February 22, 2009

HP imposes staff wage cuts

Hewlett-Packard workers fired up their PCs Friday morning to find a long memo from Mark Hurd explaining why he was imposing wide-ranging pay cuts in an effort to prevent further job losses at the computer vendor.

HP CEO Hurd told employees yesterday that no more jobs would be axed for the foreseeable future. Instead he applied salary reductions across the board.

Executive council members will have base pay trimmed by 15 per cent; other execs will see base pay reduced by 10 per cent; “exempt employees” base salary takes a five per cent hit; and “non-exempt employees” base pay drops 2.5 per cent.

Source: The Register


  1. That is a much better solution than layoffs. I like how they structure the cuts.

    Comment by myphotoscout — February 22, 2009 @ 10:58 pm | Reply

  2. Whats teh guarantee that there will not be any lyoffs after the pay cuts??

    Comment by Raj — February 22, 2009 @ 11:21 pm | Reply

  3. EDS is sinking togather with HP

    Comment by Roonie — February 23, 2009 @ 12:14 am | Reply

  4. Much better that layoffs? They already fired 20,000 people last year!
    Mister Hurd offered to cut his own base pay with 20%, wow what an offer! And the employees will only loose 2.5% TO 5%… Sounds fantastic. But let’s look into this: HP gave Mark Hurd $25.4 million in cash last year, including his $1.45 million base salary plus $23.9 million in bonus money. Now for a little calculation: 20% off his base pay of $1,450,000 is $290,000. But compared to his total compensation ($42,514,524 in 2008), $290,000 is LESS than ONE PER CENT.
    And he even won’t gauarantee that people who VOLUNTEER to get a pay cut will keep their job. He doesn’t even guarantees that this is only a temporary measure. A load of BS if you ask me. Don’t be fooled by this lying XXX.
    BTW: he drives a company car, a company plane, eats for free, has $2,000,000 stock options, free insurance, free pension fund plan, free who knows what.

    Comment by Mike NURD — February 23, 2009 @ 5:51 am | Reply

  5. #2 There’s no guarantee, of course. But the less employees earn, the less there’s incentive to lay them off. Asymptotically, if everyone is paid $0, nobody is going to be laid off.

    Comment by Kris K. — February 23, 2009 @ 7:39 am | Reply

  6. They continue to do layoffs related to the EDS integration, and are looking at job architecture to find a way to do demotions too. People will not automatically see their pay increased by the percentage taken when the economy turns around. Hurd did away with the pension program and retiree health benefits a few years earlier for rank and file employees (he and senior execs still have these things, however). Factoring in the lost benefits, some people are probably making less than they did a decade ago. Also, HP is reserving the right to do additional layoffs that are not related to EDS if the economy continues to tank.

    Comment by Sbernicca — February 23, 2009 @ 10:57 am | Reply

  7. The question is will HP lay off the same number of employees they were going to anyway (as many as HP can) and THEN lower everyone elses pay. I would gladly take a pay decrease in this economy in order to secure my job, but if this is just a ploy to lower salaries while HP continues figuring out how to ship more jobs to third world countries then Mark should be tarred and feathered for the traitor to the United States citizen that he is!

    Comment by John W — February 23, 2009 @ 5:27 pm | Reply

  8. Which divisions within HP-EDS will be affected the most?

    Comment by Ricky Myers — February 23, 2009 @ 8:43 pm | Reply

  9. I attended the Town-Hall meeting this afternoon in the Sacramento, CA area. While there was a seemingly simple effort made to answer questions, we could have received the same information via e-mail! The very same way the pay reduction was announced to thousands of loyal employees! There was less information shared today than in the long e-mail sent by Mike Hurk, cleverly disguising the forthcoming pay reductions. We were told mid to late last year that there would be no wage increases (raises, pay for performance…whatever it is you wish to call it) until some time in 2010. While that was a hard pill to swallow and made us feel a bit underappreciated, we were thankful for our positions and benefits and trudged forward. We continued to capture new business and then the BIG news… HP was buying EDS for a record breaking 13.9 billion dollars. WooHoo, things could only look up…RIGHT?! WRONG! Now don’t get me wrong, I don’t blame this recession on my employers and I know that they, just like all of us have to find ways to meet obligations on a regular basis. They have failed us here. We still have Executive staff collecting large bonus funds, so the bottom line is that their “reductions of 20%-10%” is solely from their EDS salaries, equaling much less than their proposed cuts. Why weren’t the millions of dollars in bonus funds included? This helps create a “total” wage for these folks. My entire wage is up for grabs! I am bringing this down to the “bread and butter” folks here… We get an electric bill, a phone bill, a car or home note in the mail… Can we tell the folks who provide our services that “due to a larger than anticipated loss this quarter, we cannot pay you for all of the services you have provided to us?” We all know that it just won’t work that way.

