Pay cuts barely touch HP executives

Hewlett-Packard's top executives are unlikely to suffer in the company's voluntary pay cut programme despite agreeing to take pay cuts of up to 20%.

Computer Weekly has established that cuts will have no impact on the bonuses, shares and other benefits which make up the bulk of their pay packages.

Under the voluntry scheme, HP CEO, Mark Hurd's basic salary will be cut by 20%, members of the Executive Council will lose 15% and all other executives 10%. Other HP employees will have their salaries cut by 5% and 2.5%.

But HP's directors will be cushioned from the impact of cuts to basic pay by other elements of their total pay package which significantly outweigh their basic salaries.

Last year Mark Hurd earned $1.45m in basic salary. A 20% reduction in basic salary last year would have reduced his total earnings by £300,000. But he would still be left a total package worth $42m, equivalent to an overall paycut of 0.7%.

CFO Catherine A. Lesjak was paid $625,000 in basic pay but received a total package worth $5,552,356. Meanwhile CIO Randall D. Mott, was paid a salary of $690,000 but received total benefits worth $28,293,134.

HP's six most senior executives received almost $138m in benefits in 2008 compared to just under $72m in 2007, according to an SEC filing.

The cuts to basic pay being made by the company will have a proportionately bigger impact on the rank and file workers said Peter Skyte, National Officer at Unite.

He said the more people that accept the pay cut the higher the bonuses paid to Mark Hurd and other senior executives will be.

Robert Morgan, director at Hamilton Bailey, which advises suppliers, said HP is risking losing senior executives and a lot of intellectual property with them. "HP's strategy to cut costs is putting senior people back on the market. These people find it easy to get new jobs and HP is the poorer for this," he said.