates in our annual stockholder meeting, which is conducted virtually through a live webcast and online stockholder tools. We have created and implemented the virtual annual meeting format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. We believe this is the right choice for a company with a global footprint; not only bringing cost savings to the company and stockholders, but also increasing the ability to engage with all stockholders, regardless of size, resources, or physical location. We remain very sensitive to concerns regarding virtual meetings generally from investor advisory groups and other stockholder rights advocates, who have voiced concerns that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed this virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the online format allows stockholders to communicate with us in advance of, and during, the meeting so they can ask any questions of our Board or management. During the live Q&A session of the meeting, we answer questions as they come in and address those asked in advance, as time permits. We have committed to publishing and answering each question received following the meeting. In 2017, this resulted in more than 200 stockholder questions and comments communicated to, and answered by, our directors and management. Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting is made publicly available on the company's investor relations site. In additional to strong participation from individual stockholders, we have continued to receive positive support from institutional stockholders who have indicated the virtual format is beneficial and appropriate in the context of our broader direct outreach program.

We have carefully designed our outreach program to provide continuous and meaningful stockholder engagement and participation. Our committed Board of Directors and management team value these interactions and invest meaningful time and resources to ensure that they have an open line of communication with stockholders. Stockholders and other stakeholders may directly communicate with our Board by contacting: Secretary to the Board of Directors, 3000 Hanover Street, MS 1050, Palo Alto, California 94304; e-mail:  bod-hpe@hpe.com .

CORPORATE CITIZENSHIP THROUGH LIVING PROGRESS

Sustainability and corporate citizenship are core values embedded in HPE at every level. To that end, we take a thoughtful approach to our global citizenship efforts through our Living Progress program. This program is overseen by the NGSR Committee which regularly reviews, assesses, reports and provides guidance to management and the Board regarding HPE's policies and programs relating to global citizenship and the impact of HPE's operations on employees, customers, suppliers, partners and communities worldwide. Our commitment to corporate citizenship has been rewarded, earning us the distinction of Industry Mover in the 2017 Dow Jones Sustainability Index ("DJSI"). HPE holds the highest industry score globally in six DJSI sections: Climate Strategy, Human Rights, Talent Attraction and Retention, Corporate Governance, Policy Influence, and Privacy Protection. HPE also achieved the highest possible ranking from the Carbon Disclosure Project for our carbon management and disclosure, ranking in the top 4% of companies evaluated. Detailed

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Corporate Governance   (continued)

below are a few ways Living Progress creates sustainable solutions for our company, our customers, and our world.

    Our company           Our customers           Our world    
    Uncompromising stance on human rights

Sustainable, responsible supply chain

Environmentally conscious operations

          Innovating sustainable IT infrastructure

Customers engaged on sustainability efforts

          HPE Foundation disaster relief, employee donations, and community investment

HPE technology applied to solve global challenges

   

More information regarding our award-winning Living Progress plan and our recent annual reports are available at https://www.hpe.com/us/en/living-progress.html .

HEWLETT PACKARD ENTERPRISE BOARD OF DIRECTORS

Board Composition

Our Board was thoughtfully structured after a global search targeting world-class directors with the diversity of skills, experience, ethnicity, and gender resulting in exceptional leadership for HPE.

The selection criteria for our directors included:

high professional and personal ethics and values consistent with our longstanding values and standards;

broad policy-making experience in business, government, education, technology or public service;

sufficient time to devote to the Board and our company;

diversity of background and experience, including: senior leadership and operating experience in a publicly listed company; board experience in a publicly listed company; financial, industrial/technical, brand marketing or international expertise; and

experience as an investor with a commitment to enhancing stockholder value and representation of the interests across our stockholder base.

The following page includes a skills and qualifications matrix highlighting many of the key experiences and competencies our directors bring to Hewlett Packard Enterprise Company.

HEWLETT PACKARD ENTERPRISE

 

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Corporate Governance   (continued)

Hewlett Packard Enterprise Company Board of Directors
Skills and Qualifications


 


 


Daniel Ammann


Marc L.
Andreessen


Michael J.
Angelakis


Leslie A.
Brun


Pamela L.
Carter


Raymond J.
Lane


Ann M.
Livermore


Antonio F.
Neri


Raymond E.
Ozzie


Gary M.
Reiner


Patricia F.
Russo


Lip‑Bu
Tan


Margaret C.
Whitman


Mary Agnes
Wilderotter
Risk and Compliance
Experience identifying, mitigating, and managing risk in enterprise operations helps our directors effectively oversee our Enterprise Risk Management program, which is vital to customer and stockholder protection.
· · · · · · · · ·
Financial and Audit
Experience in accounting and audit functions and the ability to analyze financial statements and oversee budgets is key to supporting the Board's oversight of our financial reporting and functions.
· · · · · · · ·
Business Development and Strategy
Experience in setting and executing long-term corporate strategy is critical to the successful planning and execution of our long-term vision.
· · · · · · · · · · · · · ·
Investment
Experience in venture and investment capital underlies our capital allocation decisions and ensures that the investors' view of our business is incorporated in board discussions.
· · · · · · · · ·
Executive Level Leadership
Experience in executive positions within enterprise businesses is key to the effective oversight of management.
· · · · · · · · · · · · · ·
Business Ethics
Experience in and continued dedication to the highest levels of ethics and integrity within the enterprise context underpins the holistic commitment of HPE to operate with integrity.
· · · · · · · · · · · · · ·
Extensive Industry Leadership
Experience at the executive level in the technology sector enhances our Board's ability to oversee management in a constantly changing industry.
· · · · · · · · · · · · ·
Legal, Regulatory and Public Policy
Experience in setting and analyzing public policy supports Board oversight of our business in heavily regulated sectors.
· · · ·
Corporate Governance
Experience on other public company boards provides insight into developing practices consistent with our commitment to excellence in corporate governance.
· · · · · · · · · · · ·
International
Experience operating in a global context by managing international enterprises, residence abroad, and studying other cultures enables oversight of how HPE navigates a global marketplace.
· · · · · · · ·
Cyber Security
Experience in understanding the cyber security threat landscape is increasingly important in our own business and that of our customers.
· · · · · · · ·

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Corporate Governance   (continued)

Director Candidate Selection and Evaluation

Stockholder Recommendations

The policy of the NGSR Committee is to consider properly submitted stockholder recommendations of candidates for membership on the Board as described below under " Identifying and Evaluating Candidates for Directors ." In evaluating such recommendations, the NGSR Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth on page 28 under " Proposals to be Voted on Proposal No. 1 Election of Directors Director Nominee Experience and Qualifications ." Any stockholder recommendations submitted for consideration by the NGSR Committee should include verification of the stockholder status of the person submitting the recommendation and the recommended candidate's name and qualifications for Board membership and should be addressed to:

Corporate Secretary
Hewlett Packard Enterprise Company
3000 Hanover Street MS 1050
Palo Alto, California 94304
Email:
bod-hpe@hpe.com

Stockholder Nominations

In addition, our Bylaws permit stockholders to nominate directors for consideration at an annual stockholder meeting and, under certain circumstances, to include their nominees in the Hewlett Packard Enterprise proxy statement. For a description of the process for nominating directors in accordance with our Bylaws, see " Questions and Answers Stockholder Proposals, Director Nominations and Related Bylaw Provisions How may I recommend individuals to serve as directors and what are the deadlines for a director nomination? " on page 92.

Identifying and Evaluating Candidates for Directors

The NGSR Committee, in consultation with the Chair, assesses the appropriate size of the Board, as well as the alignment of director skills with company strategy, and whether any vacancies on the Board are expected due to retirement or otherwise, or whether the Board would benefit from the addition of a director with a specific skillset. The NGSR Committee also considers board refreshment in its annual evaluation of the Board. We balance our respect for historical knowledge of our company with our regard for fresh perspectives by considering director tenure on a case-by-case basis, rather than imposing arbitrary term limits.

The NGSR Committee uses a variety of methods for identifying and evaluating nominees for director. Candidates may come to the attention of the NGSR Committee through current Board members, professional search firms, stockholders or other persons. Identified candidates are evaluated at regular or special meetings of the NGSR Committee and may be considered at any point during the year. As described above, the NGSR Committee considers properly submitted stockholder recommendations of candidates for the Board to be included in our proxy statement. Following verification of the stockholder status of individuals proposing candidates, recommendations are considered collectively by the NGSR Committee at a regularly scheduled meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to the NGSR Committee. The NGSR Committee also reviews materials provided by professional search firms and other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, the NGSR Committee seeks to achieve a balance of knowledge, experience and capability on the Board that will enable the Board to effectively oversee the business. The NGSR Committee evaluates nominees recommended by stockholders using the same criteria as it uses to evaluate all other candidates.

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Corporate Governance   (continued)

We engage a professional search firm on an ongoing basis to identify and assist the NGSR Committee in identifying, evaluating and conducting due diligence on potential director nominees. In each instance, the NGSR Committee considers the totality of the circumstances of each individual candidate.

Board and Committee Meetings and Attendance

Our Board has regularly scheduled meetings and an annual meeting of stockholders each year, in addition to special meetings scheduled as appropriate. During fiscal 2017, our Board held 13 meetings. In addition, our five committees held a total of 32 meetings, with the Audit Committee meeting nine times, the HRC Committee meeting five times, and the NGSR Committee meeting three times. Each of the five regularly scheduled Board meetings held during fiscal 2017 included an executive session, consisting of only non-management directors, and one included a private session consisting of only independent directors. The Board expects that its members will rigorously prepare for, attend and participate in all Board and applicable Committee meetings and each annual meeting of stockholders. When directors are unable to attend a meeting, it is our practice to provide all meeting materials to the director, and the Chair or the relevant committee chair consults with and apprises the director of the meeting's subject matter. In addition to participation at Board and committee meetings, our directors discharged their responsibilities throughout the year through frequent one-on-one meetings and other communications with our Chair, our Chief Executive Officer ("CEO") and other members of senior management regarding matters of interest.

Each of our incumbent directors who was a director during fiscal 2017 attended at least 75% of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board of Directors on which each such director served, during the period for which each such director served.

Directors are also encouraged to attend our annual meeting of stockholders. Last year, each of our directors was in attendance.

Board Leadership Structure

The Board is currently led by an independent director, Patricia F. Russo, Chair of the Board. Our Bylaws and Corporate Governance Guidelines permit the roles of Chair of the Board and Chief Executive Officer to be filled by the same or different individuals, although the Corporate Governance Guidelines express a preference for the separation of the two roles. This flexibility allows the Board to determine whether the two roles should be combined or separated based upon our needs and the Board's assessment of its leadership from time to time. The Board believes that our stockholders are best served at this time by having an independent director serve as Chair of the Board. Our Board believes this leadership structure effectively allocates authority, responsibility, and oversight between management and the independent members of our Board. It gives primary responsibility for the operational leadership and strategic direction of the Company to our CEO, while the Chair facilitates our Board's independent oversight of management, promotes communication between senior management and our Board about issues such as management development and succession planning, executive compensation, and company performance, engages with stockholders, and leads our Board's consideration of key governance matters.

The Chair  

presides at all meetings of the Board, including executive sessions of the independent directors,

oversees the planning of the annual Board calendar, schedules and sets the agenda for meetings of the Board in consultation with the other directors, and leads the discussion at such meetings,

chairs the annual meeting of stockholders,

is available in appropriate circumstances to speak on behalf of the Board, and

performs such other functions and responsibilities as set forth in our Corporate Governance Guidelines or as requested by the Board from time to time.

 

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Corporate Governance   (continued)

Board Structure and Committee Composition

As of the date of this proxy statement, the Board has 14 directors and the following five standing committees: (1) Audit Committee; (2) Finance and Investment Committee; (3) HR and Compensation Committee (the "HRC Committee" or "HR and Compensation Committee"); (4) Nominating, Governance and Social Responsibility Committee (the "NGSR Committee"); and (5) Technology Committee. The current committee membership and the function of each of these standing committees are described below. Each of the standing committees operates under a written charter adopted by the Board. All of the committee charters are available on our website at investors.hpe.com/governance#committee-charters . Each committee reviews and reassesses the adequacy of their charter annually, conducts annual evaluations of their performance with respect to their duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committees' activities. Additionally, the Board and each of the committees has the authority to retain, terminate and receive appropriate funding for outside advisors as the Board and/or each committee deems necessary.

The composition of each standing committee is as follows:

Independent Directors
Audit
FIC
HRC
NGSRC
Tech
Daniel Ammann       GRAPHIC            
Marc L. Andreessen       GRAPHIC           GRAPHIC
Michael J. Angelakis   GRAPHIC   GRAPHIC            
Leslie A. Brun   GRAPHIC       GRAPHIC        
Pamela L. Carter   GRAPHIC       GRAPHIC        
Raymond J. Lane       GRAPHIC           GRAPHIC
Raymond E. Ozzie       GRAPHIC           GRAPHIC
Gary M. Reiner       GRAPHIC       GRAPHIC   GRAPHIC
Patricia F. Russo               GRAPHIC    
Lip-Bu Tan               GRAPHIC   GRAPHIC
Mary Agnes Wilderotter   GRAPHIC       GRAPHIC        
Other Directors
                 
Ann M. Livermore       GRAPHIC            
Antonio F. Neri (1)                    
Margaret C. Whitman       GRAPHIC           GRAPHIC
(1)
As sitting CEO, Antonio Neri facilitates the satisfaction of each committee's responsibilities and guides management's support to the board.

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Corporate Governance   (continued)
Audit Committee
For financial reporting process and audit
   

Members

 

Skills and Experiences

Michael J. Angelakis

  Financial Statement Review

Leslie A. Brun

  Audit

Pamela L. Carter

  Compliance

Mary Agnes Wilderotter, Chair

  Risk Management

Risk Oversight Role and Primary Responsibilities:

    Audit

Oversee the performance of our internal audit function

Review the qualifications, independence, work product and performance of the independent registered public accounting firm and evaluate and determine the firm's compensation

          Compliance Processes

Oversee our compliance with legal and regulatory requirements

Conduct investigations into complaints concerning federal securities laws

Review results of significant investigations, and management's response to investigations

   
 
                        
    Financial Reporting

Oversee financial reporting process

Review and discuss earnings press releases

Review the audit and integrity of our financial statements

          Risk Management

Review identified risks to HPE

Review risk assessment and management policies

   
 

Required Qualifications:

Each director on the Audit Committee must be independent within the meaning of the New York Stock Exchange ("NYSE") standards of independence for directors and audit committee members, and must meet applicable NYSE financial literacy requirements, each as the Board determines. The Board determined that each of the Audit Committee members is independent within the meaning of applicable laws and listing standards. Finally, at least one director on the Audit Committee must be an "audit committee financial expert," as determined by the Board in accordance with SEC rules. The Board determined that each of Ms. Wilderotter, Chair of the Audit Committee, Mr. Angelakis and Mr. Brun, is an audit committee financial expert.

Finance and Investment Committee
For significant treasury matters, strategic transactions, and capital allocation reviews
   

Members

 

Skills and Experiences

Daniel Ammann

  Capital Structure and Strategy

Marc L. Andreessen

  Captive Finance

Michael J. Angelakis, Chair

  Venture Capital

Raymond J. Lane

  Enterprise Information Technology

Ann M. Livermore

       

Raymond E. Ozzie

       

Gary M. Reiner

       

Margaret C. Whitman

       

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Corporate Governance   (continued)

Risk Oversight Role and Primary Responsibilities:

    Finance           Investment           Mergers & Acquisitions    

 

 

Oversee significant treasury matters such as capital structure and allocation strategy, global liquidity, borrowings, currency exposure, dividend policy, share issuances and repurchases, and capital spending

Oversee our loans and loan guarantees of third parties

Review capitalization of our Financial Services business

         

Review derivative policy

Review and approve certain swaps and other derivative transactions

Oversee fixed income investments

         

Evaluate and revise our mergers and acquisitions approval policies

Assist the Board in evaluating investment, acquisition, certain long-term commercial, joint venture and divestiture transactions

Evaluate the execution, financial results and integration of completed transactions

   

Required Qualifications:

A majority of the directors on the Finance and Investment Committee must be independent within the meaning of applicable laws and listing standards, as the Board determines.

HR and Compensation Committee
For executive compensation structure and strategy
   

Members

 

Skills and Experiences

 
 

Leslie A. Brun, Chair

  Operations

Pamela L. Carter

  Legal and Regulatory Compliance

Mary Agnes Wilderotter

  Executive Compensation

Risk Oversight Role and Primary Responsibilities:

    Compensation Structure & Strategy

Discharge the Board's responsibilities relating to the compensation of our executives and directors

Annually review and evaluate management's performance and compensation

Oversee and provide risk management of our compensation structure, including our equity and benefits programs

Review and discuss the Compensation Discussion and Analysis and additional disclosures in compliance with SEC or listing standards

          Human Resources &
Workforce Management

Generally oversee our human resources and workforce management programs

   

Required Qualifications:

Each director on the HRC Committee must be independent within the meaning of applicable laws and listing standards, as the Board determines. In addition, members of the HRC Committee must qualify as "non-employee directors" for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and as "outside directors" for purposes of Section 162(m) of the Internal Revenue Code. The

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Corporate Governance   (continued)

Board determined that each of Mr. Brun, Chair of the HRC Committee, and the HRC Committee members, Ms. Carter, and Ms. Wilderotter, is independent within the meaning of the NYSE standards of independence for directors and compensation committee members, and qualifies as "non-employee directors" and "outside directors" for purposes of Rule 16b-3 under the 1934 Act and Section 162(m) of the Internal Revenue Code, respectively.

