Hewlett-Packard cuts pay and benefits

2009-02-20

Hewlett-Packard is reducing employee compensation and benefits following a drop in profits.

The international technology firm, which employs about 20,000 staff in the UK, plans to cut employee pay by 5%, although for some workers it will be 2.5%.

It announced the changes during its first-quarter earnings conference call in which it revealed a 5% drop in first-quarter 2009 profits to $2.5bn.

The firm's chief executive, Mark Hurd, will see his base salary reduced by 20%, while other executives will suffer pay reductions of 10-15%.

Other benefits will be cut back, with US employees' pension contributions being capped at 4% and employer contributions becoming discretionary based on company performance.

Staff will also no longer be able to purchase company shares at a discount.

Hewlett-Packard could not comment on how many UK workers will be affected by the changes.

A spokesperson said: "While the actions we are taking are difficult, we believe they will allow us to emerge from this recession in a powerful position to create value for our customers, employees and shareholder over the long term and be in a better position to fund 2009 bonus programmes."