    Comment by Dazed and Confused — February 25, 2009 @ 9:11 pm | Reply

  10. Since when has making 1.9 Billion dollars nett profit in a little over 12 weeks been a legitimate excuse to cut the salaries of hundreds of thousands of people world wide? I would suggest never in a million years, Mark Hurd has revealed his true colors with this one.

    First we need to put Mark Hurd’s 20% salary cut into perspective, remember he is only taking a cut to his base salary ($1,450,000) which amounts to a $290,000 drop. Seems quite reasonable until you examine the following, publicly available, information.

    * Mark Hurd’s total compensation in 2008 was $42,514,524
    * His compensation in fiscal year 2007 was $25,253,461 – so, by my calculations a 68% increase in the total package from 2007 to 2008.
    * He also exercised $10 million worth of stock options and had $15.7 million worth of HP stock vest during the 2008 period
    * His compensation package includes approximately $738,000 worth of additional compensation;

    * Personal and home security – $256,000
    * Personal use of HP’s corporate jet – $135,734 (you have to love that don’t you?)
    * $71,000 in mortgage subsidy he is guaranteed for relocation expenses under his employment agreement.

    So, the question is; what’s the significance of his stated 20% cut in base salary? I would suggest next to nothing.

    6 people at the top of the HP pyramid accounted for $142,774,325 in compensation in 2008 alone. That is an obscene amount of money.

    See my blog for the gory details

    Comment by Damian — February 26, 2009 @ 5:58 pm | Reply

  11. At least, here at Dell, they chose to cut off on expense and not on salary… =)

    Comment by Cypher — March 5, 2009 @ 2:17 pm | Reply

  12. Don’t trust these people as they have already decided on the number of people to axe, the 5% is just iceing on the cake, and will probaly increase Hurd’s bonus.

    The only reason the world economy is on its knees is because of people like Hurd. Greedy bunch of AH’s who keep on punishing their staff by moving work off shore, creating unemployment, which then results in a decrease in spending and creates more unemployment.
    These people are greedy greedy greedy. They don’t care what they have done to the average person, all they are worried about is pleasing the shareholder’s so that they can get their big fat bonuses. Problem now is that it’s gone too far and shareholder,
    ‘s have been punished as well.

    btw, did you know the top 6 earn $150m, that’s about 3000 positions. Maybe they should offer to work for 12 months on no pay and save these 3000 positions. I’m sure they can afford it.

    Comment by mike turd — March 8, 2009 @ 2:32 am | Reply

  13. Mr. Hurd only has focus for the “stockholders” (read “speculators”), his direct reports and himself. The last 2 categories (6 people) cost the company ca. $ 143M per year (salary, bonuses and expenses). He doesn’t give a F… for the rest of the company. I hope Mr. Obama will put a stop to this ridiculous grab culture. Mr. Hurd is destroying a perfectly healthy company by enriching himself and his 5 friends in the board.

    Comment by EDS employee — March 9, 2009 @ 4:43 am | Reply

  14. The ordinary person must rise against these people.

    Comment by Joe Blow — March 11, 2009 @ 9:53 pm | Reply

  15. Unite and bring them down.

    Comment by Joe Blow — March 11, 2009 @ 9:54 pm | Reply

  16. Yep I agree with you all….we received another notice that we are now expected for the month of April to have a wage adjustment of 10%…that’s on top of the already 5% adjustment that starts 3/16. We’re supposed to get it back in May….hmmmm…is anyone out there asking this simple question – exactly what’s going to change in May. We all know the economy won’t magically be better in May. And Mr. Hurd finished up his letter with, there could be further adjustments as necessary in the coming months. What a load of crap! Nice to see how much money top executives are raking in, meanwhile – the staff work way too many hours, don’t get reimbursed for internet that your expected to have to perform your job or phone usage..and oh yeah, make sure we all continue to work hard. I’d like to see the top executives make major changes in their pay structures – if they want to bring wages in line …..then start with them first!!

    Comment by Iritated — March 14, 2009 @ 7:23 am | Reply

  17. I was expecting this situation to emerge as prices were going to high for our current fiscal and social structures to maintain it. I do agree in one comment; CEOs and other executive members are getting paid way too much. The only possible reasons of CEOs getting a high compensation package will be if they will be legally liable for civil, administrative and criminal law suits. In other words, if a CEO will be paying all HP legal fees- lawsuits etc. At that moment, CEO will need legal representation and take money from its own pockets! Lastly, how HP came up with the 10%- whole number? I would though that the percentage will based on fractions- i.e. 9.32. Refer to the Benford law – 10% looks to me devious.

    Comment by Mark Ben — March 17, 2009 @ 6:52 am | Reply

  18. These leeches are sucking the company dry.

    When it is done, they will move on to the next company…

    Comment by Dried out — March 27, 2009 @ 8:24 am | Reply

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