Compensation Committee Interlocks and Insider Participation:

None of our executive officers served as a member of the compensation committee of another company, or as a director of another company, whose executive officers also served on our compensation committee or as one of our directors.

Nominating, Governance and Social Responsibility Committee
For board evaluation, director nomination, and corporate citizenship
   

Members

 

Skills and Experiences

Gary M. Reiner, Chair

  Corporate Governance

Patricia F. Russo

  Operations

Lip-Bu Tan

  Executive and Director Level Leadership Experience

Risk Oversight Role and Primary Responsibilities:

    Corporate Governance           Board Composition    

 

 

Develop and review regularly our Corporate Governance Guidelines

Identify and monitor social, political, and environmental trends and provide guidance relating to public policy matters and global citizenship

Review proposed changes to our Certificate of Incorporation, Bylaws and Board committee charters

Ensure proper attention is given and effective responses are made to stockholder concerns

Design and execute annual evaluations of the Board, committees, and individual directors

Oversee the HRC Committee's evaluation of senior management

         

Identify, recruit and recommend candidates to be nominated for election as directors

Develop and recommend Board criteria for identifying director candidates

Oversee the organization and leadership structure of the Board to discharge its duties and responsibilities properly and efficiently

Evaluate director independence and financial literacy and expertise

   

Required Qualifications:

Each director on the NGSR Committee must be independent within the meaning of applicable laws and listing standards, as the Board determines. The Board determined that each of the NGSR Committee members is independent within the meaning of applicable laws and listing standards.

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Corporate Governance   (continued)

Technology Committee
For technology and intellectual property portfolio strategy
   

Members

 

Skills and Experiences

 
 

Marc L. Andreessen

       

Raymond J. Lane

  Entrepreneurship    

Raymond E. Ozzie, Chair

  Research and Development    

Gary M. Reiner

  Venture Capital    

Lip-Bu Tan

  Enterprise Information Technology    

Margaret C. Whitman

       

Risk Oversight Role and Primary Responsibilities:

Impact of investment and other actions upon the strength of our intellectual property and
technology strategies

Make recommendations to the Board concerning our technology strategies

Assess the health and oversee the execution of our technology strategies

Assess the scope and quality of our intellectual property

Provide guidance on technology as it may pertain to market entry and exit, investments, mergers, acquisitions and divestitures, research and development investments, and key competitor and partnership strategies

Required Qualifications:

Each director on the Technology Committee will have such qualifications as the Board determines.

Board Risk Oversight

Given today's ever-changing economic, social, and political landscape, structured, conscientious risk management is more important than ever for every public company. Our Board, with the assistance of its committees as discussed below, reviews and oversees our enterprise risk management ("ERM") program, which is an enterprise-wide program designed to enable effective and efficient identification of, and management visibility into, critical enterprise risks and to facilitate the incorporation of risk considerations into decision making. The ERM program was established to clearly define risk management roles and responsibilities, bring together senior management to discuss risk, promote visibility and constructive dialogue around risk at the senior management and Board levels and facilitate appropriate risk response strategies.

GRAPHIC

Under the ERM program, management develops a holistic portfolio of our enterprise risks by facilitating business and function risk assessments, performing targeted risk assessments and incorporating information regarding specific categories of risk gathered from various internal Hewlett Packard Enterprise organizations. Management then develops risk response plans for risks categorized as needing management focus and response and monitors other identified risk focus areas. Management provides reports on the risk portfolio and risk response efforts to senior management and to the Audit Committee.

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Corporate Governance   (continued)

The Board oversees management's implementation of the ERM program, including reviewing our enterprise risk portfolio and evaluating management's approach to addressing identified risks. Various Board committees also have responsibilities for oversight of risk management that supplement the ERM program. For example, the HRC Committee considers the risks associated with our compensation policies and practices as discussed below, the Finance and Investment Committee is responsible for overseeing financial risks, and the NGSR Committee oversees risks associated with our governance structure and processes. This structure allows specialized attention to and oversight over key risk areas by aligning our carefully crafted committees with risk oversight in their individual areas of expertise. The Board is kept informed of its committees' risk oversight and related activities primarily through reports of the committee chairs to the full Board. In addition, the Audit Committee escalates issues relating to risk oversight to the full Board as appropriate to keep the Board appropriately informed of developments that could affect our risk profile or other aspects of our business. The Board also considers specific risk topics in connection with strategic planning and other matters.

Compensation Risk Assessment

During fiscal 2017, we undertook an annual review of our material compensation processes, policies and programs for all employees and determined that our compensation programs and practices are not reasonably likely to have material adverse effect on Hewlett Packard Enterprise. In conducting this assessment, we reviewed our compensation risk infrastructure, including our material plans, our risk control systems and governance structure, the design and oversight of our compensation programs and the developments, improvements and other changes made to those programs, and we presented a summary of the findings to the HRC Committee. Overall, we believe that our programs contain an appropriate balance of fixed and variable features and short- and long-term incentives, as well as complementary metrics and reasonable, performance-based goals with linear payout curves under most plans. We believe that these factors, combined with effective Board and management oversight, operate to mitigate risk and reduce the likelihood of employees engaging in excessive risk-taking behavior with respect to the compensation-related aspects of their jobs.

Succession Planning

Among the HRC Committee's responsibilities described in its charter is to oversee succession planning and leadership development. On an ongoing basis, the Board reviews succession plans for the CEO and other senior executive positions. These reviews occur with input from the CEO and EVP, Human Resources and the Board also reviews succession plans in executive session, with no members of management present. Succession reviews for key executive roles, including the CEO position, consist of an assessment of internal candidates as well as the review of external talent as identified by an executive search firm employed by the Board.

In its deliberations around CEO succession that led to the appointment of Antonio Neri, the Board identified several critical experiences, leadership attributes and business performance criteria essential for a successful CEO at Hewlett Packard Enterprise. The Board was assisted in the process by engaging a leading executive assessment firm over the course of several months. In addition, a separate executive search firm provided potential external candidates for consideration based on the success criteria articulated by the Board. These criteria and the assessment of both internal and external candidates led to a unanimous determination by the Board to promote an internal candidate, Antonio Neri into the role. The Board determined that Mr. Neri had the deep technical depth, strong customer and partner relationships, trusted leadership attributes and track record of superior business performance to execute and realize the strategic vision of HPE.

In fiscal 2017, with the spin-off and merger of our Enterprise Services and Software segments, we engaged in two robust organization design and talent selection processes to staff both companies, through which management reviewed selection recommendations below the senior leadership level, considering skill sets, performance, potential and diversity. Where the organizational changes altered our pre-existing succession plans, new successors were identified and relevant talent development plans were implemented.

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Corporate Governance   (continued)

Director Evaluations

Our Board maintains a regular and robust evaluation process designed to continually assess its effectiveness. The Board annually conducts a formal evaluation of the Board, each committee, and individual directors. The process involves the NGSR Committee, working with the Board Chair, designing each year's evaluation process, selecting from a variety of elements including external evaluators, written evaluations, and group discussions, based on the current dynamics of the Board and of the Company as well as the method of previous annual evaluations. This year, evaluations were completed through individual interviews conducted by the Board Chair, and were intended to gauge effectiveness in board composition and conduct, meeting structure, materials, committee composition and effectiveness; strategic and succession planning; culture and exercise of oversight as well as continued education and access to management.

Limits on Director Service on Other Public Company Boards

We have a highly effective and engaged Board, and we believe that our directors' outside directorships enable them to contribute valuable knowledge and experience to the HPE Board. Nonetheless, the Board is sensitive to the external obligations of its directors and the potential for overboarding to compromise the ability of these directors to effectively serve on the Board. HPE's Corporate Governance Guidelines limit each director's service on other boards of public companies to a number that permits them, given their individual circumstances, to perform responsibly all director duties and, in all events, this service may not exceed four other public company boards. Further, the ability of each director to devote sufficient time and attention to director duties is expressly considered as part of the annual board self-evaluation process, which aims to evaluate the effectiveness and engagement of HPE's directors, including in the context of their external commitments.

While the Board considers its directors' outside directorships during this evaluation process, the Board recognizes that this is one of many outside obligations which could potentially impair a director's capacity to dedicate sufficient time and focus to their service on the HPE Board. As such, the Board evaluates many factors when assessing the effectiveness and active involvement of each director. Such other factors include:

      The director's attendance at Board and committee meetings.

      The director's participation and level of engagement during these meetings.

      The role played by the director on the Board of HPE, as well as on his or her outside boards, including committee membership and chairmanship.

      The experience and expertise of the director, including both relevant industry experience and service on other (related) public company boards, which enables the director to serve on multiple boards effectively.

We schedule our board and committee meetings up to two years in advance, to ensure director availability and maximum participation. Directors serve for one-year terms; accordingly, there is an opportunity to evaluate annually each director's ability to serve.

Director Independence

Our Corporate Governance Guidelines provide that a substantial majority of the Board will consist of independent directors and that the Board can include no more than three directors who are not independent directors. These standards are available on our website at http://investors.hpe.com/governance/guidelines . Our director independence standards generally reflect the NYSE corporate governance listing standards. In addition, each member of the Audit Committee and the HRC Committee meets the heightened independence standards required for such committee members under the applicable listing standards.

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Corporate Governance   (continued)

Under our Corporate Governance Guidelines, a director will not be considered independent in the following circumstances:

    (1)
    The director is, or has been within the last three years, an employee of Hewlett Packard Enterprise, or an immediate family member of the director is, or has been within the last three years, an executive officer of Hewlett Packard Enterprise.

    (2)
    The director has been employed as an executive officer of Hewlett Packard Enterprise, its subsidiaries or affiliates within the last five years.

    (3)
    The director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from Hewlett Packard Enterprise, other than compensation for Board service, compensation received by a director's immediate family member for service as a non-executive employee of Hewlett Packard Enterprise, or pension or other forms of deferred compensation for prior service with Hewlett Packard Enterprise that is not contingent on continued service.

    (4)
    (A) The director or an immediate family member is a current partner of the firm that is our internal or external auditor; (B) the director is a current employee of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and who participates in the firm's audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on our audit within that time.

    (5)
    The director or an immediate family member is, or has been in the past three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or has served on that company's compensation committee.

    (6)
    The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Hewlett Packard Enterprise for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.

    (7)
    The director is affiliated with a charitable organization that receives significant contributions from Hewlett Packard Enterprise.

    (8)
    The director has a personal services contract with Hewlett Packard Enterprise or an executive officer of Hewlett Packard Enterprise.

For these purposes, an "immediate family member" includes a director's spouse, parents, step-parents, children, step-children, siblings, mother-in-law, father-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law, and any person (other than tenants or employees) who shares the director's home.

In determining independence, the Board reviews whether directors have any material relationship with Hewlett Packard Enterprise. An independent director must not have any material relationship with Hewlett Packard Enterprise, either directly or as a partner, stockholder or officer of an organization that has a relationship with Hewlett Packard Enterprise, nor any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In assessing the materiality of a director's relationship to Hewlett Packard Enterprise, the Board considers all relevant facts and circumstances, including consideration of the issues from the director's standpoint and from the perspective of the persons or organizations with which the director has an affiliation, and is guided by the standards set forth above.

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Corporate Governance   (continued)

In making its independence determinations, the Board considered transactions occurring since the beginning of fiscal 2015 between Hewlett Packard Enterprise, and/or its former parent HP Inc., as applicable, and entities associated with the independent directors or their immediate family members. The Board's independence determinations included consideration of the following transactions:

    Mr. Ammann is the President of General Motors Company. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with General Motors Company. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to General Motors Company, and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from General Motors Company, did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of General Motors Company's consolidated gross revenues.

    Mr. Angelakis is a senior advisor to the executive management committee of Comcast Corporation and until July 2015 served as Vice Chairman and Chief Financial Officer of Comcast Corporation. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Comcast Corporation. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Comcast Corporation, and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Comcast Corporation, did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Comcast Corporation's consolidated gross revenues. Mr. Angelakis is also the Chairman and Chief Executive Officer of Atairos Group, Inc. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Atairos Group, Inc. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Atairos Group, Inc., and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Atairos Group, Inc., did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Atairos Group, Inc.'s consolidated gross revenues.

    Ms. Carter served as a Vice President of Cummins Inc. until April 2015. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Cummins Inc. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Cummins Inc., and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Cummins Inc., did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Cummins Inc.'s consolidated gross revenues. Ms. Carter's husband is the sole owner of MAC, Inc. and a partner of Pinnacle, Inc. HP Inc. and/or Hewlett Packard Enterprise have each entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with MAC, Inc. and Pinnacle, Inc. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to MAC, Inc. and Pinnacle, Inc. and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from MAC, Inc. and Pinnacle, Inc. did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of consolidated gross revenues of MAC, Inc. and Pinnacle, Inc., as applicable.

    Mr. Kleinfeld served as Chairman and Chief Executive Officer of Arconic Inc., formerly Alcoa Inc. HP Inc. and/or Hewlett Packard Enterprise have each entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Arconic Inc. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Arconic Inc., and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Arconic Inc., did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Arconic Inc.'s consolidated gross revenues.

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Corporate Governance   (continued)
    Mr. Ozzie is a partner at Accel. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Accel. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Accel, and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Accel, did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Accel's consolidated gross revenues.

    Mr. Tan is the President and Chief Executive Officer of Cadence Design Systems, Inc. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Cadence Design Systems, Inc. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Cadence Design Systems, Inc., and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Cadence Design Systems, Inc., did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Cadence Design Systems, Inc.'s consolidated gross revenues.

    Mrs. Wilderotter's sister, Denise M. Morrison, is the President and Chief Executive Officer of Campbell Soup Company. Ms. Morrison also serves as a director of the Board of Campbell Soup Company. HP Inc. and/or Hewlett Packard Enterprise have entered into transactions for the purchase and/or sale of goods and services in the ordinary course of its business during the past three fiscal years with Campbell Soup Company. The amount that HP Inc. or Hewlett Packard Enterprise paid in each of the last three fiscal years to Campbell Soup Company, and the amount received in each fiscal year by HP Inc. or Hewlett Packard Enterprise from Campbell Soup Company, did not, in any of the previous three fiscal years, exceed the greater of $1 million or 2% of Campbell Soup Company's consolidated gross revenues.

    Each of Mr. Ammann, Mr. Angelakis, Mr. Brun, Ms. Carter, Mr. Lane, Ms. Livermore, Mr. Ozzie, Mr. Reiner, Ms. Russo, Mr. Tan, Ms. Whitman and Mrs. Wilderotter, or one of their immediate family members, is a non-employee director, trustee or advisory board member of another company that did business with HP Inc. or Hewlett Packard Enterprise at some time during the past three fiscal years. These business relationships were as a supplier or purchaser of goods or services in the ordinary course of business.

As a result of this review, the Board has determined the transactions and relationships described above would not interfere with the director's exercise of independent judgment in carrying out the responsibilities of a director. The Board has also determined that, with the exception of Mr. Lane, Ms. Livermore, and Ms. Whitman, each non-employee director during fiscal 2017, including Mr. Ammann, Mr. Andreessen, Mr. Angelakis, Mr. Brun, Ms. Carter, Mr. Kleinfeld, Mr. Ozzie, Mr. Reiner, Ms. Russo, Mr. Tan, Mrs. Wilderotter and each of the members of the Audit Committee, the HRC Committee and the NGSR Committee, had, and, with respect to current directors, has, no material relationship with Hewlett Packard Enterprise (either directly or as a partner, stockholder or officer of an organization that has a relationship with Hewlett Packard Enterprise) and is independent within the meaning of both our and NYSE director independence standards. The Board has determined that (i) Mr. Lane is independent within the meaning of NYSE director independence standards and will be considered independent within the meaning of our more stringent director independence standards as of April 4, 2018, (ii) Ms. Livermore is not independent under either standard because she was an employee of Hewlett Packard Enterprise through October 31, 2016 and was an executive officer of our former parent within the last five fiscal years, (iii) Mr. Neri is not independent under either standard because of his status as our current President and CEO, and (iv) Ms. Whitman is not independent because she was an executive officer of Hewlett Packard Enterprise through February 1, 2018.

