Instead of laying off people during the crisis, HP decided to just cut pay on all executives and employees. In a letter to employees last Wednesday, Hewlett-Packard CEO Mark Hurd announced it’s going to make some salary adjustments across the board.
The full copy of the letter can be found at AllThingsD. A section that outlines the pay cut is below:
We have decided to further variablize our cost structure by reducing base pay and some benefits across HP. My base pay will be reduced by 20 percent. The base pay of Executive Council members will be reduced by 15 percent. The base pay of other executives will be reduced by 10 percent. The base pay of all other exempt employees will be reduced by 5 percent. For non-exempt employees, base pay will be reduced by two-and-a-half percent.
Additional efficiencies, including changes to the US 401(K) plan and the share ownership plan, will also be implemented. Of course, the implementation of all of these actions is subject to compliance with local laws and regulations. Follow-up communications will detail the timing and the plans in your location.
So this looks like a pay cut for the entire global workforce. I guess people would opt for a 5% salary deduction rather than get laid off completely. No confirmation yet if people in the HP Makati office is also affected by the pay cut (though as far as I know it’s against labor code to do so).
Loading ...
My HP friend told me that HP CEO Mark Hurd had a 68% salary increase the year before, while common employees like him had barely an increase (less than 5%).
Yep, the HP folks in the Philippines are greatly affected, and unhappy. HP is not yet in the red anyway.
^
Hmm, that’s interesting.
There has to be some sort of public or at least company-wide disclosure of HP’s financial status then.
Yugs, I believe that this is already accepted by DOLE (department of Labor & Employment) in reference with the existing Global financial crisis, Instead of down sizing the number of employees and giving retrenched benefits. This is better off than nothing(jobless).
although it’s against the labour code, there’s apparently a clause saying if the government gives them permission, then it can be implemented. the employees will also need to sign contracts in relation to it.
yes, the makati office is affected (looks like it’s a worldwide thing for them), and it apparently shocked their top management as well. but i think the employees would rather take the paycut rather than risk losing their jobs.
Yikes! One of my friends works there in HP Makati. Just last year, he was given a bonus package just to stay in the company (since many of his colleagues left for other companies) and now this. What a turn of events.
it’s really worldwide scale, in Taiwan same issue also reported, sigh~~~
Good for those who are working in HP. Unlike other electronics company, they are laying off workers due to the financial situation. It is better to have a job with a lesser pay than no job at all.
OMG! I thought everyone was silent about this news. I’m a Filipino and an HP employee here in Singapore. Well, probably most of the people think that we’re luckier.. coz a lot of employees from other companies have been terminated….
Too bad… sometimes i just wanna go back to philippines…. ;(
off topic- HAPPY BIRTHDAY YUGGER!
Is this really a world wide technology crisis?… OMG after the Intel Company and IBM here comes HP too… Whoooo, what will happen to Juan Dela Cruz I.T. experts…. But, its better to reduce the salary than reduce their people…
as of now, our country leadership team in HP has not released their official statement regarding this statement made by mark hurd. they are considering our labor code that regulates the reduction of salary. however, decision is yet to be released this week… balitaan ko n lan kayo kapag meron ng balita…
Hi Abe, Do you work at HP? You quoted the exact message in the e-mail. It’s OK to have pay cuts, i think its better than losing the job.
I’m an HP employee. It’s not true that Mark Hurd had a 68% increase in salary. He had a $68(point something) million in performance bonus and other company bonuses. He only has a base salary of 1.4M. Salaries and bonuses of CEOs are published and it’s not a secret. I got these figures in Yahoo! finance website.
It’s not that I’m protecting Mark or what but it’s better to provide true facts because wrong information just causes more trouble.
Quite acceptable except for the word “variablize.”
The 68% – I think it was calculated here. Source: http://hpwfr.blogspot.com/2009/01/hurd-got-pay-valued-at-34-million-in-08.html
Mark Hurd’s 20% base salary deduction = 1% of his total benefits.
“In 2008 Hurd’s base pay was $1.45 million (£1.01 million), this was topped up by bonus, pension, share option and incentive payments, bringing the total package to $42.4 million. Hurd’s salary reduction on his base pay will be $290,000, less than one percent of his total package.” Source: http://www.computerworlduk.com/management/careers-hr/people-management/news-analysis/index.cfm?articleid=2085
Business Week’s Profile on Mark Hurd’s Income:
http://investing.businessweek.com/businessweek/research/stocks/people/person.asp?personId=214256&symbol=HPQ
To get around country’s laws, HP asks for “voluntary” employee agreement for pay cut. Source: http://www.channelregister.co.uk/2009/02/20/hp_pay_cuts_europe_not_compulsory/
History repeats itself? Seems pay cut was done in HP Asia in 2001, but was not enough to deter layoffs that came later: http://www.zdnetasia.com/news/hardware/0,39042972,20098515,00.htm
interesting article you might want to read about this “paycut” since not “all” are disclosed by those announcements
http://www.damiansaunders.net/2009/02/26/commentary/hp-pay-cuts-an-unfair-act-of-economic-opportunism-and-greed/