HP pay cuts to hit Australia

The pay cuts announced by Hewlett Packard global CEO Mark Hurd today will apply to Australian staff at both HP and EDS, according to local spokespeople.

"It is a global announcement and does impact staff in Australia. We are working through a local implementation plan at the moment, which will be in line with Australian laws and regulations," a HP spokesperson told ZDNet.com.au this morning.

HP CEO: Mark Hurd
(Credit: HP)

Hurd today said he would take a 20 per cent cut to his salary, which was US$1.45 million last financial year, as well as US$42 million in bonuses, according to documents lodged with the US Security and Exchange Commission. Senior executives' pay would be cut by between 10 to 15 per cent, while other employees' base salaries would also be cut by between 2.5 to 5 per cent, he said.

Locally, those details have yet to be finalised, however, they are expected to reflect the cuts outlined by Hurd, said the spokesperson.

"Each manager will be working with staff members about what percentage impact it would have on them," they said. Briefings had already occurred this morning at a management level in Australia, in preparation to inform Australian staff today.

EDS Australia had also commenced a similar round of discussions with staff, according to an email written by its vice president, David Caspari and seen by ZDNet.com.au.

An Australian and New Zealand Implementation Team would be headed up by HP's South Pacific human resources director, Jim Lefever, Caspari told staff, although it was not clear if that team was working across HP and EDS staff.

"The program will be rolled out based on legal requirements and subject to employee consent. As soon as we have region-specific information, we will share this with you," Caspari wrote.

The pay cut initiative was a response to the financial results that HP reported yesterday, HP's Australian spokesperson said. The results revealed significant falls in the company's revenues for each of its product lines, while its overall revenues had been shielded by its services division, which now includes EDS-generated revenues.

EDS-related revenues locally include sources such as the Australian Taxation Office, which revealed recently that the decade-long deal it held was worth AU$2.4 billion.

However, HP's Asia-Pacific business, which includes Australia, fared the worst out of HP's regions in its first quarter 2009 report. Although APAC revenues grew 11 per cent to US$4.4 billion, the result was a 9 per cent fall on last year's earnings when currency effects had been factored in. HP does not report country-specific earnings, although it will eventually have to file financial details for its Australian business with the Australian Securities and Investments Commission.

HP's Australian spokesperson said today the pay cuts should not mean more redundancies. HP Australia, however, would continue in the coming months to make further cuts under the plans announced in September to cut 24,600 jobs globally.

"We're part way through those reductions. At the end of the first quarter we have completed 9,000 of those [globally]. So we do have the rest to go globally," the spokesperson said.

EDS representatives late last year confirmed that cuts to HP and EDS' Australian and New Zealand operations would likely be in line with the 7.5 per cent global mark, which could mean about 450 jobs locally, according to ZDNet.com.au calculations.