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Director Compensation and Stock Ownership Guidelines

Non-employee director compensation is determined by the independent members of our Board, acting on the recommendation of the HRC Committee. On an annual basis when determining compensation, the HRC Committee considers market data for our peer group, which is the same peer group used for HPE's executive compensation benchmarking (see " Fiscal 2017 Peer Companies " in the Compensation Discussion and Analysis section) and input from Frederic W. Cook & Co., Inc. ("FW Cook"), the third-party compensation consultant retained by the HRC Committee regarding market practices for director compensation. Directors who are employees of the Company or its affiliates do not receive separate compensation for their board activities.

The HRC Committee intends to set director compensation levels at or near the market median relative to directors at companies of comparable size, industry, and scope of operations in order to ensure directors are paid competitively for their time commitment and responsibilities. Providing a competitive compensation package is important because it enables us to attract and retain highly qualified directors who are critical to our long-term success. As noted above, during fiscal 2017, FW Cook conducted a review of director compensation levels relative to our peer group. Results of their review indicated that, as a result of an increase to the median total director compensation relative to last year's study, the value of HPE's then-current program was below our peer-group median. To continue to align with HPE's practice of setting director compensation levels at or near the market median, the HRC Committee recommended, and the full Board approved, an annual increase of $40,000 delivered in the form of an increased annual equity retainer. The HRC Committee intends to continue to conduct director compensation reviews annually.

During fiscal 2017, non-employee directors were compensated for their service as shown in the chart below:

PAY COMPONENT

DIRECTOR COMPENSATION ADDITIONAL INFORMATION (1)

Annual Cash Retainer

$100,000 (2)

May elect to receive up to 100% in HPE stock (3) , which may be deferred (4)

Annual Equity Retainer

$215,000 granted in restricted stock units ("RSUs") (5)

May defer up to 100% (4)

Meeting Fees

$2,000 for each board meeting in excess of ten

$2,000 for each committee meeting in excess of ten (per committee)

Paid in cash

May elect to receive up to 100% in HPE stock (3) , which may be deferred (4)

Chairman of the Board Fee

$200,000

May elect to receive up to 100% in HPE stock (3) , which may be deferred (4)

Committee Chair Fees

Lead independent director: $35,000

Audit committee: $25,000

HRC committee: $20,000

All others: $15,000

May elect to receive up to 100% in HPE stock (3) , which may be deferred (4)

Stock Ownership Guidelines

5x annual cash retainer (i.e., $500,000)

Shares held by the director, directly or indirectly, and deferred vested RSUs are included in the stock ownership calculation

Must be met within five years of election to the Board

(1)
For purposes of determining director compensation, we use a compensation year that generally commences with the month in which the Annual Stockholders' Meeting is held, and ends one day prior to the following year's Annual Stockholder Meeting date. However, this does not coincide with our November through October fiscal year. Therefore, the pay components for the director compensation program for fiscal 2017 reflect program guidelines during both the 2016 and 2017 board years. The 2016 board year began in March 2016 and ended March 2017. The 2017 board year began in March 2017 and will continue until April 2018.
(2)
Annual cash retainer is paid in quarterly installments.
(3)
Annual cash retainer and chairman or committee chair fees received in shares of HPE stock in lieu of cash, are delivered quarterly in four equal grants. Meeting fees received in shares of HPE stock are delivered at the end of the board year.
(4)
Deferral elections are made in December, and effective for the following calendar year. For calendar year 2017, directors were permitted to elect to defer all or a portion of any compensation received in the form of RSUs or shares of HPE stock.
(5)
RSUs generally vest on the earlier of the date of the Annual Stockholder Meeting in the following year, or after one year from the date of grant. Directors receive dividend equivalent units with respect to RSUs.

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Non-employee directors are reimbursed for their expenses in connection with attending board meetings (including expenses related to spouses when spouses are invited to attend board events), and non-employee directors may use company aircraft for travel to and from board meetings and other company events, provided that the aircraft are not otherwise needed for direct business-related activities.

Fiscal 2017 Director Compensation

The following table provides information regarding compensation for directors who served during fiscal 2017:

Name





Fees Earned or
Paid in Cash (1)
($)





Stock Awards (2) (3) (4)
($)





All Other
Compensation
($)




Total
($)
 

Patricia F. Russo

  174,667   348,449     523,116  

Daniel Ammann

  108,000   215,116     323,116  

Marc L. Andreessen

  5,556   317,560     323,116  

Michael J. Angelakis

  125,000   215,116     340,116  

Leslie A. Brun

  120,000   225,116     345,116  

Pamela L. Carter

  110,000   215,116     325,116  

Klaus Kleinfeld

  19,667   249,851     269,518  

Raymond J. Lane

    327,116     327,116  

Ann M. Livermore

  109,543   215,116     324,659  

Raymond E. Ozzie

  123,000   215,116     338,116  

Gary M. Reiner

    340,116     340,116  

Lip-Bu Tan

    321,116     321,116  

Margaret C. Whitman (5)

         

Mary Agnes Wilderotter

  133,000   215,116     348,116  
(1)
Cash amounts included in the table above represent the cash portion of the annual retainers, committee chair fees, lead independent director fees, if applicable, chairman of the board fees, and additional meeting fees earned with respect to service during fiscal 2017. See "Additional Information about Fees Earned or Paid in Cash in Fiscal 2017" below. Any amounts elected to be received as HPE stock in lieu of cash are reflected in the Stock Awards column.
(2)
The amounts in this column reflect the grant date fair value of the annual equity retainer in the amount of $215,116, granted in the form of RSUs in fiscal 2017, as well as the following compensation voluntarily elected to be received in shares of HPE stock in lieu of cash during fiscal 2017: Ms. Russo received $133,293, Mr. Andreessen received $102,417, Mr. Brun received $9,997, Mr. Kleinfeld received $34,707, Mr. Lane received $111,969, Mr. Reiner received $124,944, and Mr. Tan received $105,974 in shares of HPE stock. The number of shares of HPE stock granted in lieu of cash is determined using the closing stock price on the last day of the board quarter (rounded down to the nearest share). All or a portion of the stock awards may have been deferred based on the director's compensation election.
(3)
Represents the grant date fair value of the annual equity retainer granted in fiscal 2017, calculated in accordance with applicable accounting standards relating to share-based payment awards. For awards of RSUs, that amount is calculated by multiplying the closing price of HPE's stock on the date of grant by the number of units awarded. For information on the assumptions used to calculate the value of the stock awards, refer to Note 7 to our "Consolidated and Combined Financial Statements" in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017, as filed with the SEC on December 15, 2017. See " Additional Information about Non-Employee Director Equity Awards " below.
(4)
Mr. Kleinfeld forfeited his full unvested RSU equity retainer upon resignation from the Board effective April 24, 2017.
(5)
Ms. Whitman served as CEO of HPE throughout fiscal 2017. Accordingly, she did not receive any compensation for her board service. Please see the " Executive Compensation " section for details regarding Ms. Whitman's fiscal 2017 compensation.

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Additional Information about Fees Earned or Paid in Cash in Fiscal 2017

The following table provides additional information regarding fees earned or paid in cash to non-employee directors in fiscal 2017:

Name





Annual
Retainers (1)
($)







Committee
Chair/ Chairman
Fees (2)
($)







Additional
Meeting Fees (3)
($)




Total (4)
($)
 

Patricia F. Russo

  55,556   111,111   8,000   174,667  

Daniel Ammann

  100,000     8,000   108,000  

Marc L. Andreessen

  5,556       5,556  

Michael J. Angelakis

  100,000   15,000   10,000   125,000  

Leslie A. Brun

  100,000   20,000     120,000  

Pamela L. Carter

  100,000     10,000   110,000  

Klaus Kleinfeld

  16,667     3,000   19,667  

Raymond J. Lane

         

Ann M. Livermore

  99,543     10,000   109,543  

Raymond E. Ozzie

  100,000   15,000   8,000   123,000  

Gary M. Reiner

         

Lip-Bu Tan

         

Margaret C. Whitman (5)

         

Mary Agnes Wilderotter

  100,000   25,000   8,000   133,000  
(1)
The dollar amounts shown include annual cash retainers earned during fiscal 2017. This includes amounts earned for the last four months of the 2016 board compensation year, and the first eight months of the 2017 board compensation year. The amount reflected for Mr. Kleinfeld is prorated due to his resignation from the Board effective April 24, 2017. Ms. Livermore became a non-employee director effective November 1, 2016 (mid-third quarter of board year 2016), and therefore her quarterly cash retainer was prorated.
(2)
Committee chair fees are calculated based on service during each board compensation year. The dollar amounts shown include such fees earned in the last four months of the 2016 board compensation year, and the first eight months of the 2017 board compensation year.
(3)
Additional meeting fees are calculated based on the number of designated board meetings and committee meetings attended during each board compensation year. The dollar amounts shown include additional meeting fees earned in fiscal 2017 for meetings attended during the 2016 board compensation year. As of the end of fiscal 2017, no additional meeting fees for meetings attended during the first eight months of the 2017 board compensation year had been earned.
(4)
Total excludes compensation voluntarily elected to be received in shares of HPE stock in lieu of cash during fiscal 2017 as described in footnote three in the "Fiscal 2017 Director Compensation" table above.
(5)
Ms. Whitman served as CEO of HPE throughout fiscal 2017. Accordingly, she did not receive any compensation for her board service. Please see the " Executive Compensation " section for details regarding Ms. Whitman's fiscal 2017 compensation.

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Corporate Governance   (continued)

Additional Information about Non-Employee Director Equity Awards

The following table provides additional information regarding non-employee director equity awards, including the stock awards made to non-employee directors during fiscal 2017, the grant date fair value of each of those awards, and the number of stock awards and option awards outstanding as of the end of fiscal 2017:

Name








Stock
Awards
Granted
During
Fiscal 2017 (1)
(#)















Grant Date
Fair Value of
Stock
Awards
Granted
During
Fiscal
2017 (2) (3)
($)















Stock
Awards
Outstanding
at Fiscal
Year End (1) (4)
(#)









Option Awards
Outstanding at
Fiscal Year End (1)
(#)
 

Patricia F. Russo

  23,034   348,449   102,768    

Daniel Ammann

  15,149   215,116   15,274    

Marc L. Andreessen

  21,095   317,560   175,380    

Michael J. Angelakis

  15,149   215,116   15,274    

Leslie A. Brun

  15,700   225,116   15,274    

Pamela L. Carter

  15,149   215,116   32,729    

Klaus Kleinfeld

  16,837   249,851     59,197  

Raymond J. Lane

  21,549   327,116   15,274   605,339  

Ann M. Livermore

  15,149   215,116   15,274    

Raymond E. Ozzie

  15,149   215,116   15,274    

Gary M. Reiner

  22,298   340,116   15,274   314,423  

Lip-Bu Tan

  21,218   321,116   15,274    

Margaret C. Whitman (5)

         

Mary Agnes Wilderotter

  15,149   215,116   15,274    
(1)
In connection with both the Enterprise Services and Software spin-merge transactions, outstanding HPE equity awards were converted using ratios that preserved the intrinsic value of the awards as of the conversion dates.
(2)
Represents the grant date fair value of stock awards granted in fiscal 2017 calculated in accordance with applicable accounting standards. For awards of RSUs, that number is calculated by multiplying the closing price of HPE's stock on the date of grant by the number of units awarded. For information on the assumptions used to calculate the fair value of the awards, refer to Note 7 to our "Consolidated and Combined Financial Statements" in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017, as filed with the SEC on December 15, 2017.
(3)
Mr. Kleinfeld forfeited his full unvested RSU equity retainer upon resignation from the Board effective April 24, 2017.
(4)
Includes dividend equivalent units accrued with respect to outstanding awards of RSUs during fiscal 2017.
(5)
Ms. Whitman served as CEO of HPE throughout fiscal 2017. Accordingly, she did not receive any compensation for her board service. Please see the " Executive Compensation " section for details regarding Ms. Whitman's fiscal 2017 compensation.

Non-employee Director Stock Ownership Guidelines

Under our stock ownership guidelines, non-employee directors are required to accumulate, within five years of their election to the Board, shares of Hewlett Packard Enterprise stock equal in value to at least five times the amount of their annual cash retainer. Service on the HP Co. Board of Directors immediately prior to the separation of HPE from HP Co. on November 1, 2015, is recognized for purposes of such five-year period. Shares counted toward these guidelines include any shares held by the director directly or indirectly, including deferred vested awards.

All non-employee directors with more than five years of service have met our stock ownership guidelines and all non-employee directors with less than five years of service have either met, or are on track to meet, our stock ownership guidelines within the required time based on the trading price of HPE's stock as of October 31, 2017.

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Anti-hedging/Pledging Policy

HPE has a policy prohibiting directors from engaging in any form of hedging transaction (derivatives, equity swaps, forwards, etc.) in HPE stock, including, among other things, short sales and transactions involving publicly traded options. In addition, with limited exceptions, HPE's directors are prohibited from holding HPE stock in margin accounts and from pledging HPE stock as collateral for loans. We believe that these policies further align directors' interests with those of our stockholders.

STOCK OWNERSHIP INFORMATION

Common Stock Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of December 31, 2017 concerning beneficial ownership by:

    holders of more than 5% of Hewlett Packard Enterprise's outstanding shares of common stock;

    our directors and nominees;

    each of the named executive officers listed in the Summary Compensation Table on page 67; and

    all of our directors and executive officers as a group.

The information provided in the table is based on our records, information filed with the SEC and information provided to Hewlett Packard Enterprise, except where otherwise noted.

The number of shares beneficially owned by each entity or individual is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the entity or individual has sole or shared voting or investment power and also any shares that the entity or individual has the right to acquire as of March 1, 2018 (60 days after December 31, 2017) through the exercise of any stock options, through the vesting and settlement of RSUs payable in shares, or upon the exercise of other rights. Beneficial ownership excludes options or other rights vesting after March 1, 2018 and any RSUs vesting or settling on or before March 1, 2018 that may be payable in cash or shares at Hewlett Packard Enterprise's election. Unless otherwise indicated, each person has sole voting and investment power (or shares such powers with his or her spouse) with respect to the shares set forth in the following table.

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Beneficial Ownership Table

NAME OF BENEFICIAL OWNER
  SHARES OF
COMMON STOCK
BENEFICIALLY OWNED

  PERCENT OF
COMMON STOCK
OUTSTANDING

 
BlackRock (1)     97,991,786     6.1%  
Dodge & Cox (2)   208,800,172   12.5%  
PRIMECAP Management Co (3)     90,353,807     5.58%  
The Vanguard Group (4)   110,380,627   6.92%  
Daniel Ammann     17,627     *      
Marc L. Andreessen (5)   177,558   *      
Michael J. Angelakis (6)     51,627     *      
Leslie A. Brun   18,619   *      
Pamela L. Carter (7)     21,583     *      
Raymond J. Lane (8)   789,662   *      
Ann M. Livermore (9)     74,932     *      
Raymond E. Ozzie   32,941   *      
Gary M. Reiner (10)     367,952     *      
Patricia F. Russo (11)   105,500   *      
Lip-Bu Tan     27,620     *      
Margaret C. Whitman (12)   11,521,724   *      
Mary A. Wilderotter     13,499     *      
Henry Gomez (13)   899,263   *      
Christopher P. Hsu (14)     212,663     *      
Antonio F. Neri (15)   1,815,715   *      
John F. Schultz (16)     971,564     *      
Timothy C. Stonesifer (17)   865,403   *      
All current executive officers and directors as a group (20 persons) (18)     18,801,030     *      
*
Represents holdings of less than 1% based on 1,587,697,131 outstanding shares of common stock as of December 29, 2017.

(1)
Based on the most recently available Schedule 13G/A filed with the SEC on January 25, 2018 by BlackRock, Inc. According to its Schedule 13G/A, BlackRock, Inc. reported having sole voting power over 83,597,297 shares, shared voting power over no shares, sole dispositive power over 97,991,787 shares and shared dispositive power over no shares beneficially owned. The Schedule 13G/A contained information as of December 31, 2017 and may not reflect current holdings of HPE's stock. The address for BlackRock, Inc. is 55 East 52 nd  Street, New York, New York 10055.

(2)
Based on the most recently available Schedule 13G/A filed with the SEC on March 20, 2017 by Dodge & Cox. According to its Schedule 13G/A, Dodge & Cox reported having sole voting power over 200,778,540 shares, shared voting power over no shares, sole dispositive power over 208,800,172 shares and shared dispositive power over no shares. The securities reported on the Schedule 13G/A are beneficially owned by clients of Dodge & Cox, which clients may include investment companies registered under the Investment Company Act of 1940 and other managed accounts, and which clients have the right to receive or the power to direct the receipt of dividends from, and the proceeds from the sale of, HPE's stock. The Schedule 13G/A contained information as of December 31, 2016 and may not reflect current holdings of HPE's stock. The address for Dodge & Cox is Dodge & Cox, 555 California Street, 40th Floor, San Francisco, California 94104.

(3)
Based on the most recently available Schedule 13G filed with the SEC on October 6, 2017 by PRIMECAP Management Company ("PRIMECAP"). According to its Schedule 13G, PRIMECAP reported having sole voting power over 31,537,461 shares, shared voting power over no shares, sole dispositive power over 90,353,807 shares and shared dispositive power over no shares beneficially owned. The Schedule 13G contained information as of September 30, 2017 and may not reflect current holdings of HPE's stock. The address for PRIMECAP is PRIMECAP Management Company, 177 E. Colorado Blvd., 11th Floor, Pasadena, CA 91105.

(4)
Based on the most recently available Schedule 13G filed with the SEC on February 9, 2018 by The Vanguard Group, Inc. ("Vanguard"). According to its Schedule 13G/A, Vanguard reported having sole voting power over 2,265,331 shares, shared voting power over 367,082 shares, sole dispositive power over 107,809,785 shares and shared dispositive power over 2,570,842 shares.

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    The Schedule 13G/A contained information as of December 31, 2017 and may not reflect current holdings of HPE's stock. The address for Vanguard is The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355.

(5)
Includes 161,898 shares that Mr. Andreessen elected to defer receipt of until the termination of his service as a member of the Board.

(6)
Represents 51,627 shares that Mr. Angelakis holds indirectly with his spouse.

(7)
Includes 17,455 shares that Ms. Carter has elected to defer receipt of until the termination of her service as a member of the Board.

(8)
Includes 605,339 shares that Mr. Lane has the right to acquire by exercise of stock options.

(9)
Includes 61,215 shares that Ms. Livermore holds indirectly through a trust with her spouse.

(10)
Includes 314,423 shares that Mr. Reiner has the right to acquire by exercise of stock options.

(11)
Includes 90,182 shares that Ms. Russo elected to defer receipt of until the termination of her service as a member of the Board.

(12)
Includes 66 shares held by Ms. Whitman indirectly through a trust and 9,670,870 shares that Ms. Whitman has the right to acquire by exercise of stock options.

(13)
Includes 805,214 shares that Mr. Gomez has the right to acquire by exercise of stock options.

(14)
Includes 121,981 shares that Mr. Hsu has the right to acquire by exercise of stock options.

(15)
Includes 1,429,852 shares that Mr. Neri has the right to acquire by exercise of stock options.

(16)
Includes 683,210 shares that Mr. Schultz has the right to acquire by exercise of stock options.

(17)
Includes 582,575 shares that Mr. Stonesifer has the right to acquire by exercise of stock options.

(18)
Includes 14,951,246 shares that current executive officers and directors have the right to acquire.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, requires our directors, executive officers and holders of more than 10% of Hewlett Packard Enterprise's stock to file reports with the SEC regarding their ownership and changes in ownership of our securities. Based upon our examination of the copies of Forms 3, 4, and 5, and amendments thereto furnished to us and the written representations of our directors, executive officers and 10% stockholders, we believe that, during fiscal 2017, our directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements.

RELATED PERSONS TRANSACTIONS POLICIES AND PROCEDURES

We have adopted a written policy for approval of transactions between us and our directors, director nominees, executive officers, beneficial owners of more than five percent (5%) of Hewlett Packard Enterprise's stock, and their respective immediate family members where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single 12-month period and such "related persons" have or will have a direct or indirect material interest (other than solely as a result of being a director or a less than ten percent (10%) beneficial owner of another entity).

The policy provides that the NGSR Committee reviews certain transactions subject to the policy and decides whether or not to approve or ratify those transactions. In doing so, the NGSR Committee determines whether the transaction is in the best interests of Hewlett Packard Enterprise. In making that determination, the NGSR Committee takes into account, among other factors it deems appropriate:

    the extent of the related person's interest in the transaction;

    whether the transaction is on terms generally available to an unaffiliated third party under the same or similar circumstances;

    the benefits to Hewlett Packard Enterprise;

    the impact or potential impact on a director's independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, 10% stockholder or executive officer;

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    the availability of other sources for comparable products or services; and

    the terms of the transaction.

The NGSR Committee has delegated authority to the chair of the NGSR Committee to pre-approve or ratify transactions where the aggregate amount involved is expected to be less than $1 million. A summary of any new transactions pre-approved by the chair is provided to the full NGSR Committee for its review at each of the NGSR Committee's regularly scheduled meetings.

The NGSR Committee has adopted standing pre-approvals under the policy for limited transactions with related persons.

Pre-approved transactions include:

    1.
    compensation of executive officers that is excluded from reporting under SEC rules where the HRC Committee approved (or recommended that the Board approve) such compensation;

    2.
    director compensation;

    3.
    transactions with another company with a value that does not exceed the greater of $1 million or 2% of the other company's annual revenues, where the related person has an interest only as an employee (other than executive officer), director or beneficial holder of less than 10% of the other company's shares;

    4.
    contributions to a charity in an amount that does not exceed $1 million or 2% of the charity's annual receipts, where the related person has an interest only as an employee (other than executive officer) or director; and

    5.
    transactions where all stockholders receive proportional benefits.

A summary of new transactions covered by the standing pre-approvals described in paragraphs 3 and 4 above is provided to the NGSR Committee for its review in connection with that committee's regularly scheduled meetings.

Fiscal 2017 Related Person Transactions

We enter into commercial transactions with many entities for which our executive officers or directors serve as directors and/or executive officers in the ordinary course of our business. All of those transactions were pre-approved transactions as defined above or were approved or ratified by the NGSR Committee or our Former Parent's NGSR Committee. Hewlett Packard Enterprise considers all pre-approved or ratified transactions to have been at arm's-length and does not believe that any of our executive officers or directors had a material direct or indirect interest in any of such commercial transactions. In addition, during a portion of fiscal 2017, Mr. Lane's daughter, Kristi Rawlinson, served as a non-executive employee of Hewlett Packard Enterprise. Prior to becoming an employee in 2013, Ms. Rawlinson previously served as a consultant to ArcSight Inc. and, subsequently, HP Inc. (and thereafter HPE), following its acquisition of ArcSight. Following the sale of HPE's Software business to Micro Focus in September 2017, Ms. Rawlinson joined Micro Focus and her employment with HPE terminated. The amount received by Ms. Rawlinson in her role at Hewlett Packard Enterprise totaled approximately $142,284 in fiscal 2017.

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Corporate Governance   (continued)

GOVERNANCE DOCUMENTS

We maintain a code of business conduct and ethics for directors, officers and employees known as our Standards of Business Conduct. We also have adopted Corporate Governance Guidelines, which, in conjunction with our Certificate of Incorporation, Bylaws and respective charters of the Board committees, form the framework for our governance. All of these documents are available at investors.hpe.com/governance for review, downloading and printing. We will post on this website any amendments to the Standards of Business Conduct or waivers of the Standards of Business Conduct for directors and executive officers. Stockholders may request free printed copies of our Certificate of Incorporation, Bylaws, Standards of Business Conduct, Corporate Governance Guidelines and charters of the committees of the Board by contacting: Hewlett Packard Enterprise Company, Attention: Investor Relations, 3000 Hanover Street, Palo Alto, California 94304, www.investors.hpe.com/ .

COMMUNICATIONS WITH THE BOARD

Individuals may communicate with the Board by contacting: Secretary to the Board of Directors, 3000 Hanover Street, MS 1050, Palo Alto, California 94304, e-mail: bod-hpe@hpe.com .

All directors have access to this correspondence. In accordance with instructions from the Board, the Secretary to the Board reviews all correspondence, organizes the communications for review by the Board and posts communications to the full Board or to individual directors, as appropriate. Our independent directors have requested that certain items that are unrelated to the Board's duties, such as spam, junk mail, mass mailings, solicitations, resumes and job inquiries, not be posted.

Communications that are intended specifically for the Chair of the Board, independent directors or the non-employee directors should be sent to the e-mail address or street address noted above, to the attention of the Chair of the Board.

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Proposals To Be Voted On
Proposal
No. 1:

 
Election of Directors

On the recommendation of the NGSR Committee, the Board has nominated the 13 persons named below for election as directors this year, each to serve for a one-year term or until the director's successor is elected and qualified.

DIRECTOR NOMINEE EXPERIENCE AND QUALIFICATIONS

The Board annually reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements, and the long-term interests of our stockholders. The Board believes that its members should possess a variety of skills, professional experience and backgrounds in order to effectively oversee our business. In addition, the Board believes that each director should possess certain attributes, as reflected in the Board membership criteria described below.

Our Corporate Governance Guidelines contain the current Board membership criteria that apply to nominees recommended for a position on the Board. Under those criteria, members of the Board should have the highest professional and personal ethics and values, consistent with our long-standing values and standards. They should have broad experience at the policy-making level in business, government, education, technology or public service. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. In addition, the NGSR Committee takes into account a potential director's ability to contribute to the diversity of background and experience represented on the Board, and it reviews its effectiveness in balancing these considerations when assessing the composition of the Board. Directors' service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. Each director must represent the interests of all of our stockholders. Although the Board uses these and other criteria as appropriate to evaluate potential nominees, it has no stated minimum criteria for nominees.

The Board believes that all the nominees named below are highly qualified and have the skills and experience required for effective service on the Board. The nominees' individual biographies below contain information about their experience, qualifications and skills that led the Board to nominate them.

All of the nominees have indicated to us that they will be available to serve as directors. In the event that any nominee should become unavailable, the proxy holders, Antonio F. Neri, Timothy C. Stonesifer and Rishi Varma, will vote for a nominee or nominees designated by the Board, or the Board may decrease the size of the Board.

There are no family relationships among our executive officers and directors.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        
  Our Board recommends a vote FOR the election to the Board of each of the following nominees.
        

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Hewlett Packard Enterprise Company 2018 Board of Directors Nominees

 
  NAME
   
  AGE
   
  HPE
DIRECTOR
SINCE

   
  NOTEWORTHY EXPERIENCE
   
  NYSE
INDEPENDENT

   
  OTHER CURRENT PUBLIC
COMPANY BOARDS

   
    GRAPHIC   Daniel Ammann       45       2015       President, General Motors Company       Yes            
    GRAPHIC   Michael J. Angelakis       53       2015       Chairman and Chief Executive Officer of Atairos Management; Senior Advisor to the Executive Management Committee, Comcast Corporation; former Vice Chairman and Chief Financial Officer, Comcast Corporation       Yes       Groupon, Inc.
TriNet Group, Inc.
   
    GRAPHIC   Leslie A. Brun       65       2015       Chairman and Chief Executive Officer, Sarr Group, LLC; former Managing Director and Head of Investor Relations for CCMP Capital Advisors, LLC; Founder and former Chairman and Chief Executive Officer for Hamilton Lane Advisors       Yes       CDK Global, Inc.
Broadridge Financial Solutions
Merck & Co., Inc.
   
    GRAPHIC   Pamela L. Carter       68       2015       Former Vice President of Cummins Inc.; former President of the Cummins Distribution business unit       Yes       Enbridge
CSX Corp.
Broadridge Financial Solutions
   
    GRAPHIC   Raymond J. Lane       71       2015       Partner Emeritus, Kleiner Perkins Caufield & Byers
Managing Partner, GreatPoint Ventures
      Yes            
    GRAPHIC   Ann M. Livermore       59       2015       Former Executive Vice President, Enterprise Business, Hewlett-Packard Company       No       United Parcel Service, Inc.
Qualcomm
   
    GRAPHIC   Antonio F. Neri       50       2018       President and Chief Executive Officer, Hewlett Packard Enterprise Company       No       Anthem, Inc.    
    GRAPHIC   Raymond E. Ozzie       62       2015       Former Chief Executive Officer, Talko, Inc.; former Chief Software Architect, Microsoft Corporation       Yes            
    GRAPHIC   Gary M. Reiner       63       2015       Operating Partner, General Atlantic; former Senior Vice President and Chief Information Officer, General Electric Company       Yes       Citigroup Inc.
Box, Inc.
   
    GRAPHIC   Patricia F. Russo       65       2015       Former Chief Executive Officer, Alcatel-Lucent       Yes       Arconic Inc.
General Motors Company
Merck & Co., Inc.
KKR Management LLC
   
    GRAPHIC   Lip-Bu Tan       58       2015       President and Chief Executive Officer, Cadence Design Systems; Founder and Chairman, Walden International       Yes       Cadence Design Systems
Aquantina Corp
Semiconductor Manufacturing International Corp
Quantenna Communication, Inc.
   
    GRAPHIC   Margaret C. Whitman       61       2015       Former President and Chief Executive Officer, Hewlett Packard Enterprise Company; former Chairman, President and Chief Executive Officer, Hewlett-Packard Company       No       The Procter & Gamble Company    
    GRAPHIC   Mary Agnes Wilderotter       63       2016       Former Executive Chairman and Retired Chief Executive Officer, Frontier Communications Corporation       Yes       Costco Wholesale Corporation
Juno Therapeutics Inc.
Cadence Design Systems
   
Mr. Tan does not intend to seek re-election to the boards of directors of Semiconductor Manufacturing International Corp. or Quantenna Communications, Inc. at their 2018 annual stockholders' meetings.

Thirteen directors have been nominated for re-election at the Annual Meeting to hold office until the 2019 Annual Meeting. Our employees and our Board are a reflection of the world in which we do business, bringing together great minds of all backgrounds to provide the best for HPE. The following provides a snapshot of the

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diversity, skills and experience of our director nominees, followed by summary information about each individual nominee. Each of our thirteen director nominees has been an HPE director since 2015, except for Mary Agnes Wilderotter who was elected in 2016 and Antonio F. Neri who was elected in 2018.

GRAPHIC

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Daniel Ammann
  Recent Career
        
      PHOTO  

Mr. Ammann has served as the President of General Motors Company, an automotive company, since January 2014. From April 2011 to January 2014, Mr. Ammann served as Chief Financial Officer and Executive Vice President of General Motors. Mr. Ammann joined General Motors in May 2010 as Vice President of Finance and Treasurer, a role he served in until April 2011.

Committee Membership: Finance and Investment

 

Public Directorships


Key Skills and Qualifications
None  

significant operational experience in global consumer, manufacturing and financial industries

 

valuable insight into customer financial services gained through his leadership over the rebuilding of the captive finance company of General Motors Company

 

executive experience helping lead an international, multibillion dollar company through a financial transformation including an initial public offering

 

in-depth knowledge of financial statements, instruments, and strategy from roles as Treasurer and CFO at General Motors Company

 

Michael J. Angelakis
  Recent Career
        
      PHOTO  

Mr. Angelakis has served as Chairman and Chief Executive Officer of Atairos Group, a global investment firm, since January 2016. Additionally, Mr. Angelakis serves as a Senior Advisor to the executive management committee of Comcast Corporation, a media and technology company. Previously, Mr. Angelakis served from November 2011 to July 2015 as Vice Chairman of Comcast and from March 2007 to July 2015 as Chief Financial Officer of Comcast. From 1999 to 2007, Mr. Angelakis was a Managing Director at Providence Equity Partners, LLC, a media and communications investment firm.

Committee Membership: Audit; Finance and Investment (Chair)

 

Public Directorships *


Key Skills and Qualifications
Current Service

Groupon, Inc.

TriNet Group, Inc.

Former Service

Duke Energy

 

decades of investment, financial and managerial experience in the media and telecommunications industries

repeatedly recognized as one of America's best CFOs

extensive understanding of the financial, operational and technological concerns important to a complex global operation

*
Groupon is an e-commerce company, TriNet Group, Inc. is a provider of human resource solutions, and Duke Energy is an energy company.

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Leslie A. Brun
  Recent Career
        
      PHOTO  

Mr. Brun has served as the Chairman and Chief Executive Officer of Sarr Group, LLC, an investment holding company, since March 2006. He is also a Senior Advisor of G100 Companies as of 2016. From August 2011 to December 2013, Mr. Brun was managing director and head of investor relations for CCMP Capital Advisors, LLC, a private equity firm. Previously, from January 1991 to May 2005, Mr. Brun served as founder, Chairman and Chief Executive Officer for Hamilton Lane Advisors, a private markets investment firm, and from April 1988 to September 1990 as co-founder and managing director of investment banking at Fidelity Bank in Philadelphia.

Committee Membership: Audit; HR and Compensation (Chair)

 

Public Directorships *


Key Skills and Qualifications
Current Service

CDK Global, Inc. (Chair)

Broadridge Financial Solutions, Inc. (Chair)

Merck & Co., Inc.

Former Service

Automatic Data Processing, Inc.

 

robust business experience from a long career as an investment banker and CEO

advisory experience and knowledge of corporate governance from his service as a chairman and director on various public company boards

valuable financial, management, investor relations, and operational advice and expertise

*
CDK Global, Inc. is a technology solutions company, Broadridge Financial Solutions is a financial industry servicing company, Merck & Co., Inc. is a pharmaceuticals company, and Automatic Data Processing, Inc. is a business outsourcing services company.


Pamela L. Carter
  Recent Career
        
      PHOTO  

Ms. Carter has served as President of Cummins Distribution Business, a multi-billion dollar global division of Cummins Inc., a global manufacturer of diesel engines and related technologies. She held this position from 2008 until her retirement in 2015. She served as Vice President and then President of Cummins Filtration, and as Vice President for EMEA, as an expatriate living in Belgium from 2000-2007. Prior to that, Ms. Carter served as Vice President, General Counsel, and Corporate Secretary from 1997 to 2000.

Before joining Cummins Inc., Ms. Carter was elected Attorney General of the State of Indiana from 1993 to 1997. She is the first female African American to be elected to this position in the United States. She practiced law and was partner, litigator and corporate lawyer for over a decade before joining Cummins.

Committee Membership: Audit; HR and Compensation

 

Public Directorships *


Key Skills and Qualifications
Current Service    

Enbridge Inc.

CSX Corporation

Broadridge Financial Solutions, Inc.

Former Service

Spectra Energy Corp

 

global, strategic, operational and transformational leadership capability and expertise

extensive knowledge of corporate governance from her board roles including her service as Corporate Governance Chairwoman and member of the Compensation Committee at Spectra Energy Corp, and of finance from her current role as Chair of the Finance Committee at CSX Corp.

*
Enbridge Inc. is a global energy infrastructure company, CSX Corporation, is a rail-based freight transportation company, Broadridge Financial Solutions, Inc. is a financial industry servicing company, and Spectra Energy Corp was a natural gas company merged with Enbridge.

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Raymond J. Lane
  Recent Career
        
      PHOTO  

Mr. Lane currently serves as Managing Partner of GreatPoint Ventures, a fund focused on using resources more efficiently, living longer and healthier lives, and increasing productivity. Mr. Lane served as executive Chairman of Hewlett-Packard Company from September 2011 to April 2013 and as non-executive Chairman of Hewlett-Packard Company from November 2010 to September 2011. Since April 2013, Mr. Lane has served as Partner Emeritus of Kleiner Perkins Caufield & Byers, a private equity firm, after having previously served as one of its Managing Partners from 2000 to 2013. Prior to joining Kleiner Perkins, Mr. Lane was President and Chief Operating Officer and a director of Oracle Corporation, a software company. Before joining Oracle in 1992, Mr. Lane was a senior partner of Booz Allen Hamilton, a consulting company. Prior to Booz Allen Hamilton, Mr. Lane served as a division vice president with Electronic Data Systems Corporation, an IT services company that Hewlett-Packard Company acquired in August 2008. He was with IBM Corporation from 1970 to 1977. Mr. Lane served as Chairman of the Board of Trustees of Carnegie Mellon University from July 2009 to July 2015. He also serves as Vice Chairman of Special Olympics International.

Committee Membership: Finance and Investment; Technology

 

Public Directorships *


Key Skills and Qualifications
Former Service

Quest Software, Inc.

Hewlett-Packard Company

 

significant experience as an early stage venture capital investor, principally in the information technology industry

valuable insight into worldwide operations, management and the development of corporate strategy

corporate governance experience from his service on other public company boards

*
Quest Software, Inc. was a software company before its acquisition by Dell Inc., a computer technology company, and Hewlett-Packard Company (now HP Inc.) is an information technology company and the former parent of Hewlett Packard Enterprise.

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Ann M. Livermore
  Recent Career
        
      PHOTO  

Ms. Livermore served as Executive Vice President of the former HP Enterprise Business from 2004 until June 2011, and served as an Executive Advisor to our Chief Executive Officer between then and 2016. Prior to that, Ms. Livermore served in various other positions with Hewlett-Packard Company in marketing, sales, research and development, and business management since joining the company in 1982.

Committee Membership: Finance and Investment

 

Public Directorships *


Key Skills and Qualifications
Current Service

United Parcel Service, Inc.

Qualcomm

Former Service

Hewlett-Packard Company

 

extensive experience in senior leadership positions from nearly 35 years at Hewlett-Packard Company

vast knowledge and experience in the areas of technology, marketing, sales, research and development and business management

knowledge of enterprise customers and their IT needs

corporate governance experience from her service on other public company boards

*
United Parcel Service, Inc. is a package delivery and logistics company, Qualcomm is a semiconductor and telecommunications equipment company, and Hewlett-Packard Company (now HP Inc.) is an information technology company and the former parent of Hewlett Packard Enterprise.

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Antonio F. Neri
  Recent Career
        
      PHOTO  

Mr. Neri has served as President and CEO of Hewlett Packard Enterprise since February 2018. He served as President of HPE from May 2017 to February 2018. Prior to his service as President, Mr. Neri served as Senior Vice President and General Manager, Enterprise Group at HP Co., and subsequently HPE, since October 2014. Previously, he served as Senior Vice President and General Manager of the HP Servers business from September 2013 to October 2014 and concurrently as Senior Vice President and General Manager of the HP Networking business unit from May 2014 to October 2014. Prior to that, Mr. Neri served as Senior Vice President and General Manager of the HP Technology Services business unit from August 2011 to September 2013 and as Senior Vice President, Customer Services for the HP Personal Systems Group from 2008 until August 2011.

Committee Membership: None

 

Public Directorships *


Key Skills and Qualifications
Current Service

Anthem, Inc.

 

extensive deep technology experience

extensive experience in senior leadership positions from nearly 23 years at Hewlett-Packard Company and later HPE

robust understanding of business development, operations and strategic planning

*
Anthem, Inc. is a healthcare insurance company.


Raymond E. Ozzie
  Recent Career
        
      PHOTO  

Mr. Ozzie is a software entrepreneur who early in his career created a pioneering product for communications and productivity, Lotus Notes. He most recently served as Chief Executive Officer of Talko Inc., a company delivering mobile communications applications and services for business, acquired by Microsoft Corporation in December 2015. Previously, Mr. Ozzie served as Chief Software Architect of Microsoft Corporation from 2006 until December 2010, after having served as Chief Technical Officer of Microsoft from 2005 to 2006. Mr. Ozzie joined Microsoft in 2005 after Microsoft acquired Groove Networks, Inc., a collaboration software company he founded in 1997.

Committee Membership: Finance and Investment; Technology (Chair)

 

Public Directorships *


Key Skills and Qualifications
Former Service

Hewlett-Packard Company

 

recognized software industry executive and entrepreneur with significant experience in the software industry

extensive leadership and technical expertise from positions at IBM, Microsoft, Talko, and Groove Networks

*
Hewlett-Packard Company (now HP Inc.) is an information technology company and the former parent of Hewlett Packard Enterprise.

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Gary M. Reiner
  Recent Career
        
      PHOTO  

Mr. Reiner has served as Operating Partner at General Atlantic LLC, a private equity firm, since November 2011. Previously, Mr. Reiner served as Special Advisor to General Atlantic LLC from September 2010 to November 2011. Prior to that, Mr. Reiner served as Senior Vice President and Chief Information Officer at General Electric Company, a technology, media and financial services company, from 1996 until March 2010. Mr. Reiner previously held other executive positions with General Electric since joining the company in 1991. Earlier in his career, Mr. Reiner was a partner at Boston Consulting Group, a consulting company, where he focused on strategic and process issues for technology businesses.

Committee Membership: Finance and Investment; Nominating, Governance and Social Responsibility (Chair); Technology

 

Public Directorships *


Key Skills and Qualifications
Current Service

Box, Inc.

Citigroup Inc.

Former Service

Hewlett-Packard Company

 

deep insight into how IT can help global companies succeed through his many years of experience as Chief Information Officer at General Electric

decades of experience driving corporate strategy, information technology and best practices across complex organizations

experience in private equity investing, with a particular focus on the IT industry

*
CitiGroup Inc. is an investment banking and financial services corporation, Genpact Limited is an outsourcing and information technology services company, Box, Inc. is a software company, and Hewlett-Packard Company (now HP Inc.) is an information technology company and the former parent of Hewlett Packard Enterprise.

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Patricia F. Russo
  Recent Career
        
      PHOTO  

Ms. Russo has served as the Chair of our Board of Directors since November 2015. Previously, Ms. Russo served as the Lead Independent Director of Hewlett-Packard Company from July 2014 to November 2015. Ms. Russo served as Chief Executive Officer of Alcatel-Lucent, a communications company, from 2006 to 2008. Previously, Ms. Russo served as Chairman of Lucent Technologies Inc., a communications company, from 2003 to 2006 and Chief Executive Officer and President of Lucent from 2002 to 2006.

Committee Membership: Nominating, Governance and Social Responsibility

 

Public Directorships *


Key Skills and Qualifications
Current Service

Arconic Inc.

General Motors Company

Merck & Co., Inc.

KKR Management LLC

Former Service

Alcoa Inc.

Hewlett-Packard Company

 

extensive global business experience

broad understanding of the technology industry

strong management skills and operational expertise

executive experience with a wide range of issues including mergers and acquisitions and business restructurings as she led Lucent's recovery through a severe industry downturn and later a merger with Alcatel

strong leadership and corporate governance experience from robust service on other public company boards

*
Arconic Inc. is an engineering and manufacturing company, General Motors Company is an automotive company, Merck & Co., Inc. is a pharmaceuticals company, KKR Management LLC is the managing partner of KKR & Co., L.P., an investment firm, Alcoa Inc. is a metals and manufacturing company, and Hewlett-Packard Company (now HP Inc.) is an information technology company and the former parent of Hewlett Packard Enterprise.

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Lip-Bu Tan
  Recent Career
        
      PHOTO  

Mr. Tan has served as the President and Chief Executive Officer of Cadence Design Systems, an electronic design automation company, since 2009. Mr. Tan has also served as Founder and Chairman of Walden International, a venture capital firm, since 1987.

Committee Membership: Nominating, Governance and Social Responsibility; Technology

 

Public Directorships *


Key Skills and Qualifications
Current Service

Cadence Design Systems, Inc.

Aquantia Corporation

Semiconductor Manufacturing International Corporation.
(does not intend to seek re-election for upcoming board year) †

Quantenna Communications, Inc.
(does not intend to seek re-election for upcoming board year) †

Former Service

SINA Corp

Ambarella, Inc.

United Overseas Bank in Singapore

 

decades of experience pioneering venture capital investment in technology in the Asia-Pacific region

corporate governance experience from service on numerous public and private boards of technology companies

robust understanding of the electronic design and semiconductor industries

extensive experience analyzing investments, managing companies and leading developments in the global technology industry

*
Cadence Design Systems, Inc. is an electronic design automation company, Ambarella Inc. is a video compression and image processing company, Aquantia Corporation is supplier of high-speed connectivity silicon, Semiconductor Manufacturing International Corporation. is a semiconductor company, Quantenna Communications, Inc. is a WiFi fabless semiconductor company, SINA is a media company, Ambarella, Inc. is a video compression and image processing company, and United Overseas Bank in Singapore is a bank.

Mr. Tan does not intend to seek re-election to the boards of directors of Semiconductor Manufacturing International Corp. or Quantenna Communications, Inc. at their 2018 annual stockholders' meetings.

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Margaret C. Whitman
  Recent Career
        
      PHOTO  

Ms. Whitman served as Chief Executive Officer of Hewlett Packard Enterprise from May 2017 to February 2018, and as President and Chief Executive Officer of Hewlett Packard Enterprise from November 2015 to May 2017. Prior to that, Ms. Whitman served as President, Chief Executive Officer, and Chair of Hewlett-Packard Company from July 2014 to November 2015 and President and Chief Executive Officer of Hewlett-Packard Company from September 2011 to November 2015. From March 2011 to September 2011, Ms. Whitman served as a part-time strategic advisor to Kleiner Perkins Caufield & Byers, a private equity firm. Previously, Ms. Whitman served as President and Chief Executive Officer of eBay Inc., an online marketplace, from 1998 to 2008. Prior to joining eBay, Ms. Whitman held executive-level positions at Hasbro Inc., a toy company, FTD, Inc., a floral products company, The Stride Rite Corporation, a footwear company, The Walt Disney Company, an entertainment company, and Bain & Company, a consulting company.

Committee Membership: Finance and Investment, Technology

 

Public Directorships *


Key Skills and Qualifications

Current Service

The Procter & Gamble Company

Former Service

Zipcar, Inc.

HP Inc.

DXC Technology

 

unique experience in developing transformative business models, building global brands and driving sustained growth and expansion

strong operational and strategic expertise built during executive positions at Hewlett-Packard Company, HPE, and eBay

public company governance experience from service on various public boards

*
The Procter & Gamble Company is a consumer goods company, Zipcar, Inc. is a car sharing service HP Inc. is a technology company and the former parent of Hewlett Packard Enterprise, and DXC Technology is an IT services and solutions company.

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Mary Agnes Wilderotter
  Recent Career
        
      PHOTO  

Ms. Wilderotter has served as Executive Chairman of Frontier Communications Corporation, a telecommunications company, from April 2015 to April 2016. Previously, Ms. Wilderotter served as Chairman and Chief Executive Officer of Frontier from January 2006 to April 2015. From 2004 to 2006, Ms. Wilderotter served as President, Chief Executive Officer, and a Director of Frontier. Prior to joining Frontier, Ms. Wilderotter served in executive and managerial roles at Wink Communications and Microsoft Corporation, both software companies and AT&T Wireless Services Inc., a telecommunications company.

Committee Membership: Audit (Chair); HR and Compensation

 

Public Directorships *


Key Skills and Qualifications

Current Service

Costco Wholesale Corporation

Juno Therapeutics Inc.

Cadence Design Systems

Former Service

Frontier Communications Corporation

Dreamworks Animation SKG, Inc.

Xerox Corporation

The Procter & Gamble Company

 

expertise leading and managing companies in the telecommunications and technology industries

in-depth understanding of financial statements and public company audit from her role as CEO of Frontier Communications, Chair of the Audit Committee of Juno Therapeutics, member of the Audit Committee of Procter & Gamble, and Chair of the Finance Committee of Xerox

strong leadership and corporate governance experience from robust service on other public company boards

valuable insight into the financial, operational, cyber security and strategic questions addressed by the Board

*
Costco Wholesale Corporation is a retail company, Juno Therapeutics Inc. is a biopharmaceuticals company, Cadence Design Systems is an electronic design automation company, Frontier Communications Corporation is a telecommunications company, DreamWorks Animation SKG, Inc. was a content and animation company, Xerox Corporation is a technology company, and The Procter & Gamble Company is a consumer goods company.

VOTE REQUIRED

Each director nominee who receives more "FOR" votes than "AGAINST" votes representing shares of Hewlett Packard Enterprise common stock present in person or represented by proxy and entitled to be voted at the annual meeting will be elected.

If you sign your proxy or voting instruction card but do not give instructions with respect to voting for directors, your shares will be voted by Antonio F. Neri, Timothy C. Stonesifer, and Rishi Varma as proxy holders. If you wish to give specific instructions with respect to voting for directors, you may do so by indicating your instructions on your proxy or voting instruction card.

DIRECTOR ELECTION VOTING STANDARD AND RESIGNATION POLICY

Our Bylaws provide for a majority vote standard in the uncontested election of directors, meaning that, for a nominee to be elected, the number of shares voted "for" the nominee must exceed the votes cast "against" the nominee's election. Stockholders are not permitted to cumulate their votes in favor of one or more director nominees. In addition, we have adopted a policy whereby any incumbent director nominee who receives a greater number of votes "against" his or her election than votes "for" such election will tender his or her resignation for consideration by the NGSR Committee. The NGSR Committee will recommend to the Board the action to be taken with respect to such offer of resignation.

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Proposal
No. 2:

 
Ratification of Independent Registered
Public Accounting Firm

The Audit Committee of the Board has appointed, and as a matter of good corporate governance, is requesting ratification by the stockholders of, Ernst & Young LLP as the independent registered public accounting firm to audit our consolidated and combined financial statements for the fiscal year ending October 31, 2018. During fiscal 2017, Ernst & Young LLP served as our independent registered public accounting firm and also provided certain other audit-related and tax services. See "Principal Accounting Fees and Services" on page 81 and " Report of the Audit Committee of the Board of Directors " on page 83. Representatives of Ernst & Young LLP are expected to participate in the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.

VOTE REQUIRED

Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2018 fiscal year requires the affirmative vote of a majority of the shares of Hewlett Packard Enterprise common stock present in person or represented by proxy and entitled to be voted at the annual meeting. If the appointment is not ratified, the Board will consider whether it should select another independent registered public accounting firm.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        
 

Our Board recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2018 fiscal year.

        

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Proposal
No. 3:

 
Advisory Vote to Approve Executive
Compensation

Our Board and HRC Committee are committed to excellence in corporate governance and to executive compensation programs that align the interests of our executives with those of our stockholders. To fulfill this mission, we have a pay-for-performance philosophy that forms the foundation for all decisions regarding compensation. Our compensation programs have been structured to balance near-term results with long-term success, and enable us to attract, retain, focus, and reward our executive team for delivering stockholder value. Below is a summary of key elements of our fiscal compensation programs relative to this philosophy.


PAY-FOR-PERFORMANCE

The majority of compensation for executives is performance based and delivered in the form of equity, in order to align management and stockholder interests

Total direct compensation is generally targeted within a competitive range of the market median , with differentiation by executive, as appropriate, based on individual factors such as tenure, criticality of the role and proficiency in the role, sustained performance over time, and importance to our leadership succession plans

Actual realized total direct compensation is designed to fluctuate with, and be commensurate with, actual annual and long-term performance, and changes in stockholder value over time

Incentive awards are heavily dependent upon achievement of critical operating goals and our stock performance, and are primarily measured against objective metrics that we believe link directly to the creation of sustainable value for our stockholders

We balance growth objectives, top and bottom line objectives, and short- and long-term objectives to reward for overall performance that creates balance and does not overemphasize a singular focus

A significant portion of our long-term incentives are delivered in the form of performance-based equity, which measures internal and external metrics, ultimately aimed at driving stockholder value

We validate our pay-for-performance relationship annually, through an analysis conducted for the HRC Committee by its independent compensation consultant

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CORPORATE GOVERNANCE

    What We Do           What We Don't Do    

Design compensation programs that do not encourage excessive risk-taking

Maintain stock ownership guidelines for executive officers, including a rigorous 7x base salary requirement for the CEO

Provide limited executive perquisites

Prohibit hedging or pledging of Company stock by our executive officers

Maintain a clawback policy that permits the Company to recover annual and long-term incentives

Maintain a severance policy that provides for "double-trigger" change in control equity vesting

Engage an independent compensation consultant for the HRC Committee that does no other work for the Company

 

Enter into individual executive compensation agreements

Provide tax gross-ups for executive perquisites

Pay share-dividend equivalents in our long-term incentive program before vesting of the underlying shares occurs

Provide supplemental defined benefit pension plans (except in the case of international transfers)

The Executive Compensation portion of this proxy statement contains a detailed description of our compensation philosophy and programs, the compensation decisions made under those programs with regard to our named executive officers ("NEOs"), and the factors considered by the HRC Committee in making those decisions for fiscal 2017. We believe that we maintain a compensation program deserving of stockholder support. Accordingly, the Board of Directors recommends stockholder approval of the compensation of our NEOs as disclosed in this proxy statement.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        
 

Our Board recommends a vote FOR the approval of the compensation of our named executive officers, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion following such compensation tables, and the other related disclosures in this proxy statement.

        

As an advisory vote, this proposal is not binding on HPE, the Board, or the HRC Committee. However, the HRC Committee and the Board value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.

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Proposal
No. 4:

 
Stockholder Proposal Related to Action by Written Consent of Stockholders    

We received a stockholder proposal from John Chevedden. The proponent has requested we include the proposal and supporting statement in this proxy statement, and, if properly presented, the proposal will be voted on at the annual meeting. We will provide the proponent's address and the number of shares that he beneficially owns upon oral or written request of any stockholder. This Proposal and supporting statement are quoted verbatim in italics below.

The Board opposes adoption of the Proposal and asks stockholders to review the Board's response, which follows the proponent's Proposal.

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STOCKHOLDER PROPOSAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THE FOLLOWING STOCKHOLDER PROPOSAL

Proposal [4]—Right to Act by Written Consent

Resolved, Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to be consistent with applicable law and consistent with giving shareholders the fullest power to act by written consent with applicable law. This includes shareholder ability to initiate any topic for written consent consistent with applicable law.

Hundreds of major companies enable shareholder action by written consent. Taking action by written consent in lieu of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle.

Dozens of Fortune 500 companies provide for both shareholder rights—to act by written consent and to call a special meeting. Our higher 25% threshold for shareholders to call a special meeting is one more reason that we should have the right to act by written consent.

It is especially important to gain a shareholder right, such as written consent, to make up for our management abruptly taking away an important shareholder right—the right to an in-person annual meeting. For decades shareholders had a once-a-year opportunity to ask our $10 million CEO and directors questions in person. Now our directors can casually flip their phones to mute during the annual shareholder meeting.

This includes Lip-Bu Tan, a distracted director (serving on 5 boards), who got 37% in negative voted and Marc Andreessen who got 18% in negative votes. Plus the distracted Mr. Tan is one of only 2 directors on our Nomination Committee.

Our management is now free to run a make-believe meeting with Investor Relations devising softball questions in advance while tossing out other questions. Then our $10 million CEO can simply read the scripted IR answers to a camera—no opportunity for audience feedback.

The lack of an in-person annual meeting means that a board meeting can be scheduled months after the virtual meeting—by which time any serious issues successfully raised by shareholders under these onerous conditions will be long forgotten by the directors. Plus a virtual meeting guarantees that there will be no media coverage for the benefit of shareholders.

A virtual meeting is an evil disincentive plan for our directors and top management. Top management has no incentive to avoid making mistakes for 365 days of the year out of concern that there will be an in-person account at the annual meeting.

Please vote to give us a shareholder right to help make up for our top management stripping away one of our important rights:


Right to Act by Written Consent—Proposal [4]

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Board of Directors' Statement in Opposition

The Board has carefully considered the proposal for stockholders to act by written consent without a meeting (the "Proposal") and, for the reasons outlined below, the Board believes that it is not in the best interests of HPE and its stockholders. Therefore, the Board unanimously recommends that stockholders vote "AGAINST" this Proposal.

Stockholder meetings offer important protections and advantages that are absent from the written consent process under this Proposal

The Board is committed to robust corporate governance and believes in maintaining policies and practices that serve the interests of all stockholders. The Board understands that corporate governance is not static—and continually monitors trends and developments in corporate governance and compares and evaluates them against our current practices. The Board recognizes that some stockholders may view the ability to act by written consent as an important right. However, the Board believes that HPE's existing Bylaw provision that provides stockholders with the right to call special meetings offers a more transparent and equitable mechanism for stockholders to raise matters for consideration by the Company.

HPE's stockholders have the right to call a special meeting at a 25% threshold, which is the most common threshold among S&P 500 companies that provide their stockholders with that right. This right to call a special meeting, along with our established stockholder communication and engagement practices, provides stockholders with opportunities to raise important matters and propose actions for stockholder consideration outside the annual meeting process. The protections and advantages of stockholder meetings include:

The meeting and the stockholder vote take place in a transparent manner on a specified date that is publicly announced well in advance, giving all interested stockholders a chance to express their views and cast their votes.

The meeting provides stockholders with a forum for open discussion and consideration of the proposed stockholder action.

Accurate and complete information about the proposed stockholder action is widely distributed in a proxy statement before the meeting, which promotes a well-informed discussion and consideration of the merits of the proposed action.

All communications with respect to the proposed stockholder action are governed by SEC rules that require fair disclosure to all stockholders through amendments to a proxy statement and/or public releases of all solicitation material.

The Board is able to analyze and provide a recommendation with respect to actions proposed to be taken at a stockholder meeting.

In contrast, the written consent process does not promote transparent decision making and could disenfranchise stockholders

The Board recommends that stockholders vote against this Proposal because it believes the transparency and fairness of the annual or special meeting process better serve stockholder's interests. Proposing action by written consent deprives stockholders of a forum for discussion or opportunity to have a meaningful and structured exchange of views with the Board and other stockholders before acting. For example, in an attempt at persuasion, the proponent of this Proposal has included several factually incorrect statements (such as the number of directors on our Nominating, Governance and Social Responsibility Committee). Unlike written consents, taking action at annual or special meetings allows for accurate and complete information about the proposed stockholder action to be widely distributed, ensuring well-informed discussion and consideration of the merits of the proposed action.

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Matters that are so important as to require stockholder approval should be communicated in advance so they can be properly considered and voted upon by all stockholders. In contrast, this Proposal would allow holders of a bare majority of shares to approve critical actions on their own, without notice to other stockholders or to the Company and without an opportunity for discussion at a stockholder meeting. This Proposal, if adopted, could therefore disenfranchise many stockholders and may deprive them of these rights, while enabling a small group of stockholders (including special interest investors and those who accumulate a short-term voting position through the borrowing of shares), with no fiduciary duties to the other stockholders, to approve their own proposed actions. Accordingly, stockholder action by written consent could be used by a group of stockholders—no matter how small of an ownership position they represent—to pursue individual agendas or significant corporate actions that are not in the best interests of all stockholders.

Additionally, the written consent process has the potential to create confusion because multiple groups of stockholders would be able to solicit written consents at any time and as frequently as they choose on a range of issues, some of which may be duplicative or conflicting. Addressing such actions could impose significant administrative and financial burdens on the Company with no corresponding benefit to stockholders. The Board believes that these possible outcomes are contrary to principles of stockholder democracy, fair and accurate disclosure, and good corporate governance.

HPE's stockholder-friendly corporate governance practices empower stockholders and promote Board accountability

The Board believes the Company's existing strong corporate governance practices make adoption of this Proposal unnecessary. In addition to the right of stockholders to call special meetings at a 25% threshold as mentioned above, the following corporate governance provisions empower stockholders to express their views or take action and enhance Board accountability:

Annual Election of Board of Directors —All HPE directors are elected annually by the stockholders, and stockholders can remove directors with or without cause.

Majority Voting for Election of Board of Directors —HPE has adopted a majority voting standard for the election of directors in uncontested elections.

Proxy Access for Director Nominations —HPE has adopted a proxy access Bylaw provision that allows an eligible stockholder or group of stockholders to nominate candidates for election to the Board that are included in HPE's proxy statement and ballot.

Majority Voting for Charter and Bylaw Amendments —HPE's charter and Bylaw provisions do not have supermajority voting provisions—stockholders can approve binding charter and Bylaw amendments with a majority vote.

No Stockholder Rights Plan —HPE does not have a stockholder rights plan (also known as a "poison pill").

Independent Board Leadership —HPE has separated the roles of Chair of the Board and CEO. The Chairman of the Board is an independent director—as are all of the chairs of the committees of the Board.

Stockholder Engagement —Stockholders can communicate directly with the Board and/or individual directors. In addition, management and members of the Board regularly engage with stockholders to solicit their views on important issues such as executive compensation and corporate governance.

Summary

The Board believes that the implementation of this Proposal is not in the best interests of stockholders or the Company and is unnecessary, given the ability of stockholders to call special meetings and the Company's

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strong corporate governance practices and policies. This Proposal would circumvent the protections, procedural safeguards and advantages provided to all stockholders by stockholder meetings. Accordingly, the Board recommends that you vote AGAINST this Proposal.

VOTE REQUIRED

Approval of this Proposal requires the affirmative vote of a majority of the shares of HPE common stock present in person or represented by proxy and entitled to be voted on the Proposal at the annual meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        
 

Our Board recommends a vote AGAINST the stockholder proposal related to action by written consent of stockholders.

        

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Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

HPE is an industry-leading technology company. Our technology and services help customers around the world deliver business outcomes due to our deep and comprehensive portfolio, spanning the cloud to the data center to the intelligent edge. Our legacy dates back to a partnership founded in 1939 by William R. Hewlett and David Packard, and we strive every day to uphold and enhance that legacy through our dedication to providing innovative technological solutions to our customers.

On November 1, 2015, HPE became an independent, publicly traded company through a pro rata stock distribution by HP Inc., formerly known as HP. The separation has allowed HPE to focus on, and more effectively pursue, our own distinct operating priorities and strategies. This has led to greater flexibility to invest capital in our own businesses, a more simplified organizational structure, enhanced efficiency in our operations, and most importantly, improved focus on the unique needs of our customers.

During fiscal 2017, we continued to execute our long-term strategy to become a more nimble and focused organization. On April 1, 2017, we completed the separation and merger of our Enterprise Services ("ES") business with Computer Sciences Corporation ("CSC") to form DXC Technology Company ("DXC"). Also, on September 1, 2017, we completed the separation and merger of our Software ("SW") business segment with Micro Focus International plc ("Micro Focus").

We made a number of strategic acquisitions in fiscal 2017 to strengthen our portfolio including, SimpliVity, Silicon Graphics International Corp. ("SGI"), Nimble Storage, Inc. ("Nimble Storage"), Niara, Inc. ("Niara"), Cloud Cruiser, and Cloud Technology Partners. We believe each of these additions are highly complementary to our core business and operate in high-growth markets with strong margins. HPE also continues to invest organically in introducing exciting new products, such as Synergy, the industry's first composable infrastructure, and new service offerings, like our Flex Capacity.

During the third quarter of fiscal 2017, we launched HPE Next, an initiative to improve our ability to compete in the rapidly evolving technology industry. Through this initiative, which is expected to be implemented through fiscal 2020, we will simplify our operating model, streamline our offerings and business processes to improve our execution, and more importantly, continue to shift our investments in innovation toward high growth and higher margin solutions and services. In addition to the reshaping of our business portfolio, the HPE Next initiative is expected to achieve annual run-rate net cost savings of approximately $800 million exiting fiscal 2020.

On February 1, 2018, Ms. Whitman, retired as CEO, and remains a director on HPE's Board. Mr. Neri, a 22-year veteran of the Company, who most recently served as the President of HPE and former Executive Vice President of the Enterprise Group business, is Ms. Whitman's successor. Ms. Whitman and the rest of the Board are confident that Mr. Neri is the right leader to continue to execute HPE's strategy and deliver value for our stockholders due to his deep understanding of technology, our products and service offerings along with their applications, as well as his experience, and his passion for our customers, partners, employees, and culture.

All of these efforts, initiatives, and changes help to position HPE to successfully deliver on our vision and the three key pillars of our strategy:

    Make Hybrid IT simple through secure, software-defined offerings that enable customers to move data seamlessly across their on-premises data centers, private cloud, managed cloud, and public cloud environments;

    Power the intelligent edge that runs campus, branch, and Internet of Things (IoT) applications; and

    Provide world-class expertise and flexible consumption models to help customers transform their IT environments.

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Executive Compensation — Compensation Discussion and Analysis   (continued)

Below is a summary of HPE's financial and strategic highlights, as well as their corresponding impact to compensation for fiscal 2017.

Summary of Fiscal 2017 Business Highlights (1)   Fiscal 2017 Compensation Impact
FINANCIAL
HIGHLIGHTS
 

Net revenue of $28.9 billion , down 5% from the prior year and up 1% when adjusted for divestitures and currency.

GAAP diluted net earnings per share of $0.21 , above the previously provided investor guidance of ($0.11) to ($0.07) per share, but below initial fiscal 2017 guidance.

Non-GAAP diluted net earnings per share of $1.41 , above the previously provided investor guidance of $1.36 to $1.40 per share, but below initial fiscal 2017 guidance.

Cash flow from operations of $0.9 billion , down from $5.0 billion in the prior year driven by our spin-merge transactions and lower net earnings.

Returned $3.0 billion to stockholders in the form of share repurchases and dividends.

 

The calculated Annual Incentive achievement as a percent of target for corporate NEOs, ranged between 54% and 76%, and between 44% and 100% for Business Leader NEOs. However, due to the underperformance of HPE's overall financial achievement, and to align with HPE's pay-for performance philosophy , the HR and Compensation Committee of our Board of Directors (the "HRC Committee") exercised its authority to apply negative discretion and determined that no annual incentive awards would be paid to the NEOs or other Section 16 Officers for fiscal 2017 (see details in the " Fiscal 2017 PfR Program Annual Incentive Payout " table).

Fiscal 2015 Performance-contingent Stock Options ("PCSOs"), granted on December 10, 2014, were forfeited because the associated stock price performance goals were not met by December 10, 2017.

STRATEGIC HIGHLIGHTS   Portfolio Optimization

Completed the ES/CSC spin-merge , creating DXC, a pure-play, global IT service market leader; delivering approximately $13.5 billion in value to HPE and our stockholders, which included an equity stake in DXC valued at approximately $9.5 billion, a $3.0 billion cash dividend to HPE, and DXC's assumption of certain HPE debt and other liabilities.

Completed the SW/Micro Focus spin-merge , creating one of the world's largest pure-play software companies; delivering approximately $8.8 billion in value to HPE and our stockholders, which included a cash payment of $2.5 billion to HPE and an equity stake in Micro Focus valued at approximately $6.3 billion.

Targeted Acquisitions

Hybrid IT

SimpliVity - a leading provider of software-defined, hyper-converged infrastructure

SGI - a global leader in high performance solutions for compute, data analytics and data management

Nimble Storage - a provider of predictive all-flash and hybrid-flash storage solutions

Cloud Cruiser - a leading provider of cloud consumption analytics software that enables customers to manage and optimize public, private, and hybrid cloud usage and spend

Cloud Technology Partners - a leading advisory company focused on cloud migration and cloud app development

Intelligent Edge

Niara - a leader in the emerging User and Entity Behavior Analytics (UEBA) security market segment

  Long-term Incentive Program

We designed the fiscal 2017 LTI program to include time-vested RSUs, and PCSOs with vesting tied to achievement of specified stock price targets and continued employment. We used this approach due to the difficulty in forecasting multi-year financial performance in light of the spin-merge transactions, as well as the uncertainty that these portfolio restructuring activities would have on our operating results.

Following the completion of the portfolio restructuring activities in fiscal 2017, and our ability to better forecast multi-year financial performance, Performance-adjusted Restricted Stock Units ("PARSUs") have been reintroduced for fiscal 2018 . The fiscal 2018 PARSU design vests based on two- and three-year performance periods, and measures Corporate Net Income and relative Total Stockholder Return ("TSR") performance.

Annual Incentive Program

We designed annual incentive goals to ensure that HPE and ES/SW leadership teams were held accountable for business performance prior to the closing of the spin-merge transactions.

To account for the impact of the SGI and Nimble Storage acquisitions, annual incentive performance goals were adjusted in a precise and formulaic manner according to the pre-determined adjustment guidelines set by the HRC Committee at the beginning of the performance period.

(1)
Financial results, including the GAAP to non-GAAP reconciliation, are reflected as reported in HPE's fourth quarter fiscal 2017 earnings press release.

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Executive Compensation — Compensation Discussion and Analysis   (continued)

Executive Compensation Pay-For-Performance Philosophy

Our executive compensation program, practices, and policies have been structured to reflect our commitment to reward short- and long-term performance that aligns with, and drives, stockholder value. The tables below summarize the key elements of the compensation programs applicable to our NEOs in fiscal 2017 relative to HPE's pay-for-performance philosophy.


PAY-FOR-PERFORMANCE

The majority of compensation for executives is performance based and delivered in the form of equity, in order to align management and stockholder interests

Total direct compensation is generally targeted within a competitive range of the market median , with differentiation by executive, as appropriate, based on individual factors such as tenure, criticality of the role and proficiency in the role, sustained performance over time, and importance to our leadership succession plans

Actual realized total direct compensation is designed to fluctuate with, and be commensurate with, actual annual and long-term performance, and changes in stockholder value over time

Incentive awards are heavily dependent upon achievement of critical operating goals and our stock performance, and are primarily measured against objective metrics that we believe link directly to the creation of sustainable value for our stockholders

We balance growth objectives, top and bottom line objectives, and short- and long-term objectives to reward for overall performance that creates balance and does not overemphasize a singular focus

A significant portion of our long-term incentives are delivered in the form of performance-based equity, which measures internal and external metrics, ultimately aimed at driving stockholder value

We validate our pay-for-performance relationship annually, through an analysis conducted for the HRC Committee by its independent compensation consultant

In addition, the Company has adopted a number of policies and practices, listed below, to support its compensation philosophy and drive performance that aligns executives' and stockholders' interests.

    What We Do           What We Don't Do    

Design compensation programs that do not encourage excessive risk-taking

Maintain stock ownership guidelines for executive officers, including a rigorous 7x base salary requirement for the CEO

Provide limited executive perquisites

Prohibit hedging or pledging of Company stock by our executive officers

Maintain a clawback policy that permits the Company to recover annual and long-term incentives

Maintain a severance policy that provides for "double-trigger" change in control equity vesting

Engage an independent compensation consultant for the HRC Committee that does no other work for the Company

 

Enter into individual executive compensation agreements

Provide tax gross-ups for executive perquisites

Pay share-dividend equivalents in our long-term incentive program before vesting of the underlying shares occurs

Provide supplemental defined benefit pension plans (except in the case of international transfers)

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Oversight and Authority Over Executive Compensation

ROLE OF THE HRC COMMITTEE AND ITS ADVISORS

The HRC Committee oversees and provides strategic direction to management regarding all aspects of HPE's pay program for senior executives. It makes recommendations regarding the compensation of the CEO to the independent members of the Board for approval, and it reviews and approves the compensation of the remaining Section 16 Officers. Each HRC Committee member is an independent non-employee director with significant experience in executive compensation matters. Our independent Chair of the Board also attends most HRC Committee meetings in a non-voting, advisory role. The HRC Committee engages its own independent compensation consultant as well as its own independent legal counsel.

The HRC Committee continued to retain FW Cook as its independent compensation consultant in fiscal 2017. The HRC Committee continued to retain Dentons US LLP ("Dentons") as its independent legal counsel through July 2017, and then later, upon the retirement of Dentons' lead attorney, the HRC Committee engaged Vedder Price, P.C. ("Vedder Price") as its independent legal counsel.

FW Cook provided analyses, market comparator benchmarking, and recommendations that informed the HRC Committee's decisions. All modifications to the compensation programs were assessed by FW Cook on behalf of the HRC Committee, and were discussed and approved by the HRC Committee. Pursuant to SEC rules, the HRC Committee assessed the independence of all its advisors, and concluded each is independent and that no conflict of interest exists that would prevent FW Cook, Dentons, or Vedder Price from independently providing service to the HRC Committee.

Neither FW Cook nor Vedder Price performs other services for the Company, and neither will do so without the prior consent of the HRC Committee chair. Both Vedder Price and FW Cook meet with the HRC Committee chair and the HRC Committee outside the presence of management.

The HRC Committee met five times in fiscal 2017. The HRC Committee's independent advisors participated in most of the meetings, as well as preparatory meetings and executive sessions.

ROLE OF MANAGEMENT AND THE CEO IN SETTING EXECUTIVE COMPENSATION

Management leads the development of our compensation programs and considers market competitiveness, business results, experience, and individual performance in evaluating NEO and other Section 16 Officer compensation. The Executive Vice President of Human Resources and other members of our human resources organization, together with members of our finance and legal organizations, work with the CEO to design and develop compensation programs and implement the decisions of the HRC Committee. Management also recommends changes to existing plans and programs applicable to NEOs and other senior executives, as well as financial and other targets to be achieved under those programs, and prepares analyses of financial data, peer comparisons, and other briefing materials to assist the HRC Committee in making its decisions. During fiscal 2017, management continued to engage Meridian Compensation Partners, LLC ("Meridian") as its compensation consultant. Because Meridian is engaged by management, the HRC Committee has determined that they are not independent. This was taken into consideration when any information or analyses were provided by Meridian, all of which were also reviewed by FW Cook on behalf of the HRC Committee.

For fiscal 2017, Ms. Whitman provided input to the HRC Committee regarding performance metrics and the setting of appropriate Company-wide and business-specific performance targets. Ms. Whitman also recommended target qualitative goals (Management by Objectives, or "MBOs") for the NEOs and the other senior executives who reported directly to her. Ms. Whitman was not involved in deliberations regarding her own compensation. She was subject to the same financial performance goals as the executives who led global functions, and Ms. Whitman's MBOs and compensation were approved by the independent members of the Board upon the recommendation of the HRC Committee, which was determined in executive session.

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Detailed Compensation Discussion and Analysis

The Compensation Discussion and Analysis or "CD&A" describes the material elements of compensation for the fiscal 2017 NEOs, who are listed below:


Name



Title
Margaret C. Whitman   Chief Executive Officer (through February 1, 2018)
Timothy C. Stonesifer   Executive Vice President and Chief Financial Officer
Antonio F. Neri   President (CEO and President, effective February 1, 2018)
John F. Schultz (1)   Executive Vice President, General Counsel and Secretary
Henry Gomez   Executive Vice President, Chief Marketing and Communications Officer
Christopher P. Hsu (2)   Former Executive Vice President, Chief Operating Officer, and General Manager, Software
(1)
Effective November 29, 2017, Mr. Schultz's title was changed to Executive Vice President, Chief Legal and Administrative Officer and Secretary to reflect his additional responsibilities.

(2)
Effective August 31, 2017, Mr. Hsu separated from his role at HPE to become the CEO of the newly combined Software and Micro Focus Company. However, since his compensation exceeded that of the next most highly compensated executive officer, he is reported as an NEO in this proxy statement.

COMPONENTS AND MIX OF COMPENSATION

Our primary focus in compensating executives is on the longer-term and performance-based elements of target compensation. The chart below reflects HPE's three main executive compensation components. Under the executive compensation program, over 90% of Ms. Whitman's fiscal 2017 target total direct compensation was variable, and on average, 87% was variable for other NEOs.

GRAPHIC

 

GRAPHIC

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The table below describes HPE's pay components, along with the role and factors for determining each pay component applicable to our NEOs in fiscal 2017.

PAY COMPONENT
  ROLE
  DETERMINATION FACTORS
         

Base Salary

 

Fixed portion of annual cash income

 

Value of role in competitive marketplace

   

Criticality of the role to the Company

   

Skills, experience, and performance of individuals compared to the market as well as internal equity

Annual Incentive (i.e., Pay-for-Results)

 

Variable portion of annual cash income

Focuses executives on annual objectives that support long-term strategy and value creation

 

Target awards based on competitive marketplace, internal equity, and level of experience

Actual awards based on performance against annual goals at the corporate, business segment (where applicable), and individual levels

Long-term Incentives:

PCSOs

RSUs

 

Reinforces need for long-term sustained performance

Aligns interests of executives and stockholders, reflecting the time horizon and risk to investors

Encourages equity ownership

Encourages retention

 

Target awards based on competitive marketplace, level of executive, internal equity, and skills and performance of executive

Realized value relative to target based on actual performance against rigorous pre-established stock price performance goals

All Other:

Benefits

Perquisites

Severance Protection

 

Supports the health and security of our executives, and their ability to save on a tax-deferred basis

Enhances executive productivity

 

Competitive marketplace

Level of executive

Standards of good governance

Desire to emphasize performance-based pay

Process for Setting and Awarding Fiscal 2017 Executive Compensation

The Board and the HRC Committee regularly explore ways to improve our executive compensation program. Fiscal 2017 target compensation levels for HPE executives were determined by the HRC Committee. In making changes for fiscal 2017, the HRC Committee considered the evolution of HPE's business and business needs, as well as appropriate levels of compensation in comparison to HPE's post spin-merge peer companies. The objectives were to encourage strong performance, pay commensurately with performance, and align the interests of HPE's executives with those of HPE's stockholders.

The HRC Committee and the Board considered a broad range of facts and circumstances in setting

our overall executive compensation levels. Among the factors considered for our executives generally, and for the NEOs in particular, were market competitiveness, internal equity, and individual performance. The weight given to each factor may differ from year to year, is not formulaic, and may differ among individual NEOs in any given year. For example, when we recruit externally, market competitiveness, experience, and the circumstances unique to a particular candidate may weigh more heavily when determining compensation levels. In contrast, when determining year-over-year compensation for current NEOs, internal equity and individual performance may weigh more heavily in the analysis.

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Because such a large percentage of NEO pay is performance based, the HRC Committee spent significant time determining the appropriate metrics and goals for HPE's annual and long-term incentive pay plans. In general, for fiscal 2017 compensation, management made an initial recommendation of goals, which were assessed by FW Cook, and then were discussed and approved by the HRC Committee. Major factors considered in setting goals for each fiscal year include business results from the most recently completed fiscal year, business-specific strategic plans, macroeconomic factors, competitive performance results and goals, conditions or goals specific to a particular business, and strategic initiatives.

In addition, the HRC Committee considered feedback from our stockholders and the results of our most current Say on Pay vote. Our fiscal 2016 Say on Pay vote reflected 83.3% support from our stockholders. The HRC Committee believes this indicates that our stockholders support the

philosophy, strategy, and objectives of our executive compensation programs.

In setting incentive compensation for the NEOs, the HRC Committee generally did not consider the effect of past changes in stock price, expected payouts, or earnings under other programs. In addition, incentive compensation decisions were made without regard to length of service or awards in prior years.

Following the close of fiscal 2017, the HRC Committee reviewed actual financial results and MBO performance against the goals under our incentive compensation programs for the year. Actual payouts were determined by reference to performance against the established goals, and the HRC Committee's authority to exercise negative discretion. In addition, the HRC Committee met in executive session without members of management present, to review the MBO results for Ms. Whitman, which were then approved by the independent members of the Board.

Determination of Fiscal 2017 Executive Compensation

FISCAL 2017 BASE SALARY

Consistent with a philosophy of linking pay to performance, our executives received a small percentage of their target total direct compensation in the form of base salary. The NEOs are paid an amount of base salary sufficient to attract qualified executive talent and maintain a stable management team. The HRC Committee targeted executive base salaries to be at or near the market median for comparable positions at our peer companies, and to generally comprise approximately 10% to 15% of the NEOs' overall target total direct compensation, which is consistent with the practice of peer-group companies.

For fiscal 2017, the Board maintained Ms. Whitman's salary at $1.5 million, unchanged since fiscal 2014. As part of HPE's annual compensation-management process, Ms. Whitman recommended, and the HRC Committee reviewed and approved, the following fiscal 2017 base salary increases to more closely align other NEOs with similar executives of HPE peer companies. In addition, the HRC Committee approved a 10% salary increase for Mr. Neri as a result of his promotion to President of HPE in June 2017.

 

Annual Base Salary


       
 

Named Executive Officer



Fiscal 2016

Fiscal 2017

Increase % (1)
 

Margaret C. Whitman

  $ 1,500,000   $ 1,500,000   0%  
 

Timothy C. Stonesifer

  $ 675,000   $ 725,000   7%  
 

Antonio F. Neri

  $ 725,000   $ 800,000   10%  
 

John F. Schultz (2)

  N/A   $ 725,000   N/A  
 

Henry Gomez (2)

  N/A   $ 700,000   N/A  
 

Christopher P. Hsu

  $ 675,000   $ 700,000   4%  
(1)
Increase percentages may be rounded

(2)
Prior to fiscal 2017, Messrs. Schultz and Gomez were not identified as NEOs, and therefore compensation prior to fiscal 2017 is not disclosed

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FISCAL 2017 ANNUAL INCENTIVES

Pay-for-Results ("PfR") Program Design

The NEOs are eligible to earn an annual incentive under our 2015 Stock Incentive Plan. The target annual incentive awards for fiscal 2017 were set at 200% of salary for Ms. Whitman, and 125% of salary for the other NEOs.

The performance metrics approved by the HRC Committee aligned with HPE's intention to focus business leaders more directly on the financial performance of their own business segments. The fiscal 2017 annual incentive program consisted of three core financial metrics: net revenue, net/operating profit, free cash flow as a percentage of revenue ("FCF") and, as a fourth metric, individual MBOs. With the exception of NEOs aligned with the Software business, each metric was weighted equally at 25% of the target award value. The applicable net revenue, net profit, and FCF targets for business leaders relate to their respective business segments. For others, those metrics relate to overall corporate performance.

GRAPHIC

(1)
Annual incentive design for Software was based on 25% revenue, 50% managed operating profit, and 25% MBOs

The specific metrics, their linkage to corporate or business results, as applicable, and the weighting that was placed on each, were chosen because the HRC Committee believed:

    performance against these metrics enhances value for stockholders, capturing both the top and bottom line, as well as cash and capital efficiency;

    requiring both revenue and profitability to be above target in order to achieve an above-target payout on these two measures encourages the pursuit of profitable revenue;

    a linkage to business-segment results for business leaders strengthens line of sight and drives accountability;
    a balanced weighting and various caps limit the likelihood of rewarding executives for taking excessive risk;

    using different measures avoids paying for the same performance twice; and

    individual MBOs enhance focus on business objectives, such as operational objectives, strategic initiatives, succession planning, and talent development, which are important to the long-term success of the Company.

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These financial performance metrics are defined and explained in greater detail below:

  Fiscal 2017 PfR
   
  Financial Performance Metrics

Definition (1)
Rationale for Metric
  Corporate Revenue   Net revenue as reported in HPE's Annual Report on
Form 10-K for fiscal 2017

 
Reflects top line financial
performance, which is a strong
   
  Business Revenue   Business-segment net revenue as reported in HPE's Annual Report on Form 10-K for fiscal 2017   indicator of our long-term ability
to drive stockholder value
  Corporate Net Profit   Non-GAAP net earnings, as defined and reported in HPE's fourth quarter fiscal 2017 earnings press release, excluding bonus net of income tax (2)   Reflects bottom line financial
performance, which is directly
tied to stockholder value on a
   
  Business Net Profit   Business-segment net profit, excluding bonus net of income tax   short-term basis
  Managed Operating Profit   Business-segment operating profit before bonus, defined as net revenue less business owned cost of sales, OPEX (e.g. WW owned costs, corporate business owned costs) and associated global functions allocations   Reflects efficiency of business segment management, including both overall demand for products and cost management. Additionally reflects key focus on one of the most critical measures for a successful spin-merge transaction of the Software business
  Corporate Free Cash Flow as a Percent of Revenue   Cash flow from operations less net capital expenditures (gross purchases less retirements) divided by net revenue (expressed as a percentage of revenue)   Reflects efficiency of cash
management practices,
including working capital and
capital expenditures
  Business Free Cash Flow as a Percent of Revenue   Business-segment cash flow from operations less net capital expenditures (gross purchases less retirements) divided by business segment revenue (expressed as a percentage of revenue)   Reflects efficiency of business-specific cash management practices, including working capital and capital expenditures
(1)
While financial results are reported in accordance with generally accepted accounting principles ("GAAP"), financial performance targets and results under incentive plans were sometimes based on non-GAAP financial measures. The financial results, whether GAAP or non-GAAP, may be further adjusted as permitted by those plans and approved by the HRC Committee. The HRC Committee reviewed GAAP to non-GAAP adjustments and any other adjustments to ensure performance took into account the way the goals were set and executive accountability for performance. These metrics and the related performance targets are relevant only to HPE's executive compensation program and should not be used or applied in other contexts.

(2)
Fiscal 2017 non-GAAP net earnings exclude after-tax costs related to the amortization of intangible assets, restructuring charges, acquisition and other-related charges, separation costs, transformation costs, disaster charges, defined benefit plan settlement charges and remeasurement benefit, an adjustment to loss from equity interests, tax indemnification adjustments and valuation allowances, net and separation taxes. HPE's management used non-GAAP net earnings to evaluate and forecast HPE's performance before gains, losses, or other charges that were considered by HPE's management to be outside of HPE's core business segment operating results. We believe that presenting non-GAAP net earnings provides investors with greater visibility to the information used by HPE's management in its financial and operational decision making. We further believe that providing this additional non-GAAP information helps management to evaluate and measure performance. This additional non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP net earnings.

In consideration of HPE's continued business transformation and the considerable impact of foreign exchange rates, the HRC Committee approved plan mechanics in the beginning of the performance period to non-discretionarily revise any internal financial goals for business transformation transactions that have a material impact to HPE's

revenue, and to limit foreign exchange impact on actual performance results to no more than +/– 5%. The HRC Committee continues to have negative discretion to the extent it decides against revising the performance goals, and can review and approve adjustments below the initially set guidelines in special cases.

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Executive Compensation — Compensation Discussion and Analysis   (continued)

Design Changes for Fiscal 2017

The terms of the fiscal 2017 annual incentive program remained largely consistent with those of the program from the prior year, but there were two changes made to better align executives' interests to the interests of our stockholders:

    For business-segment level NEOs, the capital management financial metric was changed from "HPE FCF as a percentage of revenue" to "Business FCF as a percentage of revenue," to

better hold the leaders of each business accountable for their results.

    The profit metric for the leader of the Software business segment was changed from "business net profit" to "managed operating profit," to better hold the leader accountable for results that they control and influence, including global function allocations and the unallocated corporate items directly managed by them.

Fiscal 2017 Financial Results

Shortly after the completion of the fiscal year, the HRC Committee reviewed and determined performance against the corporate financial metrics as follows:

 

Fiscal 2017 PfR Program—Corporate Performance Against Financial Metrics (1)

       
 

Metric


Weight
Target (2)(3)
($ in billions)


Result (4)
($ in billions)


Percentage of
Target Annual
Incentive
Funded
 

Revenue

  25.0%   39.1   37.4   13.19%
 

Net Profit

  25.0%   2.8   2.4   7.22%
 

Free Cash Flow (as % of revenue)

  25.0%   1.41%   1.26%   8.99%
 

Total

  75.0%       29.40%
(1)
Corporate targeted performance and final results included ES/SW performance to ensure that HPE and ES/SW leadership teams were held accountable for business performance prior to the closing of the spin-merge transactions.

(2)
Corporate targets are only disclosed after the end of the performance period. The Company does not disclose the targets pertaining to its business segments because this information is not otherwise publicly disclosed by the Company, and the Company believes it would cause competitive harm to do so in this proxy statement. Consistent with financial targets that are communicated to stockholders, business-segment targets were set at levels necessary to drive stockholder value.

(3)
Consistent with the HRC Committee's guidance previously described, financial metric goals were revised due to the SGI and Nimble Storage acquisitions, each of which were greater than the pre-determined threshold set at the beginning of the performance period.

(4)
Consistent with the HRC Committee's guidance previously described, corporate free cash flow results have been adjusted to reduce the impact of foreign currency fluctuations based on pre-determined levels approved at the time the initial program performance goals were set.

DETAILED DISCUSSION OF MBOs

With respect to performance against the MBOs, the independent members of the Board evaluated Ms. Whitman's performance during an executive session held shortly following the end of the fiscal year. The evaluation included an analysis of Ms. Whitman's performance against all of her individual MBOs, which included, but were not limited to: ensuring the successful and timely closure of both the ES/CSC and SW/Micro Focus spin-merge transactions, delivering on HPE's strategy and improving growth and operating margins for the remaining HPE portfolio, and regaining revenue growth momentum by even

greater direct engagement with customers, partners, and large scale service providers/integrators.

After conducting a thorough review of Ms. Whitman's performance, the independent members of the HPE Board determined that Ms. Whitman's MBO performance had been achieved above target. Ms. Whitman's accomplishments included:

    successfully executing the ES/CSC and SW/Micro Focus spin-merge transactions, in a timely manner and under budget, while unlocking $13.5 billion and $8.8 billion in stockholder value, respectively;

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    executing HPE's business strategy by leading a high level of M&A activity, including the acquisitions of SimpliVity, SGI, Nimble Storage, Niara, Cloud Cruiser, and Cloud Technology Partners, most of which were performing at or better than financially planned as of fiscal year-end;

    generating significant business by resetting HPE's relationship with key customers, and achieving a number of high profile sales wins; and

    engineering HPE Next, a transformative set of initiatives to optimize HPE's current portfolio into a higher performing business model that will create improved stockholder returns over the next three years and beyond.

As the former CEO, Ms. Whitman evaluated the performance of other Section 16 Officers and presented her recommendations based on those evaluations to the HRC Committee shortly following the end of the fiscal year. The evaluations included an analysis of each officer's performance against their individual MBOs, which are intended to be differentiated performance metrics. After discussion, the HRC Committee determined the degree of attainment of the MBOs. The results of these evaluations and selected MBOs for the other NEOs are summarized below:

Mr. Stonesifer.     The HRC Committee determined that Mr. Stonesifer's MBO performance had been achieved at target. HPE achieved earnings per share in line with expectations at year-end, and also delivered on its commitments of share repurchases and dividends. Mr. Stonesifer's oversight of complex spin-merge agreements, acquisition integration, and financial performance following the transactions were noteworthy in ensuring HPE met or exceeded investment plans.

Mr. Neri.     The HRC Committee determined that Mr. Neri's MBO performance had been achieved above target. While the Enterprise Group business underperformed in a highly challenging year due to intense pricing actions by scale competitors and commodity inflation, Mr. Neri played a key role in strengthening HPE's portfolio though several successful acquisitions, most of which performed at

or better than financially planned as of the end of fiscal 2017. In addition, Mr. Neri's performance excelled as he pivoted from his prior role as Executive Vice President of the Enterprise Group to a more strategic role as President of HPE. He successfully collaborated with Ms. Whitman and the Board to craft the go-forward HPE strategy and financial architecture and ultimately assumed leadership of HPE Next, the primary planning and operational vehicle for a highly transformative set of strategic shifts in product positioning, go-to-market focus, and business process improvements designed to deliver the 2018-20 business plan.

Mr. Schultz.     The HRC Committee determined that Mr. Schultz's MBO performance had been achieved above target. He continues to be a leader among corporate General Counsels and he drove a significant increase in productivity across the Office of the General Counsel. Through his intensive personal effort and deep expertise, both highly complex spin-merge transactions closed on time and under budget. Mr. Schultz continued to excel, not only in his traditional role as General Counsel, but also as a driving force for a number of key strategic HPE initiatives.

Mr. Gomez.     The HRC Committee determined that Mr. Gomez's MBO performance had been achieved above target. He delivered world class marketing and communications support across the organization in fiscal 2017, despite significant changes in the product portfolio due to complex spin-merge activity, six acquisitions, and considerable external market headwinds. His leadership helped improve HPE sales performance and maintain brand relevance. In addition, Mr. Gomez made significant contributions to the HPE Next initiative, including extensive and complex communications efforts.

Mr. Hsu.     The HRC Committee determined that Mr. Hsu's MBO performance had been achieved above target. He successfully executed the on-time and under-budget closure of both the ES/CSC and SW/ Micro Focus spin-merge transactions, generating significant stockholder value. Mr. Hsu simultaneously drove a major turnaround in the Software business, resulting in substantial operating profit improvement year-over-year. Following the closure of the Software spin-merge transaction, Mr. Hsu transitioned to CEO of Micro Focus.

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Executive Compensation — Compensation Discussion and Analysis   (continued)

Based on the findings of these performance evaluations, the HRC Committee (and, in the case of Ms. Whitman, the independent members of the Board) evaluated performance against the non-financial metrics for the NEOs to determine the overall level of achievement in the table below. HPE does not disclose detailed MBO goals for each NEO out of concern for competitive harm.

 

Fiscal 2017 PfR Program Performance Against Non-Financial Metrics (MBOs)

     
 

Named Executive
Officer



Actual Performance
as a Percentage
of Target
(%)




Weight
(%)


Percentage of
Target Annual
Incentive Funded
(%)
 

Margaret C. Whitman

  185   25   46.25
 

Timothy C. Stonesifer

  100   25   25.00
 

Antonio F. Neri

  150   25   37.50
 

John F. Schultz

  175   25   43.75
 

Henry Gomez

  125   25   31.25
 

Christopher P. Hsu

  150   25   37.50

Based on the fiscal 2017 financial and non-financial level of performance described above, the calculated annual incentive results for the NEOs under the PfR program ranged between 44% and 100% of target. However, due to the underachievement of HPE's financial performance overall, the HRC Committee (and the independent members of the Board, in the case of Ms. Whitman) applied negative discretion and determined that no annual incentive awards would be paid to the NEOs, or other Section 16 Officers for fiscal 2017. The calculated annual incentive awards prior to the HRC Committee's application of negative discretion are reflected in the table below.

GRAPHIC

Fiscal 2017 PfR Program Annual Incentive Payout

             

  Percentage of Target Annual
Incentive Funded


Total Annual Incentive
Payout
             

Named Executive
Officer



Annual
Salary (1)
($)



Annual
Incentive
Target
(%)




Financial
Metrics
(%)



Non-Financial
Metrics
(%)



As % of
Target Annual
Incentive
(%)




Calculated
Results
Prior to
Discretion (2)
($)





Actual
Payout After
Discretion (2)
($)

Margaret C. Whitman

  1,500,000   200   29.40   46.25   75.65   2,269,618  

Timothy C. Stonesifer

  725,000   125   29.40   25.00   54.40   493,036  

Antonio F. Neri

  752,403   125   6.26   37.50   43.76   411,603  

John F. Schultz

  725,000   125   29.40   43.75   73.15   662,958  

Henry Gomez

  700,000   125   29.40   31.25   60.65   530,722  

Christopher P. Hsu

  583,333   125   62.52   37.50   100.02   729,292  

    

                           
(1)
Mr. Neri's salary and target annual incentive amounts have been prorated based on a salary increase effective June 21, 2017. Mr. Hsu's salary and target annual incentive amounts have been prorated based on his 10 months of fiscal 2017 HPE employment.

(2)
Due to HPE's financial achievement overall, and to align with HPE's pay-for-performance philosophy, the HRC Committee exercised its authority to apply negative discretion and did not approve any annual incentive payouts for fiscal 2017.

Within the first 90 days of fiscal 2017, the HRC Committee established an "umbrella" pool under which a maximum bonus was determined in order to permit awards to be eligible to be considered qualified performance-based compensation under

Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Under the umbrella formula, each Section 16 Officer was allocated a pro rata share of 1.0% of net earnings based on his or her target annual incentive award, subject to a

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maximum bonus of 200% of each NEO's target bonus, and the maximum $10 million cap under the PfR program. After certifying the size of the pool and the individual allocations, which were each in excess of the maximum potential bonus for the Covered Officers, the HRC Committee determined actual payouts through the exercise of negative discretion based upon financial metrics and MBOs established by the HRC Committee for Section 16 Officers and by the independent members of the Board for Ms. Whitman, as described above.

LONG-TERM INCENTIVES

Fiscal 2017 Award Mix

The HRC Committee established a streamlined LTI design for our NEOs that consisted of two vehicles in preparation for the ES/CSC and SW/Micro Focus spin-merge transactions completed in fiscal 2017. The equity award types and value-based mix were considered appropriate for fiscal 2017 given the difficulty in forecasting multi-year financial performance in light of the spin-merge transactions.

The fiscal 2017 LTI award value-based vehicle mix for the NEOs is shown in the following chart:

GRAPHIC

    PCSOs support stockholder alignment as these options only create value for the recipient to the extent that our stock achieves rigorous pre-established stock price performance goals. As a result, we believe performance-contingent stock options encourage executives to focus on driving stock price appreciation and stockholder value. This grant vests ratably over three years to the extent performance conditions are achieved.

    RSUs support retention and are linked to stockholder value and ownership, which are also important goals of HPE's executive compensation program. This grant vests ratably over three years from the date of grant.

Fiscal 2017 LTI Grant Values

The HRC Committee, and in the case of Ms. Whitman, the independent members of the Board, approved the value of fiscal 2017 annual LTI awards for the NEOs based on factors such as: competitive market data, internal equity, individual performance, and the executives' potential future contributions.

Fiscal 2017
Annual LTI Award Values

 
     

Named
Executive
Officer



 


PCSOs
(50%)




RSUs
(50%)




Total
LTI Value
(100%)
 

M. Whitman

  $ 6,500,000   $ 6,500,000   $ 13,000,000  

T. Stonesifer

  $ 2,000,000   $ 2,000,000   $ 4,000,000  

A. Neri

  $ 2,250,000   $ 2,250,000   $ 4,500,000  

J. Schultz

  $ 1,375,000   $ 1,375,000   $ 2,750,000  

H. Gomez

  $ 1,375,000   $ 1,375,000   $ 2,750,000  

C. Hsu

  $ 2,000,000   $ 2,000,000   $ 4,000,000  

These values represent the target dollar value of awards granted. Actual grant date fair value may vary slightly. In addition, these values do not include the impact of one-time accounting costs resulting from the conversion of equity awards following the close of the ES/CSC spin-merge transaction.

For more information on NEO grants of PCSOs and RSUs during fiscal 2017, see " Grants of Plan-Based Awards in Fiscal 2017 " table.

Fiscal 2017 PCSOs

The PCSOs were structured to have both ratable time-based vesting requirements and performance conditions in the form of pre-established stock price performance goals. Each of the three vesting tranches risk forfeiture unless the stock price performance goals are met within two, four, and five years respectively. In setting the stock price performance goals required for the PCSOs to vest, the HRC Committee considered not only the stock price itself, but also the underlying compound annual growth rate required both to achieve vesting in the targeted three years, as well as to avoid forfeiture by meeting stock price performance goals in later years.

The annual PCSOs were granted to the NEOs on December 7, 2016, with a grant price of $14.67. As of the end of fiscal 2017, each of the three stock price performance goals were unmet.

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2018 PROXY STATEMENT

 

 

 

 

 

 

 

 

 

 

Executive Compensation — Compensation Discussion and Analysis   (continued)

Additional details regarding the fiscal 2017 PCSO design are described in the table below.

 

Fiscal 2017 PCSO Design

         
 

              Minimum
Compound Annual Growth Rate
         
 

Tranche


Time-vesting
Requirement


Minimum Stock
Price Performance
Goal Required For
Vesting (1) (2)




Forfeiture Date
If Stock Price
Performance Goal
Is Not Met




For Ratable
Vesting
Over Three Years



For Vesting
Prior To Tranche
Forfeiture Date
 

Tranche One

  December 7, 2017   $16.87
(115% of the grant price)

 
December 7, 2018   15.0%   7.2%
 

Tranche Two

  December 7, 2018   $18.33 (125% of the grant price)   December 7, 2020   11.8%   5.7%
 

Tranche Three

  December 7, 2019   $19.80 (135% of the grant price)   December 7, 2021   10.5%   6.2%
 

    

                   
(1)
The 20-day moving average of HPE's closing stock price must be at or above the specific stock price performance goal (at any point during the performance period) to satisfy the performance-based vesting requirement

(2)
The grant price and stock price performance goals have been formulaically converted due to the Enterprise Services and Software spin-merge transactions based on the conversion ratio determined by dividing the close price immediately prior to each transaction by the opening price immediately following each transaction

Design Changes for Fiscal 2017

Management recommended, and the HRC Committee approved, certain changes to the equity vehicle weighting for our fiscal 2017 grant. The fiscal 2017 annual equity awards were granted fifty percent in PCSOs and fifty percent in RSUs to acknowledge the goal-setting challenges in fiscal 2017 due to the expected spin-merge transactions and to further support stability and stockholder alignment. As noted previously, given the difficulty in forecasting multi-year financial performance in light of the spin-merge transactions, this value-based equity mix was considered appropriate for fiscal 2017. PARSUs have been reintroduced in fiscal 2018 which is further discussed in the " Fiscal 2018 Compensation Program " section.

 

  Annual LTI Vehicle Mix
         
 

  PARSUs
RSUs
Stock Options
PCSOs
Total
 

Fiscal 2017

  N/A   50%   N/A   50%   100%
 

Fiscal 2016

  50%   25%   25%   N/A   100%